Hi, excellent writing. I work at a warehouse for a large retailer and I can say compared to this time last year it is dead. Last year we were working off a huge abundance of inventory, and overtime was mandatory. I am shocked the employment is where it is and I think it is grossly overstated.
I am a trainer and last year I trained new hires every week. I haven’t trained anyone in since October. The company has effectively dwindled the employee count down through attrition, and sends others home early on a daily basis. I also see Walmart starting to lay workers off in their distribution centers as they plan for automation to handle 55% of the volume by 2026.
I think a lot of retailers are going to bank on a huge back-to-school season that won’t happen as extra SNAP benefits have ended, tax refunds have been disappointing, credit cards have been maxed out, parents will have to pay more for food and child care as school ends for the summer.
One other thing too is that apartments have started doing is charging for things they never did before the pandemic. Things like: trash, sewer, water, and natural gas. They have found a clever way of getting around rent controls in certain states. Electricity costs have already skyrocketed and if gas continues to rise people making under a 100,000$/year will get squeezed. Last year employees were working more hours, had lower credit card balances, excess savings, higher tax refund checks, which middle income couples with kids use to replenish savings and pay off some debt, but that will not happen this year. I suspect a lot of middle income people who were banking on a big refund will fall behind from paying the high interest debt on credit cards and the huge rise in cost of living causing for many to have a negative personal savings rate.
Thanks for staying positive right at the end. I know it's doom and gloom, but having a positive end to an article helps stay positive - this is a bump in the road, but the road is still there!
Thanks a lot . Regarding the risk on the long end, in terms of timing , do you see it more as a risk right now or only when FED starts telegraphing rate cut AFTER job data starts looking ugly ? Or you think as job data starts looking ugly the long end will look through the weakness in growth and start selling off in anticipation of FED rate cut ? You see there’s no room for long end yield to come down from now on in the short term ?
CFTC S&P 500 speculative net positions Is extremely one sided (bearish) already . Florian, do you think this could be a risk to short equity position?
This is a warranted concern. In my view what kept the market together so far
I don’t know how I found you on Twitter, which led me to your Substack, but I drop everything I’m doing to read every new post. 🙏
Thanks so much, made my day to hear it!
Hi, excellent writing. I work at a warehouse for a large retailer and I can say compared to this time last year it is dead. Last year we were working off a huge abundance of inventory, and overtime was mandatory. I am shocked the employment is where it is and I think it is grossly overstated.
I am a trainer and last year I trained new hires every week. I haven’t trained anyone in since October. The company has effectively dwindled the employee count down through attrition, and sends others home early on a daily basis. I also see Walmart starting to lay workers off in their distribution centers as they plan for automation to handle 55% of the volume by 2026.
I think a lot of retailers are going to bank on a huge back-to-school season that won’t happen as extra SNAP benefits have ended, tax refunds have been disappointing, credit cards have been maxed out, parents will have to pay more for food and child care as school ends for the summer.
One other thing too is that apartments have started doing is charging for things they never did before the pandemic. Things like: trash, sewer, water, and natural gas. They have found a clever way of getting around rent controls in certain states. Electricity costs have already skyrocketed and if gas continues to rise people making under a 100,000$/year will get squeezed. Last year employees were working more hours, had lower credit card balances, excess savings, higher tax refund checks, which middle income couples with kids use to replenish savings and pay off some debt, but that will not happen this year. I suspect a lot of middle income people who were banking on a big refund will fall behind from paying the high interest debt on credit cards and the huge rise in cost of living causing for many to have a negative personal savings rate.
Sorry for the rant.
Thanks for staying positive right at the end. I know it's doom and gloom, but having a positive end to an article helps stay positive - this is a bump in the road, but the road is still there!
Great Article! Loved to read it.
Thanks alot ! I have not yet found anyone who points out the potential path as logically, coherently and understandably as you do
Outstanding article. I share your view on the long bond (ie that the standard recession “playbook” may not work this time. Thank you!!
Thanks for the article . When you said shifting to the front end of the bond market, you mean anything less than 2 year ?
5yr and below…
Thanks a lot . Regarding the risk on the long end, in terms of timing , do you see it more as a risk right now or only when FED starts telegraphing rate cut AFTER job data starts looking ugly ? Or you think as job data starts looking ugly the long end will look through the weakness in growth and start selling off in anticipation of FED rate cut ? You see there’s no room for long end yield to come down from now on in the short term ?
Superb!