Small Business Optimism Surges As Plans To Raise Worker Compensation Soar Most In 30 Years

After stagnating for much of the past year following its 2018 all time highs, small business optimism posted the largest month-over-month gain in 19 months, since May 2018, rising 2.3 points to 104.7 in November, up from 102.4, and beating the consensus estimate of 103.0.

The "exceptional" Optimism Index reading was bolstered by seven of the 10 Index components advancing, led by a 10-point improvement in earnings.

Owners reporting it is a good time to expand increased by 6 points and those expecting better business conditions increased by 3 points. The NFIB Uncertainty Index fell 6 points in November to 72, adding to the 4-point drop in October and the lowest reading since May 2018.

In other words, US small business were swept by the same euphoria they felt when Trump was first elected.

“This historic run may defy the expectations of many, but it comes as no surprise to small business owners who understand what a supportive tax and regulatory environment can do for their companies,” said NFIB Chief Economist William Dunkelberg, who added what will come as music to Trump's ears: “As the two-year anniversary of the Tax Cuts and Jobs Act’s passage approaches this month, small businesses, the world’s third largest economy, are using those savings to power the American economy.”

Earnings, or the frequency that owners report positive profit trends, rose 10 points, 1 point below the record set in May 2018, to a net 2 percent reporting quarter on quarter profit improvements.

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"...And You Thought Recession Risk Was A Thing Of The Past..."

Rabbit Season! Duck Season! Rabbit Season! Duck Season!

As the third-quarter earnings season comes to a close with a -2.3% showing on EPS, analysts are more bearish going into the fourth quarter; the weakness looks to spread to six sectors vs. five in the third quarter indicating the industrial slowdown has spread to services

Third quarter revenue growth has slowed to levels not seen since 2016’s third quarter while expectations are that the year’s final three months slow further; as with earnings, the quarter-on-quarter weakness is expected to broaden to health care and consumer discretionary

In the short-run, companies will likely endeavor to cut costs, including labor, to draw a line under earnings as revenues deteriorate; given revenues are a demand proxy, a concurrent slowing in GDP is also foreseeable

Rabbit Fire was a 1951 Looney Tunes cartoon starring Bugs Bunny, Daffy Duck and Elmer Fudd. The Warner Bros. short was the first to feature the classic feud between Bugs and Daffy. In it, Daffy lures Elmer to Bugs’ burrow, calls down to him, then watches as Elmer shoots at the emerged Bugs, parting his ears. As Elmer aims again, Bugs informs him that it’s not rabbit season, but rather duck season. Daffy storms in irate and attempts to convince Elmer that Bugs is lying. Their conversation breaks down into Bugs engaging Daffy in the verbal play illustrated in today’s title. Of course, Daffy fumbles into saying “duck season” and Elmer fires away.


Whether you are a fan of Bugs or Daffy, there’s another season in the financial market world that’s about to come to a close – earnings season.

Ninety-two percent of S&P 500 companies have reported third-quarter earnings results. Last Friday, FactSet reported that earnings per share (EPS) had declined 2.3% versus a year ago. Industry performance was mixed with five sectors – Energy, Materials, Information Technology, Financials and Consumer Discretionary – reporting year-over-year declines and the other six – Utilities, Health Care, Real Estate, Consumer Staples, Industrials and Communication Services – posting year-over-year gains.

Analysts’ fourth-quarter guidance is more bearish for earnings compared to the third quarter. It’s anticipated that six sectors will decline including Energy, Materials, Industrials, Information Technology, Consumer Discretionary and Consumer Staples. This widened breadth carries a broader cyclical narrative beyond the sectors more closely affected by trade war; it bleeds into the entire consumer space. Implicit are hints of contagion from manufacturing to services that introduce broader labor market risks. And you thought recession risk was a thing of the past just because the yield curve un-inverted.

Cue Bugs and Daffy for an encore with a twist: “Earnings season! Revenue season! Earnings season! Revenue season!” The bottom line (earnings) gets all the attention each quarter. But the top line (revenue) should never be overlooked. For cycle chasers and equity strategists alike, revenue growth is the heartbeat of U.S. economic activity. It proxies Gross Domestic Product (GDP).

