Welcome to our #118 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we focus on investor Michael Burry’s warning that a consumer recession in the US is looming.
And will the recent rate hikes slow the rate of inflation?
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And you can review the news in brief so you stay on top of global financial, economic and investing trends.
I hope you enjoy this week’s newsletter.
Until next week,
Jana
'Big Short' investor Michael Burry warns of looming consumer recession (US)
Will raising interest rates slow inflation?
In 2008, Michael Burry, a hedge fund manager famed for forecasting the financial crisis, has warned of a consumer recession and more earnings trouble (US), as reported by Bitcoin.com.
Investor and founder of investment firm Scion Asset Management, warned on Twitter:
‘US Personal Savings fell to 2013 levels, the savings rate to 2008 levels – while revolving credit card debt grew at a record-setting pace back to the pre-Covid peak despite all those trillions of cash dropped in their laps. Looming: a consumer recession and more earnings trouble’.
Michael Burry is profiled in ‘The Big Short,’ a book by Michael Lewis about the mortgage crisis. He is best known for being able to foresee and profit from the U.S. subprime mortgage crisis (2007-2010).
He shared two tweets: the first shows a sharp decline in U.S. personal savings. The other shows a steep rise in consumer credit outstanding.
Contrary to what is being reported in mainstream media, inflation (arguably) is not the problem, but consumer debt is.
Morever, the recent interest rate hikes (demand-side monetary policy) is unlikely to slow inflation.
In a recent Bloomberg interview, Larry Finks, CEO of BlackRock, said that he does not believe the US Federal Reserve has the tools to fight inflation.
Why? Because inflation is being driven by supply shocks not consumer demand.
Due to the constraints in global supply chains, production costs have gone up, which in turn drives up consumer prices.
Interest rate hikes, therefore do not impact supply chains.
What next? (Re) listen
Money printing, rising inflation and what this means for your money, with Shaun Richards
Rising inflation, slower economic growth and why UK investment is key, with Vicky Pryce.
News in Brief
Financial news
Stocks resume weekly losses with Nasdaq 100 drops 1.1% this week. Market cap of FANGMAN gained $600bn this week.
Jamie Dimon says there's a ‘hurricane’ coming for US economy and ‘you better brace yourself.’ Dimon attributes his pessimism to two factors: Fed’s quantitative tightening in financial markets & ramifications of Ukraine war on global commodity markets.
The European Central Bank (ECB) to the rescue? Italy's yields keep rising. 10 year jump to 3.4%, highest since 2018. 10 year German yields jump to 1.24%, highest since 2014.
ECB is expected to raise its key interest rate by 50 basis points during Q3, according to a new forecast by Deutsche Bank economists that breaks w/consensus of peers anticipating only smaller moves. EU inflation is now at 8.1%.
Turkey back in the inflation age of the 1990s. CPI has jumped to 73.5%, core CPI jumped to 56%, and PPI to 132.2%.
Germany might again become the ‘sick man of Europe’, reprising a role from two decades ago as policies that kept factories humming turn sour. Only Estonia is expected to post slower growth in 2022. Economists starting to predict a contraction this quarter.
Meta falls 3%+ as Sheryl Sandberg is stepping down as Meta's COO after 14 years.
Crypto: bitcoin, ethereum, DeFi & NFTs
Bitcoin shows signs of bottoming out after 9 weeks of losses. The $29,500 level is acting as major support for the world’s largest cryptocurrency. (See the current price of bitcoin & ethereum).
Axie Infinity's AXS token rallies 19% amid Builders Program launch. Sky Mavis, the indie studio behind the Axie Infinity play-to-earn game, has announced the first 12 projects joining its Builders Program.
Elon Musk says SpaceX will accept Dogecoin—and DOGE predictably pumps.
Weekly NFT sales fall 13% to $167 million amid crypto bear market.
Prada is joining top luxury brands in Web3 with Ethereum NFTs. It's releasing 100 NFTs to go along with its Cassius Hirst Timecapsule apparel drop.
Fidelity Digital Assets to double headcount by end of year. About half of the 210 open roles focus on client services amid the company’s planned expansion.
Crypto.com’s 3rd annual Digimentality Report with The Economist is out.
‘Fear and Favouring of Digital Currency’ explores attitudes on crypto and shows how the pandemic spurred on the adoption of digital payments. Find out what consumers, executives, and institutional investors think.
Coffee Break? Read This
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