UBS analyst Matthew Mish wrote in a recent report that 44% of consumers don't make enough money to cover their expenses.

The new survey asked 2,100 respondents in the US about their current financial situation, at least 40% of the respondents said they experienced a credit problem, if that was a rejection of a credit card or a missing payment, or perhaps defaulting on a balance that was due, this was a 3 percentage-point increase from last year, the survey found. 

Mish has written before that lower-income consumers have seen very little net worth improvement in the last decade. They've increased their debt burdens significantly through credit cards, auto loans, and student debt. 

As the federal funds rate drops, consumers are being squeezed by record-high credit card rates.

Given the high leverage of lower-income consumers, the next cyclical downshift in the consumer credit cycle could be much worse than the Dot Com bust, Mish noted in July.

Mish writes in the current report that there are no signs, as of yet, of an imminent downturn in the consumer credit cycle. 

The analyst wrote that the UBS indicator that determines if consumer credit is turning stood at .10 through late September. High scores of the index are often associated with deteriorating consumer health, in 2001 and 2007 recessions, the indicator was approximately .70.  

Mish said in the last six months, only 17% of consumers reported an improvement in their financial well-being. 

As we've noted in the last several months, successful transmission of weakness from a manufacturing recession has filtered into services and employment. This means that the economic slowdown in the US has already broadened, now affecting consumers, and will lead to waning consumer health in the late year — just in time for the holiday season. 

The incident occurred on Sunday afternoon on runway 01L at BKK. 

????????(20 ??????) ????????? TG970 ??????? – ????? ???????????? ??????????????????? 777-300ER ?????????????????????????????????????????????

?????????????????????????????????????????????????????????? ?????????????????????????????????????????????????????????????????? pic.twitter.com/hPI6SBVizB

— ????????????????????? (@BannorkAviation) October 21, 2019

Air Live said the left engine, a General Electric GE90 turbofan engine, suffered catastrophic damage upon takeoff.

Flight data via Flight Trader 24, showed the aircraft hit speeds above 50 mph at the time the engine failed. 

The takeoff was quickly aborted at the halfway point of the runway. 

Takeoff speeds for a 777-300ER are between 165 to 215 mph, which means if the left engine failed at higher speeds, or at the point of lift, this could have been another massive disaster for Boeing. 

About one minute after the engine failed, the plane made a complete stop on the shoulder of the runway, where passengers and crew exited the plane.

FlyerTalk user SPK posted an image of the engine. The user said:

"B777-300ER HS-TKL "Sunanda" ("???????") returned to Suvarnabhumi shortly after taking off due to engine failure.

TG arranged a replacement flight TG970D, using HS-TKK, leaving BKK at 1PM, a 12-hour delay, and arrived ZRH at 7:08PM. This will cause TG971 to be delayed by around 9-10 hours.

The damage on HS-TKL's engine seems to require lots of repair (photo from my friend who was on the flight)."

Judging by the photo, it appears the engine exploded outward and to the side. This means the malfunction was likely due to a rear turbine section.

Another user of FlyerTalk "cleaned the picture up a little," which shows the extent of the damage.  

Airfleets.net said the airplane is 7.1 years old and was delivered to Thai Air in late October 2012. 

Thai Airways Intl Boeing 777-300 (HS-TKL, built 2012) suffered an uncontained failure of ist left Engine (GE90) whilst taking off runway 01L at Bangkok on flight #TG970 to Zürich. None of the 359 people in board was Hurt. Damage is being assessed. https://t.co/PSCm0vPBlB pic.twitter.com/0DSwKpNmbl

— JACDEC (@JacdecNew) October 21, 2019

Passengers on board were headed to Zurich, and as a result of the engine blowing up on takeoff, a 12-hour delay was seen. 

San Jose is the third largest city in California and PG&E's largest customer.

According to the Journal, Mayor Sam Liccardo hopes in the coming weeks to convince other cities to join the buyout proposal, which would change the utility's investor-owned status to a nonprofit electric-and-gas cooperative. 

The buyout proposal amounts to a revolt by some of PG&E’s roughly 16 million customers as the company struggles to keep the lights on and provide basic services while preventing its aging electric equipment from sparking wildfires.

