***Disclaimer:*** *Bearish outlook, with reasoning (feel free to fact check).*
Scott Bessent has said numerous times, *"We're not bothered about Wall Street, we're focusing on Main Street."*
So far, that has been true — the impact has been mostly felt on Wall Street. Most Americans don’t even know what’s happening, unless they actively follow the news.
Meanwhile, there’s been a flurry of alarming news over the past few days *(feel free to fact-check)*:
* No trade talks with China yet — Bessent says it’s up to them to de-escalate.
* Chinese ships are being sent back, and traffic at the Port of Los Angeles has dropped significantly.
* The Texas manufacturing gauge is at its worst level since 2020.
* Americans may start seeing empty shelves by mid-May.
* Even if other countries agree to U.S. demands, tariffs will still rise to 10–20%, compared to the current average of 2.8%, setting the stage for high inflation.
* Consumer confidence has sharply declined, reaching levels last seen during COVID-19.
* Retail bankruptcies are starting to pick up again, with several major brands warning of slower sales ahead.
* U.S. credit card debt has hit a record $1.21 trillion, with 32% of Americans having maxed out their cards.
* More Americans are now using Buy Now, Pay Later (BNPL) services just to afford groceries, with usage doubling over the past year
* Credit card delinquencies have risen nearly 40% since 2022, showing financial stress is already building.
Low supply combined with a sudden spike in prices could trigger panic buying, further driving inflation. What do you think the *average investor* (not the one living on Reddit subs) will do?
We have an aging population, and retirees are already worried about their 401(k)s, who will prefer to sell risk assets and put their money in debt instruments. Unemployment will rise, and people will sell stocks to raise money for their monthly expenses. When fear finally reaches Main Street, I believe we will see panic selling of stocks.
**Capitulation.**