As the global synchronized decline builds momentum, smartphone sales across many regions of the world will remain depressed in 2019.
Gartner, Inc., a research and advisory firm, has published a new report that details sales of smartphones to consumers will total 1.5 billion units in 2019, a 2.5% decline YoY.
The report said Japan, Western Europe, and North America are regions where most of the slump is originating from.
Gartner analysts expect smartphone sales to grow in 2020, driven by the launch of 5G models in various parts of the world by communications service providers (CSPs). Analysts expect Apple to reveal its first 5G Apple iPhone for commercial launch next year.
“Lengthening smartphone replacement cycles and a ban on Huawei accessing technology from U.S.-based suppliers weakened demand for smartphones in the first half of 2019,” said Annette Zimmermann, research vice president at Gartner. “We expect demand to get even weaker in the second half as replacement of high-, low- and mid-end smartphones continues to slow, due to low value benefits.”
Zimmermann expects 5G smartphone sales to start increasing in 2H20 because of coverage and availability will begin to increase with CSPs.
“Although leading mobile manufacturers have started positioning their first 5G smartphones (such as the LG V50 ThinQ, OPPO Reno 5G, Samsung Galaxy S10 5G and Xiaomi Mi MIX 3 5G), and CSPs have started to offer some aggressively priced 5G service packages, 5G smartphone sales are set to remain small in 2019. Sales will start to ramp up in the second half of 2020 as the coverage and availability of 5G hardware services improve,” said Zimmermann.
FY’19 projections for 5G smartphones sales across the world are about 15 million units, which represents less than 1% of total smartphone sales for the year.
Analysts found that Japan (-6.5%), Western Europe (-5.3%) and North America (-4.4%) will experience the most significant smartphone declines this year: “In mature markets, the high-end smartphone market is particularly oversupplied and commoditized, with higher average selling prices (ASPs) and no compelling new utility or experiences for users to upgrade to. Despite ASP increases on high-end smartphones slowing down recently, the vendors who primarily rely on replacement smartphone sales continue to face tough times,” said Roberta Cozza, senior research director at Gartner.
Gartner sees widespread deterioration for 2H19, continuing the trend from earlier in the year. The weakness in smartphone sales comes as the industry’s growth rate in global sales has declined since about 2015.
Another reason for slowing sales is the trade war that created massive amounts of uncertainties that have amplified a structural slowdown around the world. President Trump’s economic war against China and Huawei this year have certainly not helped the industry’s overall health: “The ban on Huawei (even though currently partially lifted) has created negativity around the Huawei brand and is likely to open a few opportunities for other manufacturers in overseas markets such as Western Europe,” said Zimmerman. “Despite the US administration’s directive that allows US suppliers to work with Huawei again, the situation remains unclear. The latter part of the second quarter of 2019 was certainly challenging for Huawei in EMEA and Latin America. However, its leading position in its home market remained unchanged.”
And in a separate report, we recently detailed how a global smartphone bust has been underway for some time, has led to a surprising new trend that sheds light on one reason why the Trump administration has waged war on China: Huawei has replaced Apple as No.2 smartphone maker in the world.
With Western smartphone makers becoming less relevant in global markets, and the launch of 5G next year, most likely dominated by Huawei and Samsung, could further explain how America’s global dominance is dying.
As cycles boom, then eventually bust, out with the old [American domiance], and in with the new [Asian dominance]. The world is rapidly reshaping away from the West.
via ZeroHedge News https://ift.tt/2M4zZ2V Tyler Durden
Submitted by SouthFront.org, J.Hawk, Daniel Deiss, Edwin Watson; Voiceover by Coby B.
By way of introduction, it should be noted that the US economy is showing many signs of a classical bubble, starting with the incredibly over-valued US stock market. Only slightly more than a decade ago, at the peak of the real estate bubble, the Dow Jones Industrial Average (DJIA) barely managed to clear the 14,000 mark, before staging a spectacular plunge almost to 7,000. Since then DJIA nearly quadrupled in value, as of mid-July 2019 hovering at above the 27,000 mark. Since the US economy as a whole has not quadrupled during the same time interval, there is a clear dissociation between “Wall Street” and “Main Street” that will at some point inevitably lead to serious economic and political problems in the United States, to the point of considerably remaking its political landscape.
The proverbial $64,000 question, however, is when will the US financial house of cards come tumbling down the next time, and what will be the triggering event?
“Pay No Attention to the Man Behind the Curtain”
Politics is a factor in the management of the US financial system. The US Federal Reserve, though it is rarely perceived as having its finger on the scale of US presidential elections, played a role during the 2000 and 2008 presidential elections and its monetary policy decisions do impact day-to-day presidential approval ratings indirectly, through their influence on DJIA fluctuations. The Fed contributed to the financial bubble bursting by raising its lending rates on the eve of the election, and while its actions may be justified in terms of preventing an even bigger bubble, the timing of the raising of interest rates was such that it hurt the candidates of the incumbent parties (Al Gore in 2000, John McCain in 2008), thus facilitating a change of flag, as it were, in the White House.
