Guest Post by Karl Denninger
…. the gathering gloom.
Plenty of people — including obviously the stock market and its commentators — believe everything will be ok.
Deficits don’t matter.
The government cannot go broke.
There will never be a loss of confidence.
I travel quite a bit. Like most people I have my habits — places I like, things I go to do and if I enjoy them I’ll go back and do them again. This means I see patterns and, unlike many, I tend to notice them immediately. Perhaps its a blessing — or perhaps a curse.
I just got back after one such trip; one I’ve made before and Sarah and her boyfriend both came as well (her boyfriend has not been on this trip before, but she certainly has.) They traveled separately but we met up and had a good time.
If you’re in the market you ought to be making up a big fat list of things to be short — or at least be out of the things you’ve had and are long of, particularly when you can get a 5%+ risk free return in the short end (the 13 week bill, for example) of the Treasury market. I was stunned at the deterioration I saw in consumer behavior from just a month or so ago on my prior trip, and gob-smacked at the change over three months or so back when Sarah and I were out at Wolf Creek, also a place I like to go on a repetitive basis (for skiing, of course.)
There was evidence of it then on our travels which were over a large part of the same path we took back in September for our trip out to the Grand Canyon. That which was jammed full was not, and yet there wasn’t a serious price delta between those two trips; that is, while there had been lots of inflation over the previous couple of years (and it was obvious) there wasn’t anything that was a sort-of “trigger moment” associated with the change, and being winter .vs. late summer, ok, maybe it was seasonal and frankly, the delta was small.
This time it wasn’t small and in addition there were serious price hikes that were attempted — and appear to have had an instant impact.
I’m talking about sit-down fast-casual places I like when traveling and lots of others do too in that they’re always slammed to the point that if you want to eat there during the dinner hours I hope you like their “get a sort of reservation on their app” thing or sit at the bar if its just one of you — because if not you might be waiting an hour.
Well, that was gone. And not a little gone either. The place had plenty of tables with no wait and the parking lot had lots of spaces too. But it wasn’t one place — on the way home I stopped at another I’ve been in a dozen times over the last five or so years, again, at dinner time, and a third of the tables were empty.
But what else was shocking? A roughly 40% total price increase over a couple of years ago and of that 10+% that just got tacked on with all the menus having just been reprinted in the last couple of weeks. It appears that last grab for cash finally hit people’s pain points and they stopped showing up.
I also saw “fast food” style places co-located with fueling stations on the highway shuttered and boarded up — and that’s entirely new, and of other chains I pay some attention to during the same times in the afternoon and evening their parking lots are half-full or less.
Yes, this is “shoulder season” — or is it? Not really. Its graduation season and a lot of people are in fact traveling for precisely that reason; in another few weeks it will be the start of “traditional summer” with Memorial Day.
Folks, there are no rate cuts coming because there can’t be into this government spending level without an explosion in inflation. Without taking on the place in the federal spending game where all the money is going (that’s health care) there is no fix. Attempting to work around it with more offshoring, more robots, more data centers (and “ai” in them) and similar won’t work either because you can’t print money — you can only print credit and to obtain money someone has to do something of value for someone else in excess of its costs.
When costs ramp that excess closes and eventually goes negative — and at the point it does that activity becomes uneconomic. If you continue to do it through various machinations such as the government playing handout games you run the risk of an exponential runaway and collapse.
But what you should keep in mind is that never in reasonably-modern history do markets let you get to that endpoint. They didn’t in 2000 or in 2008 either. All the hollering about “subprime being contained” proved to be nonsense; the underlying bubble that “supported” the charade was seen through before the endpoint and the market imposed its own view of things whether policy makers liked it or not.
Mature fast casual dining and chip companies selling for 70x earnings are fantasy-land nonsense and yet both are the case right here, right now.
I get it that nobody likes the implications of prices having to collapse by a third to come roughly into line with incomes, but its fact. Further its at least double that in the capital markets because common stock always has an element of leverage in it (otherwise why would it sell at a “multiple” of earnings at all — and yet it always does, does it not?)
