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Say When.

Updated: Jul 20, 2023

Domestic airline fares for summer are averaging more than $400 a round trip, 24% higher than this time in 2019 before the pandemic and a whopping 45% higher than a year ago, according to travel-data firm Hopper.


And unemployment was 3.6% in May, or just slightly above the pre-pandemic level, which was the lowest in 50 years, and the number of job vacancies is about double that of workers looking for employment.


Suffice it to say that we are deeply concerned that the economy is slowing much faster than those who are being fooled by full planes and tight labor markets want to believe.


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Last week was the 10th red week of the past 11 for the S&P 500, and we officially entered a bear market last Monday.


This is the 20th bear market of the past 140 years. The average peak to trough bear decline is 37.3%, and the average duration 289 days. According to BofA, that would mean today’s bear market would end on Oct 19th, 2022 with the S&P 500 at 3000.


That happens to jive pretty closely with what we’ve been writing about here in Insights since January. At this point, we’re advising clients to expect the Fed to hike rates all the way into next year but for the stock market to begin its recovery around the time of the mid-term elections.


As for rate hikes, here’s a summary of the Street’s Fed rate hike guesses for the July meeting:


Barclays +75bps

Deutsche Bank +75bps

Goldman Sachs +75bps

JPMorgan +75bps

Jefferies +75bps

Nomura +75bps

Societe Generale +75bps

TD +75bps

Wells Fargo +75bps

BNP +50bps

BofA +50bps

Citi +50bps

Credit Suisse +50bps

HSBC +50bps

Morgan Stanley +50bps


Goldman now expects a 75bp hike at the July meeting, 50bp at September, 25bp at November, and 25bp at December. And yet Jerome Powell still has a severe case of Volcker envy-- “Inflation developments warranted a bigger hike today,” he said last Wednesday after the largest rate increase in 28 years.


Yeah, but Big Paul hiked five whole points.



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So, when we see mention of the strong dollar, we must remember that this is only in relation to other fiat currencies. The dollar is not at all strong, and it is not getting stronger. We see it every single day in the prices of everything, which is why the previous week’s CPI number was so horrible.


With the US economy on the verge of recession, with inflation topping, with the housing market about to crack, the last pillar holding up the US economy (and preventing the Fed from continuing its tightening plans beyond the summer), the job market, has just hit a brick wall as revealed by real-time indicators.


Indicators of labor demand have already softened in recent months, with job openings declining 4% in April and the monthly pace of payroll growth slowing to roughly 400k from 600k in the winter, but as even the most optimistic economists will admit, demand needs to cool meaningfully further to affect inflation.


Those numbers are lagging indicators that the government pretty much always ends up revising anyway. However, we saw some meaningful real-time numbers last week as mass layoffs sent shockwaves through multiple industries. Here’s a short list of layoffs so far this month:


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We predict a long hot summer of increasing unemployment and ongoing inflation, which sets the stage for enormous civil unrest. If you take a broke and hungry citizenry and throw in the five cases currently in front of the Supreme Court that are due for rulings in the next two weeks, things start to look extremely messy. These five closely watched cases include one each on abortion, gun control and climate regulation and two on religion. Unless the court extends its term into early July, all five decisions are to be announced this month.


It seems likely that the right will prevail in every single one of these cases just as it seems likely that the right will prevail in huge fashion in the November mid-terms. Investors may already be exhausted, but we feel pretty certain that some things are going to get lit on fire this summer.


So, stay safe out there, and don’t let your cash burn a hole in your pocket. When it’s time to buy stocks, there will be an abundance of opportunities, and we’ll be your huckleberry. …We’re just waiting for this Johnny Ringo economy to say when.








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