The 2008 election was particularly indicative of the power wielded by the Fed. It is all-but-forgotten that Obama-Biden’s nominating convention was a dud, while that of McCain-Palin was a success that gave the GOP team such a bounce in the polls that they were leading their Democratic opponents in the polls and provoking panic in Obama’s camp. Had Lehman Brothers not been allowed to fail, thus triggering a global financial meltdown, the outcome of the election may well have been very different. However, on the eve of the 2016 election the Fed was very gun-shy when it came to raising interest rates—had it been as aggressive as it was in 2008, its monetary policy would have once again caused the grossly overvalued US stock market to crater, thus sending Trump into the White House with a far broader margin of victory than what he actually enjoyed.
Four More Years?
Therefore the question should be framed in terms of whether Trump is long for this political world. Sturm und Drang emanating from the establishment media notwithstanding, it does appear as if Trump succeeded in appeasing enough of Washington’s power players, not the least of them being the “intelligence community”, to give himself a solid shot at a second term. House Speaker Nancy Pelosi intimated as much when she announced, to the annoyance of a sizable portion of her caucus, that impeachment was off the table. Robert Mueller’s failure to deliver impeachable goods on Trump also suggests that the “intelligence community” no longer views its ostensible Commander-in-Chief as a threat to its institutional interests. The de-facto purge of Trump’s foreign policy apparatus followed by the installation of neocons such as Mike Pompeo at State, John Bolton at the NSC, and the reliable military-industrial complex lobbyist and functionary Mike Esper at the DOD, was probably enough to ensure smooth feathers ruffled by Hillary Clinton’s unexpected defeat.
Toward a Managed Economy
If the preference is, as it appears to be, to not sabotage Trump’s re-election bid by triggering an economic crisis, one should not expect a major crisis in the US economy within the next two years, or until the outcome of the 2020 election is decided. Observing the ups and downs of the DJIA since Trump took office, one is left with the impression that the US financial institutions are acting as if there existed an invisible “safety net” to catch them in the event of the onset of a “bear market” or even a proverbial “black swan” event that could trigger a US-wide or even global financial meltdown. Whenever one sees the DJIA drop by several hundred points in a single day, or even a thousand points within a few days, one can rest assured the drop will be followed by a spectacular rise in the following days. In a remarkable reversal of course, considering that the US economy is officially still “booming”, the Federal Reserve itself no longer seems willing to be interested in raising rates.
It does not mean that the US economy is entirely out of the woods. Certain sectors of it, for example retail, oil fracking, or even sub-prime auto loans, may suffer waves of bankruptcies. Those enterprises which are vulnerable to Chinese counter-tariffs, starting with the US agri-businesses, will also fare poorly. But if the situation gets too severe, one can expect the US Congress to vote in favor of subsidies, and the financial sector can count on the Federal Reserve to keep it afloat, so that the mounting bankruptcies are extremely unlikely to affect the “too big too fail” banks, not anymore than they did following the 2008 housing crisis.
The financial sector, in particular, is being treated as a de-facto US strategic asset. On the one hand, economic warfare being waged by the US Department of Treasury through its ever-expanding list of sanctioned entities is taking bread out of US banks’ mouths. This happens not only through the loss of actual business with the sanctioned entities but also due to the slowly progressing process of “de-dollarization” which in the long term could become an existential threat to the US status as the dominant center of global finance. But the US banks have met this situation with equanimity, indicating they are some form of compensation for their troubles.
The one threat to the stability of US economy that the US government or Fed might not be able to deal with are the consequences of the US trade war against the rest of the world. Should it trigger a financial crisis elsewhere, for example in the EU or China, then the US would find itself in a severe recession once again. However, both EU and China are developing their own capacity for dealing with US-induced economic shocks, in that respect following Russia’s example.
Disaster Capitalism on the Horizon?
This idyllic stagnation in the US is unlikely to continue forever. There are still a number of issues the US oligarchy needs tackled, first and foremost of them being the Medicare and Social Security entitlement programs. With even frontrunner Democrats like Joe Biden proclaiming, on the presidential campaign trail, no less, that “Medicare is gone”, one should expect “entitlement reform” to be on the agenda of a future administration or perhaps even of Trump’s second term. To achieve that objective, a little controlled chaos following a financial meltdown and a recession to set Americans against one another along racial and generational lines, could be very useful. But it does not appear likely such a scenario will be enacted before 2021 at the earliest.
via ZeroHedge News https://ift.tt/2MCCuJs Tyler Durden
Yesterday we highlighted comments by cybersecurity pioneer John McAfee on last weekend’s mass shootings in El Paso and Dayton – which occurred just one week a gunman opened fire at the Gilroy Garlic Festival in Gilroy, California.
“Immediately people jump on their soapboxes…first its gun control…then immigration…then race issues…this was racially motivated, psychologically motivated…before we even know what happened we are jumping on our soapboxes,” said McAfee, asking “Is this a coincidence?” (while admitting he’s not a fan of coincidences)
Second, McAfee asks just what in the hell is wrong with society?
“That’s the question, people. We need to answer that first.”
Offering his observations on both the reaction to the shooting and possible causes is journalist Paul Joseph Watson of Summit News.
Watson first notes that last weekends’s two shootings were carried out by right-wing extremist and left-wing extremists – which the media and Democratic presidential candidates selectively jumped on in their clamor to condemn conservatives.
