The Higher Standard

According to a report from the Commerce Department, retail sales increased but fell short of expectations. The advanced sales report showed an increase of 0.4%, below the Dow Jones estimate for 0.8%. Excluding auto-related figures, sales increased 0.4%, which was in line with expectations. As the numbers are not adjusted for inflation, the headline increase equaled the 0.4% monthly rise in the consumer price index. On an annual basis, sales were up just 1.6%, well below the 4.9% CPI pace.In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.They discuss news that stock in Home Depot tumbled more than 5%, or $13 a share, in premarket trading, which was worth about 100 points on the Dow Jones Industrial Average. Once trading opened, the stock recovered some of its gains, and was recently down about 1.5%, still big enough to shave about 30 points off the Dow.Chris and Saied look at a Census Bureau survey, showing that more Americans struggle to meet expenses now than in the immediate aftermath of the Covid-19 pandemic, when millions lost their means of employment. About 38.5% of American adults — or 89.1 million people — faced difficulty in paying for usual home expenses between April 26 and May 8. That’s up from 34.4% a year ago and 26.7% during the same period in 2021.They also offer some thoughts on the passing of Chicago real estate magnate Sam Zell, who earned a multibillion-dollar fortune and a reputation as “the grave dancer” for his ability to revive moribund properties.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why retail sales rose 0.4% in April, and why this is indicative of bad things to come.The concept of a real estate trust.A University of Michigan report showing that consumer sentiment is at an all-time low.Why Home Depot is warning of annual sales drop for the first time since 2009.And so much more...Resources:"Home Depot just forecast weak consumer demand — here’s what that could mean for the rest of the economy" (CNBC)"Almost 90 million American adults struggle to make ends meet, Census says" (Bloomberg Business)"Retail sales rose 0.4% in April, less than expected as consumers struggle with inflation" (CNBC)"Americans Curb Spending on Home Improvements" (The Wall Street Journal)"Home Improvement Goes on Hiatus" (The Wall Street Journal)"Experts Predict Home Improvement Spending to Decline by 2024" (M Report)

Total consumer debt hit a fresh new high in the first quarter of 2023, pushing past $17 trillion even amid a sharp pullback in home borrowing. According to a report from the New York Federal Reserve, the total for borrowing across all categories hit $17.05 trillion, an increase of nearly $150 billion, or 0.9% during the January-to-March period. That took total indebtedness up about $2.9 trillion from the pre-Covid period ending in 2019.In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.They discuss news that famed short-seller Michael Burry and his hedge fund, Scion Asset Management, snapped up 150,000 shares of First Republic prior to its purchase by JP Morgan, worth about $2 million at the end of the first quarter.Chris and Saied look at A Gallup poll indicating that 36% of US adults say they have a “great deal” or a “fair amount” of confidence that the Federal Reserve chairman would do or recommend the right thing for the economy, a precipitous drop which is now at or below his predecessors’ as the central bank wages its war against inflation.⁣They also offer some thoughts on recently-released Federal Reserve data, showing that deposits at U.S. banks climbed to $17.16 trillion in the week ended May 3, up about $67 billion, ticking up from the lowest level in nearly two years while bank lending was little changed at a record level.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why inflaton in Argentina has sped up to 109% as currency weakens before the election.The three steps to a Federal Reserve pivot.Why Warren Buffett and Michael Burry are doubling down in the banking sector.Why the FOMC needs to see inflation going down on a fast enough trend.And so much more...Resources:"With $1B in back rent due, LA landlords struggle to survive" (The RealDeal via Instagram)"Consumer debt passes $17 trillion for the first time" (CNBC via Instagram)"Michael Burry loaded up on bank stocks during the banking crisis" (Bloomberg Business via Instagram)"Paul Tudor Jones says the Fed is done raising rates, stocks to finish the year higher" (CNBC via Instagram)"Confidence in Jerome Powell has plunged to a record low" (Bloomberg Business via Instagram)"What happens when the prophecy of the blockchain fails?" (Bloomberg Business via Instagram)"U.S. bank deposits rise in early May, lending little changed at record high" (Reuters)"US real estate investors are losing money on roughly 1 in 7 homes they sell — among the worst since 2016. And they're most likely to take a hit in these 5 cities" (Moneywise)"A problem for the housing market: People won’t quit their cheap mortgages" (The Washington Post)"US Households Show Signs of Stress as New Delinquencies Rise" (Bloomberg)"Argentina to Hike Rates in Bid to Stem Inflation Crisis" (Bloomberg)

