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Small Business Bankruptcies Surge In 2023, Five Reasons Why

Small Business Bankruptcies Surge In 2023, Five Reasons Why

Authored by Mike Shedlock via,

Small business bankruptcies are at…



Small Business Bankruptcies Surge In 2023, Five Reasons Why

Authored by Mike Shedlock via,

Small business bankruptcies are at a much higher pace than any year since the Covid pandemic...

Small business bankruptcies from the American Bankruptcy Institute via the Wall Street Journal

The Wall Street Journal reports There’s No Soft Landing for These Businesses

Nearly 1,500 small businesses filed for Subchapter V bankruptcy this year through Sept. 28, nearly as many as in all of 2022, according to the American Bankruptcy Institute.

Bankruptcy petitions are just one sign of financial stress. Small-business loan delinquencies and defaults have edged upward since June 2022 and are now above prepandemic averages, according to Equifax.

An index tracking small-business owners’ confidence ticked down slightly in September, driven by heightened concerns about the economy, according to a survey of more than 750 small businesses. Fifty-two percent of respondents believed that the country is approaching or in a recession, said the survey by Vistage Worldwide, a business-coaching and peer-advisory firm.

Robert Gonzales, a bankruptcy attorney in Nashville, said he’s now getting four times as many calls as he did a year ago from small businesses considering a bankruptcy filing.

“We are just at the front end of the impact of these dramatically higher interest rates,” Gonzales said. “There are going to be plenty of small businesses that are overleveraged.”

Five Reasons for Surge in Bankruptcies

  • Rising Interest Rates

  • Surging Wages

  • Tighter Bank Credit

  • Overleverage

  • Work-at-Home Curtailing Demand

Fed Rate Interest Rate Hike Expectations Are Still Higher for Even Longer

The Fed has hiked interest rates to 5.25% to 5.50%. It’s the highest in 22 years.

And Fed Rate Interest Rate Hike Expectations Are Still Higher for Even Longer

Surge in Wages

Minimum wages have surged. Unions are piling on. Small businesses have to offer prevailing wages or they cannot get workers.

In California, Minimum Wage for Fast Food Workers Jumps 30% to $20 Per Hour. Governor Gavib Newsom called it a “big deal”, I responded:

A Big Deal Indeed, Expect More Inflation

Yes, governor, this is very big deal. It will increase the cost of eating out everywhere.

The bill Newsom signed only applies to restaurants that have at least 60 locations nationwide — with an exception for restaurants that make and sell their own bread, like Panera Bread (what’s that exception all about?)

Nonetheless, the bill will force many small restaurants out of business or they will pony up too.

30 Percent Raise Coming Up!

If McDonalds pays $20, why take $15.50 elsewhere?

The $4.50 hike from $15.50 to $20 is a massive 30 percent jump.

Expect prices at all restaurant to rise. Then think ahead. This extra money is certain to increase demands for all goods and services, so guess what.

Other states will follow California.

Biden Newsome Tag Team

Biden’s energy policies have made the US less secure on oil, more dependent on China for materials needed to make batteries, fueled a surge in inflation, and ironically did not do a damn thing for the environment, arguably making matters worse.

See  The Shocking Truth About Biden’s Proposed Energy Fuel Standards for discussion of the administration’s admitted impacts of Biden’s mileage mandates.

Newsom is doing everything he can to make things even worse.

The tag team of Biden and Newsom is an inflationary sight to behold.

Bank Credit and Over-Leverage

In the wake of the failure of Silicon Valley Bank, across the board small regional banks are curtailing credit.

The regional banks over-leveraged on interest rate bets. And businesses overleveraged too, getting caught up in work-from-home environments that curtailed demand for some goods and services.

The bankruptcies will fall hard on the regional banks.

Add it all up and things rate to get worse.