“If you’re going to hold Trump responsible for the El Paso mass shooting, you’re going to have to hold Elizabeth Warren responsible for the Dayton mass shooting,” notes Watson, “because the Ohio shooter supported Elizabeth Warren and said he was going to vote for her.”
“He also described himself as a leftist who wanted socialism. He expressed brazen sympathy for the Antifa terrorist who attempted to firebomb an ICE facility – calling him a martyr. He invoked Alexandria Ocasio-Corterz’s concentration camp rhetoric. He tweeted “Vote blue for god’s sake,” retweeting Bernie Sanders numerous times, retweeting Antifa accounts numerous times, retweeting Right Wing Watch’s Jared Holt, and tweeted “kill every fascist.”
“He was a left-wing extremist,” said Watson.
Watson then opines on what’s wrong with American culture – McAfee’s very question.
“The cause isn’t Trump,” says the Summit News founder, adding “Is this really going to really going to resolve by passing the right gun control laws? Or is there something far deeper wrong with American society?”
Young men are growing up in a culture that has lost faith in itself and offers nothing but meaningless nihilism. A Neo-liberal dystopia that indoctrinates people to shun authenticity, community and family in pursuit of vapid consumerism and fleeting fame. A culture that informs narcissism-prone young people that anyone can gain instant notoriety by generating controversy. A society that has normalized and accelerated the evisceration of the family unit and faith. A culture that celebrates serial killers. A news media that gives mass shooters the ghastly fame they crave. What else could this society produce but atomized desperate losers – whose only recourse in a life of relentless mediocrity is to lash out in violence? We also have a generation of young white men who are being told by society and the culture that they’re to blame for all the world’s historical and contemporary evils.
(Partial transcript below)
Young men are growing up in a culture that has lost faith in itself and offers nothing but meaningless nihilism. A Neo-liberal dystopia that indoctrinates people to shun authenticity, community and family in pursuit of vapid consumerism and fleeting fame. A culture that informs narcissism-prone young people that anyone can gain instant notoriety by generating controversy. A society that has normalized and accelerated the evisceration of the family unit and faith. A culture that celebrates serial killers. A news media that gives mass shooters the ghastly fame they crave. What else could this society produce but atomized desperate losers – whose only recourse in a life of relentless mediocrity is to lash out in violence? We also have a generation of young white men who are being told by society and the culture that they’re to blame for all the world’s historical and contemporary evils.
Is that message going to decrease or increase the likelihood of these young white men being lulled into resentful extremist ideologies. If you completely disenfranchise young white men and basically tell them they’re a cancer on society, some people on the fringe are going to respond to that with violence.
Is deplatforming and censorship the solution? We’ve had a solid year of deplatforming and censorship in the name of stopping hate and violence.
Did it stop hate and violence? Or did driving such ideologies underground where they can’t be challenged or red flagged actually make hate and violence worse?
The El Paso gunman was driven by his concern over the demographic replacement of white people. Why is it OK to talk about the demographic replacement of white people so long as you’re celebrating it? Then if you express any concerns that it might have some negative consequences – suddenly you’re in league with mass shooters. Is it better to have that debate out in the open, or drive it underground where extremists who become radicalized by it can’t be monitored.
Is it really a good idea for the culture to celebrate an entire race of people dying off, or is that racist and bigoted? And is it fanning the flames of extremism? White supremacism is a scourge. Anti-white racism is a scourge. Both feed and sustain each other. Both have to be challenged. Left-wing extremism is a scourge. Right-wing extremism is a scourge. Both feed and sustain each other. Both have to be challenged.
Violence has to be vehemently disavowed by all sides, and never legitimized under any circumstances.
via ZeroHedge News https://ift.tt/31k0s04 Tyler Durden
A video circulating on social media overnight shows protestors shouting outside Senate Majority Leader Mitch McConnell’s home, shouting “No Trump, no KKK, no Fascist USA!” while others called him names like “Murder Turtle.”
Over the chaotic cacophony of cowbells and cursing, viewers can hear a series of death threats being hurled at McConnell.
“Just stab the motherf**ker in the heart, please,”
A woman is on Facebook Live, outside of Senator McConnell’s home in Louisville, saying she hopes someone “just stabs the mother f*cker in the heart, please.” #KYSenpic.twitter.com/sHaPWqn32J
While Senate is on its five-week August recess, McConnell’s using the time off to recover from a shoulder injury at his home in Louisville, KY.
“The b—- is home — we keep seeing the lights go on and off,” another protester can be heard shouting.
“This h– really thought he was going to get ready to be at home after he hurt his little punk ass shoulder. B—-, don’t nobody give a f—! F–k your thoughts and prayers, Mitch. F— you, f— your wife, f— everything you stand for. ”
A spokesperson from his team told the Associate Press he’s still working from home however, protestors showed they aren’t convinced that’s the case.
One prominent voice can be heard over the crowd of protestors saying McConnell shouldn’t get rest if “the children that you’re kidnapping can’t get any rest” or the “not if families who are getting murdered can’t get any rest.”
“He’s in there nursing his little broken arm. He should’ve broke his raggedy wrinkly [expletive] neck.” shouted the same protestor,
“If we can’t get no rest cause of you, you can’t get no rest cause of us.”
