• Contract Cancellations

    Last month, new home contract cancellations hit 14.5%, their highest level in years outside of 4/20’s Covid-tainted peak of 16.5% and are 30% above their seasonally adjusted pre-Covid rate. Similarly, the percentage of pending-home sales that fell out of contract in June hit 14.9%, their highest … [Read More...]

  • Fuel Foolishness

    Reducing the federal gas and diesel taxes from 18.4 cents/gallon and 24.4 cents/gallon, respectively, to zero for three months, would cost the Treasury $10 billion, and probably not much help consumers. That’s because the slightly lower price would boost demand but won’t boost refining capacity, the … [Read More...]

  • Bear Behavior

    Since the start of the Great Depression, there have been 22 bear markets, defined as a stock market decline of more than 20%. The average duration of those bear markets is 11 months. The median duration is eight months. The shortest bear market was in 2020, just a month; the longest was the dotcom … [Read More...]

  • Inescapable Inflation

    CPI inflation rose a whopping 1% in May and is up 8.6% Y-o-Y, it’s fastest pace since 12/81! Worse, inflation is increasingly broad-based. Y-o-Y, groceries are up 11.9%, their fastest rise since 1979. Services, 45% of GDP, are rising at 5.7% Y-o-Y, their fastest pace since 3/91 and have risen … [Read More...]

  • Consumer Credit

    Since 2012, consumer credit has risen $15-20 billion/month. Non-revolving credit, which includes student and auto loans, accounts for two-thirds of the monthly rise and revolving credit, which consists of credit-card accounts, comprises the rest. Since 11/21, consumer credit growth has averaged over … [Read More...]

Aug
17

Deficit Decline

In July, the federal budget deficit was $211 billion, a 30% Y-o-Y decline. Over the first ten months of FY2022, which ends 9/30/22, receipts are up 24% and spending is down 18%, resulting in a $726 billion deficit, 71% lower than the $2.5 trillion last year. For FY2022, the deficit is projected to … [Read more...]

Aug
16

Labor Loss

Since Covid-19, the demographic group with the largest percentage point decline in their labor force participation rate is workers with less than a high-school degree with an eight-percentage point fall. Next, with a decline of slightly more than four percentage points are those with some college or … [Read more...]

Aug
15

Dollar Devaluation

The softer than expected July inflation reading resulted in markets now expecting fewer Fed rate hikes than earlier predictions. As a result, the US dollar had a dreadful week, falling 1% against a trade-weighted index of developed country currencies. At the other end, the New Zealand and Australian … [Read more...]

Aug
12

Psychedelic Percentages

The Friday File: When asked about legalizing psychedelics including psilocybin (mushrooms), LSD (acid), and MDMA (ecstasy), westerners, who are most accustomed to legal recreational marijuana, are most likely to be in favor with 34%, 25%, and 24% respectively responding affirmatively. … [Read more...]

Aug
11

Container Costs

Before Covid-19, the cost to ship a 40ft container from Shanghai to the Port of LA had generally been slightly below $2,000. Soon after Covid-19 appeared, shipping costs doubled to $4,000, where they stayed through the first four months of 2021. They then increased explosively and by late 2021 the … [Read more...]

Aug
10

Inflation Impulse

While headline CPI inflation fell from 9.1% Y-o-Y to 8.7% and monthly headline inflation fell from a shockingly high 1.3% in June to 0% in July, contain your enthusiasm. This only suggests inflation has peaked. Y-o-Y core inflation remains at 5.9% and Y-o-Y services inflation, which includes rents, … [Read more...]

Aug
09

Equity Examination

Among firms in the S&P 500, information technology had a great run last week and led all sectors, rising 2%. Consumer discretionary and communication services followed, each with a gain of slightly more than 1%. Industrials and utilities were also up but just barely. Energy was the big loser, … [Read more...]

Aug
08

Excellent Employment

With 528,000 net new jobs, upward revisions to prior months, and employment now slightly above its pre-Covid level, the July jobs report was absolutely gobsmacking. However, the unemployment rate fell from 3.6% to 3.5%, tying a 52-year low, the labor force shrank, and wage growth accelerated. These … [Read more...]

Aug
05

Baseball Bazaar

The Friday File: Earlier this week, reliever Eric Chavez was traded, making it the 10th time he has changed uniforms in the major leagues, thus making him the most traded player in baseball history. Former pitcher Dick Littlefield is next at eight. It would have been nine, but his 1956 trade by the … [Read more...]

Aug
04

Congressional Control

While the anticipated Inflation Reduction Act of 2022 might do great things for the environment, healthcare, and the deficit, it’s unlikely to much help inflation, and any benefit is likely to be years out. It’s because the overall spending and revenue effects are very modest, equaling, at most, … [Read more...]