Salient to Investors:
Michael T. Snyder writes:
The US economy is slowing down – freight volumes and expenditures are way down, consumer confidence is down sharply, major retail chains are closing hundreds of stores, the sequester threatens to bring austerity. gas prices are rising rapidly, corporate insiders are dumping massive amounts of stock, and high-profile corporate bankruptcies are in the news almost every day.
Most Americans have learned nothing from 2008, racking up staggering amounts of debt, and Wall Street is more reckless than ever. Society has concluded that 2008 was just a temporary malfunction rather than a sign our entire system was fundamentally flawed.
So, what will the rest of 2013 bring? Hopefully the economy will remain stable for as long as possible, but right now things do not look particularly promising.
Signs we are headed for big trouble in the months ahead include:
- Freight shipment volumes are at their lowest level in 2 years, and freight expenditures have gone negative for the first time since the last recession.
- Gasoline has risen by more than 50 cents over the past 2 months.
- Reader’s Digest and Atlantic City’s newest casino, Revel, filed for bankruptcy.
- A Michigan review board says there is no satisfactory plan to solve Detroit’s financial emergency, and many believe that bankruptcy is imminent.
- Town Sports Intl is struggling because consumers simply do not have as much disposable income:
- The Conference Board reports consumer confidence at its lowest level in more than a year.
- iPhone sales are slower than projected, and global cell phone sales in 2012 declined for the first time since the end of the last recession.
- Sears, J.C. Penney, Best Buy, and RadioShack may close hundreds of stores by the end of 2013.
- Wal-Mart leaked that February sales were a total disaster.
- If sequestration goes into effect on March 1, the Pentagon says 800,000 civilian employees face mandatory furloughs, and the CBO says GDP growth will drop by at least 0.6%, reducing job growth by 750,000 jobs.
- Gallup says 65% of Americans believe that 2013 will be a year of economic difficulty; 50% believe the best days of America are behind.
- GDP contracted at an annual rate of 0.1% during Q4, 2012, the first contraction in more than three years.
- Art Cashin says every time GDP growth has fallen this low for an entire year, recession has followed.
- The global economy is starting slowing.
- Corporate insiders are dumping enormous amounts of stock.
- Some of the biggest names on Wall Street warn of economic collapse, including Seth Klarman who says a collapse of the US financial system could happen at any time.
Klarman said the Fed’s relentless interventions and manipulations have left few purchase targets for his hedge fund.
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