Leif Abraham and Jannick Malling discuss the challenges faced by Public during the GameStop short squeeze. They also talk about managing user signups, transparency to build trust, personal finance, economic indicators, iPhone rumors, and investment strategies.
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Quick takeaways
A convergence of hazards including potential auto worker strikes, government shutdown, resumption of student loan payments, and rising oil prices could pose risks to the US economy.
The housing market is experiencing challenges with limited inventory, increasing mortgage rates, and declining affordability, while corporate interest rates remain low.
Consumer confidence and expectations have decreased, raising concerns about the impact on consumer spending and the overall economy.
There is uncertainty about a potential rate hike by the Federal Reserve in November, with factors like upcoming economic data and potential government shutdowns influencing the decision.
Deep dives
Possible Hazards Threaten US Economy
The US economy is facing a convergence of hazards that could create turbulence. These include a potential auto worker strike, a government shutdown, the resumption of student loan payments, and rising oil prices. While each individual hazard may not cause significant harm, their combined impact could pose risks to the economy.
Challenges for the Housing Market
The housing market is experiencing challenges, with new home sales falling by 8.7% in August and existing home prices reaching new highs in many cities. The market is characterized by limited inventory and increasing mortgage rates, leading to declining affordability for buyers. However, corporate interest rates remain low, benefiting corporations.
Consumer Confidence Declines
Consumer confidence fell in September, with the index decreasing from 108 in August to 103. This decline, along with a decrease in consumer expectations, suggests concerns about the present economic situation. It raises questions about the impact on consumer spending and the overall economy.
Federal Reserve Rate Hike Speculation
There is debate about a potential rate hike by the Federal Reserve in November. The rate hike probability is uncertain, with a 74% chance of no rate hike and a 25% chance of a 25 basis point hike. The decision may depend on various factors, including upcoming economic data and potential government shutdowns.
The Challenges Faced by Worker Strikes and Employee Pay Catch-Up
The podcast discusses how the increase in employee pay and worker strikes is a symptom of the larger problem of a catch-up in employee pay across industries. The rising prices of insurance, healthcare, and gasoline have affected all sectors and put pressure on corporate margins. The lack of unionization in companies like Apple and Alphabet has prevented a spill-over impact on S&P 500 earnings. However, experts believe that the effects of these demands and strikes are yet to fully manifest.
The Potential Impact of Biden and Trump on the Auto Industry
The podcast explores the possibility of Biden and Trump causing significant damage to domestic automakers through their involvement in labor disputes. The actions of the two politicians, combined with the ongoing worker strikes and demands for higher pay in the auto industry, could potentially disrupt the industry. The situation seems to favor Tesla compared to other automakers, with the potential to crash domestic producers.
The Impact of Rising Interest Rates on Consumer Expenses
The podcast highlights the increasing financial challenges faced by consumers due to rising interest rates. Factors such as sticker shock on mortgages and auto loans, higher borrowing costs, and increased prices have made purchasing homes and cars unaffordable for average American households. The report also discusses the squeeze on disposable income caused by student loans and higher fuel prices. These factors significantly impact the average consumer's ability to meet financial obligations, leading to a reduced ability to afford goods and services.
On this TCAF Tuesday, Leif Abraham and Jannick Malling join Downtown Josh Brown (CEO, Ritholtz Wealth Management) to discuss the story of Public.com, and "The Dumb Money" events and meme stock craze of January 2021. Then join Downtown Josh Brown and Michael Batnick (Managing Partner, Ritholtz Wealth Management) for another episode of What Are Your Thoughts and see what they have to say about the biggest topics in investing and finance!
Thanks to Rocket Money for sponsoring this episode! Go to https://rocketmoney.com/compound for more info.
Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management.
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