The number of Americans filing new claims for unemployment benefits have jumped to a 1-1/2-year high, pointing to cracks in the labor market as demand slows, potentially giving the Federal Reserve room to halt further interest rate increases next month. With demand cooling, inflation pressures are subsiding. Data from the Labor Department indicates that producer prices rebounded modestly in April, leading to the smallest annual increase in wholesale inflation in more than two years.In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.They discuss a Labor Department report showing that the consumer price index (CPI), which measures the cost of a broad swath of goods and services, increased 0.4% for the month, in line with the Dow Jones estimate.Chris and Saied look at comments from JPMorgan Chase CEO Jamie Dimon that markets will be gripped by panic as the U.S. approaches a possible default on its sovereign debt, calling the default "potentially catastrophic" for the country.They also offer some thoughts on a statement by New York Federal Reserve President John Williams, who cautioned that interest rate increases will take a while to work their way through the economy before inflation returns to an acceptable level.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why services inflation is really consumer discretionary spending more than anything else.Why housing prices are excluded from the Labor Department’s CPI report.The odds of a Fed rate cut this year.Why the Fed's 'stress tests' for banks failed.And so much more...Resources:"Jamie Dimon warns panic will overtake markets as US approaches debt default" (CNBC via Instagram)"The family behind First Citizen's Bank is $1 billion richwer since SVB" (Bloomberg Business via Instagram)"AirBnB stock craters - founders lose $4 billion in one day" (Forbes via Instagram)"Inflation rate eases to 4.9% in April, less than expectations" (CNBC)"Wholesale prices rose just 0.2% in April, less than estimate as inflation pressures ease" (CNBC)"Fed’s John Williams says rates could be increased if inflation doesn’t come down" (CNBC)"Worries linger about financial stability following bank rescue, Fed report shows" (CNBC)"US weekly jobless claims hit 1-1/2-year high; inflation subsiding" (Reuters)"Brits are being offered no-deposit 100% mortgage loans for the first time since 2008" (CNBC)"We May Be Getting Used to High Inflation, and That’s Bad News" (The Wall Street Journal)"Icahn, Under Federal Investigation, Blasts Short Seller" (The Wall Street Journal)"Inflation Eased in April but Remains Stubbornly High" (The Wall Street Journal)"Can Inflation Fall Fast Enough for the Fed?" (The Wall Street Journal)"How the Fed’s stress tests failed to stop a banking crisis" (Fortune)"Monthly Mortgage Payments Could Surge 22% If US Defaults" (Bloomberg)

The Pandemic Housing Boom saw a flood of institutional homebuying. Low interest rates, easy access to capital, soaring rents, and skyrocketing home values were just too good a deal for Wall Street types like Blackstone and iBuyer players like Opendoor Technologies to pass on. However, it seems that institutional homebuyers are pulling back. According to an analysis conducted by John Burns Research and Consulting, institutional investors — those owning over 1,000 homes — bought 90% fewer homes in January and February than they did in the first two months of 2022. Invitation Homes, the largest owner of U.S. single-family rental homes recently became a net seller. In the first quarter of 2023, Invitation Homes bought 194 homes while it sold off 297.In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.They discuss the reasons that banks are going to choose to be strategic in the deployment of capital, partially because they want to keep as much of their balance sheets as possible, in case of a run on deposits, and partially because any loan they make today is going to be