The rise in ADP is a result of strong survey data such as Business Confidence which rose to highest levels in years, and strong consumer sentiment.
Precious metals of course weaken, as they normally do when the banks, hedge funds and algos worked in unison.
On surface it looks like a rosy picture. The ADP report was the headline feature but everyone seems to ignore 3 other reports which also came out the same day.
1) Productivity growth in Q4 was 1.3% vs 1.5% expectations, and after a 3.3% surge in Q3.
2) Wholesale inventories tumbled in January to -0.2% which was way below expectations. In the prior month it rose +1.0%
3) The Atlanta Fed GDP Now has revised down the Q1 GDP to 1.2% from as high as 3% at the start of the year.
If the Q1 GDP falls below 1.9% then the US is in a TECHNICAL RECESSION.
Against this backdrop the Fed is intent on raising the interest rate by 0.25% just as the US GDP is falling behind expectations. This could not end well for the stock market.
Inflation is running above expectations and this suggests a potential stagflation if US GDP remains low.
Going back to the exuberant consumer confidence consider this. Major retailers are reporting Q4 earnings below expectations and many saw losses, resulting in several major retailers announcing bankruptcies and closure of stores. The chart below shows the severity of the situation.
This has put the shopping malls at risk due to a rise in vacancy. The commercial real estate debt is also at risk as some bonds are trading less than the par value.
With trillions of dollars at stake, this could be a bubble that is worse than the 2008 housing bubble.
Source: Zerohedge
No comments:
Post a Comment