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Is The ECB Pricing Investors Out Of The Primary Market?

Christmas has come early for Europe, with Mario Draghi’s goodbye present to the market of further quantitative easing (“QE”). The ECB has kicked off its latest round of asset purchases. While this will undoubtedly be supportive for European credit, I feel much of the impact is already priced in to the secondary market. With a large book to fill, a significant part of the ECB’s ammunition is likely to be deployed in the primary market.

The ECB buying will clearly be supportive for corporate bonds, but just how material is the buying going to be? Wolfgang Bauer recently wrote a blog (here) looking at the impact of this latest round of QE. This time, the ECB is buying from a much lower base.

To assess what impact they might have, I think it’s useful to look at the volume of supply we’ve had, and probable ECB participation going forward. Looking at the breakdown by investor type for the recent Daimler new issue (A-rated by Fitch) from 30th Nov as an example, I estimate that around €535m of the €4bn deal was bought by the ECB – a rough exercise admittedly. This is a significant amount of the expected purchases per month (around 10% if we assume higher end of €5bn of purchases per month). And this is 13% of the €4bn deal too.

Shell also issued €3bn on 4th November which priced in line with the existing secondary curve. I estimate ECB participation was around 25% of this deal – a further €750m. If the ECB continues to buy such a significant proportion of issuance, we will likely see investors priced out of new issuance as deals come with zero new issuance premium. This primary participation will be very important dynamic to monitor, and one which investors will be watching for a number of prolific issuers – with VW another likely contender.

We have had a bumper year of corporate supply, largely due to low financing costs in Europe. A large proportion of this has been ‘reverse yankees’ – US issuers taking advantage of low Euro financing costs. I have excluded these from the analysis as the ECB can only purchase European issues. Still, YTD 2019 issuance has been €476bn (up 27% from last year). The chart below shows the total senior corporate supply, ex reverse yankees, for last three months across all credit ratings.


The practice and velocity of ECB buying will be a supportive factor for spreads in November but, in my opinion, this will be reasonably small in absolute terms. The ECB and its buying boots have undoubtedly boosted market sentiment but, after the initial Dealer inventories of high quality eligible paper have been hoovered up by the central bank, the greater extent of the move will be in its effect on wider BBB eligible names and non-eligible paper – so-called beta compression.

I expect the ECB will come out the traps at a good pace. Expectations for supply in November remain healthy, albeit reducing, so the run-rate is likely to be ahead of the long-term rate in the early phase of the programme. Today will be an interesting date as we will have a summary of ECB purchases from last week – so we can see for ourselves how busy the central banks have been!

ECB purchases are expected to increase in 2020 as redemptions from QE round one roll off. This technical tailwind will therefore increase in strength and undoubtedly continue to be supportive for spreads. However the effect of CSPP crowding out investors, particularly in the primary market, seems far more diminished in the face of declining European growth. Investors are cautious on moving down the capital structure with valuations looking ever more stretched versus fundamentals.

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As US Moves To Ban Huawei 5G, CEO Says Good Riddance Ahead Of Great Decoupling

The great economic decoupling has started, this is something that we've warned about since the trade war began. Years of elevated financial market volatility will follow as the world is sliced in half, with one side being controlled by the US, and the other side controlled by China.

The latest evidence of decoupling comes from Huawei Technologies CEO Ren Zhengfei, who spoke with The Wall Street Journal and said: "We can survive very well without the US. The China-U.S. trade talks are not something I'm concerned with."

In May, the Commerce Department blacklisted Huawei, the world's largest 5G equipment and smartphone producer, from doing business US firms.

Zhengfei said, "we have virtually no business dealings in the US" since the blacklisting.

Huawei was a major buyer of US semiconductors before it was blacklisted. Sales figures showed the company bought $11 billion of technology from US suppliers in 2018. The blacklisting has forced Huawei to find alternative sourcing.

