Lots of red in our Bubble Monitor results for the week ending Thursday June 9, 2022. The 10-year crossing the 3% mark, with the 2-year close behind, represents a threat to the economy as far as many investors are concerned. This is particularly evident with the VNQ real estate fund dropping close to -5% for the week. Another concerning metric was a whopping -16% drop in the Baltic Dry Index shipping index which portends poorly for global economic activity even as China re-opens major city centers that have been locked down from months. In an apparent flight to safety, the US dollar gained while crypto continues to demonstrate its unreliability. In conclusion, major energy inflation (crude up +18% for the month) combined with an over-leveraged consumer and flailing global trade portends poorly for both the economy and the capital markets.
The consumer is in the cross hairs of every analyst. How will they fare in our new world of hyperinflation? We start by looking at consumer debt and find that it is at an all-time high. However, what is surprising is how credit card delinquency rates are at an all-time low. What gives? We explore a commonsense explanation of why that is. Another important issue to consider is worker productivity. Is it fast enough to keep-up with cost-of-living increases? Sadly, it is not. So why is the UK trialing a 4-day workweek? Maybe this is not such a great idea at a time when people need more money than ever to put gas in their cars and food on their tables. We end on a positive note for the long-term and, in this post, we look at how consumers could be enriched by providing them with an option to phase-out social security so they can invest the proceeds themselves.
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