The Higher Standard

Federal Reserve Chairman Jerome Powell has cautioned that interest rates are likely to rise higher than central bank policymakers had expected. Citing data showing that inflation has reversed the deceleration it showed in late 2022, Powell warned of tighter monetary policy ahead to slow a growing economy. His remarks imply that the peak, or terminal, level of the federal funds rate is likely to be higher than the previous indication from the Fed officials, and also that the switch last month to a smaller quarter-percentage point increase could be short-lived if inflation data continues to run hot.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 an announcement from automaker Rivian indicating a drop in its cash position. Rivian had cash and cash equivalents of $12.1 billion on hand at the end of December, down from $13.8 billion at the end of the third quarter and $15.5 billion as of June 30.Chris and Saied look at news that investors have dumped shares of SVB Financial Group and a collection of other U.S. banks after the lender said it lost nearly $2 billion selling assets following a larger-than-expected decline in deposits.They also offer some thoughts on data from ADP, indicating that private payrolls increased by 242,000 in February, versus the estimate for 205,000 and above the 119,000 in January.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Results of the most recent Job Openings and Labor Turnover Survey (JOLTS) report.The voluntary liquidation of Silvergate Bank.Demystifying concepts such as 'index plus margin' and a 'run on the bank.'Why there is much more at play in banking than just finance.And so much more...Resources:"Dow closes 570 points lower, turns negative for 2023 as Powell ignites higher rate fears: Live updates" (article from CNBC)"Fed's Powell again rejects idea of raising inflation target" (article from Reuters)"Rivian Stuns Investors With Very Bad News" (article from The Street)"US unemployment is falling even as the economy slows. What the heck is going on?" (article from MarketWatch)"Fed Chair Powell says interest rates are ‘likely to be higher’ than previously anticipated" (article from CNBC)"Job openings declined in January but still far outnumber available workers" (article from CNBC)"Private payrolls rose by 242,000 in February, better than expected, ADP says" (article from CNBC)"Banks Lose Billions in Value After Tech Lender SVB Stumbles" (article from The Wall Street Journal)"System Open Market Account Holdings of Domestic Securities" (article from The New York Fed)"Slack is introducing AI assistant that can write messages for you" (article from Morning Brew)

Home prices have finally fallen from a year-ago levels, according to a commonly used indicator of data. Last month, investors received a slate of home price data for December and January from the National Association of Realtors and S&P Dow Jones Indices. The Realtors Association indicated that the median single-family home sold for $363,100 in January, up 0.7% year-over-year, while December data from the S&P CoreLogic Case-Shiller Home Price Indices' reflected a national price increase of 5.8% year-over-year. More frequent data shows the housing market may have reached a turning point in February, with thin price gains turning into declines. Redfin said on Thursday that its measure of the median home sale price fell by 0.6% over a four-week period covering most of February.In this episode of The Higher Standard, Chris and Saied examine this news as well as other articles on the US housing market. Housing price and mortgage application indices have reached their lowest levels since the Great Recession in 2007.Chris and Saied will debunk Dave Ramsey's concept of supply and demand. They also talk about why they believe house prices must fall. Chris will discusses the younger generation's sense of entitlement in the office as well as the concept of communication in the workplace. Billionaire Charlie Munger expressed his opinion on cryptocurrencies by saying, "It's just ridiculous that anyone buys this stuff." They offer their insights on cryptocurrencies and Charlie Munger's interview. They look at CNBC's reports about crypto bank Silvergate Capital, whose shares have plummeted. According to MarketWatch, Silvergate shares have lost over 97% of their value since hitting an all-time high in November 2021.Join Chris and Saied for this fascinating and informative conversation about debt, especially for people in their 30s, and what's best thing to do with your money. Spoiler alert: It just might be to keep it in cash.What You’ll Learn in this Show:Why affordability is a powerful factor.Why house prices have fallen more slowly in the Midwest.How CPI is significantly affected by home prices.Shoul you get a salary adjustment if you moved to Utah?Some of the biggest misconceptions for consumers when submitting their financial information to a bank.Millennials' growing debt.And so much more...Resources:The housing market correction, as told by 4 charts | FortuneBillionaire Charlie Munger: Cryptocurrency is 'crazy, stupid gambling,' and 'people who oppose my position are idiots'Here’s the real challenge facing Silvergate and other 'crypto banks,' says this short seller - MarketWatchAmericans in Their 30s Are Piling On Debt - WSJ

