Growing banking pressure, a fugazi stock market, and crazy jobs numbers have many of us thinking, “am I still on the right path?” Whose path is it, anyway?
These mounting pressures combined with the fledgling consumer make for a pretty hectic environment, especially for small businesses.
In our anecdotal, boots-on-the-ground experience talking to bankers, we’re hearing about liquidity issues, multiple repo lines, and down margins.
Bank referrals to entrepreneurial factors are up. Bankers are shedding assets and butting up against issues with SBA portfolios (most of which were created in the PPP era). To grasp for liquidity, they’re going out to the market.
Pressure on small business drives banking, and it’s coming to factors. Here’s what else we’ve had on our radar lately.
Taking Stock
At the beginning of last week, Fox featured economist Harry Dent, who’s predicting the bubble will finally pop in 2025. He also says it’ll be worse than 2008.
Dent predicts this “bubble of all bubbles” will include the downfall of big tech stocks, most of which have been propped up by artificial stimulus. Smoke and mirrors, as we know.
He also says that the real estate market is front and center of this whole thing. Dent predicted that housing would see 2012 lows this year, claiming homes are already double or more what they’ll soon be worth.
On the bank side, reports of new problem children are being added to the list. The number of troubled lenders as identified by the FDIC increased from 52 to 63, with assets totaling $82.1 billion.
The back half of 2024 has investors in fear of more failures, and these fears are valid.
Labor Pains
The US labor market is also one to watch. Mixed signals are popping up everywhere, depending on what you read. In April, job openings decreased to 8.06 million, down significantly from the 8.36 million reported in March.
May’s jobs report seemed to indicate a little bit of resilience, with a reported 272,000 added jobs. May’s nonfarm payroll gains bring the three-month average employment gain to 249,000, but JP Morgan reports that pace isn’t likely to bring inflation back down to the Fed’s 2% target.
Job cuts are also reportedly flat, but hiring announcements are at their lowest levels since 2014. In May, U.S. employers announced plans to hire 4,326 workers. That’s the lowest total since December 2023’s announcement of 3,022 hires.
So far in 2024, employers announced plans to hire 50,833 workers. That’s down a whopping 50% decline from the 101,833 announced by this time last year.
So where are all these added “jobs?” It’s important to think by sector and take a look at the foreign born workers numbers. In May, we added 414,000 foreign born workers, but lost 663,000 native born workers. Pretty crazy one-month swing, no?
If you look at where these foreign workers went, BLS statistics point to healthcare, government, and restaurant jobs. And there you have your “gains.”
The Road Less Traveled
What kind of market update would this be if we didn’t touch on Roaring Kitty and the meme stocks roller coaster?
If you steered clear of the hype, maybe you’re feeling like you missed out. Maybe you’re having a case of FOMO while your buddy next to you is feeling more YOLO?
If you missed out on this monster run, sure you might have been wrong this time, but nothing about it makes sense, and the game is rigged.
The implications of the meme stock phenomenon are nothing to sneeze at. If you’re into rabbit holes, take a look at this video on what would happen if the derivatives market collapses. Spoiler alert: it ain’t great.
But back to feeling uncertain about our paths these days.
Joseph Campbell says that you’ll know it’s your path if the road before you disappears. If you’re following a path that’s already been laid out before you, how could it truly be yours? Who put it there?
Being on the hero’s journey is about doing what you feel is indicated and being who you know you need to be. It’s not what everyone else is doing, even if the YOLO crowd looks like they have it all.
On the journey, the stage of Tests, Allies, and Enemies is usually the longest, but it’s also the most critical for the hero’s story. It’s full of character development and figuring out what you’re made of. And you know you’re doing this stage right if you’re learning along the way.
While the Wizard of Oz types continue to pull our strings and try to keep us in the dark, you can choose to shine your light on your instincts that something’s up and make moves from there.
After all, following the crowd is for anyone but real heroes.
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Until next time,