underwater if the Federal Reserve continues to increase rates.Chris and Saied look at news that shares of San Francisco-based PacWest Bancorp plunged after investors learned the regional bank was considering a sale. Despite thet fact that the bank has said it had not experienced a high number of customer withdrawals, the news still stoked fears of a potential surge in withdrawals among regional banks.They also offer some thoughts on the results of a survey from the National Federation of Independent Businesses (NFIB), a lobbying organization that represents small business owners nationwide, which shows that small business earnings rose to the highest levels in at least 45 years last month.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why the market is not concerned with interest rate increases.Why the US dollar needs to be the world's currency.Why the debt ceiling is going to have to be raised well before June 1.Why, in 2011, the debt ceiling crisis led to an S&P downgrade of US sovereign debt.And so much more...Resources:Wall Street is running away from the housing market. But why?Powell’s Bet Against Recession Looks Good — Minus the Credit Crunch and a DC StandoffFed report shows banks worried about conditions ahead, with focus on slowing economy and deposit outflowsOutlook for household spending slumped in April, New York Fed survey showsCorporate Stock Buybacks Help Keep Market AfloatWhat are the advantages of being the Nation that has the Reserve CurrencyThe Kardashev Scale - Type I, II, III, IV & V CivilizationJob growth totals 253,000 in April, beating expectations even as the U.S. economy slows

Employment openings pulled back further in March, hitting a nearly two-year low in a sign that the ultra-tight U.S. job market is loosening and possibly putting less pressure on inflation, according to a report by the Labor Department. The department’s Job Openings and Labor Turnover Survey showed that job vacancies totaled 9.59 million for the month, down from 9.97 million in February and below the FactSet estimate for 9.64 million. At the same time, layoffs and discharges jumped by 248,000 to just over 1.8 million, taking the rate as a share of the workforce up to 1.2% from 1%.In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.They discuss a report from payroll processing firm ADP that states that private payrolls rose by 296,000 for April, above the downwardly revised 142,000 the previous month and well ahead of the estimate for 133,000.Chris and Saied look at Fed Chair Jerome Powell's recent press conference, in which he said that, "The run on Silicon Valley Bank was out of keeping with the speed of runs through history. And that now needs to be reflected in some way in regulation and in supervision.”They also offer some thoughts on the recent increase in the Fed's target range for its benchmark interest rate by 0.25%, while leaving its options open on future rate hikes.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why the entire regional bank sector is taking a significant pounding.Why the market doesn't believe a lot of what Fed Chair Jerome Powell is saying.The reason why so many knowledgeable people on the news and in social media seem to have no idea how banking works.The role of digital banking, providing depositors with quick access to their funds that they can move immediately.And so much more...Resources:"Dow tumbles more than 300 points as banking sector worries reignite before Fed rate decision" (CNBC)"Job openings fell more than expected in March to lowest level in nearly two years" (CNBC)"Private payrolls surged by 296,000 in April, much higher than expected, ADP says" (CNBC)"Fed recap: Here are Chair Powell’s market-moving comments after the latest rate hike" (CNBC)"Federal Reserve pushes interest rates above 5% for first time since 2007" (Yahoo! Finance)"Exclusive: US officials assessing possible 'manipulation' on banking shares" (Reuters)"Apple reportedly attracted $1 billion in deposits into its new high-yield savings account in just 4 days" (BusinessInsider)"As JPMorgan Scoops Up First Republic, Are Banks Facing Their ‘Minsky Moment?'" (Payments.com)"US job openings fall to a nearly 2-year low of 9.6 million. Fewer people are quitting too" (MarketWatch)"For Banks Under Stress, There’s a Federal Backstop That Provides Help Without Stigma" (Bloomberg)"Regional Bank Stocks Close at Lowest Level Since 2020" (Wall Street Journal)"What a Fed Debate 17 Years Ago Reveals About Its Rate Deliberations Now" (Wall Street Journal)

