1/
I've written a thread that will hopefully spark discussion around the #bigflip phenomenon, initially presented by @INArteCarloDoss .
Many consider him the most prescient within the Fintwit community, so if you haven't paid attention yet, now is the time.
Let's dive in!
I've written a thread that will hopefully spark discussion around the #bigflip phenomenon, initially presented by @INArteCarloDoss .
Many consider him the most prescient within the Fintwit community, so if you haven't paid attention yet, now is the time.
Let's dive in!
2/
For several months, consensus in Fintwit was: There are evidence of a recession, FED will pivot soon, demand is stalling, consumers run out of money using the below chart as proof 🤦 and many other predictions that you can look at @CumLordeAwards Join btw, lots of FUN
For several months, consensus in Fintwit was: There are evidence of a recession, FED will pivot soon, demand is stalling, consumers run out of money using the below chart as proof 🤦 and many other predictions that you can look at @CumLordeAwards Join btw, lots of FUN
3/
You may ask:
Is the US in a Recession? Is a Recession coming soon? Will the FED pause? Will they Pivot? Will they keep hiking?
The #bigflip concept helps you navigate within the chaos and keeps you focused on the forces that actually matters.
But which are these forces?
You may ask:
Is the US in a Recession? Is a Recession coming soon? Will the FED pause? Will they Pivot? Will they keep hiking?
The #bigflip concept helps you navigate within the chaos and keeps you focused on the forces that actually matters.
But which are these forces?
4/
On a high level as of this week we observed:
1. Hot LM conditions
2. Resilient Consumer/HH & spending ⬆️
3. Positive GDP growth rate
4. Housing market re-ignition
5. China's Re-opening potentially💪
6. Financial Conditions Loose
7. FED's rhetoric 🕊️
8. $ ⬆️
9. Inflation ?
On a high level as of this week we observed:
1. Hot LM conditions
2. Resilient Consumer/HH & spending ⬆️
3. Positive GDP growth rate
4. Housing market re-ignition
5. China's Re-opening potentially💪
6. Financial Conditions Loose
7. FED's rhetoric 🕊️
8. $ ⬆️
9. Inflation ?
5/
Inflation is high and it hurts mostly the low earners in the economy.
But data suggests that they got some support this year!
1. Minimum wage ⬆️
2. Inflation decelerates faster than wage growth => Disposable income ⬆️
3. Higher levels of quits and hires...
Inflation is high and it hurts mostly the low earners in the economy.
But data suggests that they got some support this year!
1. Minimum wage ⬆️
2. Inflation decelerates faster than wage growth => Disposable income ⬆️
3. Higher levels of quits and hires...
6/
...in lower wage sectors can indicate a tight labor market. Workers are quitting their jobs in search of better opportunities or higher wages, leading to wage growth in that sector. Thinks looking good for the HS graduates too and all minimum wage workers across America!
...in lower wage sectors can indicate a tight labor market. Workers are quitting their jobs in search of better opportunities or higher wages, leading to wage growth in that sector. Thinks looking good for the HS graduates too and all minimum wage workers across America!
7/
But the economy still experiences the effects of the fiscal support in 2020.
The best part? Excess Savings have remained very high since then.
Consumers from ALL income categories have a LOT of room to spend.
Meaning, the FEDs' job is not over yet.
But the economy still experiences the effects of the fiscal support in 2020.
The best part? Excess Savings have remained very high since then.
Consumers from ALL income categories have a LOT of room to spend.
Meaning, the FEDs' job is not over yet.
8/
And here's where the #bigflip starts to shape. Just in January spending picked up again.
And here's where the #bigflip starts to shape. Just in January spending picked up again.
https://twitter.com/INArteCarloDoss/status/1624142210412281856?s=20&t=9L2XXOrYpC23qepOtRr4TQ
9/
There's always lag involved, but it will be very interesting to see the effects on higher consumer confidence & spending in the GDP growth rate. And ofc how this will affect the inflation rate.