Tyler Durden Mon, 10/02/2023 - 15:40

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Key Events This Busy Week: Retail Sales, Housing, Earnings And Torrent Of Fed Speakers Including Powell

Key Events This Busy Week: Retail Sales, Housing, Earnings And Torrent Of Fed Speakers Including Powell

With earnings season now having started…



Key Events This Busy Week: Retail Sales, Housing, Earnings And Torrent Of Fed Speakers Including Powell

With earnings season now having started in earnest, and with traders closely following every development in the middle east, it looks like it will be a busy week but without an obvious focal point. There is a barrage of Fed speak before their media black-out at the weekend but Powell’s speech at the Economic Club of New York on Thursday will be the highlight. DB's Jim Reid details who is speaking in the end of the day-by-day calendar below, but DB’s Brett Ryan’s week ahead gives a bit more detail of their various biases here (available to pro subs).

The key data point will likely be US retail sales (tomorrow) which we expect to decline (-0.1%) after two strong months, but we also have a lot of US housing data with the NAHB (tomorrow), starts/permits (Wednesday) and existing home sales (Thursday). US weekly jobless claims (Thursday) corresponds to payrolls survey week so will be used to fine tune estimates.

Staying with the US, earnings season will start to get into gear with the highlights being Bank of America, Goldman Sachs and Johnson and Johnson (tomorrow), Morgan Stanley, Tesla, Netflix, ASML, and Procter & Gamble (Wednesday), TSMC (Thursday) and American Express (Friday). Tesla and Netflix probably have the most ability to move macro markets given their size.

China sees its monthly activity dump on Wednesday where signs of a turnaround will be scrutinized. This is the same day as UK inflation comes out (preview here). The UK labour market data tomorrow is interesting as unemployment is now 0.8pp above the lows at 4.3% and has increased more than anywhere else in the DM world. UK retail sales is out on Friday.

In Europe we have the ZEW survey in Germany (tomorrow) and the PPI report on Friday, with retail sales for France also due that day. With regards to German PPI it's expected to hit -14.2% YoY from -12.6% the previous month so crazy numbers historically after peaking at an even more crazy +45.8% YoY just over a year ago.

In Japan the national CPI on Friday will be the last before the October 31st BoJ meeting where YCC is likely in our opinion to be abandoned. So an important print.

* * *

Courtesy of DB, here is a day-by-day preview of the week ahead

Monday October 16

  • Data: US October Empire manufacturing index, Japan August capacity utilization, Italy August general government debt, Eurozone August trade balance, Canada August manufacturing sales
  • Central banks: Fed's Harker speaks, ECB's Villeroy speaks, BoE's Pill and Woods speak, BoC business outlook, China 1-yr MLF rate

Tuesday October 17

  • Data: US October New York Fed services business activity, NAHB housing market index, September retail sales, industrial production, capacity utilization, August total net TIC flows, business inventories, UK September jobless claims change, August average weekly earnings, unemployment rate, Japan August Tertiary industry index, Germany October Zew survey, Canada September CPI, housing starts, August international securities transactions
  • Central banks: Fed's Williams, Bowman and Barkin speak, ECB's Guindos, Holzmann, Centeno and Knot speak, BoE's Dhingra speaks
  • Earnings: Johnson & Johnson, Bank of America, Lockheed Martin, Goldman Sachs, Prologis, Albertsons, United Airlines Holdings

Wednesday October 18

  • Data: US September housing starts, building permits, China Q3 GDP, September industrial production, retail sales, property investment, UK September CPI, RPI, PPI, August house price index, Italy August trade balance, Eurozone August construction output
  • Central banks: Fed's Beige Book, Waller, Williams, Bowman, Cook and Harker speak
  • Earnings: Tesla, Procter & Gamble, ASML, Netflix, Abbott Laboratories, SAP, Morgan Stanley, Lam Research, Volvo, Deutsche Boerse, Alcoa

