According to New York Post, “Nearly third of New Yorkers want to move out, fed up with crime, housing costs, poor schools and more” (see New York Post, April 12, 2023). In recent reports I have described how both commercial and residential property prices in American and Canadian urban centers had been declining from admittedly inflated levels The New York Post article continues: “New Yorkers are so worried about crime, sky-high housing costs and struggling schools, 27% percent of state residents said they want to move away in the next five years.”
A stunning 30% of respondents - who also cited inept political leadership and soaring taxes as reasons for wanting to flee - said they already longed to live somewhere else.
Not surprisingly, from the peak New York City’s population is down about 4%, which is far less than San Francisco’s population, which is down by 8%.
According to Bloomberg, “Macau Gaming Revenue Jumps to Three-Year High on Tourism Boom. Macau’s casinos had their best month since the earliest days of the pandemic, with gaming revenue surging 247% in March after Chinese tourists flocked to the gambling hub as the end of Covid Zero sparks a travel boom. While March revenue rose 23% from the previous month, it was still 51% down from the 2019 level.” [The reality is that business around the world is down from the 2018/19 peak.]
United Parcel Services (UPS), which is an economic sensitive company, just announced that it was facing “challenging macro conditions and changes in consumer behavior. The company’s US domestic unit, which makes up about two-thirds of sales, saw parcel volume drop 5.4% even as revenue per package rose 4.8%. Revenue dropped almost 7% at the international business as volume fell 6.2%.”
Confirming the dismal results by UPS, Taiwan’s Ministry of Finance announced that March [2023] exports declined more than expected because, as Bloomberg reported, “global demand for electronics remained weak, suggesting the worst is not yet over for the trade-dependent economy. Overseas shipments fell 19.1% last month from a year earlier.”
If we add all the factors which I discussed above including the poor conditions in the US commercial property market, affordability issues, a global economy, which is contracting, and inflationary pressures, the conclusion could be that stocks would likely decline further in the years to come.
But how about no recession occurring and the global economy further expanding for another 2 to 3 years? [This is not my view since I believe that we are already in recession if recession was properly defined.]
This no-recession scenario would likely be extremely negative for Treasury bonds (yields would rise), but moderately favorable for stocks and for the dollar as interest rate differential with foreign countries would support the US dollar. The other point I would like to make about the “no recession” scenario is that under these economic conditions prices of industrial commodities including especially oil and copper, would bottom out and move up – perhaps sharply.
With respect to Chinese stocks two headlines caught my attention. According to the Wall Street Journal, China's State-Owned Firms Are Suddenly Stars. Furthermore, Bloomberg noted that, “A robust earnings season should help Chinese stocks regain the momentum lost after the initial wave of optimism about the country’s reopening from Covid isolation, according to Goldman Sachs Group Inc.”
I would assume that under strong economic conditions, which would likely be inflationary, precious metals would also perform well whereby it is likely that the more industrial production correlated precious metals such as silver and platinum would outperform gold.
Thomas Sowell is an American economist, historian, social observer, and intellectual who is hated by the progressive left. Sowell is a firm believer in personal responsibility. According to Sowell, “To believe in personal responsibility would be to destroy the whole special role of the anointed, whose vision casts them in the role of rescuers of people treated unfairly by ‘society.’”
I am enclosing with this report an essay by my friend and reader Mark E. Jeftovic (markjr@theBitcoinCapitalist.com) who publishes The Bitcoin Capitalist Letter. Among others Mark writes that, “We’re in the early innings of the next financial crisis.”
With kind regards
Yours sincerely
Marc Faber
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