Archive for April 2023

The Friday File: Until the late-1970s there were never more than two 300 lb. players in the NFL. By 1990, there were 72, in 2000 there were 286, by 2010 there were 379, and in 2020 there were 468. Accounting for expansion, as a percentage of all players, heavyweights hit 10% in 1994, 20% of…

Banks are currently experiencing rising deposit costs. If those costs can’t be fully passed to borrowers, profits will fall, reducing lending. It’s estimated that a 10% reduction in profits reduces lending by regional and smaller banks by 2%, and based on prior rate hiking cycles, a 4% lending reduction is possible. That’s likely to lead…

While the first estimate of 23Q1 GDP is a pleasant 2%, do not be deceived. First, growth is clearly decelerating from 3.2% in 22Q3 to 2.6% in 22Q4. Moreover, the monthly data suggests that economic growth was very strong in January, essentially flat in February and was negative in March. As a result, we head…

As the date the U.S. Treasury will hit the debt ceiling approaches, investors are increasingly taking note. The cost of a one-year U.S. sovereign credit-default swap that pays out should a default occur has risen from its typical 10bps to 140bps and is rising exponentially. The peaks in 2011 and 2013 were about 80bps. Moreover,…

The national median existing-home price fell 0.9% Y-o-Y in 3/23 to $375,700 from $379,300. Prices have now fallen Y-o-Y for two straight months, the first time in 11 years. Median home prices peaked during 6/22 at $413,800 and are now 9.2% off that high. As for sales, they declined 2.4% M-o-M in March after surprisingly…

The Friday File: Earlier this week was 4/20 or “fourtwenty”, the unofficial high holiday of weed/stoner culture. Since California legalized medical marijuana (THC) in 1996, recreational cannabis is now legal in 21 states and D.C., and medical use is legal in 19 additional states. 46% of Americans say they have used marijuana, 59% say it…

At just over $2,000/oz, gold is within striking distance of its high of $2,069.40 set in 8/20. With the Fed raising rates, gold seems unattractive. However, because it’s priced in dollars, the decline in the dollar has made gold cheaper for foreign investors. Moreover, markets must think the Fed will stop raising rates soon and…

Leading economic indicators and manufacturing activity are signaling recession, labor markets and consumer spending aren’t. However, the unemployment rate is a coincident/lagging indicator. Moreover, the Bloomberg recession indicator and the NY Fed curve-based recession model are at 55% and 60%, respectively. Every time either model rises above 40% a recession has followed since 1985, and…

After peaking at a painfully high 15% in 4/20, the Misery Index, the sum of the unemployment rate and the annual inflation rate, fell steadily and bottomed out at 7.7% during 1/21. It then rapidly rose due to, among other things, supply-chain issues, and peaked at a vexing 12.5% in 6/22. It has since steadily…

Median rent fell 0.4% Y-o-Y in March to $1,937, the first decline since 3/20. Rents are 19.9% higher than they were in 3/20. The biggest decline was in Austin, where rents fell 11% to $2,104, followed by Chicago where they fell 9% to $2,206. Rents rose the most in Raleigh, up 17% to $2,080, followed…