Are betting heavy on a collapse. I’m going to try and go extremely defensive over the next 2 months.
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" China’s economic meltdown: The health of China’s economy has become a serious concern for US investors. Traders worry that weakness in the world’s second largest economy could affect the global outlook. China’s consumer spending, factory production and investment in fixed assets all slowed further in July from a year ago, according to the National Bureau of Statistics. China also recently suspended the release of monthly data on joblessness among young people after the figure repeatedly hit record highs.
Tensions between the US and China, meanwhile, have been on the rise as the world’s two largest economies clash over issues ranging from trade policy and technology, to Russia’s invasion of Ukraine.
Russia and Ukraine’s impact on inflation: Global inflation is finally coming down, but heightened geopolitical tensions threaten to raise food and oil prices across the globe. Russia’s invasion of Ukraine continues to stoke fears of increased commodity prices, global economic instability and uncertainty around security.
Jamie Dimon, CEO of JPMorgan Chase (JPM) has cited the ongoing war as his greatest concern on many occasions. Most recently, he told CNBC that the world is seeing “serious” levels of “nuclear proliferation and nuclear blackmail.” This level of geopolitical chaos, he said, hasn’t been seen since World War Two. “The world’s not that safe.”
US economy is slowing down: Unemployment is low and inflation rates are steadily coming down. But the US economy is still showing signs of a slowdown. Shoppers have tightened their purse strings in the face of higher prices and borrowing costs, focusing on paying for necessities like groceries over discretionary purchases like clothing or home improvements. There are signs from some retailers that demand has been weakening, which could eventually eat into their bottom line.
Banks remain a quiet risk: Fears of contagion still exist around the regional banking crisis in March: Burry’s fund is also getting out of its shares in a number of regional banks — it sold its 150,000 shares of First Republic Bank (FRC) as well as holdings in Huntington Bank, PacWest (PACW) and Western Alliance (WAL).
Big banks could also be in hot water: Bank shares fell on Monday following reports that Fitch Ratings warned of an additional downgrade of the US banking industry that could affect the ratings of several large American lenders."
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Another trillion-dollar bailout?
I’m fine with this thread, as my bed needs some cushion anyway, but let’s please not spoil it.
You all know what that means.
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The whole rally this year was a bit fugazi IMO. Driven by narrative (AI), wishful thinking re: cooperative inflation, sell side analysts sandbagging projections to create top and bottom line beats and big tech coming out of a bloated CapEx era and hence having fat to trim to beat the lowered bar set by analysts. All of this has led to higher stock prices for the winners simply via (or at least overwhelmingly via) multiple expansion.
Collapse? Not sure. Personally I’ve long been on board the 1970s stagflationary repeat train which is awful in its own way. Though we don’t see what lies at the bottom until the tied goes out.
But as a Main Street proprietor who sees customers from different regions and demographics, I do believe while the consumer continues to exhibit some strength, there does seem to be a pretty distinct elasticity to that strength. As an example, November-February lodging (which as a sector is typically a canary in the coal mine for obvious disposable income choice reasons) was heading for contraction as consumers were beginning to tap out due to the 8+% inflation. Then that trend receded and travel came ripping back.
I think we’re clearly late stage in the business cycle, so some cowboy up moments inevitably await us. Personally I’m down for it (within reason). Blood letting from this era of gorging on cheap money is necessary.
But please, please, no more massive stimulus. I hate what it has done to the psyche of this country. The direct stimulus has really negatively impacted the labor market and IMO the work habits of many laborers. The too big to fail stuff has been jet fuel for the rampant speculation of the era creating exacerbating cost of living and wealth gap issues, and it’s only furthered division by making many Americans feel (justifiably so IMO) that there are too sets of rules and that most of us are second class citizens.
So far, the Burry prediction is looking spot on. Inverted yield curves are in play so I bought some 4 week treasuries this morning that pay 5.4%
That’s better than losing 20% to 40% in the market as it readjusts to the new norm. And it’s also better than keeping my money in the bank while inflation burns it up.
It’s coming. Right now, don’t buy and hold almost any ticker. Only a minority of stocks are worth holding long term. Maybe buy on strong dips if planning to build a trench or moat around specific stocks.
