Is the Real Economy as Weak as Markets?

Guest Post by Liam Cosgrove

“This market has a 1929 like feeling….”

With the S&P 500 closing in a bear market for the first time since March 2020 on Monday, investors are beginning to panic. The old adage “Don’t fight the Fed” seems to hold true in a tightening cycle as well. Those memes of Jerome Powell spitting money out of a printing press seem like ancient history now.

Tech is getting particularly slaughtered with Bitcoin down 65% from its highs, Cathie Woods’ Ark Innovation fund giving back all of its post-pandemic gains, and yet another decentralized finance platform appears to have blown up. As Lawrence Lepard, investment manager at Equity Management Associates LLC, said, “ This market has a 1929 like feeling…”

Perhaps more ominous, the pain is beginning to reach beyond financial markets. No matter which rock you look under, you won’t like what you find.

Adam Taggart, founder of investing media channel Wealthion, sounds off on the seemingly endless brigade of bearish economic data:

  • Wages, while rising in nominal terms, have been on a steady decline in real terms since Q2 of 2020.

  • Consumer credit has recently hit a new record-high in April while, that same month, the personal savings rate has reached lows not seen since the heart of the 2008 recession.

  • Unemployment and housing, two sectors which had been maintaining a veneer of stability, are showing signs of weakness with layoffs being announced at basically every major tech name you can think of and a recent spike in home listings suggesting a lack of buyers and frantic sellers.

  • The yield curve has inverted… again.

He goes over much more than can be fit into one article.

If you’ve been asleep at the wheel, you may be thinking we are doing alright, especially with reassurances from Biden’s Press Secretary that the economy is “better than it has been historically.” I urge you, take ten minutes to fill yourself in on what’s really going on behind the curtain:

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JimN
JimN

Notice how the seriously bad events keep coming: Ark fund, crypto, big tech workforce cuts cited above. The various financial markets have transcended the authorities’ abilities to control them. The runaway train that everybody had been riding carefree is about to go off the tracks. Retribution is coming. It won’t be swift but it will seem to be never ending. Once the Japanese banking sector goes down the rat hole, the EU will follow; then it will be the USD’s turn.

Working Man's Chest Surgeon
Working Man's Chest Surgeon

Not sure they will let it get that far. Israel can strike Iran or the CCP can invade Taiwan and ALL bets are off.

resuwrecked
resuwrecked

Do you think a US economy shift into war-mode will keep the can bouncing down the road any further?

hardscrabble farmer
hardscrabble farmer

No.

Captain_Obviuos
Captain_Obviuos
bucknp
bucknp

Don’t they all have that attitude? You can say two but I won’t mention the other name.

Note from Nevada
Note from Nevada

I’m getting that , standing in the middle of the road feeling with a 18 wheeler headed my way…………….

Peter Horry
Peter Horry

If you think Wall Steet stocks are the “Real Economy”, you’re probably either a dumbass, or a Millenial. You probably shop at Walmart or Sams instead of a local mom and pop. You probably don’t even know where your food comes from. You probably don’t understand that when off-road diesel hits $7.00 a gallon by August, it’s game fucking over for city people.

If you’re still “invested”in stocks and bonds as America collapses around your ears, you deserve to have your ass handed to you.

trump lost bigly
trump lost bigly

I don’t get why people are upset at high gas prices. Isn’t that just more profit for the oil companies? The goal of capitalism?

Iska Waran
Iska Waran

Home values …
comment image?itok=ZKbOOouf

bucknp
bucknp

Never fails on the housing part of it.

Some homes in Provo, Utah, drew 50 offers at the peak of housing boom. Economists are now warning of ‘overvalued’ property markets.

https://www.marketwatch.com/story/some-homes-in-provo-utah-received-50-offers-at-the-peak-of-housing-boom-economists-warn-of-many-overvalued-property-markets-11655219153?mod=home-page

What do “economists” know? I know from living that boom and bust economies …wonderful, “never ending” on the upside, a real bummer for some on the downside. Texas too is a good example of how population influx creates ridiculously high housing. Maybe it will all work out. Even when I made a respectable salary in the corporate world in Texas, a $500,000 home? Are you shitting me? No thanks.

Housing dupe easily understood, interest rates ridiculously low, home price ridiculously high. Interest rate high, home price lower and especially if economic circumstances are leading to job losses. Turn out the lights , the parties over. It may not take place every seven years on the button, still, what I call the seven year itch. And think Roaring 20’s. Unfortunately, the sky is not the limit and what goes up always comes down.

The Duke of New York
The Duke of New York

If it was only like 1929 that would be great, but in ’29 the US had a strong industrial sector, vast natural resources and a population that wanted to work. Now we have little to no production capacity, and much of that is beholden to China for inputs, farming and mining are being destroyed by green initiatives and most young people couldn’t care less about an education or really even a job.

The US has far greater debt as compared with GDP than in ’29, and really no one wants to lend the government any more money so the only alternative is for the Fed to continue printing which will continue to drive up inflation.

People and businesses (especially agriculture) are far more reliant on fossil fuels than in ’29, and these are far less abundant and more costly. Add to that the government’s green agenda which aims to eradicate the use of fossil fuels (when no viable alternative is yet available).

And it’s not like things can implode and then magically just get “reset”, there will be years of financial horror to come.

Just ask Zimbabwe or Venezuela.

n
n

“financial horror to come”
Thinking with your wallet and not your stomach?

Anonymous
Anonymous

” population that wanted to work”

A decade+ before ida may fuller got her first Universal basic In….Sorry! the first social security check.

For the unwashed masses, You either worked in some fashion or you didn’t live very long. Choice of Vocation a big factor. Saving and generational effort at our level effectively negated over time.

The rich get richer.

Ending of the pretending gaining speed. ‘Future’ pre-determined.

Question of timing the only variable.

boron
boron

deliberate, you say?

Jdog
Jdog

The economy is much worse than the market reflects. The housing market for all intent and purpose is now dead. Mortgage applications are off 40%+. Retail sales are in the toilet, inflation has decimated the working class, gas and food and utility prices are eating up discretionary spending. Healthcare is getting ready to raise insurance premiums to try to offset the massive loses from covid and now the epidemic of vaccine induced coronary and “all other cause disease and death.
Restaurants are going under left and right as labor and high food costs are making them unprofitable. Layoffs are beginning, and will spike when the construction industry runs head first into the ever shrinking pool of home buyers who are not buying homes.
We are about to experience a reality check on a scale few today can imagine.

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