The economy and the stock market are disconnected when the Fed's policy is quantitative easing. But when the Fed is raising rates, the two are tethered back together.
I fully support your point of view. In all likelihood, the next two years will be the most interesting. I made sure to have a few cases of good wine to keep an eye on things from a distance. 🍷
The savings increase were the various (and too extended) Covid stimului. It was borrowed by Uncle Sam and essentially given to the American people. Retail activity fell off a cliff, setting aside lock downs (not in my Free State of Florida where a bill was introduced to outlaw the Democratic Party... Chris you may agree). Mortgages were paused rent was paused. Everybody saved. Child supplements decreased child poverty ~50%. Then the bills came due. Plus binge buying: "No mortgage? Let's buy a jet ski, whatever!" Supply chain breakdown, prices zoom people, spend their way through all of that and a $130 billiom more in CC debt. Party on Wayne!
I have have a group text with 7 buddies who all do very well financially. The main complain over the weekend was the grocery stores. One is the prices and the other was organization of staff. I was there Sunday morning, I was just picking things up to make a pot of chili for the week. I got ready to check out and they had only 2 cashiers and the regular self check outs. All the check out lines were 8 deep. However as I was shopping there were at least a dozen "employee shoppers" filling online orders. How much labor is being wasted on Americans being too fucking lazy to pick out their own groceries.
So after 15 minute wait I check out and my bill was $101. Again I got ingredients for chili and a couple misc. small items. I was shell shocked - until I looked the bill. The meat (bacon, hamburger and sausage) was almost $30. WTF.
So going back to my text message string - 5 of the 8 of us had similar experiences over the weekend. Luckily none of us are going to change our life styles over this - but we asked how are average families surviving this? Then I pointed out the credit card chart.
The government is either clueless on what they have done to society with their policies OR they are geniuses and have pulled off the heist to convert us to a socialist country.
Retirement balances are no where close to the level for most Americans to retire.
Our government is broke and cannot bail out America this time.
I went shopping this weekend for produce and the sticker shock! Over a $100 for a bunch of veggies and some yogurt and butter! Ok, there was a 6-pack of my favorite IPA included, but still...I need to up my game on winter vegetable growing, all we have remaining fresh is carrots and then some freeze dried veggies...I too feel sorry for those with tight budgets.
Problem i see is people will eat even more unhealthy, produce and lean meats are very expensive. You can still load up on Mac N cheese and other processed foods that are affordable.
I have worked for a major airline for over 30 years. I have never seen such crowded airports and full flights as I've seen in the past couple of months. While I strongly feel that the economy is in a decline, why does everyone seem to have the money to fly?
Just curious because i do not know the answer. But how many flights have been cut since pre-pandemic levels?
I flew lots during 2020 and 21 - completely empty. In 2022 every flight i was on was sold out. However not living in a HUB city - i have noticed the number of my connecting flights have been reduced.
During 2020 - they had a lot of forced retirements to get their payroll down during the pandemic. I am guessing they have not been able to train / recruit enough to replace those who have retired.
Maybe the bigger the bubble (and this last few years is the biggest of all) the more ingrained denial there is. Whereas 2000 and 2008 tended to get on with rolling over this current decline appears to have a certified bull cycle trying to restart in the midst of it. Weird.
Those crashes were a generation ago. The 80s crashes were a generation before them. And brand new MBA kids think they're smarter, untouchable.
Same with the Fed. They ALWAYS overshoot because Fed policy ALWAYS lags. By a lot. Most of the Fed governors know this (not Lisa Cook, of course). Either they don't learn or this is managed decline to shrink the economy to fit the WEF/Xiden restricted energy policies.
Reminds me so much of my little dog who wants to do whatever she wants to do while I stand on the sidewalk and keep her from running in front of traffic to chase squirrels. Great analogy!
Serious question for Chris and everyone else here... I completely agree with the sentiment of this article and the comments.. why do you or anyone who feels this way ( myself included) stay in the market at all in this environment? If we see this all most likely ending badly at some point in the near future what are we doing discussing specific stocks or etfs, sectors, etc..... my own behavior confuses me in this way...
Had a Production Manager that repeated the same mantra over and over "Can't fit 10 lbs in a 5 lb sack". People ignored him, so he just kept repeating himself.
I feel the same way about my point on consumer debt default.
I am convinced that this is THE shoe to drop that will send things tumbling.
It's already starting with auto loans. Credit cards will be next. It will hit full force this summer with student loans (if the can doesn't get kicked again).
Then mortgages.
Consumers spend until they can't. Then they default so they can keep spending. It's a sickness.
I see you have been focused on rates at or above 5% as disastrous for the economy while this is close to the average 10 yr treas yld over the past 30 years. Why such a disaster now that rates seem "back to nornal"?
I fully support your point of view. In all likelihood, the next two years will be the most interesting. I made sure to have a few cases of good wine to keep an eye on things from a distance. 🍷
That savings/debt chart is ominous
The savings increase were the various (and too extended) Covid stimului. It was borrowed by Uncle Sam and essentially given to the American people. Retail activity fell off a cliff, setting aside lock downs (not in my Free State of Florida where a bill was introduced to outlaw the Democratic Party... Chris you may agree). Mortgages were paused rent was paused. Everybody saved. Child supplements decreased child poverty ~50%. Then the bills came due. Plus binge buying: "No mortgage? Let's buy a jet ski, whatever!" Supply chain breakdown, prices zoom people, spend their way through all of that and a $130 billiom more in CC debt. Party on Wayne!