Zhengfei said the company is rapidly expanding its 5G network products across the world without US chips. He said 5,000 5G base stations are being constructed every month.

Despite the blacklisting, Huawei is still purchasing some chips from US firms that produce offshore, where US restrictions don't apply.

Will Zhang, Huawei's president of corporate strategy, told The Journal that purchasing levels of US chips are at 70% to 80% of its previous level.

The Trump administration has spent at least 15 months creating Sinophobia across the world, by warning countries not to use Huawei 5G equipment because of spying concerns.

Zhengfei has denied the allegations that it spies on its customers or any government, though the Trump administration has labeled Huawei a national security threat.

Beijing views Huawei as a centerpiece of its economic success and is considered an essential piece of any future trade deal between the US.

The next several quarters will be critical for Huawei. That is if it can continue sourcing most of its chips from alternative producers and continue dominating the global smartphone space and the build-out of 5G networks across the world, then that will indicate the great decoupling from West to East is well underway.

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U.S. Shale Braces For Brutal Earnings Season

The timing comes as the shale sector is facing somewhat of a reckoning. After years of price volatility – with more downs than ups – oil prices have failed to return even remotely close to pre-2014 levels. For several years, shale E&Ps took on debt and issued new equity, promising investors that they would profit both from a rebound in prices and from rapid production growth.

They delivered on gains to output, but not on profits. At some point in the last year, investors really began to lose faith. Oil stocks have been the worst performers in the S&P 500 this year.

The latest release of earnings will probably do little to quell unease from big investors. Oil and natural gas prices have dropped this year, by about 17 percent and 31 percent, respectively. Job cuts have returned and bankruptcies are on the rise again.

The oil majors are pressing forward with their aggressive shale development plans. That may prevent a noticeable decline in production. But their earnings – many of the majors report this week – are expected to be down roughly 40 percent from a year ago, which will raise some tough questions.

Some of the largest banks have slashed their credit lines to smaller shale E&Ps. According to Reuters, JPMorgan Chase, Wells Fargo and the Royal Bank of Canada are among some of the lenders that have reduced the amount of credit they are offering to drillers.

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Texas Could Be The Epicenter Of The Next Subprime Auto Crisis

In a recent report, we outlined how the largest subprime auto lender, Santander, is currently experiencing one of the most significant accelerations in subprime auto loan delinquencies, not seen since the dark days of 2008. Now, in a separate report via the Federal Reserve Bank of Dallas, there is new evidence that the epicenter of the next auto loan meltdown could start in Texas.  

The Texas auto subprime market began experiencing a troughing event in serious auto delinquencies in 2015, with a rapid turn up in 2016. By the end of 2018, the serious auto delinquency rate was at 16.7%, approaching 2010 levels of 18.2%. Despite the "greatest economy ever," the Dallas Fed admits rising wealth inequality could be responsible for the growing delinquencies in Texas. 

"It's clear something is going on," said Emily Ryder Perlmeter, an adviser for the Dallas Fed and one of the report's authors. "The economy may not be working as well for everyone."

Michael Carroll, an economist at the University of North Texas, suggests the report is a clear indication that consumers in easy money times took on too much auto debt. Carroll also said consumer distress in Texas could be a bellwether for the broader economy and a warning sign that the consumer is weakening. 

Perlmeter said rising auto loan delinquencies across the country is a severe problem, but the meltdown unfolding in Texas is much worse than any other major metropolitan area. 

The Dallas Morning News noted the average auto loan in the state is $23,500 as of late 2018. 

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"We're Being Robbed" - Central Bank 'Stimulus' Is Really A Huge Redistribution Scheme

When an economy turns from expansion to contraction there is an order of events. The first signs are an unexpected increase in inventories of unsold goods, both accompanied with and followed by business surveys indicating a general softening in demand. For monetarists, this is often confirmed by an inverting yield curve, which tells them that at the margin the short-term rates set by the central bank are becoming too high for business conditions.

