Personal Savings are at a historic low, Consumer Credit at highs, and Inflation hasn't popped. The United Kingdom and other leading Eurozone parties have proclaimed their Recession, as the Federal Reserve, BEA, and Executive Branch fight against Wall Street Banks, Wall Street Megacompanies, and basic economic equations contradict each other regarding the US's. Q3 GDP came in positive due to a massive decline in imports caused by overstocking through the first half of the year as every company listened to Jerome Powell and bought inventory. Inventory that is now looking to start hitting sales prices on the back of continued consumer weakness starting hardcore in September, a massive deflation in shipping costs, some energy costs, and a big tick down in demand. Still, the money isn't there for American consumers amid high usage of credit cards in the environment of an ever-inflating cost of living.
This analyst believes the most likely outcome is a continued destruction of consumerism, feeling especially heavy on the back of a great Q4 Holiday season in 2020 and 2021 - bigly in thanks to monetary inflation. Lower wage workers have been struggling through the regular life costs amid continuously weak consumer and manufacturing surveys, even with a massive surge in domestic manufacturing construction. Mid-line income earners are in an environment of increasing recession expectations as big Tech are reducing numbers. And while the BLS stick to claims that there are two jobs for every one person looking for work, the underlying environment dispels this illusion. Failed banks aren't the only ones firing workers. Twitter was among the most successful social media companies and hasn't made a profit in history. Amazon's Alexa is being touted as one of the biggest tech failures in modern history, with 10k workers set to bite the dust on the first go from a company that has become the quickest to lose $1 Trillion in Market Cap. The rest of the tech industry is sitting in their own layoffs in the early days of a recession that not all can agree on.
The increased probability of a weak Holiday sales period carries increased chances of continued layoffs from core business units and non-core. Amazon's Alexa might be one of the most unprofitable elements of a business that is now looking at dramatically reduced online-consumer spend after a year of reducing warehouse space and inventory while Unionization boomed. Google has shut down most of it's "Moonshot"/incubator projects along with peers, meaning they aren't seeing the Profit in business ventures they don't already master, hinting at a bad look for the space. Congruent to the destruction of the active economy, Stock market valuation deterioration hits at savings and spending now-on. Mortgage rates doubling stresses an already-dubious common ability to buy, thus reducing an already thin depth of bid.
I believe we will continue to see degrading macroeconomic environments with a mix of good and bad news for the future as various international economies start to rotate through the current trends and into their future. A mix of extreme pessimism and optimism as the loudest Bulls and Bears continue screaming before the Holiday season, volatility will continue to be high. With a higher skew towards downward pressure, expect some strong similarities and contrasts to last year. The New Year Bump and Drag will likely be a big repeat, with potentially compounded effects. From a socio-psychological stance, I believe the consumer environment is primed for less push on fancy gifts as the narrative grows on Corporate Profit Greed being the greatest pusher of inflation - which is correct in the context that the Federal Reserve and an out-of-depth Government enabled and allowed it.
Disclaimer
This is in no way, shape or form, fluid and function, an analytical, qualitative or intelligent compte rendu. The function of this essay is the maddening diatribe of a curious mind, and how this one manages micro- and macro-economic data for a critical investigation into the micro- and macro-economic world. This text is not suitable for direct consumption, and should never be used as a primary or secondary source. The contents of this text are often illogical and offensive, and great care should be given to the reader's personal qualifications and senses. This text is delivered on TradingView, where the userbase is expected to have a level of financial and investigative understanding that would enable them to query appropriate thoughts and abdicate nonsense to the void. May whatever sovereign and omnipotent being you believe in, guide you through this.
Comment:
This is serving as a good guide for this bear market rally for me. I believe now and the late 70's, early 80's have remarkable comparisons. Some of the currency strength in the 70s was a transfer of financial power from Europe to America, Cold War effects, and high interest rates from the Fed. Right now I see a continued devaluation of European economic conditions, which can be seen by European leaders pushing against the US's anti-China stance. Interest rates are high at 3.5% given true neutral was 0% for the trillions of dollars borrowed at 0%, so if Waller and the Fed continue to raise interest rates to 5.5%+, expect continued US Dollar dominance and deflated speculative markets. The current bear market rally is a mix of crash mechanics with heavy short squeezes, technical periods of buying by specific fixed parties, optimism from positive Q3 GDP, the mid-terms, and the Federal Reserve is sworn to orderly and functional markets, thus they will work to prevent a crash. Anyways, that's your more.