According to the New York Post, the group of anti-gun activists held an “emergency protest” Sunday after two mass shootings occurred in the span of just 13 hours killing 31 people. McConnell released a statement following the two attacks in El Paso and Dayton, where he called for “serious, bipartisan, bicameral efforts.”
My statement regarding President Trump’s call for bipartisan, bicameral cooperation following the mass murders in El Paso, Texas and Dayton, Ohio. https://t.co/Rz6moSkwY6pic.twitter.com/OcAnArpF5t
As we’ve documented time and time again, even the epic bull run in stocks and bonds that has transpired since the financial crisis hasn’t been enough to make up the liabilities shortfall at America’s pension funds. In fact, if anything, the problem has only gotten worse, as the amount owed to retirees is accelerating faster than assets on hand to pay those future obligations.
Liabilities of major US pensions are up 64% since 2007, while assets are up only 30%. And that problem has only gotten worse over the past fiscal year, as pensions funds largely missed their targets by the widest margin since…2016, WSJ reports.
Public pension plans with more than $1 billion in assets reported a median return of 6.79% for the year ended June 30, according to Wilshire Trust Universe Comparison Service data. That’s short of the 7.25% long-term return that most funds need to get back to a place where they can cover their liabilities.
Missing these projections is a huge problem for pension funds, because its the projections – not the actual returns – that determine how much money state and local governments chip in.
And although the 10-year bull market has been good for pensions – large public plans had five years of double-digit returns and a 10-year annualized return of 9.7% through June 30 – most funds aren’t anywhere near covering the long-term costs of benefits, especially as more employees are living longer, and birth rates decline, meaning there will eventually be fewer tax dollars to support state contributions. Many state governments have started to cut back on benefits, but these cuts won’t have an impact for decades. Plus, in the aftermath of the financial crisis, many state governments skimped on pension contributions for politically expedient reasons, as state resources were badly needed elsewhere.
According to data from the Federal Reserve, state and local pension plans have about $4.4 trillion in assets, which is $4.2 trillion less than they need to pay for promised future benefits (the data in the chart below covers a slightly different universe of funds, but the theme is consistent, and clear).
To help make up the shortfall, many pension funds have increased their allocations to ‘alternative’ investments like private equity. Which is ironic, considering that many of the best performing investments in recent years were regular ol’ stocks and bonds (and once fees are factored in, their outperformance is even greater).
“For a public defined-benefit plan, we just feel like if you can focus on high-quality stocks and bonds and take a long-term approach, you’ll be better off, especially after fees,” Jay Bowen, president and CEO of Bowen, Hanes & Co., told WSJ.
According to Wilshire’s calculations, a portfolio of 60% domestic stocks and 40% domestic bonds would have returned 9.13% for the year ended June 30.
And any funds that sold during the brutal Q4 selloff or the trade-inspired turbulence this Spring probably missed out on rebounds that ultimately would have helped their bottom line.
Some of the states with the most troubled pension systems – like New Jersey, for example – have taken steps recently to right the ship. Others are considering radical ideas like transferring public assets to their pensions funds (as is the case in Illinois).
But unless state governments dramatically increase their funding levels, a nationwide pension crisis could arrive seemingly out of nowhere…since the public is largely ignorant of what’s truly at stake.
via ZeroHedge News https://ift.tt/2GRZzE8 Tyler Durden
When will Americans start to wake up and realize what is happening?
At the end of last week, President Trump announced that the U.S. would be imposing a 10 percent tariff on 300 billion dollars worth of Chinese imports, and that marked a dramatic escalation in our trade war with China. This move by Trump came as a total shock to Chinese officials, and global financial markets were thrown into a state of turmoil. Since that announcement, we have been waiting for the other shoe to drop, because we knew that the Chinese would retaliate. But honestly, very few of the experts expected something like this. On Monday, China announced that it is going to completely stop buying U.S. agricultural products…
China confirmed reports that it was pulling out of U.S. agriculture as a weapon in the ongoing trade war.
A spokesperson for the Chinese Ministry of Commerce said Chinese companies have stopped purchasing U.S. agricultural products in response to President Trump’s new 10% tariffs on $300 billion of Chinese goods.
This is essentially a trade war equivalent of a nuclear bomb.
If the Chinese would have slapped U.S. agricultural products with tariffs, that would have been a proportional response. But to quit buying them entirely is an unprecedented escalation in a trade war that is really starting to spiral out of control.
And it is also clearly a political attack on President Trump. The Chinese know that Trump is highly popular in rural areas, and this ban on U.S. agricultural products is going to severely hurt farmers in rural areas all across the United States.
U.S. voters tend to be more influenced by their bank accounts than by anything else, and so this is a smart strategic move by the Chinese if they would like to see a Democrat get elected in 2020.
In 2017, the Chinese bought 19.5 billion dollars worth of U.S. agricultural products, and that number dropped to just 9.1 billion dollars in 2018.
Now that number is going to zero, and according to Farm Bureau Federation President Zippy Duvall this latest move by China is going to be “a body blow to thousands of farmers and ranchers who are already struggling to get by.”
Please say a prayer for our farmers, because they really need it.