Regulators have seized First Republic Bank and sold its assets to JPMorgan Chase & Co in a deal to resolve the largest U.S. bank failure since the 2008 financial crisis and draw a line under a lingering banking turmoil. First Republic was among regional U.S. lenders most battered by a crisis in confidence in the banking sector in March, when depositors fled en masse from smaller banks to giants like JPMorgan as they panicked over the collapse of two other mid-sized U.S. banks.In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.They discuss comments from JPMorgan Chase CEO Jamie Dimon, who said that the crisis that led to the downfall of three regional U.S. banks in recent weeks is largely over after the resolution of First Republic.Chris and Saied look at a warning from billionaire investor Charlie Munger, vice Chairman of Berkshire Hathaway, who sees trouble ahead for the U.S. financial system because American banks are "full of... bad loans" due to falling property prices in the country in a situation that seems very similar to what caused the banking crisis in 2008.They also offer some thoughts on recently-released economic data showing that inflation rose again in March, despite a year’s worth of interest rate increases. This is data that the Federal Reserve watches very closely.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why you can’t compare the large global banks to regional community banks.Why the Federal Deposit Insurance Corporation (FDIC) will share losses with JP Morgan on First Republic loans.What other banks are doing to prepare for a possible rate hike.Why banks are not doing loans right now.And so much more...Resources:"Australia’s central bank hikes rates by 25 basis points; Asia-Pacific markets mixed" (CNBC)"Jamie Dimon says ‘this part of the crisis is over’ after JPMorgan Chase buys First Republic" (CNBC)"Key inflation gauge for the Fed rose 0.3% in March as expected" (CNBC)"Charlie Munger says the U.S. commercial property market is in trouble: FT report" (CNBC)"Big banks including JPMorgan Chase, Bank of America asked for final bids on First Republic" (CNBC)"The U.S. could hit the debt ceiling by June 1, much sooner than expected, Yellen warns" (CNBC)"Charlie Munger Sounds The Alarm on Issue That Could Bring Down the U.S. Economy" (TheStreet)"Warren Buffett might help rescue the banks again - but he'll probably make less money this time around" (Markets Insider)"Renting is still far less expensive in Dallas-Fort Worth than in other metros" (The Dallas Morning News)"Regulators seize First Republic Bank, sell assets to JPMorgan" (Reuters)"Ranked: The U.S. Banks With the Most Uninsured Deposits" (Visual Capitalist)"A Tax Loophole Makes EV Leasing a No-Brainer in the US" (Bloomberg)"First Republic Bank Is Seized, Sold to JPMorgan in Second-Largest U.S. Bank Failure" (The Wall Street Journal)"The Building Boom Is Prolonging Market Pain" (The Wall Street Journal)"Why First Republic Bank Collapsed" (The Wall Street Journal)

Growth in the U.S. slowed considerably during the first three months of the year as interest rate increases and inflation took hold of an economy largely expected to decelerate even further ahead. According to the Commerce Department, gross domestic product (GDP) rose at a 1.1% annualized pace in the first quarter. Economists surveyed by Dow Jones had been expecting growth of 2%.In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.They discuss a report stating that U.S. home prices, as measured by the seasonally adjusted Case-Shiller National Home Price Index, rose 0.15% between January and February. This month-over-month national home price uptick comes after national prices had declined every month between June 2022 and January 2023.Chris and Saied look at news showing the continued decline of First Republic Bank's stock, an ongoing rout that has erased 60% of its value just this week on concerns about the bank's financial health in the wake of two other bank collapses.They also offer some thoughts on the apparent end of the severe contraction in the US housing market over the past year, a bottoming-out which is raising hopes on Wall Street that America could avoid a recession altogether.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:The definition of gross domestic product (GDP).Why businesses have been drawing down inventory and cutting equipment purchases.Why home values don’t just drop across the country at the same time.Why historically, housing has been a critical driver of the broader business cycle.And so much more...Resources:"GDP Report Shows Economic Growth Slowed in First Quarter" (The Wall Street Journal)"Bankers’ pitch to save First Republic: Help us now, or pay more later when it fails" (CNBC)"Housing market correction is running on fumes as Case-Shiller reports the first U.S. home price uptick since June—these 2 charts tell the story" (Fortune)"The housing market's bottoming-out raises hopes that the US can avoid a recession" (Bloomberg Business)"First Republic Bank Is a Problem With No Easy Solution" (The Wall Street Journal)"Google Ad Revenue Drops for Second Straight Quarter" (The Wall Street Journal)