There's always lag involved, but it will be very interesting to see the effects on higher consumer confidence & spending in the GDP growth rate. And ofc how this will affect the inflation rate.
10/
Specifically at the stickiest and quite significant parts of the inflation problem like the Services sector & Core Services Ex-Shelter. Not to mention Rent inflation which goes up like there is no tomorrow.
FEDs' job is not over yet.
Bloomberg charts by @M_McDonough
Specifically at the stickiest and quite significant parts of the inflation problem like the Services sector & Core Services Ex-Shelter. Not to mention Rent inflation which goes up like there is no tomorrow.
FEDs' job is not over yet.
Bloomberg charts by @M_McDonough
11/
Used car sector picked up as well in January.
People have money to spend and jobs to support their spending.
JPowell was talking about anecdotal data the other day. Well, here we got both to support that people still have excess spending capacity.
Used car sector picked up as well in January.
People have money to spend and jobs to support their spending.
JPowell was talking about anecdotal data the other day. Well, here we got both to support that people still have excess spending capacity.
https://twitter.com/GuyDealership/status/1622963119390703617?s=20&t=-2hynco_sjzVEY8K1NMDgQ
12/
FCI loose despite the rate hikes cycle. Is this suppose to be deflationary?🧐
You see where I'm going with this? #bigflip
FCI loose despite the rate hikes cycle. Is this suppose to be deflationary?🧐
You see where I'm going with this? #bigflip
13/
How can the LM contract in such conditions?
How can the LM contract in such conditions?
https://twitter.com/INArteCarloDoss/status/1624063503861522434?s=20&t=9L2XXOrYpC23qepOtRr4TQ
14/
And I won't even mention the underestimated China reopening.
This is a great thread to illustrate the momentum of their economy.
And I won't even mention the underestimated China reopening.
This is a great thread to illustrate the momentum of their economy.
https://twitter.com/genemaIIF/status/1622150633146183680?s=20&t=-2hynco_sjzVEY8K1NMDgQ
15/
China latest data from the Man. side. I don't think I need to comment on many things here. It's clear.
The purple shows the China Manufacturing Supplier Delivery Time Index
Higher number less days are needed for the deliveries.
US-China trade is on the rise.
China latest data from the Man. side. I don't think I need to comment on many things here. It's clear.
The purple shows the China Manufacturing Supplier Delivery Time Index
Higher number less days are needed for the deliveries.
US-China trade is on the rise.
16/
Now here's where the #bigflip gets really interesting.
If inflation re-emerges, FEDs' rhetoric & MP, will have to turn super hawkish again.
More hawkish FED => Dollar ⬆️
With imports from China at all time high isn't that an additional highly inflationary pressure? 🤔
Now here's where the #bigflip gets really interesting.
If inflation re-emerges, FEDs' rhetoric & MP, will have to turn super hawkish again.
More hawkish FED => Dollar ⬆️
With imports from China at all time high isn't that an additional highly inflationary pressure? 🤔
17/
Lastly, I will use one of @INArteCarloDoss tweets again to illustrate the #bigflip and that things can still FLIP.
BIG time!
So celebrating too quickly on inflation or assume the FED pivots will likely be a mistake at this point.
Lastly, I will use one of @INArteCarloDoss tweets again to illustrate the #bigflip and that things can still FLIP.
BIG time!
So celebrating too quickly on inflation or assume the FED pivots will likely be a mistake at this point.
https://twitter.com/INArteCarloDoss/status/1616420109937152003?s=20&t=-2hynco_sjzVEY8K1NMDgQ
18/
I hope you find this thread helpful!
I learned a lot these past few months. Special thanks to @roaringmeows
The Alpha there is next level and the entry fee goes to a great cause every time! 🙏Make sure to check it out.
Would love to hear feedback & Thanks for reading it!
I hope you find this thread helpful!
I learned a lot these past few months. Special thanks to @roaringmeows
The Alpha there is next level and the entry fee goes to a great cause every time! 🙏Make sure to check it out.
Would love to hear feedback & Thanks for reading it!
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