Thursday October 19

  • Data: US October Philadelphia Fed business outlook, September leading index, existing home sales, initial jobless claims, China September new home prices, Japan September trade balance, Italy August current account balance, France October manufacturing and business confidence, ECB August current account, Canada September raw materials and industrial product price index
  • Central banks: Fed's Powell, Jefferson, Goolsbee, Barr, Bostic and Harker speak
  • Earnings: TSMC, Philip Morris, Blackstone, Union Pacific, AT&T, Intuitive Surgical, CSX, Freeport-McMoRan, Truist Financial, Nokia, American Airlines

Friday October 20

  • Data: China 1-yr and 5-yr loan prime rates, UK October GfK consumer confidence, September retail sales, public finances, Japan September national CPI, Germany September PPI, France September retail sales, EU27 September new car registrations, Canada August retail sales
  • Central banks: Fed's Logan, Mester and Harker speak
  • Earnings: American Express, Schlumberger

* * *

Finally, looking at just the US, here is Goldman's preview noting that the key economic data releases this week are the retail sales report on Tuesday, and the jobless claims and Philadelphia Fed manufacturing index reports on Thursday. The Beige Book for the November FOMC meeting period will be released on Wednesday. There are many speaking engagements by Fed officials this week including Chair Powell, Vice Chair Jefferson, Vice Chair for Supervision Barr, Governors Bowman, Waller, and Cook, and Presidents Harker, Williams, Barkin, Goolsbee, Bostic, Logan, and Mester.

Monday, October 16

  • 10:30 AM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Fed President Patrick Harker will speak on the economic outlook at the Mortgage Bankers Association's Annual Convention and Expo in Philadelphia. Speech text is expected. On October 13, Harker said “absent a stark turn in what I see in the data and hear from contacts, both in one-on-one conversations and in forums like this, I believe that we are at the point where we can hold rates where they are.”
  • 04:30 PM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Fed President Patrick Harker will speak on the economic outlook at a virtual event hosted by the National Association of Corporate Directors. Speech text and a Q&A are expected.

Tuesday, October 17

  • 08:00 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will moderate a discussion with Intel CEO Pat Gelsinger at the Economic Club of New York.
  • 08:30 AM Retail sales, September (GS +0.6%, consensus +0.3%, last +0.6%); Retail sales ex-auto, September (GS +0.4%, consensus +0.2%, last +0.6%); Retail sales ex-auto & gas, September (GS +0.3%, consensus +0.1%, last +0.2%);  Core retail sales, September (GS +0.1%, consensus -0.1%, last +0.1%): We estimate core retail sales edged up 0.1% in September (ex-autos, gasoline, and building materials; mom sa). Our forecast reflects a late-month pickup in spending following sequential weakness in the first half of the month. We also estimate a 0.6% rise in headline retail sales, reflecting increases in auto, gasoline, and restaurant sales.
  • 09:15 AM Industrial production, September (GS +0.2%, consensus flat, last +0.4%); Manufacturing production, September (GS +0.2%, consensus -0.1%, last +0.1%); Capacity utilization, September (GS 79.7%, consensus 79.6%, last 79.7%): We estimate industrial production increased 0.2%, as strong motor vehicle and oil and gas production outweigh weak mining production. We estimate capacity utilization was unchanged at 79.7%.
  • 09:20 AM Fed Governor Bowman speaks: Fed Governor Michelle Bowman will speak about responsible innovation in money and payments at the Harvard Law School Program on International Financial Systems Roundtable on Central Bank Digital Currency. Speech text and audience Q&A are expected. On October 11, Governor Bowman said “inflation remains well above the FOMC’s 2 percent target. Domestic spending has continues at a strong pace, and the labor market remains tight. This suggests that the policy rate may need to rise further and stay restrictive for some time to return inflation to the FOMC’s goal.”
  • 10:45 AM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Tom Barkin will speak on the economic outlook to the Real Estate Roundtable in Washington. An audience Q&A is expected.

