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January 4-10, 2025

Big news. Very bad labor market data for 2024. Official announcements of layoffs in the US for 2024 are 761.4 thousand. Not counting 2020, this is the peak since 2009:

True, the data on layoffs for December are not the worst, but seasonal adjustment has been working poorly lately. So it is possible that in a few months the data will be revised upwards. However, if you look at the length of the work week, the picture in December has not changed compared to November:

At the same time, hiring plans, on the contrary, have been reduced to the minimum since 2015: https://finance.yahoo.com/news/us-hiring-announcements-2024-lowest-123741478.html

Macroeconomics. As usual, everything is bad in the European Union. Industrial production in France is -1.1% per year, the 7th consecutive monthly minus:

French consumers are at their most pessimistic in 14 months, a historical low:

The Eurozone economic sentiment index is at its lowest since the summer of 2013 (not taking into account Covid yet):

Even more gloomy is confidence in the eurozone industry, which is at a 12-year low, with the 2012 lows already close by:

True, also minus the period of the insidious quarantine.

Leading indicators in Japan are at the bottom since February 2016 (ignoring the Covid slump) – another 0.1% down and there will be a 13-year minimum:

PPI (industrial inflation index) of the eurozone +1.6% per month. Not counting the Covid-war surges in 2021/22, this is a record for all 30 years of observations:

Norway PPI +9.3% p/p, 2-year high:

US annual inflation expectations 3.3%, 14-month high:

And 5-year (also 3.3%) – for 17 years; and only 0.1% from the 30-year peak:

Britain’s massive budget deficit has sparked a massive sell-off in government bonds, pushing 10-year yields to 4.9%, hitting their highest since the summer of 2008:

Rates on 30-year bonds have soared to 5.5%, which is already a record since 1998:

US mortgage rates hit six-month high (6.99%):

Why loan applications have returned to multi-year lows:

Demand for home purchase loans (not refinancing) is particularly weak, at just 2% of the 30-year low set in the fall of 2023:

As the minutes of the U.S. Federal Reserve’s latest meeting show, board members are increasingly concerned that the easing in inflation has stalled and believe it is time to rethink their rate-cutting plans and slow the pace significantly.

Main conclusions. Inflation has clearly gone up. Well, more precisely, official inflation, real inflation was already significantly higher than official figures. Perhaps this is a reaction to some easing of monetary policy by most central banks in the world, perhaps it is a consequence of excessive emission.

There are many different options here, it will be possible to understand for sure after some time has passed. For now, we can only make hypotheses. But this is precisely the specificity of a structural crisis – it breaks out all the time in different places. And again, the monetary authorities have a problem: tightening monetary policy means accelerating the decline of the economy in general and industry in particular. Not tightening – inflation will run up again. Well, there is no good way out until the structural imbalances are resolved at a significantly lower level of global GDP.

And for clarification, the scale of wealth of individual states and the United States as a whole against the background of the G7 countries:

As you can see, the US is much richer than both Canada and Germany (one and a half times), not to mention other countries. And if we take into account the scale of the GDP decline (twice as compared to real GDP, which is about 40% lower than the official one), then we get that as a result the US will have about 25,000 dollars per capita. In today’s dollars, of course.

This, by the way, corresponds to the level of the same Canada and Germany after the crisis. That is, in fact, we are talking about the complete elimination of the emission advantage of the USA. Well, and about the fact that in reality, except for control over the center of emission, the USA no longer has an advantage over some other countries.

However, it is possible that Canada will fall more than 50%. Precisely because it can receive part of the emission income from the USA. But this requires a very careful study of their mutual financial flows. So far, no one has done this work.

However, our readers have enough knowledge to get an answer to this question if necessary. It is not that difficult. In general, understanding the structural nature of the crisis greatly facilitates the construction of an adequate strategy for behavior in crisis markets. So we wish our subscribers a calm weekend and a successful work week!