Layoffs Surge, Delinquencies Soar; How Bad Will It Get? | Danielle DiMartino Booth

Summary

Danielle DiMartino Booth of QI Research argues the Fed is behind the curve because the labor market is deteriorating, layoffs are rising, and consumers are increasingly delinquent, so the Fed should cut rates by at least 25bp. She sees US equities as overvalued with a correction continuing, favors defensive income such as utilities and healthcare dividend stocks, and watches Bitcoin/Nasdaq as a risk-appetite signal. She also flags risks in commercial real estate/CMBS, residential real estate, gold margin-call selling, and AI-debt-funded speculation.

• Fed minutes showed disagreement, and Danielle says the Fed should cut at least 25bp because labor data are weakening.
• She cites surging layoffs, weak seasonal hiring, and rising consumer delinquencies across credit cards, auto, personal loans, and HELOCs.
• She expects shelter disinflation and a weakening labor market to pull Treasury yields lower.
• She favors defensive equity exposure, including dividend-paying healthcare stocks and utilities.
• She warns US equities are overvalued and sees the ongoing correction as a reason to hold dry powder and hedges.
• She watches Bitcoin and the Nasdaq 100 as correlated risk-appetite indicators.
• She flags commercial real estate/CMBS price discovery as a risk to banks, plus weak residential real estate and untested gold positioning.
• She is skeptical of Nvidia's receivables factoring and sees the AI bubble as increasingly debt-funded.