August 20, 2023

Global Wealth Drops For First Time Since 2008 Financial Crisis

Global Wealth Drops For First Time Since 2008 Financial Crisis. Total private wealth declined by 2.4 percent, or $11.3 trillion, to $454.4 trillion. Financial assets saw the face the brunt of the decline last year, while non-financial assets, particularly real estate, remained resilient.

Instacart Plans for September IPO in Boost for US Listings. Instacart, which had previously considered a direct listing, is planning a traditional IPO on the Nasdaq. A listing by Instacart would add momentum to the IPO market.

SoftBank’s Arm Said to Line Up 28 Banks for Biggest 2023 IPO. In addition to four lead banks — Barclays, Goldman Sachs, JPMorgan, and Mizuho — the offering will have 10 second-tier underwriters, including Bank of America Corp. Citigroup Inc., Deutsche Bank AG, and Jefferies Financial Group Inc.

Walmart and Target Face Similar Problems. Despite the different fiscal second-quarter results, the companies showed they still have much in common. Target and Walmart leaders offered similar descriptions of American consumers who now think twice before spending money.

Evergrande Files for U.S. Bankruptcy as China Crisis Deepens. In a filing to the Manhattan bankruptcy court, the firm sought recognition of restructuring talks underway in Hong Kong, the Cayman Islands and the British Virgin Islands.
X to Get Rid of Ability to Block Accounts. Elon Musk, who acquired Twitter last year for $44 billion and has set about overhauling the social media site, said blocking will still be possible for direct messages, but that it would be deleted as a feature.

10-Year Treasury Yield has moved up to 4.30%, the highest since Dec 2007. The Real 10-Year Yield (adjusted for expected inflation) of 1.97% is the highest since July 2009. Source.
New York City is rolling out a plan to convert vacant offices into as many as 20,000 new housing units by creating a multi-agency group to help developers cut through red tape and rezoning a section of Manhattan known as Midtown South. Source.
For the first time ever, both auto loan and credit card delinquencies are above pre-pandemic levels. Stimulus has worn off and higher interest rates are being felt. The average new car payment is now nearing a record $800/month. The average household has nearly $8,000 in credit card debt. Source.
Builders having to buy rates down to 6% or above will be interesting to watch. Entry-level ability to qualify will shrink vs. days of buying down at 4.75% to 5.5%. Kind of throws the ‘new homes are only game in town’ thesis into jeopardy, at least relative to earlier this year. Source.
Year/year decline in Leading Economic Index (LEI) from The Conference Board eased a touch in July to -7.5%, but still a sharp drop from the peak and in territory consistent with prior recessions. Source.

Debt becomes deflationary when you can’t issue more of it. You are witnessing that right now with China.

Michael Gayed

Builders Ramped Up Construction of New U.S. Homes in July. Housing starts rose to a 1.45 million annual pace. A persistent lack of listings for the sale of existing homes has pushed more home buyers to consider newly built homes, prompting home builders to ramp up construction.

Home Prices and Mortgage Rates End Summer at a High. With the housing supply down, this has put upward pressure on prices. In July, home prices hovered at a national median of $440,000 and prices continued to rise by 0.2% compared with the same week last year.

Housing Sales Volume Has Hit 'Rock Bottom', Says Redfin CEO. That means it’s tough to picture it getting much worse. Even at the slowest point of the housing crash in 2008, sales levels weren’t much lower than they are today.
Deere Crushed Earnings Forecasts. Analysts had expected Deere to report $8.20 profit per share -- but Deere actually reported $10.20 per share. On sales, Deere's beat was similarly sizable. Wall Street predicted $14.25 billion in Q3 revenue; Deere delivered $15.8 billion.

The US Housing Market Is In An Untenable Position. Chamath Palihapitiya says high US housing market rates push homeowners to stay put and limit available homes for sale, benefitting builders. This could lead the Federal Reserve to consider earlier rate cuts if economic resilience weakens. Source(1:05:01)
Strong Housing and Labor Data Defy Recession Odds. You can't have a recession with new home buildings and new home sales on fire. Those two things do not happen at the same time, along with a very tight labor market. There is a demographic tailwind for housing in the next decade because of a structural shortage. Source(25:40)

Aldi to Acquire Winn-Dixie and Harveys Supermarket Stores. The German grocer has entered into an agreement to buy nearly 400 locations from Winn-Dixie and Harveys Supermarket. The deal underscores the resiliency of the supermarket industry and immunity to macroeconomic conditions. Source(8:04)
US Mortgage Rates Have Soared To A 21-Year High. The average 30-year fixed rate mortgage hit 7.09 percent, driven by the Fed’s aggressive interest rate rises. Plus, the yield on 10-year treasuries continued to rise yesterday. It’s now at its highest level in 16 years. Source(2:30)
Maker of $400 Golf Putters Becomes 2023’s Best IPO With a 624% Gain. Sacks Parente Golf Inc. shares skyrocketed 624% on its first trading day. The company closed just shy of $29 Tuesday after pricing its initial public offering of 3.2 million shares at $4. Source(14:40)