In recent episodes Chris and Saied have highlighted some of the things that get people excited in the current market. Today, however, Chris emphasizes that conditions have changed and there is a new call for concern. Time to be extra observant. Stocks move lower as bond yields extend their gains. The 10-year Treasury hit 4% and the 1-year treasury rose 3 basis points. The Minneapolis Fed Reserve President Neel Kashkari has said that he is open to the possibility of a larger interest rate increase at this month's policy meeting on March the 22.But first Chris and Saied explore Tim Cramer and the inverse ETF (Exchange Traded Funds) of Cramer. One can literally bet against him to make money. Cramer is well known for his show Mad Money on CNBC. Chris describes how Cramer rose to popularity and still receives a lot of coverage but doesn’t actually have a profitable track record to follow.  He once urged listeners to dump HP stock in 2011 just before it shot up, and he did the same with Netflix and Best Buy in 2012. Is all this being done for entertainment value?Chris and Saied get into the evolution of social media and what's next for that whole industry. Enjoy a discussion about the second wave of social media and how it may be driven by Gen Z's fundamentally different mindset. They discuss the Be Real app that will encourage people to be truly authentic.Finally, Chris and Saied dive into Blackstone and the news that it defaulted on a $562 million bond backed by a portfolio of Finnish offices and stores. They dissect the implications of this news.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why betting against Tim Cramer is a good idea.What the big concerns are in the market and why you should be vigilant.How home prices and sales can really be a lag indicator.What happens when there is less revenue for companies and why some of the ramifications of a recession take time to show themselves.Interesting discussion about how Americans get over big news easily, including that of the Chinese balloon and disappearances of Chinese moguls in finance and tech.How Gen Z, and in particular teenage girls, will shape the social media landscape of the future.Resources:https://apple.news/Av_puaSbTSg6aOiM7mGvBtQhttps://www.cnbc.com/amp/2023/02/28/treasury-prices-fall-slightly-to-close-out-bumper-month-for-yields.htmlhttps://apple.news/Au83a5dJwTwOxXU-n5MTiNwhttps://apple.news/ALcINeqAzSoypvOQOMmD5vghttps://apple.news/AsFGWviHCTmmgdYfWEo827ghttps://www.thestreet.com/etffocus/blog/inverse-cramer-etf-is-livehttps://www.wsj.com/articles/fed-official-says-hotter-data-will-warrant-higher-rates-a0162583https://www.cnbc.com/2023/03/01/mortgage-demand-falls-interest-rates-rise.htmlhttps://www.cnbc.com/2023/03/02/mortgage-rates-back-over-7percent.htmlhttps://finance.yahoo.com/news/blackstone-defaults-562-million-nordic-160233476.htmlhttps://www.reuters.com/markets/currencies/investors-pull-around-6-billion-out-binances-stablecoin-2023-03-01/https://www.cnbc.com/video/2023/02/28/below-trend-growth-with-a-rising-unemployment-rate-means-reces…https://www.morningbrew.com/daily/stories/2023/03/01/elon-musk-master-plan-tesla

A measure the Federal Reserve watches closely to gauge inflation rose more than expected in January, indicating the central bank has more work to do to bring down prices. According to a report by the Commerce Department. The personal consumption expenditures price index excluding food and energy increased 0.6% for the month, and was up 4.7% from a year ago. Wall Street had been expecting respective readings of 0.5% and 4.4%. The core PCE gains were 0.4% and 4.6% in December.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 survey from the Philadelphia Fed that indicates 39% of crypto owners said last October that they would likely buy more cryptocurrency as a way to gain wealth.Chris and Saied look at a research white paper that examines the history of central bank efforts to create disinflation, which states that the Federal Reserve is unlikely to be able to bring down inflation without having to raise interest rates considerably higher, causing a recession.They also offer some thoughts on ‍a report from Goldman Sachs, which says that, out of the country's 25 largest metropolitan areas, four cities stand out for having particularly dim housing forecasts: Austin, Seattle, Phoenix and San Francisco.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why the Fed believes that wages and wage inflation will put upward pressure on prices.What could happen to the sub-markets of San Francisco and Silicon Valley.Why Open Door closed out 2022 with two straight quarters of losses and where it goes from there.The duties and role of a Chief Financial Officer.And so much more...Resources:"Roger Ferguson: The Fed has more work to do as inflation still presents danger" (article from CNBC)"Key Fed inflation measure rose 0.6% in January, more than expected" (article from CNBC)"Despite high inflation, Americans are spending like crazy — and it's kind of puzzling" (article from CNBC)"Fed can’t tame inflation without ‘significantly’ more hikes that will cause a recession, paper says" (article from CNBC)"Are we headed for a recession? More economists think a 2023 downturn may come later than they thought" (article from USA Today)"Subprime auto lender folds as more Americans fall behind on car payments" (article from Fortune)"Home prices will sink in these cities that were once red hot as supply starts to overwhelm demand" (article from Markets Insider)"Opendoor loses $400 million as home sales tank" (The Real Deal via Instagram)"Home remodeling is slowing down, but ‘historic boom' is coming" (article from Yahoo! Finance)"The Rental Housing Market Hits An Historic High Point (And That’s Saying A Lot)" (article from Forbes)"The investors who still think crypto can make them rich" (Wall Street Journal via Instagram)"Binance's asset shuffling eerily similar to maneuvers by FTX" (Forbes via Instagram)"Corporate Stock Buybacks Help Keep Market Afloat" (article from The Wall Street Journal)

