PC Shipments Plunge 20%, Steepest Drop in More Than 20 Years Demand for personal computers fell by the fastest pace in over two decades as back-to-school promotions failed to reignite sales.
(…) “While supply-chain disruptions have finally eased, high inventory has now become a major issue given weak PC demand in both the consumer and business markets.”
Back-to-school sales were weaker than expected despite promotions and price drops aimed at driving purchases, Ms. Kitagawa said. A slowing global economy is also making businesses more cautious in their spending decisions.
The U.S. market for PCs declined by 17.3% in the third quarter, driven by a slump in laptop sales, according to Gartner. (…)
- Retailers Kick Off Black Friday in October Again Target and Walmart are rolling out early deals this week in a bid to attract holiday shoppers, as the retail industry works to unload excess inventory and compete with Amazon.
JPMorgan’s Dimon Expects US Recession in Six to Nine Months
(…) “These are very, very serious things which I think are likely to push the US and the world — I mean, Europe is already in recession — and they’re likely to put the US in some kind of recession six to nine months from now,” Dimon said in an interview Monday with CNBC.
While the US economy is doing well at the moment, a number of indicators and global issues — the impact of surging inflation, interest rates going up more than had been expected, the effects of the Federal Reserve ending quantitative easing and Russia’s war in Ukraine among them — are ringing alarm bells, Dimon said. (…)
“If you make a list of all the prior crises, sitting here we would not have predicted where they came from, though I think you could predict this time that it probably will happen. So if I was out there I’d be very cautious. If you need money, go raise it.”
Dimon said the S&P 500 “may have a ways to go” in its decline, and that “it could be another easy 20%.” The index is down almost 25% this year. “The next 20% will be much more painful than the first,” he told CNBC. “Rates going up another 100 basis points are a lot more painful than the first 100 because people aren’t used to it.”
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John Authers: Why We Still Listen to What Dimon and Bernanke Say
(…) Bernanke’s role in causing the crisis and then attempting to end it will doubtless be debated for decades, and it’s strangely provocative for the Nobel committee to decide to make him the award at this juncture. (…) crucially, it was the Fed’s monetary policy over the preceding decade, in which Bernanke had played a part as a Fed governor, that created the conditions for the crisis in the first place. Bernanke was plainly too slow to see the systemic risks building, particularly in the sub-prime credit market. Having done the job, it’s worth listening to Bernanke’s mild warning in his comments on receiving the award that even if financial problems don’t begin an episode, they can over time “add to the problem, and intensify it — so that’s something, I think, that we really have to pay close attention to.”
(…) The bank that [Dimon] took over on Jan. 1, 2006 — exactly a month before Bernanke took over at the Fed — had done more than any other institution to develop the credit derivatives that were to enable the financial implosion. Somehow, JPMorgan avoided the worst of this, and as the years have gone by it’s gained respect in a way its peers have been unable to do. (…)
That’s why we still care about these men who took over huge jobs at the beginning of 2006. Both are concerned about possible financial accidents. (…)
When financial conditions move this fast, the odds are that something will “break.” The credit market and the still relatively untested mechanism of ETFs are both areas that preoccupy plenty of people. If something went wrong with them, there would be trouble (just as the 2008 implosion was driven by collateralized debt obligations, commercial paper, the repo market, money market mutual funds, and other dull and apparently useful instruments that hadn’t been tested before). (…)
We should heed Bernanke’s Nobel laureate insight: “One of the lessons of my life is, you never know what is going to happen.” (…)
- The IMF and the World Bank, like Jamie Dimon, warned of a rising risk of global recession.
- NABE Reduces Growth Forecasts Again The National Association for Business Economics reduced its forecast for real GDP growth in 2022 to 0.1% (Q4/Q4) from 1.8% expected in May (Q4/Q4). For 2023, expected growth also was reduced to 1.1% from 2.1%.
- Economists cut China’s 2022 GDP outlook to 3.2%: Nikkei survey From 4.1%
- Federal Reserve Vice Chair Lael Brainard articulated a view that the central bank should exercise caution in its rate-hiking campaign. In comments on Monday, Brainard advised the Fed should move forward “deliberately” and in a “data-dependent manner” to gauge how previous rate hikes are working through the economy. This contrasts with strategists at Goldman Sachs, who said it’s too early to price in a dovish pivot from the Fed. Cecilia Mariotti and her team warned two-year yields would need to peak to see a top in Fed hawkishness. (Bloomberg)
Dimon’s “it could be another easy 20%.”