In addition to ending purchases of U.S. agricultural products, the Chinese also allowed the value of the yuan to decline dramatically on Monday. This really rattled global financial markets, and shortly thereafter U.S. Treasury officials formally designated China as a “currency manipulator”. The following comes directly from the official website of the Treasury Department…
The Omnibus Trade and Competitiveness Act of 1988 requires the Secretary of the Treasury to analyze the exchange rate policies of other countries. Under Section 3004 of the Act, the Secretary must “consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.” Secretary Mnuchin, under the auspices of President Trump, has today determined that China is a Currency Manipulator.
As a result of this determination, Secretary Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions.
This is the first time since the 1990s that the Treasury Department has used this designation on any of our trading partners, and it is the kind of move that would not be made unless all hopes for a trade deal were completely gone.
Of course the Chinese wouldn’t have made the moves that they made either if they were still holding out hope for a negotiated solution. According to one market analyst that was quoted by CNBC, the Chinese are “signalling that they have lost confidence that they can reach an agreement with Trump.”
So what this means is that in the short-term things are going to get bad for the global economy.
Really bad.
In the longer term, the structure of the entire global economic system could change dramatically, and this will especially be true if Donald Trump emerges triumphant in 2020. According to economist Neil Shearing, we could literally be looking at “the end of the world as we know it”…
Among the implications for more deterioration in the global picture that Shearing cites are the “disintegration of the rules-based system” that has governed international commerce since the end of the World War II, and a potential “Balkanization” of the world economy as the U.S. and China develop their own standards, tech platforms and payment systems.
“It’s too soon to say exactly how events will pan out, but this casts the escalation in the US-China trade war over the past year in an altogether more ominous light. We may be witnessing the end of the world as we know it,” he wrote.
It is difficult to imagine a world in which there is no trade between the United States and China, and many would argue that we would be far better off today if we had never gone down that road in the first place.
But now that our two economies are so deeply integrated, trying to decouple is going to be an exceedingly painful process.
If you are familiar with my work, than you already know that I am not a fan of the Chinese government at all. Something needed to be done about China, because they have been brazenly taking advantage of us and flouting the rules for decades.
Having said that, it is imperative that the American people understand that a messy breakup with China is going to cause an extraordinary amount of pain for us, for them and for the whole world.
It looks like this trade war could be the spark that plunges the global economy into utter chaos, and right now very few Americans seem to understand the true scope of the economic nightmare that appears to be headed our way.
via ZeroHedge News https://ift.tt/2Yq1DhA Tyler Durden
New data suggests that the US is doing everything possible to repeat the 2008 financial crisis.
America’s middle class is sinking further into debt simply to maintain its middle class lifestyle, according to a new report from the WSJ , and its enabler has been none other than the Federal Reserve, which has continued to make borrowing extremely easy thanks to artificially low interest rates that are once again sliding lower.
Meanwhile, as incomes have remained stagnant for nearly two decades, the price of cars, colleges, houses and healthcare have all risen. In order to fill the gap, the middle class is turning to more debt.
Consumer debt ex-mortgages – which comprises of credit card debt, as well as auto and student loans – is now at an astonishing $4 trillion, its highest level ever adjusted for inflation, while mortgage debt is rebounding after its post-financial crisis slide. More notably, student debt now totals about $1.5 trillion, exceeding credit card and all other types of debt except for mortgages.
Adjusting for inflation, auto debt is up about 40% to $1.3 trillion and the average loan for new cars is up an inflation-adjusted 11% in a decade, to $32,187. Due to peer to peer lending and tech based banks, unsecured personal loans are also popular yet again.
Amusingly the WSJ describes the rising debt levels as a “vote of confidence in the future”, instead of what it is – a desperate scramble to keep up appearances “for the Joneses” and to be perceived as well off, even if it means having a soaring credit card balance to show for it:
In one sense, the growing consumer debt is a vote of confidence in the future. People borrowing money today expect to have the income tomorrow to pay it back. Consumer debt tends to rise when borrowers feel secure in their jobs.
Of course, if job losses start to occur, the debt load could easily become unsustainable for many borrowers, which would then result in missed payments, delinquent loans and lenders writing off balances.
Some perspective: the median U.S. household income was $61,372 at the end of 2017, which is barely above the 1999 level when adjusted for inflation. Not adjusted for inflation, this number rose 135% over the last three decades – but over the same period, average tuition was up 549% over the same period of time. Healthcare expenditures were up about 276% between 1990 to 2017. Average housing prices were up 188% over those same three decades.
Adam Levitin, a Georgetown Law professor who studies bankruptcy, financial regulation and consumer finance said: “The costs of staying in the middle class are going up.”
U.S. households with credit card debt owed $8,390 in Q1 2019, which is up 9% from 2015 adjusted for inflation.
And while borrowing to fund a degree or a house, which could both provide an eventual return on investment, can sometimes be smart decisions, borrowing for everyday consumption or for assets that depreciate (like cars) makes its harder to save and invest.
Despite the U.S. economy nearly doubling in size from 1989 to 2016, the gains in assets owned were “heavily skewed” toward the highest earners, according to the report.
The median net worth of households in the middle 20% of income rose 4% in inflation-adjusted terms to $81,900 between 1989 and 2016, the latest available data. For households in the top 20%, median net worth more than doubled to $811,860. And for the top 1%, the increase was 178% to $11,206,000.
