The headwinds the U.S. faces have been created by the U.S. From Charles Hugh Smith at oftwominds.com:
These headwinds will persist for the next decade or two.
The stock market is rallying hard after a brutal sell-off–not an uncommon occurrence. As we savor our winnings in the ship’s first-class casino, it’s not a bad idea to step out onto the deck and gauge the weather.
There are headwinds. Not zephyrs, not gusts, just steady, strong headwinds.
1. Presidents Trump and Xi view each other an as existential challenge to the future prosperity of the nation they lead. Neither can afford to lose face by caving in, and each has a global strategy with no middle ground.
2. Global trade / capital flows are all over the map. Uncertainty is the word of the moment, but perhaps the more prescient description is unpredictability: if enterprises have no visibility on the future costs of trade, commodities, labor and capital, they have little choice but to avoid big bets until visibility is restored.
3. The American consumer is tapped out. Credit card charge-offs are rising, auto loan defaults are rising, air travel is faltering–there are many sources of evidence that consumers–especially the top 20% households whose spending has propped up the economy–have reached financial and perhaps psychological limits.