Redfin Corp. has said that the total value of homes in the U.S. totaled $45.3 trillion at the end of 2022, which is down about $2.3 trillion, or 4.9%, from the June 2022 peak of $47.7 trillion. That marks the biggest decline for any June-to-December period since 2008, during the financial crisis. The housing market has been declining as rising mortgage rates have hurt demand. The hardest hit area was San Francisco, which saw the total value of homes in December fall by $37.3 billion, or 6.7%, from a year ago to $517.5 billion, while Miami saw the value of its homes surge by $77 billion, or 19.7%, in December to $468.5 billion.In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect this will have on the housing market.They discuss data from the Mortgage Bankers Association (MBA) showing that the average interest rate on the most popular U.S. home loan rose last week to its highest since November as bond markets took fright that the Federal Reserve might have to continue tightening policy through summer to subdue inflation.Chris and Saied look at news that the number of large office landlords defaulting on their loans is on the rise, which appears to offer fresh evidence that more developers believe that remote and hybrid work habits have permanently impaired the office market.They also offer some thoughts on ‍the decision to no longer offer travelers using American Express premium credit cards the ability to to bring two free guests to the American Express lounges. There is now a $50 fee for adults and a $30 fee for children ages 2 to 17.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why something in the Fed rate outlook is causing problems in the market.Why college campuses have incubators for extremism on all sides.Why people need to be aware of where the market is moving.Why existing home sales have slowed down, no matter what some will say.And so much more...Resources:"U.S. mortgage interest rates jump to highest level since November - MBA" (article from Reuters)"US home values declined by $2.3 trillion in 2nd half of 2022, Redfin says" (article from MarketWatch)"Existing home sales fall for the 12th consecutive month in January" (article from CNBC)"Office Landlord Defaults Are Escalating as Lenders Brace for More Distress" (article from The Wall Street Journal)"American Express Airport Lounges Cut Back on Free Plus Ones" (article from The Wall Street Journal)

Bank of America analysts warn that the U.S. economy could be headed for a "no landing" scenario thanks to the hot labor market, but that might not be good news for the stock market. BoA chief economist Michael Hartnett predicted a "no landing" scenario in the first half of the year, where there is no immediate slowdown in growth but inflation remains above trend. That would likely force the Fed to raise interest rates much higher than previously forecast — and keep them elevated for longer.In this episode of The Higher Standard, Chris and Saied examine this news and what it could mean for the economy as a whole.They discuss comments from Equity Group Investments founder and chairman Sam Zell, stating that Jerome Powell "missed the boat" on inflation, allowing "super-low" interest rates to exist for too long.Chris and Saied look at a warning from economist Mohamed El-Erian that the Federal Reserve won’t be able to get US inflation down to its 2% target without “crushing the economy.” He added that the central bank is unlikely to officially change that goal post.They also offer some thoughts on a tweet from Charlie Bilello, Chief Market Strategist for Creative Planning, LLC, indicating that only 21% of homes for sale in the US sold above their final list price in the last 4 weeks, down from 40% a year ago. This is the lowest % since March 2020.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why holding rates for a prolonged period of time will create mental strain for people.The definition of a 'hard landing,' and what it means for the economy.Why household debt saw its largest increase in 20 years in New York.Whether the FOMC has the courage, after holding rates for 6-8 months, to raise them again.And so much more...Resources:The Real Deal via Instagram"Bank of America Says Stock Market Threatened With 'No Landing' Scenario" (article from Entrepreneur)"All aboard the mortgage rate roller coaster" (The Data Deli via Instagram)"Fed Can’t Reach 2% Inflation Without Crushing Economy, El-Erian Says" (article from Bloomberg)Charlie Bilello via Twitter"Americans Have Nearly $1 Trillion in Credit Card Debt" (article from Bloomberg)"Investors Worry Too-Hot Economy Will Put Fed on More Aggressive Rate Path" (article from The Wall Street Journal)