“Powell Delivers A Dire Warning For Stocks And Bonds”
“Powell admits that the era of QE is over, signaling tough times ahead for stocks and bonds. Cash and short-term Treasury Bills may be attractive assets.”
“The Fed Chair Jerome Powell delivered a direly hawkish speech for stock and bonds at the New York Economic Club on October 19th. Although the stock market (SP500) and bonds (TLT) both fell slightly after the speech, the magnitude of the policy warning is far from being fully processed by the markets. In fact, lower stock prices and higher interest rates could be a secular trend going forward.”
I’ll be buying more 4 week treasuries for sure.
This is a Main Street observation in response to the Wall Street one that you described above – and it’s simply anecdotal – but I recently put out a job add for a housekeeper. Been damn near impossible for probably three years to find decent candidates — like people with actual applicable experience – for nearly three full years. The last ad I had out was three months ago and things have changed dramatically since then. Dozen of applicants, e-mail cover letters that were actually thoughtfully composed, near immediate response to interview scheduling e-mails. Totally different response. Yet demand in our sector is still solid so part of me wonders if this is (for now) more of a supply side situation with disposable income spending amongst certain demographics capping side hustle/gig economy earnings.
Whatever the reason is, my experience in dipping my toe into the labor market echoed what friends have told me. The job market here is finally getting tight. It’s coming.
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The small business reports like yours, are usually the most accurate “canary in a coal mine” indicators. Very valuable info and results reported. Just the tip of the iceberg with more indicators like that to be seen.
Again, it’s weird bc October looks to be another record (though in nominal terms and we can’t discount the role of inflation) and demand doesn’t yet show signs of tapering off beyond the usually seasonality … and yet I do feel that the demand cliff is just in the offing. I’ve been trying to prepare employees for it as well but easier said than done. The Covid and post Covid economic bubble has really warped some minds.
But hospitality is always the tip of the Speer so we’ll likely feel it first.
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Worth reading these comments.
I’d fully expect little down largely financed big ticket items to be struggling in this high rate environment. I don’t think that is all that closely correlated to people spending $500 bucks over a weekend to see their son while he’s at college.
BUT I see a lot of testimonials about AirBnB hosts complaining about their demand seizing up so I do see the writing on the wall. But whereas AirBnB inventory skyrocketed, in my area there hasn’t been many new hotel/inn/B&B rooms being added.
And this may sound crazy, @pdono, but in some ways I’m eager for the recession to arrive. I’m tired of this labor market. I want people to want to work again. To feel grateful to have a means to pay their bills. The debt to equity on my property is like .07. We’ll be okay. But my sanity has wore thin over the last three years.
But folks that have been living above their means, or entrepreneurs that levered up having forecasted fugazi Covid demand to be durable … a lot of them are about to get clobbered IMO.
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Totally agree. Its been generational softness and poor decision making up and down the socio economic ladder. Plus, the total lack of leadership within private business and government has been staggering.
We are currently living this part of the quote.
"…Good times create weak men. And, weak men create hard times.”
Historically speaking…The good times have been going on for 40+ years.
And borrowing from the future to finance those good times.
Mickey Loomis would have made a great central banker.
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I bought 200 shares of Google @ $121.82 last week when it collapsed. Then, I wrote a covered call with a strike at $130.0. Nov 17 2023 Expiriation. $226.68 in premium collected today.
Then I lost my ass today with ON Semiconductor. Ouch, down (-21.77%) in one day.
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Buy PLTR on the dips. That is my main recommendation for long term hold and gain.
Palantir (PLTR) shares rose more than 4% on Friday, adding on to Thursday’s 20% surge after it reported strong third-quarter results and raised its guidance.
The Denver, Colorado-based company is seeing heightened demand for its product portfolio across government and commercial sectors with 34% growth in customer count, Wedbush explained.
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I’m doing really well selling cash secured PUTS on a few companies. Over the last few months, my big bagger has been SMCI. At the very least, a person can do one of these trades per month as a supplemental revenue stream. Selling PUTS out of the money on the down side, provides some ticker depreciation protection.
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Sounds like Burry has a had a change of thinking on shorting the US economy. We still have a long way to go to reach deficit stability and real growth.
https://twitter.com/Tesla_Armando/status/1732073087531733462
The Govt always manipulates numbers and data. Always have to wait a few months to get the real data after the initial release.