Wednesday, October 18

  • 08:30 AM Housing starts, September (GS +11.0%, consensus +7.6%, last -11.3%); Building permits, September (consensus -5.9%, last +6.8%)
  • 12:00 PM Fed Governor Waller speaks: Fed Governor Christopher Waller will speak about the economic outlook at the European Economics and Financial Centre's Distinguished Speaker Seminar. Speech text and both audience and moderator Q&A are expected.
  • 12:30 PM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will participate in a moderated discussion at Queens College. A moderated Q&A is expected.
  • 01:00 PM Fed Governor Bowman speaks: Fed Governor Michelle Bowman will deliver welcoming remarks at a Fed Listens event at the Richmond Fed. Speech text is expected.
  • 01:00 PM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Tom Barkin will deliver opening remarks and speak at a Fed Listens event hosted by the Richmond Fed. Speech text is expected.
  • 02:00 PM Beige Book, November FOMC meeting period: The Fed’s Beige Book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. The Beige Book for the September FOMC meeting period noted that overall economic activity was modest during July and August. Consumer spending on tourism was stronger than expected, and some districts’ reports suggested that consumers may have exhausted excess savings. Manufacturing contacts in 7 districts noted improved supply chains and ability to meet existing orders. Nearly all districts reported that the inventory of homes for sale remained constrained. In this month’s Beige Book, we look for anecdotes related to growth, sentiment, and the evolution of labor market tightness and inflationary pressures.
  • 03:15 PM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Fed President Patrick Harker will speak about workforce challenges at an event titled "People, Possibilities, Practice: Designing a Better Future for Workers" at the Philadelphia Fed. Speech text is expected.
  • 06:55 PM Fed Governor Cook speaks: Fed Governor Lisa Cook will speak about the evolution of the Fed's mandate at the Louis E. Martin Awards Ceremony at the 2023 Future of Black Communities Summit. Speech text is expected.

Thursday, October 19

  • 08:30 AM Initial jobless claims, week ended October 14 (GS 205k, consensus 214k, last 209k); Continuing jobless claims, week ended October 7 (GS 1,725k, consensus 1,700k, last 1,702k)
  • 08:30 AM Philadelphia Fed manufacturing index, October (GS -3.5, consensus -7.0, last -13.5); We estimate that the Philadelphia Fed manufacturing index picked up by 10pt to -3.5 in October, reflecting the rebound in East Asian industrial activity and upward convergence toward other manufacturing surveys.
  • 09:00 AM Fed Vice Chair Jefferson speaks: Fed Vice Chair Philip Jefferson will deliver welcoming remarks at the Fed's 18th Central Bank Conference on the Microstructure of Financial Markets. Speech text is expected. On October 9, Vice Chair Jefferson said “my view is that the FOMC is in a position to proceed carefully in assessing the extent of any additional policy firming that may be necessary.”
  • 10:00 AM Existing home sales, September (GS -5.5%, consensus -4.0%, last -0.7%)
  • 12:00 PM Fed Chair Powell speaks: Fed Chair Jerome Powell will speak at the Economic Club of New York. Speech text and moderated Q&A are expected. On September 20, Chair Powell said “the fact that [the Committee] decided to maintain the policy rate at [the September FOMC] meeting doesn’t mean that we’ve decided that we have or have not at this time reached that stance of monetary policy that we’re seeking.”
  • 01:20 PM Chicago Fed President Goolsbee speaks: Chicago Fed President Austan Goolsbee will participate in a moderated Q&A at the Wisconsin Manufacturers & Commerce Business Day. A moderated Q&A is expected. On October 5, President Goolsbee said “on the real side I feel like nothing has happened so far that is convincing evidence that we are off the golden path. I still feel like this is our goal and it’s still possible.”
  • 01:30 PM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will speak about stress testing at the 2023 Federal Reserve Stress Testing Research Conference at the Boston Fed. The event will be livestreamed. Speech text and moderated Q&A are expected.
  • 04:00 PM Atlanta Fed President Bostic (FOMC non-voter) speaks: Atlanta Fed President Raphael Bostic will speak on the role of policy in addressing inequality at the New School University Center. Speech text and audience Q&A are expected. On October 11, President Bostic said “today, I don’t think we need to do anything more in terms of interest rates.”
  • 05:30 PM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Fed President Patrick Harker will speak on the economic outlook at the Chartered Financial Analyst Society Philadelphia 80th Anniversary Celebration. Speech text and audience Q&A are expected.
  • 06:30 PM Dallas Fed President Logan (FOMC voter) speaks: Dallas Fed President Lorie Logan will speak at a Money Marketeers of New York University event. Audience and moderated Q&A are expected. On October 9, President Logan said “if term premiums rise, they could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening to achieve the FOMC’s objectives.”