That was the position for the US 10-year bond less the 2-year bond very briefly at the end of August, since when this measure, which is often taken to predict recessions, has turned mildly positive again. A generally negative sentiment, fueled mainly by the escalating tariff war between America and China, had earlier alerted investors to an international trade slowdown, expected to undermine the American economy in due course along with all the others. It stands to reason that backward-looking statistics have yet to reflect the global slowdown on the US economy, which is still buoyed up by consumer credit. The German economy, which is driven by production rather than consumption is perhaps a better guide and is already in recession.

After an initial hit, a small recovery in investor sentiment is understandable, with the negative outlook perhaps having got ahead of itself. But we must look beyond that. History shows the combination of a peak in the credit cycle and tariffs can be economically lethal. A brief return to a positive yield curve achieves little more than a sucker rally. It may be enough to put further monetary expansion on pause. But when that is over, and jobs begin to be threatened, there can be no doubt that central banks will ramp up the printing presses.

So reliant have markets become on monetary expansion that the default assumption is that an economy will always be rescued from recession by an easing of monetary policy, and furthermore that monetary inflation will prevent it from being any more than mild and short. We see this in the performance of stock market indices, which reflect perpetual optimism.

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The Shale Boom Has Turned To Bust: Producers Slashing Budgets, Staff, & Production Goals

The collapse in the shale industry is continuing with no signs of stopping or even slowing down.

No sooner did we highlight how shale is doomed no matter what the industry does and how recent price movements have triggered chaos across the industry, than we find out that oil producers and their suppliers are now cutting budgets, staffs and production goals, according to Reuters. 

The U.S. now has 904 working rigs, which is down 14% from a year ago. Harold Hamm, chief executive of shale producer Continental Resources, still thinks this could be too many. 

Additionally, bankruptcy filings by U.S. energy producers through mid-August of this year have matched the total for all of 2018 already. Earl Reynolds, CEO of Chaparral Energy said:

"You’re going to see activity drop across the industry."

His firm has slashed its workforce by about 25% and cut spending by about 5%. It has also agreed to sell its headquarters and use some of the proceeds to pay off debt. 

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The latest sign that absolutely nothing makes sense

In the latest sign that absolutely nothing makes sense anymore, WeWork filed formal regulatory paperwork with the Securities and Exchange Commission last week, officially notifying the world that it will soon be going public.

If you haven’t heard of WeWork (or it’s parent– ‘The We Company’), it’s a real estate company that owns practically zero real estate.

Instead, they lease vast amounts of office space in commercial buildings on long-term contracts, and then sub-lease that space to individual tenants– often small businesses– with short-term contracts.

It’s essentially the same business model as Regus– which provides virtual office services, business addresses, and short-term office space, in pretty much every major city around the world.

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An “Earnings Recession” Is Here – Big Companies All Over America Are Reporting Disastrous Financial Results

If the U.S. economy really was “booming”, then corporate earnings would be rising.  But that isn’t happening.  In fact, we haven’t seen corporate earnings fall like this since the last recession.  They fell during the first quarter of this year, and based on the results we have so far, it appears that corporate earnings will be down substantially once again in the second quarter.  When corporate earnings drop for two quarters in a row, that is officially considered to be an “earnings recession”, and that normally occurs just before the overall economy plunges into recession territory.  As things get tighter for our corporate giants, we should expect a lot more layoffs in the months ahead, and the unemployment rate should rise quite briskly.  In other words, it looks like our economic problems are about to accelerate substantially.

This week, some of the largest companies in the entire country reported results for the second quarter, and we witnessed disappointment after disappointment.

And other economic numbers continue to tell us the exact same thing.  For example, we just got the worst U.S. manufacturing PMI number in 118 months.  That is absolutely terrible news, but Europe’s manufacturing sector is doing even worse.

Manufacturing activity is slowing down all over the globe, and a big reason for that is because global trade is shrinking at the fastest pace that we have seen since the last financial crisis.

Meanwhile, we just learned that existing home sales in the United States have now fallen on a year over year basis for sixteen months in a row.

