2022 Week 28
Notes, thoughts and observations - Compiled weekly
THIS WEEK
Inflation
Inflation feels good at first but the endgame is grim - Jens O. Parsson
OPINION :: This graph makes sense. Millennials spending habits shifted from experiences, which were hard to come by, to things which were an Amazon or DoorDash click away
QUESTION :: Is this shift permanent, or will demand trend back toward the mean?
Two options:
- The trend sticks and people stock up on goods and home furnishings. Hard to do when you can’t buy and sell for bigger houses.
- Demand trends back toward the mean, goods sales declines and discretionary experiences like casino and resorts come roaring back.
Energy
Gimme fuel, gimme fire Gimme that which I desire - Metallica
OPINION :: Gas prices are falling, almost as if consumers are buying less fuel
SPECULATION :: Belt tightening, not demand reduction. EVs will be a macro trend, but we are more than 100 years away from electric as a primary power source for most vehicles
- Why invest more to expand or maintain existing capacity, given the long-term structural decline of gasoline and diesel demand? - Joe Weisenthal
Credit Crunch
A bank is a place that will lend you money if you can prove that you don’t need it. - Bob Hope
OPINION :: Banks passed their stress tests, the American worker may not
OBSERVATION :: Personal savings is falling again, meaning consumers are strapped for cash admid rising prices and uncertain employement/hours
- Liz Ann Sonders :: Massive divergence in bank deposits by income percentile, with wealthy’s deposits having surged, while those in bottom 20% having reversed course from a slight upward trajectory
Sovereign Debt
THOUGHT :: Need to watch the Chinese and Russian debt market, could be an early indicator
THOUGHTS :: China attempting to slow roll their credit situation to prevent a crash
- Danielle DiMartino Booth :: “Chinese developer Shimao Group Holdings missed payment on $1B dollar note due Sunday
THOUGHTS :: Everyone saw this coming. More to do with banking boycott rather than lack of cash
- Seeking Alpha :: Russia defaults on foreign debt for the first time since 1918