The US is facing a "death spiral" as a result of its mounting debt and the inability of politicians to confront the issue, according to "The Black Swan" author Nassim Taleb.
Per Bloomberg, the Universa Investments advisor who correctly called the 2008 financial crash cast a dire warning about the US debt situation, which has seen the federal debt balance notch $34 trillion for the first time ever to start the year. As long as Congress keeps up its rapid pace of spending, those debts are going to continue to pile up, which could have disastrous consequences for the US economy, Taleb said this week at an event held by Universa Investments. In fact, rising debt in the US is a "white swan," Taleb said, and is an event that poses an obvious risk to markets versus a "black swan" event, which can occur without much warning. That death spiral would necessitate "something to come in from the outside, or maybe some kind of miracle," Taleb said, when asked how the shock would play out, adding that the situation has made him more pessimistic about the political system in the West. Source: Business Insider
German inflation slows to 2.9% in January from 3.7% in December, lowest level since June 2021
Core CPI slows to 3.4% in January from 3.5% in December, lowest level June 2022. Energy in deflation, hashtag#energy prices dropped -2.8% YoY, while Food CPI slowed to 3.8% from 4.5% in December. Source: HolgerZ, Bloomberg
US Treasury confirms spending on debt interest now larger than entire Defense Budget.... and will soon surpass entire Social Security budget.
Source: www.zerohedge.com
US government spending (inflation-adjusted) since 2020 has exceeded the combined spending of:
- World War I - World War II - 1970 to 1990 Is this sustainable?
All the headline numbers have showed that the labor market is incredibly strong
But is it really? Currently, the US has a record ~8.6 MILLION people that are holding 2 or more jobs. Since 2020, nearly 2.6 million people have taken on an additional job. Source: Bloomberg, The Kobeissi Letter
Interesting FT article highlighting the improvement of global liquidity (contributor -> Cross Border Capital as contributor)
Flows of global liquidity accelerated higher into early 2024, expanding by 9 per cent at an annual rate from September, led by strong increases in Japan and China In 2024, we expect greater liquidity support from central banks as more policymakers turn towards monetary policy easing. Aside from the Fed, the People’s Bank of China is the obvious central bank to watch as it already contributed almost one-fifth of the total increase in global liquidity last year.
BREAKING: 14% of all commercial real estate (CRE) loans and 44% of office building loans are now in "negative equity."
In other words, the debt is now greater than the property value on all of these properties. Currently, US banks hold over $2.9 trillion of CRE debt, the majority of which is held by regional banks. Office building prices are down 40% from their highs and CRE as a whole is down over 20%. All as rates rise and many of these loans are due CRE is beyond bear market territory.
Gross domestic product data showed the U.S. economy grew at a rate of 3.3% in the fourth quarter
That’s much higher than the 2% expectation from economists polled by Dow Jones, underscoring continued economic resiliency despite interest rate hikes from the Federal Reserve. The result, for better or worse, speak for themselves: while Q4 GDP rose by $329 billion to $27.939 trillion, a respectable if made up number, what is much more disturbing is that over the same time period, the US budget deficit rose by more than 50%, or $510 billion. And the cherry on top: the increase in public US debt in the same three month period was a stunning $834 billion, or 154% more than the increase in GDP. In other words, it now takes $1.55 in budget deficit to generate $1 of growth... and it takes over $2.50 in new debt to generate $1 of GDP growth! Source; www.zerohedge.com