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AI-Trained Robots Set To Automate Recycling Centers, Will Displace Countless Jobs

AMP Robotics, an artificial intelligence and robotics company that is automating the recycling industry, has rolled out new trash-picking robots for recycling centers that will replace countless low-skilled jobs, reported The WSJ.

Single Stream Recyclers (SSR) in Sarasota, Florida, which processes 350 tons of waste per day, said last week that it would add eight AMP trash-picking robots to its already six. "Robots are the future of the recycling industry. Our investment with AMP is vital to our goal of creating the most efficient recycling operation possible, while producing the highest value commodities for resale," said John Hansen co-owner of SSR.

AMP robots are more productive than humans, can sort garbage more accurately and faster, are set to eliminate most human sorter jobs at SSR's Florida facility in the coming years.

"AMP's robots are highly reliable and can consistently pick 70-80 items a minute as needed, twice as fast as humanly possible and with greater accuracy. This will help us lower cost, remove contamination, increase the purity of our commodity bales, divert waste from the landfill, and increase overall recycling rates," said Eric Konik co-owner of SSR.

Hanson said, "It's 95 degrees, they're [human sorters] standing on a platform and sorting," adding that AMP robots are "twice as fast and they don't make mistakes."

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Big Pharma Hikes Drug Price 879% And That's Just One Of 3,400 So Far This Year

Big Pharma continues to jack up the prices on the drugs they peddle. The price of one drug was hiked 879%, and that’s only ONE of the 3,400 price increases that have occurred so far this year.

Pharmaceutical companies raised the prices of more than 3,400 drugs in the first half of 2019, surpassing the number of drug hikes they imposed during the same period last year, according to an analysis first reported by NBC News. While the average price increase per drug was 10.5%, a rate around five times that of inflation, about 40 of the drugs saw triple-digit increases. That includes a generic version of the antidepressant Prozac, which saw a price increase of 879%.

ARS Technica reported that the surge in price hikes comes amid ongoing public and political pressure to drag down the sky-rocketing price of drugs and healthcare costs overall. In May of 2018, President Donald Trump boldly announced that drug companies would unveil “voluntary massive drops in prices” within weeks, however, Big Pharma didn’t announce any big drops or actually reduce their prices. Trump then went on to publicly shame Pfizer for continuing to raise drug prices. The company responded with a short-lived pause on drug price increases mid-way through last year, but it resumed increasing prices in January along with dozens of other pharmaceutical companies.

“Requests and public shaming haven’t worked,” Michael Rea, chief executive of RX Savings Solutions, told Reuters last December. His company helps health plans and employers seek lower-cost prescription medicines. It also conducted a new analysis of some drug prices.

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30% Of The Companies In The Russell Are Unprofitable

Today we have 3 suggestions for portfolio positioning in 2H 2019. First, overweight US equities; ever more negative global interest rates over recent weeks are a warning sign. Second, expect more volatility from late July (post Fed meeting) through October; seasonality and fundamentals align on this point. Lastly, be cautious on US small caps; they are more cyclical than large caps and are levered to financial conditions.

From a fundamental standpoint, nothing much good happened in the first half of 2019. Specifically:

• We didn’t get a US-China trade deal, and based on current press accounts we’re further away now than we were on January 1st. Moreover, bilateral tariffs are higher now than just a few months ago and apply to more goods.
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• Corporate earnings growth has been slipping. For example, first quarter S&P 500 earnings were slightly negative as compared to last year. Analysts expect the same for Q2, and margins are lower than a year ago for both quarters.
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• Slowing global growth. The export-driven German economy, long a bright spot in the Eurozone, likely slipped into contraction in Q2. Japan’s economy managed to post +2.2% GDP growth in Q1, but Q2 will almost certainly be slower. China’s economy has benefited from some easing of financial conditions, but trade tensions are clearly taking a toll as we start Q3.

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Is This The Beginning Of A New Oil Crisis In Canada?

Canada is desperately trying to build the much-delayed Trans Mountain Expansion, but even as it tries to advance the ball on one front, another pipeline has found itself in the crosshairs.