That would be 2880. This was my “worst case, 2700-2900, if a crisis or stagflation” back in June (Desperately Seeking The Low).
On trailing EPS after Q3 (~$223), that would be 12.9x trailing (red line), last seen very briefly in September 2011 and in early 2009.
If EPS drop 12% to $197 in a recession, that would be 14.6x.
The Most Powerful Buyers in Treasuries Are All Bailing at Once From Japanese pensions and life insurers to foreign governments and US commercial banks, where once they were lining up to get their hands on US government debt, most have now stepped away. And then there’s the Federal Reserve, which a few weeks ago upped the pace that it plans to offload Treasuries from its balance sheet to $60 billion a month.
Thousands of rail workers rejected a Biden-backed labor pact, reviving the threat of a strike.
More than 6,600 members of the Brotherhood of Maintenance of Way Employes voted against the tentative agreement compared to 5,100 votes in favor, the division of the International Brotherhood of Teamsters said in a statement Monday. (…) The result signals continued discontent over compensation, working conditions and sick-leave policies among some of the more than 100,000 union-represented workers of US freight railroads. (…)
Four other unions have approved the pact, while seven more are scheduled to vote through mid-November. If one union were to go on strike, others could refuse to cross the picket line, and rail companies could respond in kind with a nationwide lockout. (…)
BTW, “The agreement gives employees a substantial pay raise — after nearly three years of no increases — but doesn’t adequately address many workers’ concerns over workplace conditions, insiders told Axios.
Data: FactSet; Chart: Axios Visuals
Tomato shortage
Price hikes coming for tomatoes, onions and garlic next year. “There’s just not enough water to grow everything that we normally grow,” California Board of Food and Agriculture president Don Cameron told Reuters. California accounts for 95% of the nation’s processed tomato production and 35% of global production, Axios’ Sareen Habeshian reports.
Kraft told Reuters it couldn’t rule out price increases — but can guarantee ketchup and other products on the shelves.
The Southwest is gripped by its worst megadrought since the Dark Ages, Axios’ Andrew Freedman reports. The past 22 years rank as the driest period for the region since at least 800 A.D.
Manwhile
Over Half of Americans Disapprove of Supreme Court as Trust Plummets
Trust that the U.S. Supreme Court is operating in the best interests of the American people has plummeted amid growing perceptions that the justices are partisans just like any other politicians, according to the latest Annenberg Public Policy Center survey, which includes questions tracking the court across more than a decade and a half.
The survey, which was conducted in August, two months after the Supreme Court overturned the 49-year-old Roe v. Wade ruling guaranteeing a constitutional right to abortion, finds that 53% of U.S. adults disapprove of how the court handles its job. The survey also reveals a chasm between the qualities the American people say they value most in judges, such as fairness and impartiality, and the traits they perceive in Supreme Court justices.
In most of the years the policy center has conducted this survey, differences in trust in the court by party affiliation have not been meaningful. That changed in 2022, with a wide gap separating Republicans from Democrats and independents on some attitudes toward the court.
“Whether the perceptions registered in our survey are justified or not, they are worrisome,” said Annenberg Public Policy Center Director Kathleen Hall Jamieson, who has directed the survey since its inception in 2005. “For the court to play its role in our system of government, it is important that it be perceived to be an independent branch that impartially and fairly bases its decisions on the Constitution, the law, and the facts of the case.”
The survey found that:
- Only 39% of U.S. adults approve of how the Supreme Court is handling its job, while 53% disapprove.
- Over half (53%) have little or no trust in the Supreme Court to operate in the best interests of the American people, up 22 percentage points since 2019.
- Trust is driven by party: 70% of Republicans but only 32% of Democrats have a great deal/fair amount of trust in the court.
- If voting for a local or state judge, 90% of respondents say that having judges who rule based on the Constitution, the law, and the facts of the case is essential/very important.
- But when the public is asked whether Supreme Court justices are more likely to set aside their personal and political beliefs to make rulings based on the Constitution, the law, and the facts, just 40% say they are likely to do so.
- Half of Americans (50%) strongly disapprove of the Supreme Court’s Dobbs ruling that the Constitution does not guarantee a right to abortion. (…)
