I was thinking about just making this a brief piece about the anecdotes from my week long trip where I test drove my liver at an older age and at the same time, fed the fish off the coast of Belize where the small ones I threw back should be fat and happy by this winter if I kept “fishing” for three weeks straight.
Instead, I shall share some brief tales of horror without revealing names, companies, or exact locations so my readers can get a taste of what’s about to hit the United States which is getting much, much worse with each backward looking economic release.
-First I met a young software engineer from southeastern China which has been hit by the lockdown mania in the past few months and he was “luckily” on assignment in the US when it happened. He and his wife were vacationing and his position was to program machinery and systems, aka, the “internet of things” for integration into large scale manufacturing facilities. We shared a few drinks and when I asked in reality just how soon things might start to get caught up, he basically said that by August his company and others are hoping to catch up on their order book; for orders due in December 2021 and this past January! That was a major buzzkill as I know some companies that will have to begin layoffs soon due to a lack of sub-components for their lines. I wished he and his wife luck, gave him a few good bourbons to check out and we parted ways.
-An old friend of mind still in the trucking industry informed me that the diesel shortages are far worse than the EIA (Energy Information Administration) and DoT are telling the public. They are now at the point of abandoning some of their routing software and using the old tried and true methods of contacting truck stops by phone to verify fuel availability. Rates into the major cities of the Northeast for fresh produce will be at the highest levels in years as refrigerated truckload carriers are fearing real diesel shortages. Between the regulatory environment and the fear of shortages, trips are being meticulously planned before equipment is dispatched into California or cities like Philadelphia or New York so drivers do not ended up stranded.
This bad bit of news apparently was verified by the Founder and CEO of FreightWaves in a Tweet today:
A reply on another thread also seemed to verify some of the information filtering through the noise in the back channels of America’s failing transportation system:
-Lastly, one more friend who hooked up for cocktails and feeding the fish in the investing world confirmed what I already suspected about the real estate collapse. ZeroHedge alluded to this tonight in his piece titled “There Goes The Housing Market” and it’s going to be a nightmare. Now that housing prices have exceeded the financial capacity of the consumer at the same time that Federal Reserve is withdrawing as the buyer of Mortgage Backed Securities (MBS) and Collateralized Loan Obligations (CLO’s) there is no logical reason for the banks or any company to issue subprime to near subprime loans. Since the majority of good mortgages and refi’s are now completed by credit worthy individuals, the ARMs have ticked up and the risk that the paper is complete garbage will hit Wall Street. His fear was that in addition to uncontrolled inflation in addition to a credit event will result in a crash making 2008-2009 (which he and I discussed frequently off the air) look like a child’s birthday party (his words not mine).
Sven Henrich pointed this risk in a few Tweets today so perhaps my friend’s warning should be heeded:
Ah, I see. pic.twitter.com/4Z2HZwPw5g— Sven Henrich (@NorthmanTrader) May 11, 2022
Thus when stories like this one from the NY Post appears, the top is just about in and the investment bankers buying at the top and bailing out of the markets seems imminent:
Goldman Sachs-backed firms buy entire Florida community for $45M
After a week of hangovers, sunburn, and fishing frustrations, I can safely state that the JohnGaltFLA fishing trip of doom continues. It was a great trip in October 2008 so if it stays true to form, my predictions of S&P 3100 coming sooner rather than later will probably happen shockingly fast this year.
Sadly however, that’s not the bottom, it’s just the bear saying hi to all his fans. The market still and probably will make that Fibonacci run for the 1830 range, especially because of the inflationary risk and both parties political incompetence before the Fed and US Government decide to go beyond the Japanese experience and confiscate everything the middle class “invests” in plus buy everything in our markets to “save” the economy.
In other words ladies, this sucker could get real ugly, real fast. Enough doom for ya tonight?