Enbridge’s Line 5 pipeline carries more than a half a million barrels of oil and products per day from Alberta, across the border into the U.S., and ultimately to refineries back in Canada at the major refining and petrochemical hub of Sarnia, Ontario.

The 540,000-bpd pipeline may be in trouble, however. The state of Michigan just launched a lawsuit, which could force Enbridge to shut the pipeline down. Michigan is concerned about the possibility of a leak from the aging pipeline, which crosses under the Straits of Mackinac. A leak could threaten drinking water and spoil the scenic Great Lakes.

Governor Gretchen Whitmer promised to stop the “flow of oil through the Great Lakes as soon as possible.”

Enbridge has been trying to build a replacement for the pipeline, which is nearly 70 years old. But the replacement proposal has been a huge point of contention. Michigan’s attorney general is hoping to shut it down. The risk the state most fears is an anchor strike.

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Bring on Higher Oil Prices: They’ll Boost the US Economy. Powell Sees it Too. A New Experience for the US

Powered by the iffy situation in the Persian Gulf, the Strait of Hormuz, and the Gulf of Oman, with attacks on tankers and now the downing of a US drone, the price of crude oil got a little nervous in recent days. WTI jumped about 6% today to over $57 a barrel.

But this was just a minor uptick in the overall scheme of things: The US, which has become the largest oil producer in the world, is in the middle of its second oil bust in five years:

These two oil busts are largely a consequence of surging US crude oil production. During the oil bust of 2014-2016, the price of WTI collapsed by over 75%, careening from $107 per barrel to a low of $27 per barrel in 18 months, before starting to rebound. In the process, a slew of oil-and-gas drillers filed for bankruptcy.

For a while it looked like the shale boom, where all the growth in production had come from, was running out of money, and therefore out of fuel. Production fell sharply from early 2015 through much of 2016, but then new money from Wall Street appeared, and production began to soar again, hitting new records all along the way.

Shale wells produce a variety of liquid hydrocarbons (they also produce gaseous hydrocarbons which are not included here). This production of crude oil and petroleum products soared from just over 7 million barrels per day (bpd) in 2010 to 16.6 million bpd currently, according to EIA data:

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The US Economy's Dirty Big Secret

There is a dirty little secret in economics today: the United States has benefited – and continues to benefit – from the global slump.

The US economy is humming along, even while protesters in the United Kingdom hurl milkshakes at Brexiteers, French President Emmanuel Macron confronts nihilist yellow-vested marchers, and Chinese tech firms such as Huawei fear being frozen out of foreign markets.

Last year, the US economy grew by 2.9%, while the eurozone expanded by just 1.8%, giving President Donald Trump even more confidence in his confrontational style. But relatively strong US growth amid sluggishness elsewhere is not what economics textbooks would predict. Whatever happened to the tightly integrated world economy that the International Monetary Fund and the World Bank have been advocating – and more recently extolling – since World War II?

The US economy is in a temporary but potent phase in which weakness abroad lifts spirits at home. But this economic euphoria has nothing to do with Trump-era spite and malice, and much to do with interest rates.

Borrowing costs are currently lower than at any time since the founding of the US Federal Reserve in 1913, or in the UK’s case since the Bank of England was established in 1694. The ten-year US Treasury bond is yielding about 2.123%, and in April, the streaming service Netflix issued junk bonds at a rate of just 5.4%.

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Amazon Hit By "Serious" Hack, Resulting In "Extensive" Fraud, Cash Stolen From Merchants

We recently documented  how Amazon has come under fire from its merchants for allegedly trying to undercut them on pricing and products. Now, the e-commerce giant is under scrutiny for a different reason: security. Amazon is now saying it was hit by an "extensive" fraud last year, revealing in court documents that hackers were able to transfer funds from merchant accounts over the course of six months, according to Bloomberg.

The "serious" online attack included hackers breaking into about 100 seller accounts and moving cash from loans or sales into their own bank accounts. The hack took place between May 2018 and October 2018, according to Amazon’s lawyers.

