reSee.it - Tweets Saved By @GameofTrades_
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11/ That’s why Gold has seen a lot of bullishness lately Surging +40% since Oct 2023 Our members have already secured a 22% gain on $GDX when we booked partial profits on 23rd May 2024 And continue to hold the rest for more upside https://t.co/uh5ohy0JGm
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The US govt debt crisis is getting UNREAL This won’t end well A thread 🧵 https://t.co/HZ0E0MsECm
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Important: US 10-year Treasury yield history
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Interest rates just hit 5% for the first time in a decade The EXACT same thing happened in 1929 A thread 🧵
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2/ In May 1929, US interest rates reached 5%, ushering in the most severe economic downturn in history Unemployment soared to 26%, while interest rates eventually plummeted to 0%
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3/ Fast forward to May 2023, and US interest rates have once again surpassed the 5% mark, level last seen in 2007 before the Financial Crisis The recent rise in rates aims to combat elevated inflation
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4/ The Fed's decision to raise rates from 3% to 5% in 1929 was an attempt to curb stock market speculation It was followed by the largest stock market crash in US history Can today's economy withstand rates higher than those during the Financial Crisis and the Great Depression?
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5/ In both 2009 and the early 1930s, inflation turned into deflation because of the severe economic crisis Today, the Fed expects inflation to return to and stay at 2% But their success rate at pulling this off is very low
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6/ Analyzing the Consumer Price Index (CPI) helps us understand the risk of a deflationary episode today The CPI tracks the price of everyday items, revealing the rate of change over time Since 1913, this index has been up only
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7/ As GDP expands, money supply increases, leading to higher prices Initially, investors didn’t grasp this phenomenon, but its economic impact gradually became evident
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8/ Between 1913 and World War I, the US economy witnessed severe and prolonged periods of declining consumer prices, known as deflation This was mainly due to human psychology
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9/ After the inflationary period following World War I, people expected prices to return to their original levels The idea that prices only rise wasn't popular in the early 1900s
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10/ Expecting price declines, consumers reduce spending, which initiates a vicious deflationary cycle: Reduced spending → lower prices → tightened profit margins → increased layoffs → higher unemployment → further reduced spending
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11/ Hindsight offers a key distinction between today and the Great Depression Unlike the 1930s, we now know that prices generally increase over time without going back to their original levels
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12/ Currently, we face the opposite problem, with people expecting rapid price increases This anticipation prompts consumers to advance their purchases and creates an inflationary spiral This concept is called de-anchoring of inflation expectations
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13/ Another factor to consider is population growth In 2021, US population growth declined to nearly 0% Echoing a similar reading from the 1930s that reached nearly 0.5% This development raises concerns for the economy
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14/ A surge in discussions surrounding job automation is noticeable, with many books exploring the topic People are concerned about how it will affect employment Similar to the Great Depression
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15/ Job automation was a significant theme during the Great Depression, described as "Technological Unemployment" at the time The English vocabulary on this issue has changed over a century
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16/ Government intervention has played a key role in preventing a Great Depression-like scenario until now Even in 2020, when unemployment spiked to Great Depression levels Government stimulus prevented a deflationary spiral
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17/ It’s unlikely that we'll see a huge period of deflation like we saw during the 1930s But there are similar themes occurring like the uncontrollable government spending Which can be very inflationary like in the 1970s
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18/ Deflation in the 1930s and inflation in the 1970s caused market volatility Significant drawdowns followed by recoveries offered investment opportunities Similar volatility is likely in the coming years We help our clients identify these opportunities at Game of Trades
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19/ Thanks for reading! If you found this thread valuable, please ❤️ and 🔁 the first tweet below, and follow @gameoftrades_ Sign-up to our FREE newsletter at http://newsletter.gameoftrades.net for more data-driven analysis, a weekly market roundup & actionable investment strategies
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Interest rates just hit 5% for the first time in a decade The EXACT same thing happened in 1929 A thread 🧵
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Beware: The consumer is borrowing more than they can afford to pay Default rate on credit card loans from small lenders has seen a sharp spike to 7.51% This level is higher than the: - Dot Com bubble - Financial Crisis - C-19 With credit card interest rates still above 20% Consumers are going to continue feeling the pressure
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This has happened only 3 times in the last 75 years Savings as a % of national income is now contracting The previous 2 contractions coincided with the: - 2008 Financial Crisis - 2020 Pandemic High interest rate - high debt environment is a major headwind for the consumer At this rate, a sharp economic downturn is not far away
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The stock market bottoms AFTER the unemployment rate rises sharply
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The stock market is in trouble Yield curve steepening from inverted levels has coincided with sharp market declines Is this time different?
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This is shocking: US population growth is nearing 0% Current levels have NEVER been seen since 1901 In other words, this is the worst population growth setup seen in over 100 years of history
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Since 1978: Top 1% have continued getting richer While bottom 50% have continued getting poorer Wealth inequality is a major challenge for the US economy
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Job openings is an accurate leading indicator for the unemployment rate Job openings have been plummeting Indicating that the unemployment rate is bound to move higher
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This indicator spiking = recession Permanent job losses have risen aggressively
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Bank deposits continue to contract at an unprecedented rate
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Consumers are heading for trouble Under $200 billion is left in excess savings, which is keeping households afloat 3 months ago, this number was at $500 billion At current rate, savings will be depleted by Oct 2023
