Archive for December 2022

As expected, the Fed bumped rates 50bps earlier today to 4.375%. Markets were hoping the Fed might halt increases going forward due to declining inflation, and because in September Fed members anticipated raising the fed-funds rate to slightly above where it’s now. Those hopes were dashed. The Fed now expects to slowly raise the fed-funds…

The November CPI rose 7.1% Y-o-Y, down from 7.7% last month, and a 6/22 peak of 9.1%. Better yet, shelter, which while up 0.65% in November, is down from 0.75% in September and October, is at a four-month low, and is falling quickly. This matters because shelter was by far the largest single contributor to…

Of late, long-term (10-year) interest rates have fallen quite dramatically, by about two-thirds of a percentage point. However, short-term (2-year) rates have fallen by only half as much. Thus, the yield curve inversion, an accurate recession indicator, has gotten worse. This implies that the Fed will keep short term rates high for now to quash…

The Friday File: While prices ending in $0.99, like $4.99 of $399.99, known as charm pricing, look good, they are on average 18% more expensive than when identical items have different prices. Stores do it because we think it signals a good deal! Worse, when firms raise prices, as they are now frequently doing, the…

In 2008, at the start of the Housing Bust, household spending on goods was 34% of income, but it quickly fell to 32% by early 2009, near the end of the recession. It then resumed rising and was 36% pre-Covid. Then in just months it skyrocketed to 40%, a bump of four percentage points, what…

Used car prices declined 0.3% in November M-o-M, are down 14.2% Y-o-Y, and are back at prices that prevailed over a year ago in 8/21. Compact cars enjoyed the smallest Y-o-Y decline at 10.5%, followed by vans and sports cars at 11.6%, and pickups at 11.9%. Mid-sized cars fell more than average at 14.4%, as…

In 2021, there were a record-breaking 1,033 IPOs of which 59%, or 613, were SPACs, “blank-check” shell companies designed to take firms public without going through the traditional IPO process. YTD there have been just 173 IPOs, a decline of 83%, and just 76 have been SPACs, a decline of 87.6%. No matter how you…

November net job growth was strong at 263,000. While it’s the weakest number this year, signaling a softening market, it’s still way too strong. To wit, M-o-M wage growth rose a very robust 0.6%, the highest rate since 10/21. Moreover, the labor force participation rate has now declined for three straight months and is at…

The Friday File: Since the first World Cup in 1930, eight nations have won. Brazil is the only nation to have competed in all 21 World Cups (no competitions were in 1942 and 1946) and has won five. The best U.S. showing, third place in 1930 in Uruguay. Pele has won the most times, three.…

Pre-Covid, the container shipping industry earned profits of $1 billion/quarter. With the arrival of Covid, however, profits soared. During 20Q4 they were $10 billion, in 21Q1 they hit $20 billion, by 21Q3 they were $48.1 billion, and in 22Q1, $58.7 billion. The peak, 22Q2 at a mind-blowing $63.7 billion, 145% more profit than Facebook, Apple,…