Taxes, production, logistics, business, banking, federal control, government intervention into the economy, subsidies, foreign investment and other factors as required.
“Rick Santelli: if federal spending doesn’t come down we could see 14% treasuries.
Last time that happened in the 1970’s it brought 11% unemployment and 18% mortgages. Today, with $33 trillion in debt, it would be catastrophic.”
Analyst Comment: Many US financial analysts assume that the US is the cleaniest dirty shirt: We may be screwed but every other country is in worse economic condition and will break first. That’s an assumption that deserves to be questioned. With high borrowing in Washington, and modest treasury sales by historic buyers like China already yielding higher Treasury rates, we may be closer to a debt doom loop than most analysts realize.
Saudi Arabia and Russia agree to extend oil production cuts through the end of 2023.
Analyst Comment: Higher gas prices aren’t going away soon.
The average 30-year mortgage rate has hit 7.53%.
“Starbucks is the latest retailer to announce it is fleeing San Francisco’s crime-infested downtown core.
According to The San Francisco Business Times, the coffee giant is closing seven locations in the crime-plagued downtown core…”
“Nearly 1,500 small businesses filed for Subchapter V bankruptcy this year through Sept. 28, nearly as many as in all of 2022, according to the American Bankruptcy Institute.”
Office mortgage delinquency rates have climbed to 5.6% while mall delinquencies have reached 7.0%.
Q2 personal consumption was revised downward from 1.7% to 0.8%, indicating consumer spent much less on personal items then previously believed.
Additionally, personal savings rates were overstated. Savings were slashed by $1.1 trillion.
Analyst Comment: People on average have less savings than expected and are tightening their belts while prices remain high. Meanwhile student loan payments are coming back and rates are at record high. This is the setup for something big to break.
“Europe has almost run out of local olive oil supplies and is set for more shortages, after extreme weather damaged harvests for a second year.
The world’s largest producer has said it is having to import supplies from South America to keep up with demand…
Global production is expected to fall to 2.4m tonnes according to the International Olive Council, less than last year’s harvest and well short of global demand of about 3m tonnes, after drought and heatwaves of more than 40 degrees hit production in Spain.”
“Wheat headed for the worst run of quarterly losses in 14 years as bumper harvests in parts of the Northern Hemisphere offset ongoing tension in the Black Sea after the collapse of a grain agreement.”
Analyst Comment: Bad news for traders, brokers and farmers, but good news for end consumers.
“Russia is selling oil to India at nearly $80 per barrel, some $20 above the Western price cap, traders said and Reuters calculations showed, as tight global oil markets help Moscow generate strong appetite for its exports…
India, which is the world’s third biggest oil importer, has become the top buyer of seaborne Russian oil, mainly Urals, since 2022 after Western sanctions against Moscow.”
“The pause on federal student loan payments and collections is coming to an end on Oct. 1, meaning that borrowers with outstanding balances will soon get their first bill in more than three years.
The pause, which went into effect in March 2020 and has since been extended numerous times under the Trump and Biden administrations, will not get another extension after Congress prohibited President Joe Biden from doing so as part of a debt-ceiling deal.”
Analyst Comment: Just as prices of gas, food, energy and housing are sitting at record levels, student loan payments are coming back. This will be a huge drag on the economy and another indicator recession is approaching.
Chase bank is banning cryptocurrency transactions. The bank claims it will automatically decline transactions related to buying crypto assets like bitcoin.
“The Freightos Baltic Daily Index (FBX) spot assessment for the Asia-North America West Coast lane has fallen 16% over the past month, to $1,712 per forty-foot equivalent unit as of Thursday. The FBX Asia-North America East Coast assessment is down 13% over the past month, to $2,662 per FEU.”
Analyst Comment: Ocean freight rate declines are a good early indicator of demand declines. If trend holds, inflation should cool, but it means recession is probably coming soon.
New home prices are dropping as overall housing supply is decreasing. It looks like things housing may be about to break:
“The median price of new single-family houses sold in August dipped by 1.4% from July, by 2.3% year-over-year, and by 13.4% from the peak in October, to $430,300, back where it had first been in November 2021…
The seasonally adjusted annual rate of sales of new houses fell by 8.7% from July, to 675,000 houses, which was down by 3.4% from August 2019, but was up 5.8% from the plunge last August.
Actual sales – not seasonally adjusted, and not annual rate of sales – fell to 54,000 houses, the lowest since December last year, down by 5.3% from 2019, though compared to the sales plunge a year ago, it was up by 5.9%.
So despite lower prices, ample supply (more in a moment), and large-scale mortgage-rate buydowns, sales remain below the pre-pandemic levels and well below the activity in 2021…”
“Nearly 96 percent of pharmacy technicians surveyed by the Pharmacy Technician Certification Board reported shortages of essential drugs—from chemotherapy and attention-deficit/hyperactivity disorder meds to much-needed anesthetics and popular diabetes and weight loss drugs, including Mounjaro, Ozempic, and Wegovy…
To address shortage issues, 90 percent of surveyed technicians said they offer substitute drugs when available. However, almost half the time (45 percent), patients still leave without their needed medication.”
