Do Not Read The Following While Standing:
Saudi Arabia is not renewing the 50-year Petrodollar agreement with the US & it expires on June 9, 2024.
This is the end of the petrodollar.
If this happens slowly, it will not matter
If this happens too quickly, there will be both winners and losers, but in general it would be absolutely devastating.
The Governments and Central Banks of the world know this and they are working on it.
“After recent releases from the US Census Bureau and the Institute for Supply Management, the nowcasts for annualized second-quarter real personal consumption expenditures growth and real private fixed investment growth declined from 2.6 percent and 3.1 percent, respectively, to 1.8 percent and 1.5 percent.”
personal spending is still growing but slowing.
Allan
Yes. The Census bureau did say that.
and Yes, personal spending is so high that “still growing but slowing.” is probably accurate.
In fact we are spending more than we are earning.
We are spending by depleting savings.
Might not be terrible, but it is impossible for that to continue
One day the Federal Reserves helicopters in a bunch of corn.
Later when the fields are sick and the farm is unproductive his family eats corn from the helicopter pile.
Having that pile is a good thing. It is not a bad thing.
But it would be crazy to say “Look the family is eating a lot, that means the fields are healthy. Let’s pass a law to make them eat more, then the fields will set new record for healthiness.”
In other words:
“personal spending is still growing but slowing.”
Means “The red arrow on this chart is pointing down.”
Is that a good thing?
amazon revenues were up 12% last year.
all i see is those ubiquitous prime boxes all over our complex.
on line sales are rising at a rapid pace.
Allan
This is creating an environment where the yields on dollar denominated bonds are driven by the secondary market rather than fed policy. In such an environment fed rate cuts will mean nothing for yields. The dollar weakening will become the inflation driver in our negative trade balance world.
dollar is 2.7% stronger in the calendar year.
“As of Monday afternoon, the U.S. Dollar Index was down 0.5% at around 104.13, but still up by 2.7% since Jan. 1.”
the dollar is a strong currency right now.
Allan
Yes I know and so does the Department of Commerce.
(they agree really smart people)
Ergo, the above numbers include e-commerce.
History suggests the next stopping point (for the “goods economy”) is somewhere below the dotted green line.
Judging from history (note the solid green lines) we can surmise:
Imagine if Roosevelt, or Carter or Reagan had pretended “it’s not happening.” Imagine any president or economist or even Internet commentator anywhere pretending, for political purposes “it’s not happening.” That would be pretty crazy huh?
yes but why is amazon revenues increasing like crazy. how much diesel is needed to deliver prime packages nationwide? if diesel consummation is down but personal spending is growing (albeit at a slow pace). what does that say to you?
Allan
Amazon is not a “thing” company anymore.
(I was surprised to learn that about a year or two ago.)
Just under 50% of its revenues come from selling books and other stuff, more than half of that is from third-party sellers.
The majority of its revenues come from amazon Web services, amazon Streaming video, It’s ownership of MGM,
Thursday Night football etc…
IOW its biggest sales product is electrons.
Retail is in trouble (chart above shows that)
The retail subsegment, “things” is in even bigger trouble.
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.
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If ya happen to be in the bricks-and-mortar subset of selling “things” well, God help ya. You’ve been triple-punched (1. retail, 2. things, 3. brick-and-mortar) and you are in a perfect storm right now.