Friday, October 20

  • 09:00 AM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Fed President Patrick Harker will speak on the economic outlook at the Risk Management Association Philadelphia Chapter Meeting. Speech text and audience Q&A are expected.
  • 12:15 PM Cleveland Fed President Mester (FOMC non-voter) speaks: Cleveland Fed President Loretta Mester will speak on the outlook for the economy and monetary policy at the Manhattan Institute for Policy Research. Speech text and audience Q&A are expected. On October 3, President Mester said “if the economy looks the way it did at the next meeting, similar to the way it looked at our recent meeting, I would do the further rate increase… I probably favor going again, but again, we’re going to have to wait and see how the economy evolves.”

Source: DB, Goldman, BofA

Tyler Durden Mon, 10/16/2023 - 10:15

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“Darkness On The Edge Of Town”

"Darkness On The Edge Of Town"

Authored by Jim Quinn via The Burning Platform blog,

Poor man wanna be rich
Rich man wanna be king
And a…



"Darkness On The Edge Of Town"

Authored by Jim Quinn via The Burning Platform blog,

Poor man wanna be rich
Rich man wanna be king
And a king ain’t satisfied
‘Til he rules everything

Badlands – Springsteen

I know Springsteen has aged into a far-left establishment shill who fell for the Covid scam, got his jabs and boosters, and is now clearly vaxx injured, as he had to cancel his world tour because of “illness”. During the covid scamdemic he made his audiences prove they were vaxxed, and then had to cancel multiple concerts because band members tested positive for covid. He and Neil Young, the anti-establishment bad boys during the early 1970’s, are now a laughing-stock to any critical thinking person who didn’t buy the government and media propaganda about a non-lethal flu bug.

Be that as it may, Springsteen’s 1975 album – Darkness on the Edge of Town – is my favorite, probably because most of the songs are dark and angry, matching my personality. Times in this country were not good in 1975. A president resigned over Watergate. Inflation was raging due to central bank and government incompetence.

The OPEC oil embargo due to the U.S. support for Israel created supply shortages and long lines at gas stations across the badlands of America. It seems support for Israel hurting America has been a constant theme over the last 50 years. As a 12 year old kid, I remember waiting in those gas lines with my dad. There were no smart phones to kill the time, maybe just my latest edition of Sports Illustrated to read.

The four lines above from Badlands pretty much sum up how the world works and how it has always worked. Everyone on this earth has 80 to 100 years, if they are lucky, to make their mark. We know a virtuous decent person would just want to work hard, earn a fair wage, marry, raise honest upstanding children, teach them morals, be a benefit to their community, and leave the world a better place than when they entered. But we know the forces of evil will not allow this path for most people.

The American Dream was a glorious fantasy, to keep the masses sedated and malleable, as those behind the scenes, pulling the strings of society, as documented by Edward Bernays in his 1928 book Propaganda, would never allow the dream to be realized by most.

