What Happens From Here?

Submitted by B3stAuD1t0rofA11tiME t3_11c1ei3 in wallstreetbets

Everyday you hear about credit card debt that is going through the roof, people withdrawing from 401k’s to pay for groceries and of course those interest rates that are rising faster since the beginning of time to defeat something called inflation.

Gen Z = the parents of Gen X so they have some catching up to do on average credit card balance.

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https://preview.redd.it/idmke1ounfka1.png?width=599&format=png&auto=webp&v=enabled&s=1ba362cd4d20c83308248868b68d871b425b274c

But closing in on 1st place with 90+ days delinquent

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https://preview.redd.it/993hq4nvnfka1.png?width=570&format=png&auto=webp&v=enabled&s=f68dc8e6757a77658bc3f16a55ee30a2264f7476

Consumer debt is at $4.8 Trillion up $400M from a year ago and up $800M prior to covid in 2019

Guess how much of that is student loans? $1.8 Trillion or almost 40%.

Is this the catalyst that will break the camels back and cause the recession? Probably not. If you exclude the student loan debt from the picture. Consumer debt is around normal levels if not lower.

There is more cash sitting on the sidelines than Pablo Escobar had and he would have invested it in the market if he could have, but that wasn’t an option.

We are going to the moon when everyone rushes back into stocks again trying to time the bottom.

FOMO will happen and all of a sudden the S&P 500 will be at 5,000 and some people will still have their d*cks in their hand.

Anyways, just my opinion...have a wonderful evening!

81

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VisualMod t1_ja1172y wrote

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>TL;DR: Consumer debt is at $4.8 Trillion up $400M from a year ago and up $800M prior to covid in 2019. Student loan debt is $1.8 Trillion or almost 40% of the total.
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VisualMod t1_ja117nu wrote

>It is interesting that you mention student loan debt as a potential catalyst for recession. I have seen data that suggests that this type of debt is actually quite manageable for most people and does not pose a significant risk to the economy. However, it is worth noting that rising interest rates could make this situation more difficult for borrowers in the future.

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Milot25wallst t1_ja123hz wrote

Wtf is this average, I have 68k on all my ccs 🤣

68

NicePosiedon t1_ja1446y wrote

i think people who have any cc debt are dumb

−9

crypt0_sports t1_ja149y2 wrote

This is a prime example of someone shilling their bags by picking and choosing data based on what they want the outcome to be.

Fact remains: Credit card debt to savings ratio is the worst in recorded history.

You can only swipe so much for $40 Olive Garden plates and $15 Little Mac meals before you max out. People are simply refusing to cut back on spending, even at super inflated prices.

This is unsustainable.

It should also be noted that Gen X are just some of the parents of Gen Z & not the other way around.

Short term this refusal to stop spending will fuel earnings and the market overall. But even this analysis shows Gen Z & Millennial credit card debt defaults increasing at a rapid pace, even with student loan suspensions for what seems like an infinite amount of time.

They will more than likely stay suspended through the 2024 presidential election and if the Democrats win, through 2028.

If they don’t expect the moratorium to expire Dec of 2024 so the GOP can inherit a disaster of debt and be blamed for the inevitable crash.

Also people are normalizing $1500-$2500 rents.

That’s simply absurd & unsustainable as well.

Enjoy your short term pump in the market - but the reality will kick in at some point and number not always go up.

The only way to slow down consumer spending it seems is for 1 point increases constantly. The Feds actions aren’t helping clearly - just prolonging the inevitable.

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suicide_walter t1_ja178og wrote

Don’t forget that fixed income is now an extremely attractive allocation for “sideline cash”

“9% BBB bonds and Canadian bank LRCNs are so fucking good right now, there’s no reason to over allocate into risk assets”

  • fixed income PM I know
6

yorklebit t1_ja1i1in wrote

All of the below is just my personal opinion and should not be construed as anything except that. Probably what happens is the market stays stuck in a range or goes down until the Fed stops raising interest rates. When they stop or make it clear (firmly) they will stop soon, the market starts going up from that point. How low it goes before it starts going up again is anybody's guess, but will probably depend on how severely they continue to raise rates and how severe the economic fallout from the rate-raising is.