Put differently, the value of assets for all U.S. households increased from 1989 through 2016 by an inflation-adjusted $58 trillion. A third of the gain—$19 trillion—went to the wealthiest 1%, according to a Journal analysis of Fed data.
Cris deRitis, deputy chief economist at Moody’s Analytics said: “On the surface things look pretty good, but if you dig a little deeper you see different subpopulations are not performing as well.”
And while consumers still aren’t as burdened by debt as they were in Q4 of 2017, they’re heading in the wrong direction. In Q4 2017 households devoted 13.2% of their disposable income to debt service – that number is about 9.9% now, mostly due to lower interest rates. Other debt, including auto and student loans, consumed about 5.7% of disposable income in Q1 versus 4.9% at the end of 2012.
Of course, while rates can always go even lower, the overarching problem is that instead of deleveraging, US consumers are instead adding on more and more debt in the hopes that rates never go up. Come to think of it, that precisely what corporations and sovereign nations are doing as well.
Finally, for for those that have an problem visualizing the inequality gap, those who don’t realize that the quarterly net worth exercise is meaningless and the result of averaging data when in reality only the top 10% benefit, and those that argue that the US society, not just its financial elites, is far better off than 2008, here’s the one chart that will set you straight:
via ZeroHedge News https://ift.tt/33gGQvO Tyler Durden
Befuddled and blind, we wander toward the cliff without even seeing it, focusing on our little screens of entertainment and self-absorption.
There are no physical barriers in the Gulag of the Mind–we imprison ourselves, and love our servitude. Indeed, we fear the world outside our internalized gulag, because we’ve absorbed the narrative that the gulag is secure and permanent.
We’ve also absorbed the understanding that escape will be punished. Dissent will quickly be suppressed or vilified, and the dissenter socially and economically marginalized.
In a peculiarly human pathology, we now believe the exact opposite of reality:our abuser is our savior, we’re getting wealthier when in fact we’re getting poorer, the government will always save us, even though the government is the problem, not the solution, and we’re entitled to all sorts of good things even as the entire system clings to a veneer of normalcy that is increasingly difficult to maintain.
We dare not realize the crises we’re about to face are novel, and the thinking of the past is worse than useless, as doing more of what’s failed is about to bear real consequences that cannot be papered over.
There was no room at all, in these ways of thinking, for the novel, apocalyptic situation which had now arisen, a situation which needed solutions as radical as itself. (The Status Quo) attitude is a complacent acceptance of things as they are, without a single new idea.
This acceptance was accompanied by greatly excessive optimism about the present and future. Even when the end was only sixty years away, and the Empire was already crumbling fast, Rutilius continued to address the spirit of Rome with the same supreme assurance.
This blind adherence to the ideas of the past ranks high among the principal causes of the downfall of Rome. If you were sufficiently lulled by these traditional fictions, there was no call to take any practical first-aid measures at all.
The Gulag of the Mind is constructed of both traditional fictions–that all the looming crises can be solved by repeating what worked in the past 50 years– and the new ones of virtual signaling–that publicly signaling our virtuous convictions is magically equivalent to actually solving problems, as if our problems are all nothing but a scarcity of virtuous convictions rather than real-world crises that will require immense fortitude and sacrifice to weather, much less resolve.
The Gulag of the Mind depends on technology–or more precisely, on a magical thinking faith that technology will always effortlessly save us: some new form of magic will manifest at the moment of need and we won’t have to change anything in our lifestyle or our corrupt power structure.
In the Gulag of the Mind, a perversion of justice passes for real justice: there are two sets of laws and two levels of enforcement: the wealthy and powerful escape justice while commoners are given life-crushing prison sentences for Drug Gulag offenses, and their vehicles and belongings are confiscated for being too poor to pay the state’s onerous penalties and fees.
Befuddled and blind, we wander toward the cliff without even seeing it, focusing on our little screens of entertainment and self-absorption. The bottom of the cliff beckons, and filled with the magical sense of security bestowed by the Gulag of the Mind, we imagine we can walk on air and escape unhurt.
In Part One of this article I laid out the unsustainable economic conditions which will drive the next phase of this Fourth Turnings and detailed the economic factors which drove the previous three American Fourth Turnings.
Strauss and Howe, when writing The Fourth Turning in 1997, did not know the exact circumstances and events which would propel the next Turning. But their study of economic and demographic trends along with the attitudes of generations and historical precedents in prior Fourth Turnings, led them to conclude the driving factors of this Crisis would be debt, global disorder and civic decay.
As I watch what is currently happening in this country and around the world, it is evident to me they nailed it. The volcanic eruption in 2008 unleashed a torrent of molten lava, which continues to flow along channels of distress, but is currently threatening to burst free of these channels and wreak worldwide financial and physical devastation. A multitude of possibilities described by Strauss and Howe below are already happening or will happen in the next few years.
