Donald Trump allegedly wanted to look defiant when he got his mug shot taken yesterday in Fulton County, Georgia. What do you think?

We’d be remiss if we didn’t put Trump’s mug in The Daily Missive if for no other reason than to commemorate the historic fact that no former president, in the 234 years since the Constitution was ratified, has been as unceremoniously booked as this one.

He was in the county jail for 20 minutes. His motorcade took longer to arrive.

Sometimes the themes we write about come at us fast and furious. Today is one of those days…

One feature of the post-pandemic economy we’ve been observing is the syncopated depletion of consumer savings—all while consumer debt is hitting historic highs.

Our fear is what we’ve described as a “balance sheet recession.” As consumers get tapped out, big retailers feel the pinch in their profits and loss statements. We’re expecting a full manifestation of a balance sheet recession in 2024.

But a more pernicious societal ailment is also impacting retailers.

“High-end retail is under attack,” trend aficionado Matthew Carr points out. “Jewelers are reporting a 31% increase to the largest numbers ever. The total dollar amount nicked at jewelry stores jumped 85% last year to the highest level since 2009.”

We’ve noted here in the Missive how Dick’s Sporting Goods, Target and Kohl’s have all had profits literally stolen from their racks. Mr. Carr points to a much longer list of retailers: Yves St. Laurent; Nordstrom; Ksubi and Home Depot. Amazon Go, Cracker Barrel, Old Navy, Saks Off Fifth, Anthropologie, Office Depot, Westfield malls, and more are shuttering their doors in places like Portland and San Francisco. Even the low-end retailer Dollar Store has begun to lock up goods in their stores.

“The reality is,” says Carr, “81% of retailers are reporting theft is on the rise. For every $1 billion in sales, $700,000<> is stolen.”

Just as consumers start stretching their legs again at the mall, violence has come out to play, as well. Carr cites another curious statistic: consumer fatalities have doubled since 2016. Fatalities. Deaths.

The average 401(k) and IRA holder is also getting ripped off.

The share price of Dick’s, for example, dropped 22% on the open on Tuesday immediately after the company blamed crime for slogging earnings. The retail sector and consumer spending, in general, make up 70% of US GDP. Discretionary consumer spending and communications make up nearly 25% of S&P 500 earnings.

Smash and grab may be trendy among thugs but it’s also working its way into the everyday financial plan for middle class Americans.

Far be it for us to draw connections where there aren’t any… but Jerome Powell wrapped up his address to the central bankers confab in Jackson Hole, Wyoming moments ago.

Powell cited sustained—“brisk”, even—consumer spending as a reason the FOMC believes the economy is still running too hot and needs a further coolant.

The annual Jackson Hole conference is more of an opportunity for bankers around the country to escape the city heat and enjoy the Grand Tetons at the end of the summer than it is a formal adjustment of interest rates. Yet, Powell took the opportunity to reiterate the “higher for longer” mantra and left future rate hikes with an apple in its mouth on the table.

No word from JPow on what he thinks of the prospect of consumers tapping out.

Following Chairman Powell’s remarks, the Dow shed 200 points within the hour. The S&P 500 plunged a similar percentage. Both have since recovered to pre-speech norms. Year-to-date the Dow is hanging in there at +3%. The S&P 500 is up 14% YTD.

The Nasdaq, which has been levitating in an alternate reality of its own this year, shared a short dip on Powell’s announcements, then also rebounded. Year to date the Nasdaq is still up 30%.

Nvidia beat expectations for the third straight quarter earlier this week helping to keep the Nasdaq higher than the broader market for tech stocks would indicate. (You can check out Shah Gilani’s forecast for how AI will alter the way we trade, here.)

China, for its part, tried to manufacture a rally in its stock market yesterday. One sector dragging the Chinese economy down, as we also alluded to in yesterday’s Daily Missive, is the residential housing sector. The government relaxed home ownership regulations and suggested they would be easing interest rates for the near term. The suggestion had an immediate effect, the stock market rallied.

Alas, the rally only lasted 10 minutes.

We’re keeping one eye open on China. They’ve blocked, tackled, spit and duct-taped their way to the second largest economy in the world.

If anything, as armchair economic historians, it will be fascinating to see what happens next.

Shàngdì bǎoyòu,

Addison Wiggin,
The Daily Missive

P.S. Following up on yesterday’s anecdotes about our experiences in China: On one trip, we had our names translated into Chinese characters and then asked what they meant.

The Mandarin equivalent of Addison Wiggin?

“Danger Gold.” Not bad, eh?

I had it emblazoned on a business card.