Leading economic indicators point to a worsening economy; Economy relies on credit; expensive credit impacts.

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China rapid change of mind! Defend the #RMB!! PBOC has DRAINED >1tn RMB liquidity this past week


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Financially Strained Consumers Forced to “Dumpster Dive” to Afford Groceries

Bidenomics fails to deliver economic revival as inflation crisis hits hard. Negative real-wage growth persists, forcing consumers to deplete savings and accumulate record credit-card debt. Dollar stores and dumpster diving become survival strategies amid rising food costs. Google searches for “pawn shop near me” and “is dumpster diving illegal” reach record highs, indicating financial strain. Despite evidence of struggling consumers, the Biden administration maintains an optimistic narrative. The middle class continues to decline, posing challenges for upcoming elections.

End of Easy Money: Financial Conditions Loosen Again for Junk-Rated Companies

Financial conditions for junk-rated companies have shown limited tightening despite the Federal Reserve’s efforts. The narrow spread between junk-rated debt and risk-free Treasuries, coupled with increasing bankruptcy filings, raises concerns. Loose financial conditions persist, creating a disconnect from economic realities. Structural changes, such as the growth of e-commerce, further exacerbate the challenges faced by struggling companies. The effectiveness of tightening measures in addressing underlying issues remains questionable, increasing the risk of a severe crisis.

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China On Brink Of Deflation As CPI Slumps, PPI Tumbles Most Since 2015

The risk of deflation in China is a real concern, as producers grapple with lower commodity prices and weak demand. If consumers and businesses continue to hold back from spending and investment, it could trigger a self-fulfilling downward spiral in prices. To avoid a third consecutive contraction, a stimulus is becoming increasingly necessary, potentially leading to another surge in commodity prices. However, the scope for policy intervention is limited due to concerns about debt risks. While the government has taken some measures to support the economy, expectations are that any stimulus will be targeted and coordinated rather than massive in size. Nonetheless, if China’s economy and property markets worsen and deflation persists, Beijing may have no choice but to take stronger action.

Bank Credit Slows To 0.5% YoY, Lowest Since 2011 (41+ Countries Sign On For BRICs Gold Standard)

41+ Countries Join BRICS Gold-Backed Reserve Currency as US Economic Policies Face Criticism. A growing number of countries have signed on to the BRICS gold-backed reserve currency, a move perceived as a divergence from the US’s fiat currency. Amid concerns about the direction of the American economy under President Biden and the policies of the Federal Reserve, the BRICS reserve currency offers the stability of gold backing. Furthermore, US Treasury Secretary Janet Yellen’s recent meeting with the Chinese vice-Chairman has drawn attention, with some criticizing her perceived capitulation in bowing three times without receiving a reciprocal gesture.

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