Having identified virtually every single asset bubble of the current cycle (as well as a few extra), SocGen’s cranky strategist Albert Edwards has found yet another place where there is irrational exuberance: vacations, and ever the optimist, Edwards has a message for Americans: enjoy it while you can, because it won’t last. In a note titled “Who needs wage inflation when even vacations have become a bubble” , the SocGen strategist observes that “more Americans plan to take a holiday in the next six months than ever before (see chart below)” and complains that there is “no wonder it was so difficult to book hotels in Yosemite National Park and Lake Tahoe next May!”
The problem with this latest bubble is that while a record number of Americans are taking vacations, far fewer can actually afford it when one strips away the fleeting asset bubbles created by central banks. As a result, record vacations have become only the latest indicator of consumers’ confidence in rising wage growth, which however has yet to materialize. “I know US consumer confidence has been booming on the back of a surging equity market, but cheap money has also prompted the consumer to book holidays galore.”
Which means that once the punch bowl is taken away, so will the downtime: “When the bubble bursts, households will be mighty pissed that it?s not just their wealth that evaporates in front of their eyes but their ability to vacation like never before.”
This post was published at Zero Hedge on Nov 9, 2017.
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