You can see on a chart (e.g. SPY) how the market attempted an uptrend starting about mid October last year. IMO this was predicated on the (putative, forthcoming) ending of interest rates rising. Now that is majorly in question and so the uptrend is in question and MAY fail and turn out to be one of those famous "dead cat bounces."

Economically, good news is bad news right now, until the good news doesn't imply a rate raise anymore.

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jonsnuuuuuu t1_ja1ie3i wrote

As someone unaffected by all of this I literally just keep buying my favorite index funds/stocks/cryptos and continue to not care

−5

jonsnuuuuuu t1_ja1ikj6 wrote

Replying to crypt0_sports (#2,011,192)

Hey man. Just came to say I genuinely don’t give a shit about any of this because I’m personally unaffected. I’ll continue to invest in my favorite stocks and index funds because I can and I don’t care what the market does. Thanks for this write up though I hope you make money

−2

dmfr628 t1_ja1imao wrote

Just paid off my 20k of credit card debt. Gotta update the numbers accordingly. My student debt is 0 as I is smooth in the brain

16

jonsnuuuuuu t1_ja1kl1t wrote

Replying to crypt0_sports (#2,014,256)

I know this is Wall Street bets but from the comments it feels like people are playing with money they need and not money they don’t. So yeah I find it weird when people on this sub are freaking out and trying to predict the SPY. like just pick up or down and place your bet. Otherwise you shouldn’t be here

6

crypt0_sports t1_ja1kvzi wrote

Replying to jonsnuuuuuu (#2,014,342)

Yupppp they most definitely are! That’s dangerous degeneracy. Better off playing roulette some of them.

You should see crypto during a bull run it goes from mania to despair in a matter of hours sometimes

4

Theta_Ome t1_ja1r70t wrote

Everyone is panicking over numbers while traditional finance completely ignores the crypto holdings (or at least what is left)

The amount lost in crypto implosion is not dampening the massive gains.

As crypto continues to liquidate back into the equities market, you’ll see more and more headlines about doom trying to shake retail out so institutions can buy the dip.

Institutions were the money backing most of the exchanges that collapsed, looking for those 200,000% gains as owners of exchanges burned them. Retail rugged them hard.

9

hodlethestonks t1_ja1ttyb wrote

Everyone losing their shit and seeing crash is imminent means there Will Be no crash

13

DeadStringScrolls t1_ja1zck3 wrote

The middle class continues to dwindle is what happens from here.

7

Dangerous_Ad4451 t1_ja27dak wrote

Nothing happens. The bus is always on the move. Some will get off while some get in. Financially illiterate folks will get burned while financially savvy folks will thrive. It is nothing new

1

CaptainStonks t1_ja2bgr1 wrote

"Gen Z = the parents of Gen X" are you expecting the Gen Z'ers to invent a time machine in the future? OK Boomer.

60

Modelminorityperson t1_ja2i47y wrote

Replying to Milot25wallst (#2,010,769)

There are 2 credit cards with no balance transfer fees and promotional interest rates for the first 12 to 18 months on balance transfers. I am currently paying my debt off with the Navy federal credit Union platinum card. You have to be a vet or related to one.

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DelightedAutist t1_ja2t06q wrote

There are like 2 people from the silent generation left. Useless data points.

3

Shuttodeath t1_ja2x83v wrote

hw thinks more genz buying stocks rn, they are focus on fast moving money like crypto. stocks are old ways of making money😁

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something-quirky- t1_ja2zzk6 wrote

Well the answer is quite clear, surprised you couldn’t figure it out for yourself. The numbers may go, or it could possibly go down.

