Originally published at: https://peakprosperity.com/daily-digest/dead-woman-in-cubicle-for-four-days-economic-indicators-turning-down/
Economy
Economic indicators from August reveal a downturn in both the services and manufacturing sectors, with the Federal Reserve’s regional surveys indicating contraction. Philadelphia’s services index reached its lowest point since mid-2020, and the bond market signals potential unemployment, now affecting the services sector, which includes mobile networks and content subscriptions. About 86% of jobs are in services, many tied to goods transportation and management. Recent manufacturing data also shows a downturn, indicating broader economic issues. The Federal Reserve is expected to cut rates multiple times in response to economic weakness, with consumer demand reportedly declining this summer compared to last year. Surveys show businesses from restaurants to dental clinics experiencing reduced demand, with spending figures reflecting this downturn. Treasury market signals, such as the 2-year and 10-year spread, indicate lower interest rates, a negative economic sign. Regional Fed surveys, when averaged, align closely with other indicators like ISM and S&P Global, showing a consistent message of economic contraction. In August, three out of five regional surveys reported worsening conditions, with Philadelphia’s index at its lowest since 2020. New York’s survey improved slightly, while Chicago’s remained stable. However, Philadelphia, Richmond, and Texas showed significant declines. Philadelphia’s full-time employment index fell, indicating negative employment conditions. Richmond’s revenue and demand indexes also turned negative, and Texas reported a sharp decline in business activity. Comments from survey respondents highlight concerns about consumer spending and rising costs. For example, a publishing industry respondent noted a significant decline in consumer spending, while a rental and leasing company reported an unusual sales decline. These anecdotes reflect broader economic challenges. When averaged, the five regional Fed surveys indicate a contraction in the services economy, with August’s average at -9.25, down from July’s -4.63. This renewed weakness in the services sector is accompanied by increasing references to employment issues. Manufacturing data also shows a downturn. The average of five regional Fed manufacturing indexes for August was -8.68, slightly worse than July’s -8.4. This decline follows a brief uptick earlier in the year, likely due to over-ordering. Now, the manufacturing sector is retrenching, with negative signals from both regional and national surveys. Overall, the economic data points to a broader downturn, with both the services and manufacturing sectors showing signs of contraction. The bond market’s bull steepening and the Federal Reserve’s expected rate cuts further confirm these negative trends. The U.S. economy appears to be transitioning from a half-recession to a full-blown one, with similar issues observed in Europe and Germany.
In related financial discussions, experts highlight the impact of prolonged financial excess and free money over the past decade, which has led to significant commitments by corporations, governments, and individuals based on the assumption of cheap money. As interest rates rise, these assumptions are being challenged. Michael Oliver, chief analyst and founder of MSA, predicts economic weakness, noting that the stock market often precedes overt economic downturns. He references historical instances where rate cuts followed periods of rate hikes, leading to temporary market rallies before significant declines. Oliver emphasizes that the current market situation mirrors past scenarios where rate cuts did not prevent market downturns, suggesting that the market is in a topping zone and poised for a significant decline. The discussion also touches on the performance of various asset classes, including gold, silver, bonds, and the U.S. dollar. Oliver notes that gold and silver have broken out of long-term momentum bases, indicating a bullish trend. He also highlights the recent breakout in the bond market and the downside break in the dollar index, suggesting a shift in asset allocation by investors seeking lower risk and higher reward. Oliver provides insights into the potential for significant moves in gold and silver prices, driven by monetary deterioration and central bank actions. He also discusses the undervaluation of gold miners and the potential for them to outperform gold in the coming year. Additionally, he addresses the tech sector, noting that while it has led the market’s upside, it is now showing signs of weakness and could lead the market’s decline. The conversation concludes with a discussion on the broader implications of these market trends, including the potential impact of the upcoming U.S. elections and the importance of monitoring multiple asset classes to understand market dynamics. Oliver emphasizes the need for investors to be cautious and prepared for significant market shifts in the coming months.
And in other news…
In a tragic incident, Denise Prudhomme, a 60-year-old Wells Fargo employee, was found dead at her desk four days after clocking in. Her body went unnoticed due to the secluded location of her cubicle and the fact that many employees were working remotely. Prudhomme last scanned into her office job in Tempe, Arizona, at 7 AM on Friday, and her body was discovered at 4:55 PM on Tuesday, August 20. Her coworkers detected a strange smell but assumed it was a plumbing issue. Tempe police and the Maricopa County Medical Examiner did not detect any signs of foul play, but the woman’s official cause of death remains to be seen. Wells Fargo has stated that they will review their internal procedures to ensure employees receive regular check-ins.
Sources
Federal Reserve Surveys Signal Economic Downturn: Services and Manufacturing Sectors Hit Hard
Several of the Federal Reserve Services indicators have absolutely tanked here in August, including Philadelphia’s number, which plunged to its lowest level since the middle of 2020.
Source | Submitted by rhollenb
Financial Excess Unveiled: Is the Bull Market’s End Near?
We’ve had the biggest bull market in US history painted and created by financial excess.
Source | Submitted by rhollenb
Wells Fargo Employee Dies at Desk, Goes Unnoticed for Four Days
Wells Fargo Worker Dies At Desk, Nobody Notices For Four Days
Source | Submitted by Shplad