The Economy Is Showing Signs of Heating Up

The overall spending numbers this holiday season may show the consumer is healthy. But the debt picture shows that the party won't last forever... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] The Weekend Edition is pulled from the daily Stansberry Digest. --------------------------------------------------------------- The Economy Is Showing Signs of Heating Up By Corey McLaughlin --------------------------------------------------------------- People are opening their wallets this holiday season... With Thanksgiving behind us, the holiday-shopping season has officially begun. And while we're still early in the season, Americans are spending more than ever for this time of year. E-commerce platform Shopify (SHOP) said that it saw a 22% increase in sales on Thanksgiving. And credit-card company Mastercard (MA) said that online shopping is already up 15% from last year – even higher than last year's 9% growth. In total, Thanksgiving Day spending jumped 9% from last year to a record $6.1 billion. Then on Black Friday, it surged above $10 billion. But that wasn't even the peak... On Cyber Monday, folks spent another $13 billion – marking the biggest online-shopping day ever. According to Adobe Analytics, folks spent the most on Bluetooth headphones, TVs, and other electronics. And here's why we're bringing up early holiday-season spending trends... a lot of this spending is going on credit cards. And the effects of that trend could linger beyond the holiday season... --------------------------------------------------------------- Recommended Link: [Once-in-a-Generation Market Setup (See These Charts)]( Amid today's bull market, THIS is one of the biggest and most bullish opportunities today: an overlooked group of stocks fueled by the Fed's recent moves with a more-than-50-year history of dramatically outperforming the S&P 500 Index by nearly 4 times. The last time investor Brad Thomas recommended this group of stocks, his readers could've seen annualized gains of 44% per year for five years straight. But today, he says the setup is even better this time around. [Take a look at the evidence here](. --------------------------------------------------------------- While spending is this high, so is credit-card debt... According to the New York Federal Reserve, credit-card debt hit a record $1.17 trillion in the third quarter. That's up about 8% year over year. That debt growth becomes an issue when you consider that credit-card interest rates are at the highest level since the St. Louis Fed began tracking the data in 1994. Just take a look... Record-high debt loads and interest rates are a bad combination for consumers. It means that folks are paying even more just to maintain their credit-card balances. And that means more of them will fall behind on their payments. We're seeing that as well... At the end of the third quarter, 11.1% of credit-card balances were more than 90 days delinquent. Put another way – 1 in 10 Americans haven't paid their credit-card bills in more than three months. That's the highest level of delinquencies since 2012, when Americans were recovering from the Great Recession. Here's more evidence that folks are racking up debt... On Cyber Monday, consumers spent a record $993 million in buy now, pay later ("BNPL") loans. And Adobe Analytics expects BNPL payments to jump 11% to $18.5 billion this holiday season. BNPL is an installment plan that typically charges no interest and is easy to qualify for. So while the overall spending numbers this holiday season may show the consumer is healthy, the debt picture shows that the party won't last forever. And soon, this mountain of debt is going to come back to bite the economy. For now, though, there's more game to be played... Could a labor-market rebound be in the works?... This week was a significant one for U.S. labor-market data. On Tuesday, we got a look at jobs data from the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey for October. It showed 7.74 million openings for October, up about 370,000 from September and higher than Wall Street economists' consensus estimate of 7.5 million openings. Hiring also slowed by about 270,000 jobs from September to October, consistent with a dip in "nonfarm payrolls" that had already been reported for October, largely due to hurricanes in the Southeast and a labor strike at Boeing (BA). More than 1.6 million Americans were laid off in October, but that's a decrease of roughly 170,000 from September. And "quits" – when workers voluntarily leave, perhaps for better job opportunities – increased to 3.33 million... up almost 230,000 from September. All in all, this jobs report suggests a labor market that strengthened overall in October. Now, this is backward-looking data. We received even more timely payroll data this week, including the government's latest unemployment rate for November, which