Archive for September 2022

The Friday File: Earlier this week, NASA sent a bus-size spacecraft travelling at over 14,000/mph directly into a 525-foot-wide asteroid called Dimorphos, seven million miles away from Earth. Sounds tricky. The aim, to see if the crash alters the asteroids’ orbit. If so, this approach might save Earth from a catastrophic asteroid impact, think dinosaur…

Mortgage rates are getting hit twice over. On 9/27/22, the 10-year Treasury briefly hit 4%, up from 1.52% on 12/31/21, the fastest rise since 1981, as inflation fears worsen. Additionally, the spread between the rising 10-year Treasury and the 30-year mortgage is approaching 200 bps, the largest gap since the Fed raised rates during the…

While some talk of a UK currency crisis, concern is misplaced. Currency crises occur in nations with floating exchange rates for one of two reasons, either when the nation in question has large debts denominated in foreign currency or when markets fear that public debt won’t be serviced and will instead be monetized, meaning the…

The Dow Jones Transportation Average, which tracks 20 large US firms including trucking, airlines, and railroads fell 12% month-to-date, double the decline of the S&P 500. Declines in transportation suggest less need for goods, materials and travel, unsurprising given high and rising rates. Overall, the index is down 26% this year, slightly worse than the…

Of all IPOs on US exchanges last year, 87% are trading below their IPO price compared to the 23% fall in the S&P 500 this year and the 31% decline in the Nasdaq Composite. This is the worst year for IPOs in a decade with just $7.2 billion raised, versus $154 billion (excluding SPACS) in…

The Friday File: US per capita beer consumption is tops in North Dakota at 45.8 gallons/year followed very closely by NH at 43.9, and Montana at 41.0. SD is next at 38.9, WI follows at 36.2. In 26th, the median state, is IL at 29.1. NY and NJ are tied for 48th at 22.4 gallons/year,…

August housing starts unexpectedly rose to a seasonally adjusted annualized rate of 1.575 million. While up 12.2% M-o-M, starts dipped 0.1% Y-o-Y. More significantly, single-family starts at 935,000, while up from 904,000 M-o-M are, ignoring the first months of Covid-19, at their lowest level since 11/19. Conversely, multifamily starts at 621,000 are jumping to their…

While the 75bps hike in the Fed funds rate was fully anticipated, the surprise was the committee’s plan to raise rates another 125bps at their two remaining 2022 meetings. Moreover, they now finally forecast the unemployment rate to rise to 4.4% by 1/1/23, a rise of almost one percentage point from its 7/22 low. That…

Currently, the unemployment rate is 3.7%, up from 3.5% in July. While 3.5% equaled the 2/20 pre-covid low and is the lowest unemployment rate since 11/69, when we were in Vietnam, it dramatically understates labor market tightness. In 2/20, when the unemployment rate was 3.5% there were 1.22 job openings per unemployed person, today that…

Last Thursday (9/15/22) perfectly encapsulated our economy. Retail sales were up 0.3% M-o-M, but the prior month was revised down to -0.4% from 0%. Industrial production declined, led by a 2.3% fall in utilities output, as higher electric bills reduced demand and manufacturing activity declined in the Northeast. However, first time unemployment claims fell for…