San Jose Mayor Sam Liccardo said in an interview that the time has come for the people dependent on PG&E for essential services to propose a new direction. A cooperative, he said, would create a utility better able to meet customers’ needs because it would be owned by customers—and answerable to them. -Wall Street Journal

In other words, Liccardo thinks a coalition of California officials can do it better. 

"This is a crisis begging for a better solution than what PG&E customers see being considered today," Liccardo told the Journal, saying of the recent Venezuela-tier power shut-offs, "I've seen better organized riots." 

Faced with more than $30 billion in wildfire-related liabilities, PG&E sought chapter 11 bankruptcy protection in January. The will likely oppose the proposal as they explore how to emerge from bankruptcy, compensate fire victims, and modernize their infrastructure (for which they passed along a giant $2 billion rate hike to their customers last December). 

California officials are running out of patience with PG&E after the company shut off power to roughly two million Californians in 34 counties earlier this month to ensure that its power lines, transformers and fuses didn’t ignite fires that could spread quickly amid warnings of high winds. PG&E warned Monday that winds could trigger another round of shut-offs for parts of 17 counties later this week.

PG&E may have accidentally galvanized support for the public buyout proposal last week when Chief Executive Bill Johnson told state

How could Chicago Public Schools get a fresh restart, fix its pension crisis, cut its debt, void bad contracts and end the teacher’s strike?

The same way Michigan did for Detroit schools. It’s called “reconstitution” and it’s a regular process in the private sector, often called “oldco/newco.” It would have all the benefits of a bankruptcy reorganization, though a formal bankruptcy might not even be needed.

It would go something like this:

• Create a new entity, or perhaps several of them, to run the schools.

• Redirect to the new entity taxes and other funding now going to CPS. Transfer needed assets to the new system. Put the old CPS in a Chapter 9 bankruptcy, if necessary.

• Freeze the Chicago Teachers’ Pension Fund and, instead, begin funding a new, affordable retirement plan.

• Terminate all CPS employees and rehire the good ones on terms affordable for the city.

We wrote about the option for CPS in 2015. The Wall Street Journal wrote later about its application in Detroit’s schools and its potential for Chicago:

“The district would avoid declaring bankruptcy by using an ‘oldco/newco’ model similar to GM’s. School operations would be transferred to a new debt-free district.”

The Detroit Free Press reported the opening of that city’s new school district in July 2016. We also wrote here about why the option is actually better suited for Chicago than it was for Detroit.

GM did the same thing in its bankruptcy. The GM you know today is actually a new company formed in 2009 to take over assets of the old, insolvent GM.

Reconstituting CPS would require state legislation as well as the city’s cooperation. That legislation could also include changes to the collective bargaining process to ensure there’s no repeat of the Chicago Teachers Union’s impossible demands. Currently, those laws are stacked in favor of CTU and are out of line with other states, especially our neighboring states, as we described here.

To nobody’s surprise, Illinois politicians have never considered the option

Credit Suisse published the new report in its annual Global Wealth Report on Monday, which is the most "comprehensive and up-to-date source of information on global household wealth. "

The Swiss bank's report found 100 million Chinese were members of the global top 10% club versus 99 million Americans. 

"Despite the trade tension between the US and China over the past 12 months, both countries have fared strongly in wealth creation, contributing USD 3.8tn and USD 1.9tn, respectively. 

The number of millionaires has also risen globally by 1.1million to 46.8 million in 2019, collectively owning USD 158.3 trillion or 44% of the global total.

 China and other emerging markets have contributed significantly to this growing contingent and show signs of progress and opportunity for investors," stated Nannette Hechler-Fayd'herbe, global head of economics and research at Credit Suisse.

A seismic shift is underway, one where the number of wealthy American consumers, who powered the global economy for decades, is starting to fade. 

The report offered some insight into the slump of wealthy Americans, as we tend to believe it could be due to demographics issues. 

While US population growth hits an 80-year low, unleashing demographic stagnation, leading to a dismal economic recovery, China's population isn't expected to stop growing until 2030, indicating that the Asian economy will continue to be somewhat more robust for the next decade. 

It's likely that China's upper-middle-class and wealthy families, currently has more millionaires than the US, will be a crucial driver for global consumption in the 2020s and beyond. 

Anthony Shorrocks, a British development economist and author of the report, suggested that after the 2008 financial crisis, China replaced the US as the world's global growth engine of wealth creation, which maybe explains why more millionaires are being produced in the country. 