Retail sales rose far more than expected in January as consumers persevered despite rising inflation pressures. According to the report by the COmmerce Department, advance retail sales for the month increased 3%, compared with expectations for a rise of 1.9%. Excluding autos, sales rose 2.3%, which is not adjusted for inflation. The ex-autos estimate was for a gain of 0.9%.In this episode of The Higher Standard, Chris and Saied examine this news and try to determine what effect it will have on the economy and the seemingly ever-present inflation.They discuss comments from St. Louis Federal Reserve President James Bullard, who said that continued Federal Reserve rate increases will “lock in” slowing inflation even with continued economic growth. He also says it's likely that the economy will slow and the unemployment rate rise towards its “longer-run natural level,” something economists define as consistent with stable inflation and in the case of the United States estimated by Fed policymakers as around 4%.Chris and Saied look at data from mortgage technology and data provider Black Knight Inc. showing that some of the most popular pandemic boomtowns such as Phoenix and Seattle, as well as popular West Coast cities like San Jose and San Francisco, posted home price declines of more than 10% from their 2022 peaks.They also offer some thoughts on a report from the Labor Department, which indicates that inflation rebounded in January at the wholesale level, as producer prices rose more than expected to start the year.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why Chris believes that home values have gone down, but we're not seeing accurate reporting of that fact.Why the Fed's main tool for controlling monetary policy is the Fed funds rate.The most opportune time for people to list their homes.Why unemployment is often a by-product of the Fed raising interest rates.And so much more...Resources:"CPI shows US inflation still sticky and slowing grudgingly in January" (article from MarketWatch)"Fed's Bullard: Further rate increases would "lock in" disinflation" (article from Reuters)"Zillow says the home price correction is winding down—here’s what 28 other forecast models have to say" (article from Fortune)"Map: Here's where home prices are dropping the most" (article from Yahoo! Finance)"Here’s the breakdown of the inflation report for January — in one chart" (article from CNBC)"Retail sales jump 3% in January, smashing expectations despite inflation increase" (article from CNBC)"Consumer debt hits record $16.9 trillion as delinquencies also rise" (article from CNBC)"Wholesale prices rose 0.7% in January, more than expected, fueling inflation increase" (article from CNBC)

So it's finally happened. The Federal Reserve Board warned member banks that it intends to presumptively prohibit a large portion of cryptocurrency banking activity, as the demand for more guidance over digital assets has grown following rampant instances of fraud. The regulator issued a new policy largely prohibiting digital assets from the regulated banking environment, primarily due to security concerns.In this episode of The Higher Standard, Chris and Saied examine this news and try to determine what effect it will have on the crypto space.They discuss a recent Gallup poll indicating that half of Americans say they are financially worse off now than they were a year ago, the highest share since 2009. About 61% of those with a household income of less than $40,000 reported they were worse off, compared to 49% and 43% for middle- and high-income households respectively.Chris and Saied look at a report from Zillow stating that the amount of time it would take to save enough to put 10% down on a typical home in Austin rose from eight years in 2019 to 13 years in 2022.They also offer some thoughts on Affirm Holdings Inc. seeking new sponsor banks to diversify the sources of loan originations, as the buy-now, pay-later platform comes under pressure to improve earnings after a slowdown in growth.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:The concept of centralized cryptocurrency exchanges and how they work.What’s happening in the commercial real estate market in terms of lagging responses.Why banks have an ongoing due diligence requirement for commercial loans.The reasons why more San Francisco homes are selling below the asking price in LA.And so much more...Resources:"Two More ‘Shoes To Drop’ In The Real Estate Market" (article from Forbes)"Morgan Stanley says the stock market is ‘disconnected from reality’ and it’s going to hit bottom this Spring" (article from Fortune)"Half of Americans say they're worse off than they were a year ago" (Bloomberg Business via Instagram)"Federal Reserve Issues New Restrictions on Crypto Banking" (article from NextGov)"More San Francisco homes selling below asking price. Could that trend come to L.A.?" (article from the Los Angeles Times)"It now takes roughly 13 years to save for a down payment in New York and Austin" (Bloomberg Business via Instagram)"Fed’s Neel Kashkari says central bank has not made enough progress, keeping his rate outlook" (article from CNBC)"Zoom to lay off 1,300 employees, or about 15% of its workforce" (article from CNBC)“Yahoo to lay off more than 20% of staff” (article from Yahoo! Finance)"Affirm seeks new sponsor banks as it shifts to interest-bearing loans" (article from S&P Global)"LA landlords must pay to relocate tenants facing hefty rent hikes" (TheRealDeal via Instagram)"There’s a new inflation warning for consumers coming from the supply chain" (article from CNBC)"Stablecoin issuer Paxos ordered to halt creation for Binance USD" (article from Yahoo!)

