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Thursday, March 28, 2024

Faltering Friday – Eurozone GDP 0.3% From Recession

Will the G20 "fix" this? 

Now we're getting terrible GDP reports from all 19 Eurozone nations, coming in at an overall 0.3% in Q3, down from a not exciting 0.4% in Q2 and please keep in mind this is DESPITE TRILLIONS of DOLLARS in stimulus.  Draghi has already said he plans to do more of the same and we can expect all of the G20 nations to pledge to do SOMETHING to prevent a Global Recession – but can they?  Should they?  

What we need the G20 to do is to put shovels in the ground and fund some infrastructure projects that put real money into the economy and, more importantly, begin to burn of the massive surplus of raw materials that China's slowdown has left us with.  Pumping another $58.6Tn into the Top 1% (see Tuesday's post) isn't going to "fix" anything but the balance sheets of people rich enough to have balance sheets.

If you can't get Capitalists to pay their laborers more then the Government (the one that is supposed to be "of the people, by the people and FOR the people") then it is the JOB of the Government to compete with those Capitalists for cheap labor and cheap materials.  The Capitalists are not making efficient use of our workforce or our materials – that is an OPPORTUNITY for the Government to get a few home improvement projects done while they can be done cheaply.  

The same logic should apply to any industry that is being mismanaged.  If private enterprise is unable to efficiently deliver low-cost health care to all of the citizens, then why can't our Government compete to offer a service at a lower cost?  That's not socialism – that's real Capitalism. 

The thing we are doing now is nothing like Capitalism, it is Corporate Welfare on a massive scale and the worst thing about it is that, ultimately, the burden of all these debts we're incurring falls back on the same people we are making no effort to help – it makes no sense – unless you are the one getting the Corporate Welfare, of course

Not that our Corporate Citizens don't need all the welfare they get – this morning, we have a PPI report that is NEGATIVE 0.4% and even Core PPI is down 0.3% vs +0.1% expected by our leading Economorons.  Retail sales were also a huge miss at just 0.1% and Core Retail Sales were just 0.2% a 50% miss from 0.4% predictions but, much, much worse, September Retail Sales have been revised down to NEGATIVE 0.4% – Merry F'ing Christmas!

This is why I tend to go on and on about how rising inventories are NOT really a positive for GDP and this is why I try to get my point across that by ignoring the plight of the bottom 90%, we are creating an economy that is simply unsustainable because people cannot afford enough goods and services to keep things going – no matter how many private jets the Top 1% buy themselves.  

Meanwhile, Global stockpiles of oil are at record highs (3Bn barrels) so, despite the fact we had a nice winner in yesterday's long play on Oil Futures (/CL), now that the pre-inventory run has ended we're on our way back to $40 where, HOPEFULLY, we find a pre-Thanksgiving bottom next week.  

Of course the real excitement next week will come from China as they are getting ready for the next correction by doubling the margin requirements on stocks – something they announced after the close this morning.  As of Nov 23rd (10 days!) margins may be no more than 100% of the cash in the account (currently 200%).  This gives Chinese traders just one week to square their accounts – expect our FXI puts to do well next week! 

Have a great weekend, 

– Phil

 

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