Submitted by QTR's Fringe Finance
Just days ago, I released my latest take on macro and the markets, including two new long positions I like, heading into the second half of 2024.
As I wrote then, there are a number of negative catalysts still just waiting to play out for markets: numerous potential wars, a fiscal situation in the U.S. that is completely untenable (listen to this interview with James Lavish and read this report from Mark Spiegel to understand) and now even more uncertainties with the 2024 election, given the attempt on President Trump’s life over the weekend.
This comes on top of a good ole’ fashioned economic contraction.
The cold hard fact is that two years of higher rates after 15 years of taking on debt at near-zero rates is eventually going to grind the gears of the economy to a halt. It’s as simple as math. Rates go up, cost of debt goes up, discretionary spending slows as a result of higher debt service, businesses generate less cash, layoffs happens and round and round we go, spiraling into a de-leveraging cycle.
In other words, this will have consequences. Try to act surprised when it happens, OK?
It’s only a question of how long it’s going to take to get there. My readers also know that I have been predicting this outcome for 18 months, while the stock market has done nothing but rocket higher. I underestimated how much liquidity there was in the economy and have been wrong on timing — though I don’t believe I’m wrong on outcome — for the past year or two.
Now, macro data — which operates on a pretty significant lag — is starting to turn into “ugly” territory, indicating that a true economic slowdown could already be taking place, just not showing up in the data yet.
My readers know I published a great recap from Schiffgold days ago where economist Peter Schiff reviewed a recent batch of major economic data, including new jobs data and revisions to job numbers, and why a declining manufacturing sector bodes poorly for the economy.
Today, I offer up Peter St. Onge from Brownstone, who throws his own data into the mix to make my point. I also point out additional data on the U.S. housing market struggling.
St. Onge asserts economic data is "broken" - something I asked my readers about over the weekend. He uncovers the "actual" inflation rate, stalling manufacturing orders, and indicators that quality of life is suffering even when the numbers don't make it look as though Americans are taking it on the chin.
Finally, he compares the data to the 1970s "disaster" to make the point we may damn well already be in recession...(READ THIS FULL ARTICLE FREE HERE).