“The Biden administration on Wednesday offered nearly half-a-million Venezuelan migrants in the U.S. the ability to live and work in the country legally, approving a longstanding request from cities struggling to house asylum-seekers.
The Department of Homeland Security expanded, or redesignated, the Temporary Protected Status program for Venezuelan migrants, allowing recent arrivals to apply for the deportation protections and work permits offered by the policy…
Previously, only Venezuelans who arrived in the U.S. before March 2021 qualified for TPS, a program created by Congress in 1990 to offer a temporary safe haven to migrants from countries facing humanitarian crises, such as an armed conflict or a natural disaster.”
“General Motors has halted operations at a Kansas factory and laid off 2,000 workers, saying it was a ‘negative ripple effect’ from other workers going on strike.”
“The first grain ship left Ukraine’s port of Chornomorsk, as Kyiv seeks to defy Russia’s effective blockade of its Black Sea facilities since the collapse of a safe-passage deal in July. Wheat extended losses.”
“The Biden administration proposed to block of thousands of acres from future oil drilling or mining in northern New Mexico in an effort to protect Native American lands.
According to the Department of the Interior (DOI), the proposal would ban new mining claims and oil and gas development across more than 4,200 acres in Sandoval County, New Mexico, located north of Albuquerque. If finalized and implemented, the action would remain in place for up to 50 years.”
“Chicago Mayor Brandon Johnson announced last week that his administration is exploring a city-owned grocery store as a means of promoting “equitable” access to food, though the plan has drawn criticism from skeptics of a government owned and operated store…
Several big-name grocery stores have been among those that closed in recent years. Last year, Whole Foods closed a store in the South Side neighborhood of Englewood six years after it opened…“
CPI (the Fed’s inflation measure) rose 0.6% over last month.
Rents and shelter cost inflation cooled slightly while gas and airfare rose.
Illegal immigration is being leveraged to across the western world for cheap labor, depressing wages of working class citizens:
“House Democrats sent letters to Biden administration officials asking that the federal government… alleviate the delays in granting work authorizations to illegal immigrants due to significant immigration court backlogs.”
EU Commissioner Ursula von der Leyen said Europe needs more immigration fill labor shortages.
Analyst Comment: The best cure for labor shortages is the market. When there is an employee shortage, employers begin to raise wages to attract employees and encourage increased productivity. By saturating nations with illegal immigrant workers, the wages for many working class people are reduced. Western gov policies are deliberately hurting middle and low-class workers.
“JPMorgan Chase allegedly informed the government of over $1 billion in transactions related to “human trafficking” by the late financier Jeffrey Epstein dating to 2003, a lawyer for the U.S. Virgin Islands said.
The Wall Street giant reported the financial activity — which took place over 16 years — as “suspicious” to the Treasury Department in 2019 after Epstein died by suicide…”
“An index of food-commodity costs fell 2.1% last month on subdued demand and good output of vegetable oils and milk, the United Nations’ Food and Agriculture Organization said Friday. The gauge has slid 24% since hitting a record in March 2022…
In contrast, the agency’s rice index surged by almost 10% month-on-month as India’s decision in July to ban Indica white rice exports disrupted trade at a time of tight availabilities ahead of new-crop harvests…”
“Apple shares fell about 3% on Thursday, following a 4% decline on Wednesday, after several reports suggesting that Chinese government workers could be banned from using iPhones.
The reported restrictions, which have not been publicly announced by the Chinese government, raise concerns that Apple’s products could get caught up in international tensions between the U.S. and China.”
Liberty Safe provided the FBI with an access code to a customer’s safe. The FBI had a warrant to search the customer’s property, but did not have a subpoena to compel Liberty Safe to provide any assistance. After massive public backlash, Liberty Safe launched a program where customers can request their safe combination is removed from Liberty Safe’s database.
China to invest $40 billion to boost its semiconductor industry.
Analyst Comment: China is highly reliant on western-designed and produced chips for consumer goods to military hardware. As the risk of a war with the US increases, China is trying to create independent supply chains that are not reliant on the west.
“OPEC+ leaders Saudi Arabia and Russia are set to keep tightening the oil market into the autumn, announcing Aug. 3 they will extend their supply cuts through at least September.”
Analyst Comment: Higher gas prices are here to stay.
“The federal government has run nearly $2 trillion in deficits over the past year, based on monthly data from the Congressional Budget Office (CBO). Monthly deficits from May of 2022 through this April totaled $1.942 trillion – which is almost double the 12-month rolling deficit from last summer and also nearly double the deficit immediately prior to the pandemic.
The rolling deficit has been growing since November of last year, driven by rising nominal spending and declining revenue.”