I heard a wholesaler tell someone the other day that the economy’s chugging along, all is fairly good, employment is decent, and so long as Hormuz gets opened soon, things should be back to normal in no time. I also heard him say that a Nasdaq 100 ETF that writes covered calls and generates an 11% yield is more on the conservative side. I told this person after their conversation that if he said this to 90% of Americans, he’d get punched in the nose.
Here are three charts that suggest a different story…
First, full-time work. Back to negative year-over-year (YOY) after the population artifact of migration worked its way out of the numbers. If you know anyone who’s recently lost a job, finding a new one isn’t easy. These numbers check out. Negative YOY growth in full-time jobs is usually reserved for recessions. Except this one, of course.
Past-due payments on various consumer loans. Not good. Student, credit card, and auto loans are higher than they were coming into the 2007—2009 recession. Mortgage and home equity are working their way up, probably still buffered by historically low interest rates from a few years ago. That is resetting every day.
Car sales. Negative YOY and declining, and with rising gas prices, folks will probably be driving even less. A decent barometer of consumer strength.
Of course, none of this means stocks can’t continue to defy gravity and logic, but it does suggest that they’re doing it on a foundation of slippery elephant dung. And, with an estimated 1.5—2 billion barrels of oil (and other important products) missing from the global economy in the months to come, “normal” probably isn’t how we’ll end up defining things.
Invest accordingly.
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