Ian Shepherdson, founder and chief U.S. economist of Pantheon Macroeconomics, believes that home prices may fall another 15% in 2023, citing the large disparity between property costs and buyer incomes. He predicted the eventual housing crash of 2008 in 2005 and recently suggested that the price-income gap, coupled with increased house supply and high mortgage rates, may precipitate a period of continued deceleration of the housing market rather than a significant rebound this year.In this episode of The Higher Standard, Chris and Saied examine this prediction, and attempt to determine just how likely it could be based on current data.They discuss comments from Zillow senior economist Jeff Tucker, who says that, in 2022, homeownership was further out of reach than it has been in modern recorded history. While home prices and mortgage rates may be falling, making the market at least a little more accessible, they’re doing so from historic highs.Chris and Saied look at an interview with Minneapolis Fed President Neel Kashkari, who said that explosive jobs growth is evidence that the central bank has more work to do when it comes to taming inflation, including more hikes to interest rates.They also offer some thoughts on the differences between the affordability crisis this time around, and the last recession.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:The difference between being data-driven and data-based.Why Bob Iger is right-sizing the company to weather the storm and to be more efficient, returning more profits to the shareholders.Why Zoom has laid off 15% of its workforce.What would happen if the Fed started lowering rates again and the effect it would have on inflation?And so much more...Resources:"Economist Who Predicted the 2008 Housing Crash Says Home Prices Will Drop 15% in 2023" (article from Yahoo! Finance)"Home prices are falling, but that doesn’t mean they’re affordable" (article from Grid)"Bob Iger Outlines New Disney Org Structure, With 7,000 Job Cuts Planned" (article from The Hollywood Reporter)"Fed’s Neel Kashkari says central bank has not made enough progress, keeping his rate outlook" (article from CNBC)"Zoom to lay off 1,300 employees, or about 15% of its workforce" (article from CNBC)"Yahoo to lay off more than 20% of staff" (article from Yahoo! Finance)

Employers added more jobs in January than expected, while the unemployment rate fell to a 53-year low, underscoring the resilience of the labor market despite the Fed's aggressive tightening campaign. ⁣ Nonfarm payrolls increased 517,000 last month after an upwardly revised 260,000 gain in December. The figure beat all estimates from economists, who called for a 188,000 gain in payrolls. The unemployment rate dropped to 3.4%, the lowest since May 1969, and average hourly earnings grew at steady pace.In this episode of The Higher Standard, Chris and Saied examine this news, and determine the effect this will have on the economy as a whole.They discuss ARK Investment Management CEO Cathie Wood’s comments that ARK is "the new Nasdaq," adding that her flagship fund now gives investors better exposure to long-term innovation than most of the market’s most popular growth stock benchmarks.Chris and Saied look at a report stating that benchmark 10-year U.S. Treasury yields hit four-week highs after the recent employment numbers raised expectations that the Fed's rate hikes will not end with a hard economic landing, and that the U.S. central bank may have more than one more rate increase left.They also offer some thoughts on Blackstone's plans to ramp up evictions to help its struggling real estate investment trust.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why wages aren't keeping up with inflation, and what the next stage of the Fed's pivot might look like.Why the world’s largest cryptocurrency exchange is temporarily suspending deposits and withdrawals of US dollars.Why FTX debtors are calling on politicians, parties and PACs to return tens of millions in campaign contributions.The definition of a depreciation amortization benefit.And so much more...Resources:"US adds 517,000 jobs in January, far exceeding economists forecasts" (Bloomberg Business via Instagram)"Jobs Report Tells Markets What Fed Chairman Powell Tried to Tell Them" (article from Barron's)"A New Supercycle Is Starting, Says This Macro Strategist. How to Invest." (article from Barron's)"Cathie Wood says AARK is "the new Nasdaq" (Bloomberg Business via Instagram)"Binance to Suspend US Dollar Transfers Using Bank Accounts" (article from Bloomberg)"TREASURIES-Yields hit four-week highs, Fed expected to hike above 5%" (article from Yahoo! Finance)"Blackstone ramps up tenant evictions" (TheRealDeal via Instagram)