It is extremely obvious to anyone paying attention that the “markets” are truly devoid of any price discovery. The imbalances, in my opinion, are so great that the approaching reset is likely to be unlike anything we have ever seen before. Because of this, we can throw most historical references out the window.
While the financial gameshows and mainstream media propagandists pepper us daily with economic spin that has little bearing on the reality you and I are living day to day, our living conditions are deteriorating at an accelerating pace.
The reports today (Nov. 16) is that inflation MAY BE moderating. It may be but the spin is that inflation was lower. It was lower than anticipated but still rising and causing massive problems for many in our society. Let’s also not forget that the inflation is massively massaged to the downside to hide the true damage being done.
There was a report today from Target- a major retailer that consumers are snapping their wallets shut. In addition, retail thefts at their stores in the USA cost them $400 MILLION dollars in the past year.
I have been writing for a LONG TIME that I believe if you invest in stocks it should be in companies that produce hard assets or the necessities of life.
The retailers, who have had a beautiful run selling cheap goods from across the globe, may be seeing the end of that run in sight.
While personal expenditures were up substantially in October the biggest increases came in food and fuel. The buying of trinkets and luxuries like electronics are taking a beating.
Just last year the big story was all of the congestion at our ports and supply chain disruptions. Today, there is no more congestion at our ports and shipping companies are idling ships and planes. (Fedex and Maersk are two). As a matter of fact, according to Gene Seroka- head of the Port of Los Angeles the Port of L.A had the quietest October since 2009.
This paints a pretty dire picture for the coming holiday season as retailers are cancelling orders and trying to wind down excess inventory.
When people have bills to pay and mouths to feed the necessities always win out over all else. I don’t believe that heating homes this winter will help anyone’s budget either.
If it’s not enough that the price of everyday goods are skyrocketing how about this? Charlie Bilello says “A US homebuyer now needs to earn $107,000.00 to afford the median priced home for sale, an increase of 45% in the last 12 months”.
Just a few data points to let us know how “WELL” our economy is.
- Total household debt jumped $351 BILLION in Q3 2022.
- Total Household debt is at a record $16.5 TRILLION
- Mortgage balances are up $1 TRILLION this year
- Credit card debt is up 15% this year (people trying to maintain their lifestyles)
- The USA’s (admitted) national debt is $31.28 TRILLION and RISING.
- Each citizen is on the hook for $93,830.00 just for the 31.2 TRILLION. Since many are not working it is important to note that the tab for each taxpayer is actually $247,882.00.
- There are $172.7 TRILLION in unfunded liabilities (promises made with no actual cash there to pay) and that adds another debt load of $517,749.00 to EACH AND EVERY US Citizen.
- Manufacturing is collapsing both here in the USA and globally
- Many companies are announcing layoffs and many who had already announced are increasing their projected layoffs. Pretty hard to carry all of that debt-load with FEWER jobs!
You get the picture.
If debt were actually growth (which government numbers count it as) we would be in great shape. So would Argentina, Zimbabwe, and Weimar Germany.
As I have written MANY times there is NO WAY to pay off these type of debts and have our currency hold anywhere near its value. In my opinion, the idea that the US dollar is a safe haven is a carefully crafted deception that will end in misery for those that are buying it.
Since we are in a debt-based system I can’t buy the idea of an outright default because that would mean that no new debt could be issued and the system would likely immediately implode- leaving those “in charge” responsible. I expect that the “printers” will keep on conjuring up cash until it is virtually worthless and find an external excuse for why our “money” collapsed.
Of course, a new system awaits us on the other side- most likely Central Bank Digital Currencies which are popping up across the globe as we speak. Many tests are being done on cross-border payments, etc.
I believe we have to ask ourselves a serious question. Are the assets I am holding more or less valuable than the price I have paid? In relation to stocks, bonds and real estate- it is likely that you paid a FAR higher price than the value you received if you bought recently. Of course, there are some exceptions as every transaction is different. If you have been purchasing gold, silver and companies that mine them you are likely getting a MAJOR bargain in VALUE because the major banks and central banks are suppressing the price as they buy record amounts of the physical goods.
I was always taught to buy low and sell high. That is a hard thing to do for most because most people chase what has done well in the recent past rather than trying to determine where the economies and “markets” may be headed.
How sure are you that stocks will continue to perform well with the economy in freefall? While it may appear that stocks won’t fall right away- how sustainable are any rallies we are seeing?
How sure are you that bonds will recover after a 40-year bull market appears to have ended?
How sure are you that Real Estate will continue to rise as interest rate increases and a falling economy make affordability a MAJOR issue for most Americans?
How sure are you that the dollars you have saved over your lifetime will sustain you in a prolonged period of inflation?
Do you have a backup plan? Do you have hard assets that you can fall back upon?
Serious questions that, in my opinion, should be asked of everyone.
Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
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