“Imagine some national (and probably global) volcanic eruption, initially flowing along channels of distress that were created during the Unraveling era and further widened by the catalyst. Trying to foresee where the eruption will go once it bursts free of the channels is like trying to predict the exact fault line of an earthquake. All you know in advance is something about the molten ingredients of the climax, which could include the following:
Economic distress, with public debt in default, entitlement trust funds in bankruptcy, mounting poverty and unemployment, trade wars, collapsing financial markets, and hyperinflation (or deflation)
Social distress, with violence fueled by class, race, nativism, or religion and abetted by armed gangs, underground militias, and mercenaries hired by walled communities
Political distress, with institutional collapse, open tax revolts, one-party hegemony, major constitutional change, secessionism, authoritarianism, and altered national borders
Military distress, with war against terrorists or foreign regimes equipped with weapons of mass destruction”
The Fourth Turning – Strauss & Howe
The economic, social, political, and military distress pervading the world should be terrifying the average American, but most are blissfully ignorant of the coming anguish when the best laid plans of central bankers and corrupt politicians blow up once again and plunge the world into global depression. The immense mountain of debt has been built on the backs of humanity by evil sociopaths rigging the system to benefit themselves and their billionaire benefactors.
The United States, along with virtually every “developed” country, are effectively bankrupt. The $200 trillion of unfunded Federal liabilities can never be paid. States have accumulated over $6 trillion of unfunded pension liabilities and billions more in health care related liabilities. With an economy supposedly booming, according to Trump, we are running deficits exceeding $1 trillion. When the imminent recession unfolds over the coming year, deficits will skyrocket towards $2 trillion.
This expansion of debt is unsustainable, but the Fed is trapped and pushing on a string. Ten years of easy money heroine injections into the arms of Wall Street bankers and mega-corporation executives have left the .1% enriched, while people living in the real world have been left cash poor and dependent upon their credit cards and seven-year auto loans to maintain their fake lifestyles.
Despite the bullshit propaganda unemployment rate propagated by government apparatchiks and obediently parroted by the corporate media, people in the real world know their wages haven’t kept up with the real inflation rate for the last twenty years. When 40% of the working age population doesn’t work and the propagandists report a 3.7% unemployment rate, it takes a supreme level of willful ignorance to swallow that big lie. The feeling of cognitive dissonance among the populace is creating a nation of angry, disillusioned, frustrated victims.
The fake news corporate media have successfully used their propaganda machine to convince the public a surging stock market means the economy is doing great. Despite corporate profits being flat for the last four years, corporate stock buybacks (using debt), Trump’s corporate tax cuts, and Federal Reserve easy money, have propelled the stock market to all-time highs. The Fed proved they are Wall Street’s bitch by cutting rates with the market at all-time highs and unemployment supposedly near all-time lows.
This is an acknowledgement the “great economy” is fake news. The economy is on the verge of recession. The most overvalued stock market in history has reached a tipping point. Global economies, propped up with negative interest rates, are already in recession. The global trade war is hurting all parties and is pushing those countries most impacted towards drastic measures.
The multitude of stresses impacting the nation and the world are building up along fault lines created over decades of bad decision making, deferred action, political corruption, Wall Street greed, corporate hegemony, media propaganda, and willful ignorance by a dumbed down technologically distracted populace. Once the economy falters and the stock market crashes for the third time in twenty years, an earthquake of epic proportions will devastate the minimal savings of the working class and give rise to tens of millions of angry desperate citizens.
If a deflationary wave sweeps across the globe, our debt saturated world will shatter and a global depression will create economic havoc and lead to a catastrophic outcome. This would lead countries to lash out militarily to either distract their suffering citizens or to seek retribution against countries they feel have wronged them.
The military build-up in countries across the globe in the last ten years has created a global powder-keg, with lunatic leaders lighting matches. Extreme economic distress always leads to war. And war during this Fourth Turning will include nuclear arms in the hands of many countries, rather than just one in the previous Fourth Turning. The implications are terrifying.
The social and political distress we are presently experiencing are already tearing the fabric of civil society. Politicians on the left are promising trillions more in freebies, with absolutely no plan to pay the bill. They have no intention of deterring anyone from crossing our southern border illegally. They see them as added votes in future elections. They use every mass shooting by mentally disturbed individuals as an opportunity to confiscate the guns of the law abiding “deplorables” in flyover country. They ignore the flood of mental illness created by a society promoting degeneracy, hate of traditional family values, and defamation of men. Public schools are nothing more than indoctrination centers for depravity and left-wing social policies.
The left-wing corporate media stokes the flames of societal distress by making every issue racial. Screaming racism or white supremacy at every opportunity creates anger on both sides and will lead to further violence. If a democrat wins the 2020 presidential election and tries to restrict the 2ndAmendment, all hell will break loose in this country. Trying to pry 300 million fire arms from “deplorables” will be a bridge too far. We are fifteen months from an election which will likely ignite civil chaos in this country of confrontation. It doesn’t matter who wins, the losers will not accept the result.
There is no possibility of compromise between the left and right on any issues, other than agreeing to spend more of your money. I have an overwhelming feeling of foreboding about the unrelenting forces pushing the world towards economic collapse and military confrontation. By the 12thyear of the last Fourth Turning, America was at war with foes on opposite sides of the world. Economic factors were the driving force. We are approaching the 11th anniversary of the onset of this current Crisis.
Based on history, we are likely to have five to ten more years before this Crisis is resolved and the existing social order swept away and replaced by something new. When this house of cards, built on a foundation of unpayable debt, gives way, the tragic consequences will propel the world towards a bloody climax. Strauss & Howe pondered four possible outcomes, with only one being relatively positive. The peaceful episode of this Crisis is winding down. We are exiting the eye of a category 5 hurricane. The apocalyptic chapter is about to unfold. I don’t think I’m prepared. Are you?