“The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.” – James Truslow Adams – The Epic of America – 1931

The American Dream has always been a fallacy, with a brief period during the 1950s and 1960s where some of the poor were able to elevate their status to the middle class. Since the 1970s, the poor have gotten poorer, even though they have been convinced by their overlords they are richer through the use of seemingly limitless debt. Driving expensive sports cars and living in McMansions while up to your eyeballs in debt is not getting richer. Buying shit you don’t need with one of your ten credit cards, to keep up with the Joneses, while paying 24% interest on the balance is not getting richer. The only ones getting richer are the already rich bankers.

There are many rich men in this world, and they aren’t satisfied with those riches. They want to use their wealth to gain more wealth, power and control over others. Life is a game to many of these psychopaths, and they want to win at all costs. Millionaires want to be billionaires. Billionaires want to be the wealthiest billionaire. And these soulless greedy accumulators of wealth want to be king and rule everything. Gates and Soros are poster boys for Springsteen’s description. They do not want to build a better world. They want to remake the world, unleashing a darkness that will engulf and destroy the planet. These are evil men who have a vast army of equally evil men working to fulfill their satanic agenda.

The gathering gloom you are feeling is real. As most people go about their daily lives, rooting for their football teams, posting drivel on facebook and twitter, buying tickets to Taylor Swift’s concert movie, staring at their i-gadget prisons, and wondering why their standard of living keeps going down, psychopaths in suits are pushing the world toward World War 3. Time to get right with the lord and be prepared for the worst. There truly is a darkness on the edge of town and it is bearing down on us like a locomotive. The dream is real and it should be waking you up at night with a fear so real. Welcome to the badlands.

Talk about a dream
Try to make it real
You wake up in the night
With a fear so real
You spend your life waiting
For a moment that just don’t come
Well, don’t waste your time waiting

Springsteen – Badlands

Tyler Durden Mon, 10/16/2023 - 10:45

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British pound eyes UK employment release

UK releases employment data on Tuesday BoE’s Bailey says rate decisions will be tight The British pound has started the week in positive territory. In…



  • UK releases employment data on Tuesday
  • BoE’s Bailey says rate decisions will be tight

The British pound has started the week in positive territory. In the European session, GBP/USD is trading at 1.2166, up 0.17%. The pound had a rough week, falling by 0.74% after a hotter-than-expected US inflation report saw the US dollar climb sharply.

It’s a busy week in the UK, with employment data on Tuesday, followed by inflation on Wednesday and retail sales on Friday. The Bank of England will be watching closely, with the inflation report being the key release of the three. The BoE meets next on November 2nd after pausing at the September meeting. The decision marked the first time after 14 consecutive rate increases that the BoE held rates. The move was a close call, with a 5-4 vote in the Monetary Committee Policy.

UK job growth, wages expected to ease

The BoE’s rate hikes have cooled the economy and job growth has dropped off sharply. Job creation fell by 207,000 in the three months to July, the sharpest job decline since September 2020. This sharp downtrend is expected to continue, with an estimate of a loss of 195,000 for the three months to August.

At the same time that job growth is falling, wage growth remains very strong. Average earnings including bonuses rose 8.5% y/y in the three months to July, and the market estimate for the three months to August stands at 8.3%. High wage growth is contributing to inflation, which currently stands at 6.7%. That figure is the lowest since February 2022 but is the highest in the G-7 and nowhere near the BoE’s 2% target.

Bank of England Governor Bailey said on Friday that future rate decisions would continue to be tight. The central bank is keeping its options open, and Deputy Governor Broadbent said last week that it was an “open question” whether the Bank would raise rates again. Broadbent noted that energy prices were dropping, which would likely inflation back to the 2% target by 2025. The issue facing Broadbent and his colleagues at the BoE is whether inflation will fall fast enough without any further hikes or will the BoE have to tighten further.


GBP/USD Technical

  • GBP/USD is testing resistance at 1.2164. Above, there is resistance at 1.2202
  • 1.2066 and 1.1973 are providing support

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