I have have a group text with 7 buddies who all do very well financially. The main complain over the weekend was the grocery stores. One is the prices and the other was organization of staff. I was there Sunday morning, I was just picking things up to make a pot of chili for the week. I got ready to check out and they had only 2 cashiers and the regular self check outs. All the check out lines were 8 deep. However as I was shopping there were at least a dozen "employee shoppers" filling online orders. How much labor is being wasted on Americans being too fucking lazy to pick out their own groceries.
So after 15 minute wait I check out and my bill was $101. Again I got ingredients for chili and a couple misc. small items. I was shell shocked - until I looked the bill. The meat (bacon, hamburger and sausage) was almost $30. WTF.
So going back to my text message string - 5 of the 8 of us had similar experiences over the weekend. Luckily none of us are going to change our life styles over this - but we asked how are average families surviving this? Then I pointed out the credit card chart.
The government is either clueless on what they have done to society with their policies OR they are geniuses and have pulled off the heist to convert us to a socialist country.
Retirement balances are no where close to the level for most Americans to retire.
Our government is broke and cannot bail out America this time.
This is not going to end well.
I paid $16.00 yesterday at Home Depot for a really crappy piece of 1/4 inch 2 feet by 4 feet plyboard. WTF. I agree.
I went shopping this weekend for produce and the sticker shock! Over a $100 for a bunch of veggies and some yogurt and butter! Ok, there was a 6-pack of my favorite IPA included, but still...I need to up my game on winter vegetable growing, all we have remaining fresh is carrots and then some freeze dried veggies...I too feel sorry for those with tight budgets.
Isn't it good that overweight Americans eat less? Just seems like market forces at work
Problem i see is people will eat even more unhealthy, produce and lean meats are very expensive. You can still load up on Mac N cheese and other processed foods that are affordable.
always enjoy your analysis...great stuff.
I also really enjoy your podcasts...wish you would do more...
I have worked for a major airline for over 30 years. I have never seen such crowded airports and full flights as I've seen in the past couple of months. While I strongly feel that the economy is in a decline, why does everyone seem to have the money to fly?
Just curious because i do not know the answer. But how many flights have been cut since pre-pandemic levels?
I flew lots during 2020 and 21 - completely empty. In 2022 every flight i was on was sold out. However not living in a HUB city - i have noticed the number of my connecting flights have been reduced.
The real question is where are all of the pilots hiding?
During 2020 - they had a lot of forced retirements to get their payroll down during the pandemic. I am guessing they have not been able to train / recruit enough to replace those who have retired.
Forced retirements and my guess is a fair amount of pilots smart enough not to take the jab...
Fascinating insight. Thanks for sharing.
Maybe the bigger the bubble (and this last few years is the biggest of all) the more ingrained denial there is. Whereas 2000 and 2008 tended to get on with rolling over this current decline appears to have a certified bull cycle trying to restart in the midst of it. Weird.
Those crashes were a generation ago. The 80s crashes were a generation before them. And brand new MBA kids think they're smarter, untouchable.
Same with the Fed. They ALWAYS overshoot because Fed policy ALWAYS lags. By a lot. Most of the Fed governors know this (not Lisa Cook, of course). Either they don't learn or this is managed decline to shrink the economy to fit the WEF/Xiden restricted energy policies.
The thesis is correct but the timing is out of our hands.
This has been the thesis for decades, impossible to time. "Government is broke" has been said since 1776 lol
Precious metals are in the exact same boat with regards to real yields no?
Reminds me so much of my little dog who wants to do whatever she wants to do while I stand on the sidewalk and keep her from running in front of traffic to chase squirrels. Great analogy!
Good analysis, linking as usual @https://nothingnewunderthesun2016.com/
Another shoe drop https://www.forbes.com/sites/maurybrown/2023/02/24/warner-bros-discovery-announce-plans-to-exit-rsns-added-with-bally-sports-puts-two-thirds-of-mlb-on-edge/?sh=1148c961651c
Serious question for Chris and everyone else here... I completely agree with the sentiment of this article and the comments.. why do you or anyone who feels this way ( myself included) stay in the market at all in this environment? If we see this all most likely ending badly at some point in the near future what are we doing discussing specific stocks or etfs, sectors, etc..... my own behavior confuses me in this way...
What if the market doesn't crash but remains horizontal for the next 3-5 years. Would be the same result.
I get it about being repetitive.
Had a Production Manager that repeated the same mantra over and over "Can't fit 10 lbs in a 5 lb sack". People ignored him, so he just kept repeating himself.
I feel the same way about my point on consumer debt default.
I am convinced that this is THE shoe to drop that will send things tumbling.
It's already starting with auto loans. Credit cards will be next. It will hit full force this summer with student loans (if the can doesn't get kicked again).
Then mortgages.
Consumers spend until they can't. Then they default so they can keep spending. It's a sickness.
I see you have been focused on rates at or above 5% as disastrous for the economy while this is close to the average 10 yr treas yld over the past 30 years. Why such a disaster now that rates seem "back to nornal"?
Trillions in debt - public, private, corporate.
Wouldn't fundamentals be no path