Strauss & Howe provide four possible outcomes to our current Crisis:
This Fourth Turning could mark the end of man. It could be an omnicidal Armageddon, destroying everything, leaving nothing. If mankind ever extinguishes itself, this will probably happen when its dominant civilization triggers a Fourth Turning that ends horribly. For this Fourth Turning to put an end to all this would require an extremely unlikely blend of social disaster, human malevolence, technological perfection and bad luck.
The Fourth Turning could mark the end of modernity. The Western saecular rythm – which began in the mid-fifteenth century with the Renaissance – could come to an abrupt terminus. The seventh modern saeculum would be the last. This too could come from total war, terrible but not final. There could be a complete collapse of science, culture, politics, and society. Such a dire result would probably happen only when a dominant nation (like today’s America) lets a Fourth Turning ekpyrosis engulf the planet. But this outcome is well within the reach of foreseeable technology and malevolence.
The Fourth Turning could spare modernity but mark the end of our nation. It could close the book on the political constitution, popular culture, and moral standing that the word America has come to signify. The nation has endured for three saecula; Rome lasted twelve, the Soviet Union only one. Fourth Turnings are critical thresholds for national survival. Each of the last three American Crises produced moments of extreme danger: In the Revolution, the very birth of the republic hung by a thread in more than one battle. In the Civil War, the union barely survived a four-year slaughter that in its own time was regarded as the most lethal war in history. In World War II, the nation destroyed an enemy of democracy that for a time was winning; had the enemy won, America might have itself been destroyed. In all likelihood, the next Crisis will present the nation with a threat and a consequence on a similar scale.
Or the Fourth Turning could simply mark the end of the Millennial Saeculum. Mankind, modernity, and America would all persevere. Afterward, there would be a new mood, a new High, and a new saeculum. America would be reborn. But, reborn, it would not be the same.
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Despite stocks still being down 5% from pre-Powell levels, today’s dead-cat-bounce has prompted a resurgence of ‘everything is awesome’ with several speaking heads proclaiming “the resilience” of markets…
It all began when China fixed the yuan a smidge stronger than expected…
China stocks managed a small bounce in the afternoon but it was not enough to recover from the US-driven catch down…
Hong Kong stocks are down 7 of the last 8 days (its biggest drop since Feb 2018) back in the red for 2019…
European stocks did not play along with US markets, ending very weak into the close…
US Equities had their momentum ignited and despite a pull back into the EU close (and then reacceleration after), managed to squeeze hold gains with Nasdaq best…
NOTE – this was S&P’s best day in 2 months and first up-day in the last seven.
But still ugly on the week…
After Europe closed, the short-squeeze in US stocks began…
Nasdaq led the day, bouncing off a key trendline level…
Dow futures soared over 900 points off the overnight lows hit after UST called China a currency manipulator… (seemed like Dow 26k was all the algos wanted)
NOTE – Dow futs plunged right after hours, erasing yesterday’s late-day 200 point rampathon – before the currency manipulator calls.
Dow cash bounced off its 200DMA…
Today’s gains were led by defensives…
On the heels of a proposed Opioid settlement, drug stocks were monkeyhammered…
NFLX is back in a bear market, down 20% from July highs and down 16 of the last 19 days…
BYND Barfed back to its secondary offering levels…down 35% from record highs
Credit spreads tightened very very modestly on the day…
Bonds and stocks decoupled during the US day session – both bid…
Treasury yields rose on the day, with the short-end underperforming (2Y +4bps, 30Y +1bps)… but remain dramatically lower on the week…
NOTE – 30Y yields slipped to unchanged from the US equity cash close.
The yield curve did not steepen, staying at its most inverted of the cycle…
Markets are pricing in 2.5 more rate-cuts in 2019 (completely ignoring Powell’s insurance cut last week) – not at all what Jim Bullard was hinting at today…
The market is once again getting excited about the prospect of a 50bps cut in September…
The Dollar Index found support at pre-Powell levels and rallied today…
Cryptos ended lower on the day – despite a big pump-and-dump intraday…
Bitcoin spike above $12k intraday…
Oil was worst as the dollar rallied but PMs managed gains…
Gold was bid back up to overnight highs after tumbling on the CNY Fix…
Oil prices plummeted late on with WTI back below $54…
WTI closed in a bear market, down 21% from April highs…
Finally, with Negative-yielding debt now over $15 trillion, bitcoin and bullion seem like solid sanity trades…
The Value Line Geometric Composite (VLG), an index that tracks the median U.S. stock performance among a universe of roughly 1800 stocks, is at a critical level…
And as for stocks, its time to party like its 1998…
And so to summarize:
China fixed the yuan slightly stronger than expected and US equity markets soared rather unbelievably… but Chinese stocks did not, Hong Kong stocks did not, European stocks did not, the dollar rallied, crude crashed, gold gained, bonds were bid even as stocks squeezed higher, and Jim Bullard poured cold water on hopes for ever more rate-cuts. So everything else in the world was saying this is not a reduction in rhetoric, but US mega-tech stocks “know better.”
via ZeroHedge News https://ift.tt/2OIuXeV Tyler Durden