Many critics have blasted new rules from the Biden administration that will force good-credit homebuyers to subsidize the costs of buyers with poor credit. One former Obama housing official is calling out the "unprecedented" move, arguing this is "not the way" to bring in more home buyers. New rules from the Federal Housing Finance Agency (FHFA) will allow consumers with lower credit ratings and less money for a down payment to qualify for better mortgage rates than they otherwise would have. In turn, the costs are expected to be passed on the those with good credit. The rules are set to go into effect May 1.In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.They discuss comments from tech investor Chamath Palihapitiya, who said two years ago that bitcoin had replaced gold and predicted the digital currency would climb to $200,000, who is now saying that "Crypto is dead in America," blaming its demise largely on regulators, who have gotten much more aggressive in their pursuit of bad actors in the industry.Chris and Saied look at reports that Bed Bath and Beyond has filed for Chapter 11 bankruptcy protection after it failed in several last-ditch efforts to raise enough money to keep the company alive. It had been warning of a potential bankruptcy since early January, when it issued a “going concern” notice that it may not have the cash to cover expenses after a dismal holiday season.They also offer some thoughts on real estate magnate Sam Zell's assertion that "Remote work is a bunch of bullshit," speaking at a luncheon at NYU’s Schack Institute of Real Estate as part of its annual REIT Symposium.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:What is Moody's and why do its ratings matter?Why working from home is here to stay, but it's not for everyone.Why Google CEO’s compensation package includes $6 million for personal security.Why Coinbase's CEO Brian Armstrong says his company is preparing for a years-long court battle with the commission.And so much more...Resources:"Former Obama housing chief slams Biden’s ‘unprecedented’ mortgage plan: ‘Not the way to do it’" (Fox Business)"Frank's Charlie Javice moved millions from JPMorgan to Signature months before the bank collapsed" (Bloomberg Business)"More US consumers are falling behind on payments" (Yahoo! Finance)"Amazon, Microsoft, Meta, Alphabet lead earnings rush: What to know this week" (Yahoo! Finance)"‘Crypto is dead in America,’ says longtime bitcoin bull Chamath Palihapitiya" (CNBC)"Meta has started its latest round of layoffs, focusing on technical employees" (CNBC)"Google’s 80-acre San Jose mega-campus is on hold as company reckons with economic slowdown" (CNBC)"BuzzFeed News Is Shutting Down, and Vice World News Could Be Next" (The Wall Street Journal)"Bed Bath & Beyond Files for Bankruptcy" (The Wall Street)"First Republic Lost $100 Billion in Deposits in Banking Panic" (The Wall Street Journal)"The Labor Market Might Be Bending; It Isn’t Breaking" (The Wall Street Journal)"Moody’s Downgrades 11 Regional Banks, Including Zions, U.S. Bank, Western Alliance" (The Wall Street Journal)"The Repo Man Returns as More Americans Fall Behind on Car Payments" (Bloomberg)"Remote work is ‘bull***t’ and the ‘office situation will change,’ says real estate billionaire Sam Zell: ‘People need to be together’" (Fortune)“US existing-home prices fall nearly 1% in March, the biggest drop in a decade” (MarketWatch)

