ONLY 10% OF AMERICANS ARE NOW KEEPING THE ENTIRE US ECONOMY FROM CRASHING.
28 million people are driving 49% of everything Americans spend. The other 221 million account for just 37%. This is the highest concentration of consumer spending ever recorded in US history. Every 1% rise in the stock market increases consumer spending by 0.05%. Markets are up double digits this year. The entire consumer economy is now a direct function of where the S&P 500 closes every day. The bottom 80% have nothing left to contribute. National household debt just crossed $18 trillion. Credit card balances hit a record $1.2 trillion as lower income households borrow just to cover basic expenses against prices that are 25% higher than 2020. Deloitte projects that a 10% stock market correction would cause real consumer spending growth to fall to just 0.2% in 2027 and drop 1% in 2028. The 28 million people keeping this economy running are fully invested in the stock market. The US economy has never been this dependent on this few people. And those people have never been this dependent on the stock market. Source: Bull Theory, FT
Bloomberg's US Macro Surprise data slumped yesterday with headline and core PCE printing below expectations on a MoM basis
Initial jobless claims a little weaker than expected, GDP disappointing, personal consumption weak (income unch), core capital goods orders declined, and a plunge in new home sales... Source: zerohedge
Japan's Core Inflation Hits Four-Year Low of 1.4% in April
Core inflation, excluding fresh food but including energy, rose 1.4% year-on-year, down from 1.8% in March and below the 1.7% forecast, driven by government subsidies on fuel and school tuition. This marks the third straight month below the BOJ's 2% target—the slowest since March 2022—and follows the bank's April rate hike to 0.75%, its highest since 1995. Free school lunches played a role, but a slowing was widespread. Full impact of War yet to be felt but the deceleration in inflation should keep BoJ gradual in hiking. Markets saw a milder yen and bond support, though analysts predict a rebound as subsidies fade and Middle East tensions lift fuel costs. Source: Bloomberg
What is happening in China?
Car retail sales plunged -15% YoY in April, the steepest decline since mid-2022, according to China's National Bureau of Statistics. Home appliance and furniture purchases fell at a double-digit pace, while gold, silver, and jewelry sales collapsed -21% YoY. Overall retail sales rose just +0.2% YoY in April, the weakest reading since December 2022, while fixed-asset investment fell -1.6% in the first 4 months of 2026, returning to contraction. The April data suggest GDP could expand as little as +4.1% YoY in Q2 2026, which would represent a significant miss of Beijing's official growth target of 4.5% to 5% China's economy is struggling. Source: Global Markets Investor
Here's why soaring yields do matter. Annual US interest expense is currently $1.3 trillion.
For context, the largest US government outlay is Social Security. It is $1.6 trillion. Source: zerohedge
According to BofA fund manager survey, the biggest risk to stocks is a "second wave" of inflation.
Source: BofA
Why is the Fed expanding its balance sheet again (QE)?
The stock market is at an all-time high. Credit spreads are near all-time lows. And inflation has been above the Fed's target level for 62 consecutive months, averaging over 4% per year since 2019. So why is the Fed expanding its balance sheet again (QE)? Source: Charlie Bilello
Interesting statistic: If you spent $10 million every day since Jesus was born, you would’ve spent $7.4 trillion. The US debt is $39 trillion.
Of course. it does not account for inflation. The $7.4 trillion figure is in nominal dollars, as if someone spent today’s $10 million every day for ~2,026 years. If you adjust for inflation, the comparison becomes messy because: - Dollars did not exist for most of that period. - Inflation data only exists meaningfully for recent centuries. “$10 million per day” could mean either: -> $10 million in today’s purchasing power each day, or -> $10 million nominal dollars each day, which is unrealistic historically. It still shows that today’s U.S. debt is over five times larger than that total. Source: Bull Theory
