*** denotes well-worth reading in full at source (even if excerpted extensively here)
Economic and Market Fare:
Schnabel: Money and Inflation
Kupperman: The Great Macro Dreamscape Part 1
"9-Sigma Miss": Personal Consumption "Unexpectedly" Collapses In Latest GDP Revision
You Will Never Guess What Happened To "The Strong US Consumer" After Today's Huge GDP Revisions
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You Will Never Guess What Happened To "The Strong US Consumer" After Today's Huge GDP Revisions
It has become a running joke: the "strong" Bidenomics economy comes with an expiration date, as it is only "strong" for about a month, at which point the initial "strength" is downgraded, and the data is revised sharply lower.
That has certainly been the case with US labor data, where as we first reported last month, every single monthly payrolls print in 2023 has been revised lower (see chart below), a 12-sigma probability and virtually impossible ...
But the BLS is not done: as we reported last week, besides the now traditional one-month lookback revisions the ridiculously high monthly payrolls prints accumulated over the past year will also be slowly but surely revised gradually lower at annual benchmark revisions for years to come. ...
But while downward payroll revisions under Bidenomics are as certain as death and taxes, what we wanted to discuss here are the just as striking downward revisions to US consumption which hit this morning alongside the comprehensive once every-five-years historical revisions to GDP. As a reminder:
Today’s release presents results from the comprehensive update of the National Economic Accounts (NEAs), which include the National Income and Product Accounts (NIPAs) and the Industry Economic Accounts (IEAs). The update includes revised statistics for GDP, GDP by industry, GDI, and their major components. Current-dollar measures of GDP and related components are revised from the first quarter of 2013 through the first quarter of 2023. GDI and selected income components are revised from the first quarter of 1979 through the first quarter of 2023.
..... It should come as no surprise to anyone that with the (slight) exception of just Q4 2022, personal consumption in every single quarter since the start of 2022 - when the Fed aggressively started tightening and hiked rates by the most since Volcker - has been revised lower, and in some cases dramatically so. ...
There's more.
When looking at the composition of the US household's income statement - the summary of economic accounts - we find just what we had expected: US savings were in fact far lower than previously expected.
In the latest negative revision, US households saved $1.1 trillion less than previously thought over the past six years...
Mike Wilson: The Consumer Is Falling Off A Cliff
They have become the broken records of gloom: since late 2022, Morgan Stanley's Mike Wilson and JPM's Marko Kolanovic have peddled a bearish narrative that has been as relentless as it has been wrong, and even when the S&P rose more than 1000 points from its Oct 2022 lows (roughly around the time the formerly permabullish Kolanovic turned into a bear), they have refused to change their tune even as their more nimble (and flip-floppy) Wall Street peers such as BofA's Savita Subramanian and Goldman's David Kostin turned from mega bears to ultra bulls months ago (top-ticking the market as they did). .....
... what is the anchor thesis behind Wilson's condemnation of the consumer sector is that the "price action is picking up on slowing consumer spend, student loan payments resuming, rising delinquencies in certain household cohorts, higher gas prices and weakening data in the housing sector."
..... His conclusion is that "investors should avoid rotating into early cycle winners like consumer cyclicals, housing-related / interest-rate sensitive sectors, and small caps" and instead they should "barbell" of large-cap defensive growth with "late-cycle" cyclical winners like Energy and Industrials.
With the Fed keeping interest rates at these high levels for another nine months, it is unlikely that the lines in these charts will suddenly start moving sideways.
The likely scenario is that the trends in these charts continue. In short, more weakness in the economic data is coming as Fed hikes bite harder and harder on consumers and firms.
A historic shakeup is threatening to snare many small, struggling or fading money managers unable to raise fresh funds
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(not just) for the ESG crowd:
Once deemed outlandish and fitting for a dystopian novel, today's unfolding events challenge fiction writers to redefine their narratives
Abstract
Previously, anthropogenic ecological overshoot has been identified as a fundamental cause of the myriad symptoms we see around the globe today from biodiversity loss and ocean acidification to the disturbing rise in novel entities and climate change. In the present paper, we have examined this more deeply, and explore the behavioural drivers of overshoot, providing evidence that overshoot is itself a symptom of a deeper, more subversive modern crisis of human behaviour. We work to name and frame this crisis as 'the Human Behavioural Crisis' and propose the crisis be recognised globally as a critical intervention point for tackling ecological overshoot. We demonstrate how current interventions are largely physical, resource intensive, slow-moving and focused on addressing the symptoms of ecological overshoot (such as climate change) rather than the distal cause (maladaptive behaviours). We argue that even in the best-case scenarios, symptom-level interventions are unlikely to avoid catastrophe or achieve more than ephemeral progress. We explore three drivers of the behavioural crisis in depth: economic growth; marketing; and pronatalism. These three drivers directly impact the three 'levers' of overshoot: consumption, waste and population. We demonstrate how the maladaptive behaviours of overshoot stemming from these three drivers have been catalysed and perpetuated by the intentional exploitation of previously adaptive human impulses. In the final sections of this paper, we propose an interdisciplinary emergency response to the behavioural crisis by, amongst other things, the shifting of social norms relating to reproduction, consumption and waste. We seek to highlight a critical disconnect that is an ongoing societal gulf in communication between those that know such as scientists working within limits to growth, and those members of the citizenry, largely influenced by social scientists and industry, that must act.
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OCTOPUS INTELLIGENCE IS UNLIKE ANYTHING WE KNOW
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