The Uncomfortable Truth About The "Soft Landing" Scenario

There has been no shortage of market drama in 2022. The Nasdaq is down 33% so far this year, and the SP500 is down almost 20% so its safe to say investors are feeling the pain. The 3 letter word FUD is now the norm, Fear, Uncertainty and Doubt is now the reality of investing in 2022.  

But hey, it doesn't stop Jerome Powell and Janet Yellen to say a soft landing is possible and that a recession is not going to be that bad. In this Patreons newsletter, I will bring data to prove to you that these claims are total BS and that a hard landing is not only happening, it already started, you just don't see it yet.

U.S. retail and food services sales came in at $689.44 billion in November, according to the seasonally adjusted Census Bureau preliminary estimate. The decline came after an increase in October which made every politician claim that the recession is cancelled.

Sales at furniture and home furnishing stores dropped in the biggest monthly decline in all retail categories excluding gas stations, bars and restaurants. Monthly sales of building material declined, sales of motor vehicles and parts dealers fell as well. 

Read this carefully guys: "Disposable income growth has struggled to keep up with inflation, and it's only a matter of time before this headwind strengthens — the recent pace of job and wage gains cannot persist. And, relatively high interest rates will make consumers less willing to use credit cards to maintain their spending," Oren Klachkin, lead U.S. economist for Oxford Economics, said 3 days ago!

I made a video 2 weeks ago talking about savings rate as a percentage of disposable personal income. Just 2 years ago the ratio was 14, right now its at 2.3, which is not just 7 times smaller than what we had in late 2020, its also the lowest figure we have seen since November 2007, just before the 2008 crash.

How about the PMI? The JP Morgan Global Composite Purchasing Managers’ Index (PMI) covering 14,000 companies in 40 countries, and it accounts for 98% of global manufacturing. According to the latest PMI data, we are headed into a major recession. The numbers show that the economic downturn is not only here, it is actually getting worse.  

Mortgage Buydowns are back as well, more than 75% of homebuilders nationwide are using mortgage buydowns to attract more homebuyers, which is yet another sign that the market is not doing well. 

While all this is going on, the U.S. mutual funds and ETF are getting more money than ever. Mutual funds and ETFs are VERY popular among individual investors, and they have attracted more than $100 billion in net inflows in 2022, one of the highest amounts on record, all while the economy is about to hit a brick wall and while smart money is getting out. 

Please consider my warning. Tom.