Quote:
Originally Posted by elysiantraveller
Do you interpret the Feds near immediate reversal on their rate position as a sign of underlying weakness?
That's how I'm seeing it at the moment and it appears to be our industries interpretation of events.
There is a lot of debt in the system but with a decade of basically free money it's kinda to be expected.
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Debt started to inflect meaningfully higher in 1980. Here are the stats (courtesy of Ned Davis Research--I've rounded).
US total debt to GDP:
1980: 160%
1995: 235%
2010: 380%
Now: 350%
The massive run up in total debt to GDP was not a result of the last decade's low interest rates.
In the past 18 months, when we'd see a big jobs print or a shortfall, I'd say "trend remains 200k/month" and statistical noise (tons of it in the monthly numbers) explains the upside/downside. I think the jobs market has softened a tad recently, but not to the sub 100k number reported today. I suspect trend is 150k to 175k now. Monitor weekly claims closely, though.
The Fed will cut in two weeks or the next meeting after that.
On banks writing off credit card debt (not your suggestion), total bank equity capital is $1.9 trillion. Writing off credit card debt would wipeout half that capital base. That would be absolutely, positively disastrous for lending and the US economy (see 2008). Actually, it would require a government bailout (see 2008/2009). Once again, there's no free lunch. That's all for me on the topic, as I don't want to get into politics.