The US economy stalled in recent weeks, with hiring and inflation slowing and access to credit narrowing, the Federal Reserve said in its Beige Book survey of regional business contacts. "Overall economic activity was little changed in recent weeks," the Fed said in the report, published two weeks before each meeting of the policy-setting Federal Open Market Committee. "Several districts noted that banks tightened lending standards amid increased uncertainty and concerns about liquidity. Overall price levels rose moderately during this reporting period, though the rate of price increases appeared to be slowing."In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.They discuss a recent survey from LendingTree Inc., indicating that US consumers are increasingly using installment loans to pay for everyday items like groceries, highlighting the financial pain wrought by the worst inflation outbreak in four decades.Chris and Saied look at Meta’s latest round of job cuts, as employees with technical backgrounds like user experience, software engineering, graphics programming are being let go.They also offer some thoughts on earnings season, demystifying some of the terminology and concepts that get tossed about so that you can better understand what earnings reports mean for you and the economy.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:How credit is being impacted by the stalling US economy.The Federal Reserve's Beige Book: What it is and why it matters.The rise of 'buy now, pay later' services, and the negative impact they're having on consumers.The continued rash of layoffs in the tech sector - and soon, the banking sector as well.And so much more...Resources:"US Economy Stalls as Credit Narrows, Fed’s Beige Book Says" (Bloomberg)"Americans Go Deeper Into Debt as They Use Buy Now, Pay Later Apps for Groceries" (Bloomberg)"More US consumers are falling behind on payments" (Yahoo! Finance)"Meta has started its latest round of layoffs, focusing on technical employees" (CNBC)

According to data from Redfin, the median U.S. asking rent fell 0.4% year over year to $1,937 in March. That’s the first U.S. Treasury Secretary Janet Yellen has said that banks are likely to become more cautious and may tighten lending further in the wake of recent bank failures, possibly negating the need for further Federal Reserve interest rate hikes. In a recent interview, Yellen said that policy actions to stem the systemic threat caused by last month's failures of Silicon Valley Bank and Signature Bank had caused deposit outflows to stabilize, "and things have been calm."In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.They discuss the launch of Apple's 'Apple Card' savings account, with a 4.15% annual percentage yield. It requires no minimum deposit or balance, Apple said, and users can set up an account from the Wallet app on their iPhones.Chris and Saied look at a report from investment research firm Morgan Stanley Capital International (MSCI), indicating that investors have grown voracious for apartment-building acquisitions in 2021 and 2022, having purchased $355.5 billion and $299.2 billion worth of apartment buildings, unprecedented sums that far surpassed the previous $194 billion record of multifamily sales in 2019.They also offer some thoughts on news that the National Association of Home Builders / Wells Fargo Housing Market Index climbed to 45 in April, a 1-point gain, the highest since September. The index stood at 77 in April 2022.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why the Fed believes that unemployment is an inflationary trend.Why Chris believes inflation may be moderating.The degree of liability on the line for banking executives in the wake of the current crisis.Why difficulty getting loans and a lack of inventory has created a stalemate in the housing market.And so much more...Resources:"Yellen says US banks may tighten lending and negate need for more rate hikes" (Reuters)"Fed should let the economy equilibrate, says former Fed nominee Judy Shelton" (CNBC)"Warren Buffett Doesn't Hold Back When Asked About Failed Bank Execs" (TheStreet)"Credit-card balances have hit historic highs. Here’s why that’s a worrying sign." (Market Watch)"NO ATMs, no fees, and a 103-year old vault: Inside America's Smallest Bank" (Businessweek via Instagram)"Apple launches its savings account with 4.15% interest rate" (CNBC)"Rental Market Tracker: U.S. Rents Post First Annual Decline in Three Years" (Redfin)"Landlords pumped billions into apartment buildings during the pandemic. That bet could now go horribly wrong." (Yahoo! Finance)"Apple launches its savings account with 4.15% interest rate" (CNBC)"Charlie Javice, the founder accused of fraud by JPMorgan, is arrested as DOJ files criminal charges" (Fortune)"Bosses Pay Workers to Move Closer to Offices" (The Wall Street Journal)"Homebuilder sentiment rises in April, as builders grab near-record share of the market" (CNBC)"$134.1M! Wells Fargo CEO's retirement payout even bigger than thought" (USA Today)