Archive for August 2022

The combination of high inflation, rising rates, and a European war has frozen IPOs. YTD, only $5 billion has been raised, a year ago the amount raised exceeded $100 billion, and on average going back to 1995 the amount raised is $33 billion. To wit, it has been 109 days since a traditional IPO raised…

The total cost of the student-loan relief package is about $500 billion to the Treasury, with about $360 billion in immediate cancelled debt costs and the rest coming over about a decade. As for inflationary impacts, they are likely to be small. The combination of immediate debt relief twinned with near simultaneous restarting of debt…

This past Friday, Fed Chair Jay Powell gave a major speech outlining the Fed’s monetary policy approach for the near future. Importantly, the phrase ‘soft landing’ was nowhere to be found, a deliberate decision. Instead, the word ‘pain’ made an appearance very early on, an equally deliberate decision. A recession and hard landing are now…

The Friday File: In 1995, Americans ate 75 lbs/year of beef, 50 lbs/year of pork, 37 lbs/year of chicken and 8 lbs/year of turkey. Since then, the amount of pork consumed has not budged and in 2022 is still 50 lbs/year. Turkey consumption has doubled and is now 16 lbs/year. The amount of beef consumed…

Over the past two years, 29% of the working population changed employers. Among Boomers the percentage was low at just 15%, for Gen Xers 17%, and for Millennials an elevated 32%. However, for Gen Zers it was a whopping 49%. This explains how overall economy-wide quit rates are averaging 34%/year for the last 18 months.…

According to the National Association of Realtors, Y-o-Y home price appreciation through 7/21 was 17.8%, and with annual inflation, as measured by the CPI at 5.4%, real appreciation was a very strong 12.4%. The housing market has since weakened and for the year ending 7/22 home price appreciation declined to 10.8%, but with annual inflation…

Since 8/1/22, the probability of the Fed raising the Fed funds rate by 75bps vs. 50bps has moved from a low of 20% on 8/2/22 to a high of 80% on 8/5/22 after release of the hot July employment report. There it remained until 8/10/22 when, following the weaker CPI report, it fell to 40%,…

The Friday File: During 2020, the most Googled painting was the “Mona Lisa” by Da Vinci with 1.02 million monthly global average searches. Next was “Guernica” by Picasso with 455,000/month. In third, another Da Vinci, “The Last Supper” with 343,000/month. In fourth, “The Scream” by Munch with 241,000/month, followed by “Las Meninas” by Velasquez at…

New home construction activity is either in or near recession given the rapid 20% decline in starts since the recent 4/22 peak and the vertiginous collapse in the NAHB Home Builder Sentiment Index since 12/21. This month was the lowest reading since 6/14, excluding the worst Covid-19 values. However, first-time mortgage applications have been holding…