{"id":53372,"date":"2023-08-26T16:56:36","date_gmt":"2023-08-26T20:56:36","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/data-not-conducive-to-wall-streets-soft-landing-scenario\/"},"modified":"2023-08-26T16:56:40","modified_gmt":"2023-08-26T20:56:40","slug":"data-not-conducive-to-wall-streets-soft-landing-scenario","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=53372","title":{"rendered":"Data Not Conducive To Wall Street\u2019s \u201cSoft-Landing\u201d Scenario"},"content":{"rendered":"
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One of the two major economic\/market events that occurred last week (week of August 20) was the stellar performance of Nvidia (NVDA) which, unlike the retailers, beat on both top and bottom lines and whose stock price has soared from a 112 low last October to a high print of nearly 503 early on Friday morning (August 25). That\u2019s nearly a 450% rise in less than a year. As a result, on Friday, shareholders began taking profits as the stock closed within pennies of its low for the day at just over 460, down -8.5% from its early morning high.<\/p>\n

Nvidia\u2019s one day performance feels very much like a compact version of the S&P 500\u2019s performance over the past month. After a monster rise of 28% from last October 12th<\/sup>\u2019s low point (3577) to its July 24th<\/sup> high (4582), over the next month (to August 24) the S&P 500 fell -4.6%, closing at 4369 on Thursday before a small rally on Friday. We attribute this small rally to Fed Chair Powell\u2019s recognition, in his keynote speech at the Fed\u2019s annual Jackson Hole symposium, that progress has been made on the inflation front and that there is uncertainty over the timing of policy lags on the economy. Hints, perhaps, that the tightening cycle may be nearing its end.<\/p>\n

Despite the August pullback in equity prices, markets continue to be convinced that the economy will have a \u201csoft-landing.\u201d This is the same attitude market participants had prior to the tech-wreck Recession at the turn of the century and to the Great Recession. Given that those participants listen to the business media which, in turn, listen closely to the economists employed at the major Wall Street firms, a \u201csoft-landing\u201d scenario is always going to be the \u201cofficial\u201d forecast prior to any Recession, lest those economists suddenly become unemployed! As readers of this blog know, we are not in that \u201csoft-landing\u201d camp. Incoming data say so!<\/p>\n

The Retailers<\/h2>\n

In past blogs, we noted the rapid rise in credit card balances as consumers tried to maintain their living standards in the face of rapidly rising prices. For the first time in Q2, credit card balances exceeded $1 trillion, up $270 billion over the past year, well in excess of the $120 billion that Rosenberg Research says is the long-term average growth rate. Unpaid balances, according to Rosenberg, are up 16% (with credit card interest rates above 20%), and delinquencies, at 2.8%, are up large from 1.8% a year ago. Eventually, credit card lines of credit get maxed out leading to spending cut-backs. And such behavior appears to already have started as gleaned from Q2 financial reports from the nation\u2019s major retailers.<\/p>\n

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