Amazon said it was still looking into the compromised accounts and that it believed hackers changed the details on its Seller Central platform to bank accounts in their name. Amazon believes that the accounts were compromised by phishing techniques that looked for login information. Amazon has reportedly concluded its investigation of the incident.

Lawyers for the online retailer asked a judge in London to approve searches of account statements at Barclays and Prepay, two banks that "have become innocently mixed up in the wrongdoing." Amazon says that it needed the documents “to investigate the fraud, identify and pursue the wrongdoers, locate the whereabouts of misappropriated funds, bring the fraud to an end and deter future wrongdoing."

The filing doesn’t denote how the suspected wrongdoers were able to add new bank account information to merchant accounts. Amazon has issued more than $1 billion in loans to merchants and one of the units named in the filing was Amazon Capital Services U.K., a division of the company responsible for making these loans.

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Americans Can't Afford To Buy A Home In 70% Of The Country

Even at a time of low interest rates and rising wages, Americans simply can’t afford a home in more than 70% of the country, according to CBS. Out of 473 US counties that were analyzed in a recent report, 335 listed median home prices were more than what average wage earners could afford. According to the report from ATTOM Data Solutions, these counties included Los Angeles and San Diego in California, as well as places like Maricopa County in Arizona.

New York City claimed the largest share of a person's income to purchase a home. While on average, earners nationwide needed to spend only about 33% of their income on a home, residents in Brooklyn and Manhattan need to shell out more than 115% of their income. In San Francisco this number is about 103%. Homes were found to be affordable in places like Chicago, Houston and Philadelphia.

This news is stunning because homes are considerably more affordable today than they were a year ago. Although prices are rising in many areas, they are also falling in places like Manhattan. Unaffordability in the market has been the result of slower home building and owners staying in their homes longer. Both have reduced the supply of homes in the market.

And the market may continue to create better conditions for buyers. Affordability could improve because of the fact that homes are out of reach for so many seekers, according to Todd Teta, chief product officer at ATTOM Data Solutions. Today’s market is also more affordable than it was a decade ago, before the crisis. Home prices were about the same prior to the crisis, even though income adjusted for inflation was lower.

"What kept the market going was looser lending standards, so that was compensating for affordability issues," Teta said. Since then, standards have toughened (for now, at least).

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It’s Only April, And U.S. Retailers Have Already Closed More Stores Than They Did ALL Of Last Year

If the U.S. economy is in good shape, why have retailers already shuttered more stores than they did in all of 2018?  Not only that, we are also on pace to absolutely shatter the all-time record for store closures in a single year by more than 50 percent.  Yes, Internet commerce is growing, but the Internet has been around for several decades now.  It isn’t as if this threat just suddenly materialized.  As Internet commerce continues to slowly expand, we would expect to see a steady drip of brick and mortar stores close, but instead what we are witnessing is an avalanche.  If the U.S. economy really was “booming”, this wouldn’t be happening.  But if the U.S. economy was heading into a recession, this is precisely what we would expect to see.

Last year, U.S. retailers closed 5,864 stores.

That was a rather depressing number, but here we are in April 2019 and we have already surpassed it.  The following comes from CNN…

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Here are all the ways inflation is happening today

Something strange happened in the markets last month that signals trouble ahead…

When stocks fell from their September highs, you would have expected investors to run for cover in the world’s safe-haven asset – US Treasurys.

But that’s not what happened.

While stocks were plunging, Treasurys also fell. Yields on 30-year Treasurys increased to 3.4% from 3.22% (and yields have already more than doubled from their 2016 lows).

It’s a sign that the market is worried about the US government’s ability to pay its exploding debts and that inflation is creeping back into the market. That makes me a bit nervous because we haven’t seen inflation in a decade.

We’ve seen an increase in oil prices, food prices, rent and many other things that eat into people’s savings. Unemployment is low and US wages increased 3.1% in September (the highest in nine years). And core inflation is already running above the Fed’s target of 2%.

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