• Bull.




Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here.

We're increasingly considering what "higher for longer" truly means and the actual implications of a recession. It's been a considerable time since the GFC, and many in the younger generation haven't fully experienced its impact on the labor market and Wall Street. Housing and construction are notably significant contributors to GDP, with construction alone accounting for approximately 4.3%, and housing's overall contribution typically ranging between 15-18%.

Half of Retailers' Incomes Down 50% Or More From Pre-Covid - MSR1

The GFC was a Wall Street crisis that eventually rippled down to Main Street. Conversely, the looming recession is a Main Street downturn that hasn't significantly affected Wall Street yet. From 2007 to mid-2009, the U.S. lost nearly 8.7 million jobs, and globally this figure was closer to 200 million. By 2014, it was estimated that there were 61 million fewer people employed globally than before the GFC.

During the 2008 financial crisis, the construction sector was severely hit. The International Labor Organization reported that at least 5 million construction workers globally lost their jobs in 2008 alone. In the United States, about 780,000 construction jobs were lost from September 2006 through the end of 2008.

A slowing housing market eventually impacts labor. When NVDA rallies 22% in 3 weeks on AI headlines, it's easy to overlook the broader repercussions of a recession. Recessions lead to job losses, forcing people to focus on basic needs, like food, shelter, jobs and paying bills. As news from Main Street continues to emphasize, "it's tough out there for small business." A few astonishing charts from Alignable highlight that nearly 50% of Main Street retailers say incomes are down 50% or more from pre-Covid:

Half of Retailers' Incomes Down 50% Or More From Pre-Covid - MSR2

And unfortunately, the downturn accelerated in November as spending has gravitated to online. As we've repeatedly advised, "give a small businessperson a hug ... they need it."

Half of Retailers' Incomes Down 50% Or More From Pre-Covid - MSR3

Learn more about the Market Situation Report written by Tier 1 Alpha.

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