As Torsten Slok from Apollo posted this weekend, a US corporate default cycle has started the markets are not paying attention
Source: Vignesh Vijayakumar
The U.S. has accumulated as much debt in the last 10 years as in the entire 100 years before that
From 1923 - 2013: $16 trillion , From 2013 - 2023: $16 trillion Source: FRED
US Budget Deficits Are Exploding Like Never Before
Some economists and investors warn that the Biden administration’s fiscal spending—it’s pouring hundreds of billions of dollars into programs to bolster domestic manufacturing of electric cars and semiconductors, and to repair roads and bridges—could rekindle inflation and make it hard for the Fed to dial back its rate hikes. Source: Bloomberg
Going into Jackson Hole, the probability of a September hike is just 20%, well below 50%, so not likely. But, as shown below, the probability of a hike in November (see below) is now 50/50
What will it be when Jay is done? Source: Jim Bianco
EU Composite PMI... monetary policy works with a long and variable lag...
Source: Macrobond, Nordea
U.S. Home Purchase applications drop to lowest level in nearly 30 years
Source: Bloomberg, Barchart
"Soft landing" narrative is now the consensus. This also happened in 2000 and 2006...
Source: Game of Trades
Wage inflation: UPS workers approve massive new labor deal with big raises. The deal passed with 86.3% of votes, the highest contract vote in the history of Teamsters at UPS, according to the union
Under the new agreement: 1. Part time workers will make no less than $21/hour, up from a minimum of $15.50 currently, 2. Full time workers will average $49/hour. Current workers will get $2.75 more an hour this year and $7.50 an hour more over the five-year contract. 3. UPS drivers will average $170,000/year 4. Contract impacts ~340,000 workers 5. The company cut its full-year revenue and margin forecasts, citing the “volume impact from labor negotiations and the costs associated with the tentative agreement.” UPS has put $30 billion aside for this new contract