2

ZadarskiDrake t1_ja3af1n wrote

I keep seeing these charts and hearing things about how bad the economy is and I agree I am broke af meanwhile my rich friend took me out for dinner last night and I was just amazed at how carelessly people who make a lot of money spend. He paid for our meals ($100+) and he spent like $60 on drinks for himself without even thinking twice about it. He is 27 and makes $150,000 per year and for people like him, they will never struggle or be affected by inflation. He is going to be promoted to IT manager next year and he said his base pay will go to $200,000 + $20,000 yearly bonus . If you guys are smart, go to school and major in computer science or engineering. You will make alot of money and never have to worry about surviving.

3

nomoneynicetruck t1_ja3atkl wrote

We've had an artificially low FF rate since the Obama years. And that's helped to produce a generation of people who only know how to buy risk assets and consume. So know when there's easy money in fixed income we have cc debt and flat lining stocks.

1

JeromeJGarcia t1_ja3cd6h wrote

Got divorced, used the 10% of assets I got to pay off debt under my name and haven’t paid a penny in interest for the last 6 years. I use the card for everything and now Chase is paying me in points, they bought me a $2600 ebike last summer. Debt sucks. I got the feels for those that are about to eat a shit sandwich.

4

GuiltyBee60 t1_ja3f4x3 wrote

the apartment I used to live in sent me a bill of $12 K (for breaking the lease) .. very respectfully I asked them to go fck off!

9

Dry-Stop2000 t1_ja3ih9w wrote

There will be no crash, SP500 is sitting sideways (Paul Wall, baby)

2

to_the_andromeda t1_ja3jq3p wrote

Nothing is gonna happen until someone pokes the bubble...people enjoyed the rise in prices now they are enjoying the rise in the rate of inflation. Next they will enjoy the zombie apocalypse

2

iPigman t1_ja3lokh wrote

>Gen Z = the parents of Gen X

Nobody tell him.

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Rabid-tumbleweed t1_ja3nrb2 wrote

Gen X are the children of the Baby boomers. Did you really think it went Boomers, Gen Z, Gen X, Gen Y?

1

McSnoots t1_ja3sded wrote

I have 7k on credit cards. As soon as tax return arrives I’m paying it all off

1

crypt0_sports t1_ja3tz9u wrote

Replying to cl0wn_w0rld (#2,028,529)

Exactly let’s start getting these homes under 300k averages so the real estate and greedy fuckers thinking they will retire off rent at 45 can go and get promptly fucked.

See you behind the dumpster 🫡

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cl0wn_w0rld t1_ja3uljr wrote

Replying to B3stAuD1t0rofA11tiME (#2,011,886)

I just re-read your OP and i am sure how it equates to "the course of your life is changing and you dont see it"

there is a lot more going on than consumer credit card debt. consumers are spending and keeping things proped up because they feel good about their job and income security. once unemployment kicks up a little bit and the layoffs spread to other industries and main st, people will stop spending.

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LouieS76 t1_ja3wuan wrote

Looks like more bank bailouts are coming.

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crypt0_sports t1_ja3xhd1 wrote

Replying to Jerund (#2,028,932)

The only place that is semi reasonable is in a large metro city where avg incomes for 1 person are near $80-100k. There’s no reason rent should be anywhere near that in the woods , in the middle of bumfuck, or a rural area 2 plus hours out of a major city for an apartment.

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Wander21 t1_ja4a0iu wrote

Replying to StockNinja99 (#2,030,689)

Even if student loan forgiveness act finally passed, it will only infuse 400 billion into current system, still not enough by a lot compare to one year ago, and SPY peaked at around 4800

1

ACiD_80 t1_ja4d531 wrote

Replying to hodlethestonks (#2,031,894)

This 'already priced in' argument seems to be really popular amongst those who cant defend their arguments.

I could say the same thing and say the recovery is already priced in.

It's such a baseless/moot argument.

