The Joe Biden Economy is the worst I have seen since the Jimmy Carter Economy back in the late 1970s as I was coming of age. I was in high school then. No one could get a job. People back then didn’t even try after graduating college, they just went straight to grad school.
Today the Consumer Price Index (CPI) number comes out. Will it be unexpectedly “hotter than expected” or “less than expected”? We don’t know. Unexpectedly was part of the financial journalism lexicon from 2009-2016. Obvious reasons why. Maybe the number was leaked yesterday which caused the market to get decimated out of nowhere.
Or, maybe investors are so frightened from the potential print of the number, they got out ahead of time and will rush back in today. Not likely on a Friday. They can buy it on Monday and it might be cheaper.
They are looking for inflation to hold steady at 8.3%.
Yesterday, I was chatting with a friend. They are a CEO of a multinational firm. They sell to big box stores all over America. They told me it used to cost $5000 and 50 days to ship goods from a country in Southeast Asia to the US. Now it’s $20,000 and 150 days. As I drove across the country the last few days, I never saw diesel gas even close to $5 per gallon in price.
The energy premium that it takes to move goods around the world hasn’t hit the inflation numbers yet. CPI famously takes the “volatile food and energy sector” out.
This isn’t a “Putin war issue” and President Biden isn’t doing everything he can to cure inflation. Biden is actually making it worse.
In one of the daily venture capital emails I subscribe to, the headline was “The Case For Embracing Down Rounds”.
Media outfits reported earlier this week that the crypto lending platform BlockFi is looking to raise roughly $100 million in fresh funding in a round that would value the company at about $1 billion. Very notably, when BlockFi last raised money from investors -- $350 million in March of last year -- the investors assigned the company a $3 billion valuation
Detractors of crypto will say it’s just “crypto” and “crypto is a scam anyway”. But, Fidelity Investments unit that invests in late stage startups just dropped the valuations of companies it is invested in. Venture firms are remarking their portfolios down. There are tough conversations to be had with limited partners.
Those markdowns reverberate through the entire ecosystem. Big tech firms are slowing their hiring and in many cases laying off employees. That’s odd because for the last ten years we have seen Big Tech thirsty for talent and hiring sight unseen. Engineering schools will see kids pivot from trying to get jobs with Big Tech to trying to get jobs with traditional companies to just trying to get a job.
One of the great things about being 60 is you have seen a lot of movies. I have seen this one before but this sequel is slightly different.
I remain long puts in the S+P 500. I think Bitcoin will trade for $12,000 and I think the S+P $SPY contract trades down to 320. It’s at 400 currently. The stock market had a mini-bear market rally. It’s still sell-the-rip psychology.
Chief salesperson Janet Yellen testified yesterday that she doesn’t see gas prices dipping below $5 but also doesn’t see the US economy slipping into recession. That’s because it already is in recession…..Yellen commented on the Trump tariffs and said they took some of them off. That should drop prices on those goods since tariff costs are simply passed all the way down to consumers.
Already, the housing market shows some signs of cracking nationwide as higher interest rates do their thing. More supply is coming on the market and sales times are slightly longer.
For people that are not seeing recession, and that “good times are just around the corner” and that the economy will have a “soft landing” what economic signs are telling you that and how are you framing the data to begin with?
Two things Biden could do today to send a signal to markets that he is serious about stopping inflation is to return to Trump’s energy policy and drastically cut government spending.
I don’t see it. I know how this movie ends.
POST NUMBER (written at 8:15 CT)
8.6%. Higher than expected. Mohamed El-Erian just said that next month is going to be worse. The market is showing a horrible open with all equity markets down at least 1.4%.
With job layoffs and high inflation, they coined the term “stagflation” in the 1970s and that’s where we are at. We are there….we aren’t going there. This isn’t some theory. You are experiencing it in real-time every day and it is going to get worse.
You knew this but the energy index rose 34.6 percent over the last year, the largest 12-month increase since the period ending September 2005. The issue is Biden won’t change course to stop the rise in energy prices because of climate change.
It is not just goods, it’s also services. The costs of services are accelerating, now at their fastest pace since 1991. That’s labor costs and labor is the largest input into manufacturing. The aforementioned energy is second.
Crazily, real average hourly earnings fell 3.0% YoY. Hence, your wages are going DOWN while costs are skyrocketing UP. It’s even worse than we thought.
My prediction:
Sometime in late January of 2023, Minority Leader of the House Democrats Nancy Pelosi will bring Articles of Impeachment to House Speaker Kevin McCarthy with Senate Minority Leader Schumer’s blessing.
They think it will stop the bleeding but it won’t.
Hello 3900. Studly trade. The metrics your ceo friend shared are almost unbelievable. But the clown show trials keep everyone's attention where it matters.
In re: Impeaching Biden. They MUST get rid of the cackler first. I do agree that the D's will defenestrate Slo Joe but they will get rid of Kamala first. She is an even greater liability than Joe.
We are way, WAY overdue for a political assassination. The climate is ripe for violence.
After Harris is out of the way, they will 25th amendment a new VP (best guess is Gov. Jared Polis of Colorado) and then get rid of Joe. Either by using impeachment or the aforementioned 25th amendment to remove him.
They simply cannot and will not go into 2024 cycle with either of those two at the helm.
Remember, the Dem's are ruthless, soulless political animals. They have no morals. Power is everything. They will do ANYTHING to get and keep POWER.
Dangerous times.