The belief that The Fed “must” or “will” step in and prevent such a reversion to the mean is absurdly common — after all, they have stepped in through the last two decades (or even more) but in doing so each time they’ve made the imbalance worse and now the exponential nature of such deficit spending and debt load are here rather than a future problem.
For those who believe that it will “never fail” or worse, that you’ll get plenty of warning before something serious breaks I have three words for you:
SOLD TO YOU.
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Each time they kick the can it rolls a little shorter and the kicks become more frequent. Soon they will have to kick the can with every step and eventually they will kick and the can won’t move… closer and closer. A trillion in annual interest and climbing..
“Deficits don’t matter.”
Until they do; then deep doo-doo for me and you.
Thats very good Auntie now do a parity of some enchanted evening using some entitled asshole instead
It was Dick Cheney that made that famous statement. A republican, new world order guy, and member of the uni-party. Also raised a traitorous daughter.
AWAKEN!!! THEY CAN “KICK THE CAN” BECAUSE “YOU” HAVEN’T CAUGHT ON TO THE “SCAM”…GET THAT???
I caught on to the scam like over a decade ago and yet they still kept kicking that can down the road didn’t they ?
“The collapse happened slowly and then suddenly.”
It will be a mostly peaceful collapse.
Applebee’s, IHOP parent has rare profit miss as consumers remain price sensitive
Stock falls as same-restaurant sales for both Applebee’s and IHOP chains fall more than expected
https://images.mktw.net/im-14388730?width=700&height=466
Shares of Dine Brands Global Inc. dropped premarket Wednesday, after the parent of the Applebee’s and IHOP restaurant chains reported first-quarter profit and sales that fell more than expected, as price-sensitive consumers continued to pose a challenge.
Despite the downbeat quarter, the company reiterated its full-year sales outlooks for Applebee’s and IHOP. Chief Executive John Peyton said the company is planning to meet customers’ need for “abundant value” through upcoming campaigns and new menu items.
The stock DIN, -2.05% was down 1.3% in light premarket trading, putting it on track to open at a four-week low.
The company reported net income that fell to $17 million, or $1.13 a share, from $26.7 million, or $1.74 a share, in the same period a year ago.
Excluding nonrecurring items, adjusted earnings per share of $1.33 missed the FactSet consensus of $1.56. That snapped a 12-quarter streak of bottom-line beats.
Revenue was down 3.5% to $206.2 million, below the FactSet consensus of $210.5 million.
Comparable same-restaurant sales at Applebee’s dropped 4.6%, compared with the FactSet consensus of a 2.7% decline. Same-restaurant sales for the chain have declined — and missed expectations — for four straight quarters.
For IHOP, same-restaurant sales were down 1.7%, the first decline in 12 quarters, to miss expectations of a 0.7% drop.
“Our brands have been tested through many economic cycles in the past decades and while our first-quarter results reflect the impact of consumer price sensitivity and challenging weather conditions, our fundamental business model remains steady with solid cash flow and positioning us to deliver on our guidance for the year,” said Chief Financial Officer Vance Chang.
For 2024, the company still expects Applebee’s same-restaurant sales to be flat to up 2%, compared with the current FactSet consensus of 0.6% growth. For IHOP, same-restaurant sales are still expected to be up between 1% and 3%, compared with current expectations of a 1.4% rise.
Breath deep the gathering doom , watch whites fade from every room …
Cold hearted ,,,, flat surface ,,, that rules the night ….
I saw that
Red is gray, and yellow, white; and we decide which is right…and which is an illusion.
We’re there.
That’s a great line.
“Breath deep the gathering gloom, watch lights fade from every room.”
Very Edgy.
Very Moody Blues
R.I.P. Graeme.
Its the poem ” Late Lament ” at the end of “Nights In White Satin” .I figured everyone knew that . I guess I’m dating myself yuk yuk ( dirty joke ) .
I had that album recorded on a reel-to-reel. Talk about dating someone.