2

Ok-Grapefruit1284 t1_ja4g8ec wrote

Replying to joefunk76 (#2,031,335)

In my area, investment firms are buying up cheaper houses and flipping them into high priced rentals or reselling them for 100k more than they were previously listed for. Sure there are a few independent flippers but mostly it’s companies. We don’t stand a chance.

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_ziros_ t1_ja4wnu6 wrote

Replying to crypt0_sports (#2,011,192)

Where did you find the data that the credit card debt to savings ratio is the worst in history? I’m trying to further support my bear/short thesis and trying to collect as much data as I can. It’d be really helpful if you can share the link with me and I can save it for later. Thank you much appreciated

3

rocketseeker t1_ja4za4g wrote

Replying to cl0wn_w0rld (#2,028,529)

75bps being considered pulling the bandaid feels like a hurricane screaming “GET TO THE FKN BASEMENT U REGARD” on our faces until it inevitably destroys all our houses and mattresses stuffed with money

1

DogeAutist t1_ja5ho3d wrote

Replying to crypt0_sports (#2,029,270)

Supply and demand amigo. Arbitrary numbers mean nothing. Rental increases are sustained until a better option presents itself for the rentors. Three families in a 3 bedroom two bath home, kids sleeping in closets. This shit is normal. I suspect it will continue as I don't see interest rates dropping anytime soon, and talk of the housing crash has spooked alot of new construction.

1

crypt0_sports t1_ja5i877 wrote

Replying to DogeAutist (#2,039,571)

Well if they lose their jobs all bets are off the table.

Based on your logic then you’ll have 12 people and 3 generations living in a 2 br 1 bath house all while hundreds of thousands of homes sit empty while an investor refuses to take anything less than $2500 a month on a property they overpaid by 2x ?

If so then you’ll have armed security patrolling these neighborhoods trying to run off squatters.

Make it make sense.

P.s. new manufactured homes are now starting at 49k where I am and they were 79k less than a year ago.

So they apparently know something.

2

DogeAutist t1_ja5k25u wrote

Replying to crypt0_sports (#2,039,663)

Everyone in the household works. It's not a theory. I see it daily. And if one or two lose job the family gets replaced or the throw another in the living room.

Nowhere to put a manufactured homes (where I'm at anyways)and even then you have to rent the land and that goes up annually as well.

Also, most these people work in a variation of service industry. They will always have work cleaning houses, taking care of children, fixing cars. And that work at this price point is just not possible if they move 1 hour outside of the city in a manufactured home.

I'm in Cali, so I know this ain't the norm, but it's what I'm seeing here. Think about it, how is it different than 4 college kids renting a 3 bedroom and two splitting the master.

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PSUBagMan2 t1_ja5mc5t wrote

Posts like these made me glad I'm not poor. Imagine being a full grown adult and carrying credit card debt lmao

−2

vaibhav_bu t1_ja5sqzx wrote

Replying to StockNinja99 (#2,030,751)

I don’t think using the same number of employees as 2020 is a good measure to see if the companies are bloated. But the amount of “wasted resources” in big tech companies (FAANG) is insane. The only reason why they were able to support this was because of the crazy profits that were raked in, take that profit out of the equation and everything falls through.

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SohndesRheins t1_ja6bzl6 wrote

Replying to joefunk76 (#2,031,335)

Man that would be awesome. I'm 15 years away from 45, and my parents are in their 60s and are chronic alcoholics. If they both die in 15 years then I'll definitely liquidate their assets, pay off my house, and buy a rental property or two and retire by age 45. By all means, please drop housing prices.

1

ACiD_80 t1_ja6cyg7 wrote

Replying to [deleted] (#2,045,672)

No.

You cant really know/predict if something is already (fully) priced in or not.
That is an assumption/opinion.

That the stock market is driven by emotion and opinion is just a fact.
You think something wll go up, you buy.
You think something will go down, you sell.
Simple.

So one is a fact and the other is an assumption/guess.

1