Market & CTLP Update

My latest “Quickie” (12 mins) is now available for viewing on my YouTube Channel.

In it, I discuss Cantaloupe (CTLP) earnings and why I believe the shares are a bargain at these levels. You can see my model here.

But first, I discuss where the wealth of America resides and the impact that has on how the Fed can control inflation.

Specifically, here’s the breakdown:

Residential Real Estate — $50 trillion
Bonds, Cash, CDs, and Bank Deposits — $60 trillion
Stocks — $50 trillion

So they’re all equally big contributors to U.S. wealth. However, stocks are easily the most volatile. That’s the key, because moving stock prices (up or down) is the easiest way to change the wealth of Americans (and therefore their feelings about spending, since people spend more when they feel rich and less when they feel poor).

Keep in mind, a lot of the money that the Fed lends to banks ends up in stocks, directly or indirectly. This is primarily due to institutions, but also trickles down to retail investors.

For example, if the bank gives me a larger mortgage, I can keep more money in the stock market. Margin and collateral loans allow me to buy even more stocks. But if the Fed pulls back lending to banks, banks have to pull back lending to people… which means people don’t have as much $$$ to put into stocks… which decreases demand and increases supply, causing stocks to fall (thus, accomplishing the goal of slowing down an overheated economy and/or the rate of inflation).