Shorrocks adds that the US has endured more than a decade, since the

Chinese stocks were mixed on the day with small caps/tech on the losing side and bigger cap names leading (thanks to two buying-panics)…

Source: Bloomberg

European markets ended the day higher, led by Germany (and UK's FTSE rebounded from a weak open)…

Source: Bloomberg

While Boeing weighed down the Dow…

Small Caps and Trannies surged out of the gate and accelerated again after the EU close…

The S&P 500 once again battled with the 3,000 level as various repetitive trade progress headlines attempted to defend the Maginot Line… First close above 3k sine 9/18…

"Most Shorted" stocks were panic-squeezed at the open (and at the EU close)…

Source: Bloomberg

Boeing back at early 2018 lows…

Bank stocks continue to outperform as the yield curve steepens…

Source: Bloomberg

Energy stocks also surged in traday… despite a drop in crude (we've seen this before)…

Source: Bloomberg

Treasury yields were uniformly 3-4bps higher on the day…

Source: Bloomberg

Notably, the longer-end of the yield curve has been trading in rather extreme short-term trends…

Source: Bloomberg

The Dollar Index was flat on the day, rebounding from some overnight weakness once again…

Source: Bloomberg

Cable continues to rise, tagging 1.3000 intraday (despite today's proceedings going against Johnson) – up 8 handles in 8 days

Source: Bloomberg

Silver and Gold were lower on the day (after decent gains overnight) and oil was also lower…

Source: Bloomberg

Gold futures pushed up towards $1500 itraday before falling back…

And silver popped and dropped…

WTI chopped around intraday (between $53 and $54) but ended lower…

Copper/Gold continues to track 10Y TSY yields (or vice versa) almost perfectly..

Source: Bloomberg

Finally, we note that tech stocks continue to outperform, despite flat to falling earnings expectations…

And this is why…

But it may not be enough as Bloomberg points out that as the U.S. dollar heads for the biggest monthly decline since the trade war began, the outlook for corporate profits has started to deteriorate in America and improve in emerging markets.

Source: Bloomberg

Late breaking news was that Softback will bailout WeWork at a valuation around $7.5-8 billion…

Neumann's wealth went full  Keyser Söze.

Here are some of the headlines President Trump dished out in the early afternoon to boost stocks (must defend 3K E-Mini S&P500 level) :

• 21-Oct-2019 11:54:18 AM – TRUMP SAYS TRADE DEAL WITH CHINA IS COMING ALONG GREAT
• 21-Oct-2019 12:38:43 PM – U.S. TRADE REPRESENTATIVE LIGHTHIZER SAYS U.S. TARGET IS TO HAVE PHASE ONE TRADE DEAL WITH CHINA BY TIME OF CHILE APEC SUMMIT, BUT STILL SOME ISSUES TO RESOLVE
• 21-Oct-2019 12:39:13 PM – TRUMP SAYS CHINA IS PURCHASING U.S. AGRICULTURAL PRODUCTS NOW
• 21-Oct-2019 12:40:03 PM – TRUMP SAYS ISSUES THAT WOULD NEED TO BE DEALT WITH IN PHASE TWO TRADE TALKS WITH CHINA ARE IN MANY WAYS A LOT EASIER THAN PHASE ONE ISSUES

Besides the apparent stock market pump, the president was trying to orchestrate around lunchtime — one particular headline stood out to us. 

• 21-Oct-2019 12:39:13 PM - TRUMP SAYS CHINA IS PURCHASING U.S. AGRICULTURAL PRODUCTS NOW

In a report over the weekend, several commodity traders told Reuters while President Trump has been touting massive agriculture purchases made by China in recent weeks — they said China logged zero soybean sales with the U.S. last week, along with no transactions at the USDA. 

"I've not had any inquiries at all for U.S. (shipments)," said one of the U.S. soybean exporters. "There were a few November boats bought from Brazil and several new-crop South American boats for March forward but nothing here."

Soybeans are one of the leading agriculture products that the U.S. exports to China — so when Trump touts "China Is Purchasing U.S. Agricultural Products Now," one would expect to see a whole bunch of soybeans — but as the one trader said, China abandoned the U.S. market for Brazil. 

U.S. vs. Brazil (Market share of China's total soybean imports) pic.twitter.com/8tYdlbWbrT