ticked up slightly to 4.2%. This week's numbers – paired with a recent downward trend in initial jobless claims over the past month or so – don't scream that the labor market is cratering. If anything, it might be heating up again... And so might inflation. Despite these signals, though, the Fed still seems intent on cutting rates... This week was also a big one, as it was our last chance to hear from Fed members before they went into a media "blackout" on Friday (in which they won't speak publicly until after their next policy meeting on December 17 and 18). And unless they change their minds in the next couple weeks, it looks like they're targeting what they consider a more "neutral" interest-rate level before the end of the year. That would mean another rate cut. On Tuesday, Fed Governor Adriana Kugler delivered a speech at the Detroit Economic Club and spoke directly about recent inflation readings. The core personal consumption expenditures index, the Fed's preferred inflation measure, rose 2.8% year over year in October. And October's consumer price index showed 2.6% year-over-year growth. "I still view those readings, as of now, as consistent with... a path to return to our 2% goal," Kugler said. Still, she added, today's inflation numbers "also show the job is not yet done. Core inflation at 2.8% and our target at 2% means we're definitely not done yet." Kugler said she's keeping an eye on "stubborn" housing inflation, global risk factors with the wars in the Middle East and Ukraine, and a potential slowdown in immigration to the U.S. If inflation falls off its "path" to 2%, Kugler may prove less interested in cutting rates further. But for now, she is telling us to expect the status quo on Fed policy even without inflation fully under control. On Monday, Fed Governor Chris Waller seemed more intent on cutting rates no matter what... Speaking at a monetary-policy forum, Waller acknowledged that more progress on inflation may be "stalling," but also said he thinks the pace is still headed in the right direction... Overall, I feel like an MMA fighter who keeps getting inflation in a choke hold, waiting for it to tap out, yet it keeps slipping out of my grasp at the last minute. But let me assure you that submission is inevitable – inflation isn't getting out of the Octagon. Waller may think "submission is inevitable," but we're not so sure. And that's based on the data the Fed purports to rely on so much itself. Once again, this reminds me that Fed members rarely lack in confidence, even if their opinions are misguided. Here's the point, though: Waller, a Fed vet, said he's still leaning toward voting for a rate cut in two weeks. The market is expecting it, too. Federal-funds futures traders are betting with close to 85% odds on a 25-basis-point cut at the central bank's next meeting. On Thursday morning, the "Mar-a-Lago man" told his story... No, I'm not talking about President-elect Donald Trump... but somebody who has known him well for more than a decade and considers him a close friend... This man served as an adviser to Trump during his first presidential term, has dined with him at his Mar-a-Lago estate in Florida, saw him there as recently as a few months ago, has been on his plane, and in general has spent time with Trump on dozens of occasions. And on Thursday, in an exclusive live event, this "Mar-a-Lago man" revealed his identity and his story... the secrets he has learned from a network of nearly 30 billionaire and multimillionaire friends like Trump... how they helped him build a fortune – twice... and how anyone can use his insights to build lasting wealth. I won't spoil things, though. You should hear the full presentation from the man himself. And good news: [You can watch a replay for free here](. As part of the presentation, he took viewers on a trip to a private-jet hangar, which one of the five richest people in the world uses... This is worth the watch alone. But you'll find plenty of insights as well. All the best, Corey McLaughlin --------------------------------------------------------------- Editor's note: He's an investor, entrepreneur, and former economic adviser to the president-elect... who has recommended nearly two dozen winners that could've returned at least triple-digit gains over the years. And today, this "Mar-a-Lago man" is sharing something he's calling "the No. 1 opportunity of my life"... along with a shortlist of investments he believes could hand you the biggest gains under the new administration. With stocks trading at historically high valuations today, this opportunity could be even better than buying stocks in 2009. Don't miss this first-of-its-kind interview... [Learn more here](. --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. If you no longer want to receive e-mails from DailyWealth [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. 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