I had it on LVD …….. (large vinyl disc).
8-track
And it was written by Graeme . . .
If you think it’s bad now…wait till there’s no food…period.
We want it collapsed and the zionists ousted from the world. Who cares about your narcissist, always shit talking arrogant while ignorant video game playing all day angry views?
When it collapses we will rebuild, those of us who are ready and we are. Bring it
You are delusional. This is not the 950’s. Try the 1800s. Actually much worse than even that, because almost no one is agrarian or prepared for what that means and entails.
Humans are fairly resilient.
Some.
I save in gold. For the day the FRN is rejected.
EVEN A “HALF-WIT” SHOULD SEE BY NOW THAT THE STOCK MARKET IS JUST FRAUDULENT AS THE BANKOHOLIC’S ARE!
THE REAL “STOCK” IN THE MARKETS WERE NEVER ABOUT “PRODUCTS AND SERVICES” FOLKS!!!
IT WAS ABOUT THE “PEOPLE”…DUMB-STUPID PEOPLE, WHO CANNOT “SEE THE FOREST FOR THE TREE’S”
WHEN A “BABY” IS BORN PEOPLE FILL OUT AND SIGN A “CERTIFICATE OF LIVE BIRTH”….BUT, NEVER WERE TOLD WHAT THAT DOCUMENT WAS ACTUALLY ABOUT…”YOURSELF”!!!
WHEN YOU SIGNED IT…THE “STOCK” WAS REALLY YOURSELF…GET-THAT?!?
PRODUCTS & SERVICES CANNOT EVEN HAPPEN UNLESS “YOU” ARE THERE!
THE MARKETER’S PAID THEM SELVES 5 – 15 BILLION DOLLAR…EACH TIME SOMEONE IS BORN!!!
GET THIS: IT WAS “YOUR VALUE” TO THEM…BUT ITS “YOUR MONEY” THEY STOLE!!!
REMEMBER: HUMANITY WAS NEVER FOR SALE?!?
CATCHING-ON YET???
THEY ALREADY KNOW ALL ABOUT THIS…UNDERSTAND???
Create the crisis , enact the solution. Rinse & repeat.
Eyeball-Scanning Company Capitalizes on Argentina’s Inflation Crisis
CBDC , social credit ID.
Was invited back (after 6 years) by an old Section 8 Prop. Mgt. company to handle compliance, doing IAQ mold testing required to re-finance and renovate.
First complex was in Denmark (SC, that is). The second was in a nearby town. Both crushed by poverty & are 90% black. Stores vacant or boarded up.
There’s no hope for these areas. I’d hold that as true for much of the rural US.
But, was in Chester, SC in the afternoon. Booming. Every large biz (GITI Tires, Boise Cascade, Carolina Poly, Quality Carriers (hazmat) and others all begging for skilled employees w/ full bennies. 25 miles south of Charlotte, a nice 10,000 pop. town.
In the South, if you’re over a 30 minute drive from a large metro, it’s a life of drudgery. Unless you area a farmer or have a timber biz.
Man, not Texas. We are doing alright out here in the boonies of rural, pine-filled East Texas. Except for rising prices, life is pretty normal. Weird for me to read about everywhere else and see the shit on the news.
But it is freakin hot, muggy and our skeeters got ticks, they’re so big. I advise people to stay away for your own protection.
Deficits don’t matter, though. That’s the narrative mistake a lot of folks jump to. The MMT hacks say deficit spending is good. So others reflexively say deficit spending is bad. But that just reinforces the underlying premise that aggregates matter in a fiat world.
They don’t. The real critique, the one that allows for a different analytical framework, is to recognize that deficits are irrelevant. What matters is who gets the currency units (not how many are emitted).
Notice Congressional debates are all staged to focus the drama on how much to tax and spend. Very little time and energy is devoted to what the appropriations actually do. This is part of why the Occupy movement was such a threat a few years ago. It successfully cut through a lot of the carefully crafted official narratives of the uniparty.
Who has the best contact for junk silver?