May 21 2017

The debt spending binge: Household debt has surpassed record levels reached during 2008 Great Recession.

Debt spending is once again keeping the economy afloat.  People are leveraging future income on buying items today on the basis that the economy is not going to have a hiccup.  On some reports you see pundits mentioning that delinquencies remain low.  Well things were fine too before the Great Recession hit.  Once again we are teetering on the brink of a solvency crisis should the economy have a slight turn.  People are living beyond their means and banks are gaming the system once again.  A recent report by the New York Fed shows that household debt has now reached a new record.  What is more problematic is much of the debt increase is coming from student loans, auto debt, and credit cards.

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May 15 2017

Amazon is annihilating the Department Store faster than you think with 80 million prime subscribers: 4 charts showing the destruction of the department store.

If you enjoy the process of shopping at department stores you may want to get it out of your system sooner rather than later.  Forget about the fact that the US has built a ridiculous amount of mall space thinking that Americans were perpetually going to only buy in-person in cavernous florescent light stores.  Amazon has set the new model of shopping and how can you beat shopping in your pajamas?  After recently purchasing a big piece of furniture online, I can see why department stores are in big trouble.  The recent list of retail bankruptcies are only going to grow larger.  People have made a conscious decision and are voting with their wallets online.  The word of the day is “disruption” and it is happening much more quickly than expected.  When you look at these three charts you can see that retail is in deep trouble.

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May 7 2017

Debt Apocalypse: US Student and Auto Loans Hit New Record of $2.6 Trillion.

American consumers are once again spending beyond their means.  Just a few months ago there was a startling headline reporting that US consumers now had over $1 trillion in credit card debt outstanding.  That seemed astonishing in itself but now looking at debt levels in other sectors we find that auto loans outstanding are also over $1 trillion.  Keep in mind this is for an item that will lose value once it is taken off the lot.  You also have student debt over $1.4 trillion which is amazing given many young Americans are working in jobs that really don’t require a college degree.  The debt apocalypse is once again upon us and we better hope the economy keeps on running on fumes or we will be confronted with another solvency crisis shortly.

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May 2 2017

Canada Housing Bubble Pops and Looks Similar to US Housing Bubble: Canada’s Largest Alternative Mortgage Lender Crashes in Dramatic Fashion.

The Canadian housing market is now facing a crisis like moment as the United States did in 2007.  While the U.S. housing market did undergo a correction, the Canadian housing market just kept moving up.  Canada has one of the largest housing bubbles ever witnessed in North America.  People may recall that in the U.S. we had mortgage lenders like toxic junk pusher New Century Financial that imploded in grandiose fashion because of their corrupt and mathematically dubious products that they were peddling to the market.  Well in Canada, the tip of the iceberg is now being exposed.  Home Capital Group tanked by 60 percent after announcing that it needed emergency liquidity.  Of course this is just the start of the correction for our neighbors in the north.

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Apr 23 2017

The epic retirement crisis for older Americans: The median family of retirement age has $12,000 in savings.

Given the discussion of 401ks and IRAs you would think that most Americans have a nice nest egg ready to support them into their margarita drinking days on the beach.  Yet like most dreams, the reality is very different.  Most Americans are broke.  The Economist put out some data highlighting that the median family of retirement age has $12,000 in savings.  In other words, one minor injury and you are bankrupt.  It is a troubling contrast to the image that is portrayed on television and throughout the media of the fully financially prepared family.  Life just doesn’t work out that way for most.  Unsuspected illnesses, job losses, stagnant wages, inflation, family changes, and student debt all throw a wrench into the plans of most.  What is also startling is that this drought in retirement savings is happening at a time when the stock market is near an all time high.  So what gives?

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Apr 16 2017

The Great Retail Apocalypse: Americans spend more at bars and restaurants than at grocery stores.

The list of retail bankruptcies continues to grow in 2017.  The list includes J.C. Penney, Sears, RadioShack, and just recently Payless.  Of course there is massive growth in dollar stores as Americans are pinched for cash.  There has been a retail apocalypse and part of this has to do with the ridiculous amount of mall space that has been built out over the last few decades.  Just like Blockbuster not seeing Netflix coming, many malls simply assumed things would never change.  Then we get Amazon.  The game has been fully upended and people simply choose to be more selective with what they buy.  For the first time ever, Americans spent more money on bars and restaurants than at grocery stores.  Habits are changing and the Millennial generation simply has different interests.

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Apr 9 2017

Miami condo market acting as if it is 2007: Condo market in Miami is saturated with units and inventory is growing.

There is a major leading indicator in the housing market and that involves inventory and sales.  These two economic points can signal trouble ahead.  And we saw this trend unfold in the last housing crisis when over euphoric builders chased bubbles across the country.  The sad part is that most Americans are too broke to afford a home.  So the condo market in Miami is seeing a big surge in inventory while sales decline – obviously these two indicators feed into each other.  The euphoria in real estate is running red hot and it is no surprise that Florida is at it again.  Is this simply an isolated market or is there something larger brewing in the nationwide housing market?

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