QUOTE OF THE WEEK
“Look up, laugh loud, talk big, keep the color in your cheek and he fire in your eye, adorn your person, maintain your health, your beauty and your animal spirits.” – William Hazlitt
TECH CORNER
The soft data, which are primarily surveys such as Purchasing Manager’s Index or Consumer Confidence Index, have been pointing towards a recession for quite a while. Now, the hard data which are the actual results, are now starting to show a recession on the horizon. Below are some of the hard data reports. First the consumer.
- Retail sales were down 0.9% last month.
- In April, a report from Redfin showed that one of every seven contracts for sale of residential properties were cancelled.
- Auto repossessions are at the highest level in 17 years.
- Home equity cash-outs rose 22% in the first quarter in which is the highest it’s been since the 2008 financial crisis.
- Credit card and auto loan delinquencies are rising fast.
- Jobs quits rate has plummeted.
- Consumers went on a spending spree in anticipation of the coming tariffs.
- Consumer savings are at extremely historic lows.
- Job openings are down substantially.
Remember, consumer spending is 70% of the economy and the bottom 70% of consumers are tapped out.
Now let’s address the economy.
- The levy on global trade is up five times.
- No stimulus is coming with the current legislative make up in Washington.
- The rest of the world’s economy is flat on its back.
- The U.S. housing sector values are starting to trend down. Housing is massively restrained due to high mortgage rates.
- The stock market is not priced for a recession.
- Interest rates, where they are now, is restrictive for business expansion and is a drag on the economy.
- The Composite Index of 10 Leading Indicators are worse than pre COVID.
I can go on but you get the picture. If we escape a recession, it will be the first time that it has ever happened based on the direction of the current data.
If you add in the tariffs, the situation becomes worse. Tariffs, aka taxes, have always are a drag on the economy. Simply put, if taxes go up, people and businesses have less to spend.
Because of the high level of risk, we are positioned in gold, silver, and short-term U.S. Government debt.
