As we near the end of a wild trading week, this is one of the most unbelievable things you will have ever seen.
Consumer Being Squeezed
May 16 (King World News) – Here is a portion of what Peter Boockvar wrote today as the world awaits the next round of monetary madness: I yesterday highlighted the possibility that a nearly 17% credit card interest rate, the most on record dating back to 1994 was a likely factor weighing on retail sales. Today I wanted to give four reasons why we’ve seen a sharp increase after doing so on CNBC this morning…
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1) In 2009 after the financial meltdown, Congress passed the Credit Card Accountability, Responsibility, and Disclosure Act. One of the goals was to limit the flexibility banks would have in raising interest rates on card holders. The unintended consequence, which there ALWAYS is when restrictions are placed on the free market, was that banks then started off the credit card rate at a higher level than otherwise.
2) Who do you think pays for all the rewards we receive by utilizing our charge cards? Banks recoup the costs via higher card rates.
3) The Fed has hiked rates 9 times since December 2015.
4) Credit card delinquencies are rising.
Consumers Getting Squeezed By Higher Credit Card Interest Rates
As we all know the investor mood follows price, individual investor sentiment changed rather quickly over the past week according to AAII. Bears jumped from near the lowest level since early January last week at 23.2 to 39.3 today. Bulls fell by 13.3 pts to 29.8, the least since December 20th 2018 when it was 24.9, and that was a week after it was 20.9. For a tradeable bottom which we are possibly in the 3rd day of, this is the sentiment switch you want to see for this very short term indicator.
I’ve said before that inflation is always in the eye of the beholder, or the one who pays. Only a few weeks after we saw this magazine headline from Bloomberg Businessweek, ‘Is Inflation Dead?’, we get this selling for $91 million from a living artist.
Unbelievable: Who Would Pay $91 Million For This?
With respect to the tariff impact on inflation, this was a chart from Goldman a few days ago that I got from the Daily Shot which isolates the goods directly impacted by tariffs versus everything else. Just wait until the new tariff rates fully kick in.
Tariff Price Increases Also Weighing On Consumer
Meanwhile, China Reinflating Its Housing Bubble
If it gets too hot, cool it down. If it gets to cold, heat it up. That is essentially the game plan of the Chinese when it comes to their housing market.
Well in April, all 70 cities surveyed saw price increases from the same month last year for new homes. For existing ones, 68 of 70 saw gains from 67 in March. Property remains a key safety deposit box for many Chinese.
***KWN has released the powerful audio interview with legend Pierre Lassonde and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***Also just released: Extreme Readings Have Shown Up As Investors Yank Money Out Of Stock Funds At Near Record Pace CLICK HERE TO READ.
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