This economy is nuts. I’ve never seen such a booming economy in which the vast majority of people are suffering through lost jobs, high rents, ridiculous car payments, burdensome credit card debt, and ever-increasing food costs.
Yet those who have money in the stock market and real estate have seen their net worth increase by 40 to 60% in just a few years. Heck, I’m one of them but I’m also knowledgeable enough to realize that most of these gains come from money printing and government debt.
If everything is so good why aren’t people prospering? In 1999 you knew people were making lots of money from the CEOs to the janitors. In 2006 gardeners were buying mansions.
Now people are selling boats and RVs that they bought three years ago for less than they owe just to get out of the payments.
They tell us that inflation is low, unemployment is low and the stock market is at record levels.
Something is off
The restaurant index is way down. Car dealerships are closing shop. Stellantis, the maker of Jeep and Dodge is trying to get rid of its CEO and is firing 2,400 people with more to follow. Cars have been sitting on lots for a year.
Something is just off about all of it. The flights I’ve been on recently have plenty of empty seats and yet United Airlines (UAL) jumped 17% in the last two days.
Hotels in Podunk nowhere charge $300 a night and won’t even change your sheets. Hilton Worldwide (HLT) is up 56% this year and hitting all-time highs. The company has a p/e of 50 and a quarterly growth rate of 8.4%. MGM (MGM) is down 10% year to date though up 8% for the year.
The company that supplies machines to chip makers, ASML, fell 17% yesterday on forecast earnings estimates, and yet Taiwan Semiconductor (TSM) is up 12% today.
The S&P 500 is up 33% for the year and gold is up 40%!
That shouldn’t happen.
The Fed cut rates fifty basis points and mortgage rates didn’t go down, they jumped fifty basis points instead. The bond market doesn’t believe what Powell is selling but equities do.
The sentiment index tells us that investors are extremely greedy, and yet the VIX index has traded above 20 all month.
Fidelity tells us that there are more 401k millionaires than ever before, some 8.8 million of them in the U.S. What they don’t tell us is that a million dollars has the same buying power as $500,474.00 in 1996. You really need $2 million.
I went to a diner on Saturday morning and it was empty and yet the high-end Italian place was packed for dinner on Monday night.
According to Zillow, Airbnb owners are trying desperately to unload all of their inventory, and yet Royal Caribbean (RCL) hit an all-time high and is up 134% this year.
Uranium stocks are flying, oil is down and natural gas stocks are flat, despite the fact that it will take at least 5 years to bring nuclear power online if not ten. Natural gas will have to produce the excess energy needed for AI and it’s gone nowhere.
Warren Buffett is hoarding cash while every other Wall Street billionaire shows up on Bloomberg and preaches that the market is going to “melt up” and 2025 will be a banner year. High-paying jobs will be plentiful, inflation will be forgotten and rate cuts will fall like mana from the heavens.
Who’s zoomin who?
All the best,
Christian DeHaemer
Outsiderclub.com
Know Nukes: https://www.outsiderclub.com/nuclear-goes-nucular/
Party on Garth: https://www.outsiderclub.com/the-market-hit-an-all-time-high/
