Eurodollar University

Wendy's plans to close hundreds of locations due to weak consumer demand, raising concerns about the fast food industry. McDonald's also admits to falling guest counts, highlighting a shift towards affordability. A contrast emerges between U.S. and Chinese responses to reduced demand. Job losses in late October signal further economic strain, while small business optimism hits a six-month low. Trends in consumer credit show a significant pullback. Ultimately, the podcast explores the troubling divergence between stock performance and economic reality.

The discussion dives into the federal government's proposal for a tariff dividend amid worsening economic conditions. It explores how this plan targets low-income Americans, reflecting growing public discontent. The impact of highlighting stock market gains alienates struggling workers and may even push younger generations toward socialism. Surveys indicate rising fears of unemployment and a potential recession, while the tariff dividend is seen as an admission of labor-market deterioration. Ultimately, this symbolic gesture does little to address the root economic issues.

Steve Van Metre, a market and credit analyst, joins to unpack the alarming collapse of CarMax and its implications for the credit system. They discuss how plunging consumer confidence and crumbling job security signal broader distress in the auto sector. As lenders tighten subprime auto risk, they highlight the ripple effects reaching prime borrowers. Furthermore, the tightening liquidity in supply chains and the increasing fears of layoffs present a critical outlook on the economy, revealing potential for a wider credit crisis.

UBS is shutting down two hedge funds, raising alarm bells reminiscent of 2007. One fund’s exposure to First Brands is under scrutiny due to potential fraudulent collateral. The second fund’s closure indicates widespread investor redemption pressure, leading to fire sales and systemic strain. Losses from First Brands are estimated at 30%, heightening panic in high-grade funds. Current conditions differ from 2008, yet a weakening labor market may accelerate investor exits. The episode highlights the importance of monitoring redemptions and liquidity issues.

October witnessed the highest job cuts in over 20 years, surpassing even the crisis of 2008. Rising unemployment is linked to increasing delinquencies in auto, credit card, and student loans. Companies that overhired post-COVID are now slashing jobs, particularly in warehousing and tech due to weak demand. Revelio Labs reveals a disturbing downward trend in hiring, suggesting a shift towards stagnant labor dynamics. The implications for credit and lending markets are dire, as ongoing layoffs may lead to severe consequences ahead.

The dollar is soaring unexpectedly, shaking up the crypto world as Bitcoin and Ether face major selloffs. There's a deep dive into the misconceptions around dollar debasement and how euro movements impact its strength. Japanese yen weakness hints at looming intervention, while the Indian rupee serves as a warning sign for global monetary conditions. The discussion also explores the roots of 'dollar doom' and the historical context, arguing that current dollar strength indicates risk aversion and deflation rather than hyperinflation.

Target is cutting 1,800 corporate roles and skipping seasonal hiring, hinting at weaker holiday expectations. Falling cardboard shipments signal a looming retail slump, while major layoffs at companies like UPS point to shrinking goods demand. There's a troubling shift in the labor market from hoarding workers to implementing cuts, reflecting a grim consumer sentiment despite stock market gains. The economy is becoming increasingly predictable, but in a concerning direction for demand.

A cash squeeze in wholesale money markets is escalating, with interest rates spiking, challenging the Fed's strategies. Jeff Snider dives into the signals of systemic stress and the implications of increased dealer risk aversion. He examines historical money market crises, linking them to current tensions. Recent fraud revelations raise questions about collateral safety, suggesting this tightness could indicate a brewing financial crisis. Insights into repo rates and shadow credit could provide clues to future market movements.

Join Steve Van Meter, a macro commentator known for his sharp insights into monetary markets, as he delves deep into Europe's economic landscape. Discover why the ECB's decision to hold rates at 2% could be masking troubling underlying issues. The conversation explores how stagnant GDP affects consumer spending, revealing how companies like Chipotle are feeling the pinch. They also discuss the challenges of rate cuts and their limited impact on low-income households amid broader structural issues in the economy.

China's new home sales plummeted by 42%, raising alarms for its banking sector and broader economy. Despite government stimuli, consumer demand remains stagnant, questioning the effectiveness of past interventions. The focus on tech over traditional industries poses immediate risks, with urgent calls for fiscal support in real estate. Declining bond yields reflect global economic concerns, as Chinese banks shift to safer investments amidst escalating stability fears. This housing crisis could have ripple effects on regional economies and currencies.