During the pandemic, the dictators assured us that restaurant closures would not be an issue, since the economy would easily “recover” afterwards. Add in the recent hikes in minimum wages and it comes as no surprise that the marginal consumer has evidently reached a very different conclusion.

Late last week, anonymous sources told Bloomberg that TGI Fridays was preparing to file for Chapter 11 bankruptcy and was in talks with lenders who could possible keep the company afloat in the meantime.

In related news, Denny’s is scaling back its operations in accordance with the declining fortunes of its customers.

Denny’s is closing 150 restaurants over the next year, and the 71-year-old diner chain is mulling a major change to its 24/7 operating hours.

Fifty locations are set to close by the end of 2024, while the remaining 100 will shutter in 2025, Denny’s announced in an earnings call Tuesday.

With the marginal consumer now cutting back in sharp contrast to the heady days of the pandemic spending spree, we’re likely to see more of this in the future.

True Value, the hardware retailer based in Chicago, has filed for Chapter 11 bankruptcy and agreed to sell itself for $153 million to Do it Best Corp., the home improvement company based in Fort Wayne, Indiana, according to court filings.

Micheal Gayed of the Lead-Lag Report interviews Canada’s foremost real estate expert Ron Butler in a recent podcast. Well worth the listen as it covers all the main points about Canadian real estate. In a nutshell, the Canadian housing market might be where the US was in 2008, or maybe even worse.

If the decline in Fedex’s earnings is not an indication that the marginal consumer is tapped out, I don’t know what is.

…Fedex stock tumbled as much as 11% after hours when it cut the top end of its full-year profit outlook and reported quarterly earnings below expectations on softer demand for package deliveries.

The company said that Q1 results were negatively affected by a mix shift, which reduced demand for priority services, increased demand for deferred services, and constrained yield growth. In addition, higher operating expenses and one fewer operating day negatively affected the quarter’s results.

Hat tip: Neil

So much for “normalizing” interest rates. When even the mainstream financial media is picking up on the idea that interest rates are not only going to fall, but fall quickly, you just know that a recession is baked in the cake.

Billionaire John Paulson said the Federal Reserve has waited too long to cut interest rates and expects the central bank to lower them in the months ahead.

By the end of next year, “my best guesstimate would be around 3%, perhaps 2.5%” for the federal funds rate, Paulson, 68, said in an interview on Bloomberg Television.

Monetary system analyst Rafi Farber makes a pretty convincing case that a recession is imminent, based on some recent action in the banking system and also by looking at the inverted yield curve (short term interest rates above longer term rates). In a nutshell, the recession occurs not when the yield curve inverts, but after it un-inverts and goes back to its normal upward slope. We’ll know if he’s right or not within a few months. Interestingly, he doesn’t see us bouncing back from this downturn.

Not to worry. When mark to market won’t give you the results you want, just mark to book value. If need be, fill the balance sheet with made up numbers. That’s sure to safeguard your retirement savings.

Canada’s large pensions are facing rising losses from real estate investments, according to a sector report by Fitch Ratings Inc., which concluded that fund titans are nevertheless well-positioned to absorb near-term market swings.

The ratings agency said it has not seen widespread private credit losses, though defaults are likely to tick up for the remainder of this year and into 2025 given higher debt service burdens for underlying borrowers and slowing growth.