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Down with Housing

Down with Housing

With the renewed runup in interest rates, I thought it would be appropriate to revisit the homeownership market via a frenzy of charts. Of course, all real estate is local, but these overall trends are pretty powerful, so it would be unusual for most markets to be immune to them.

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Office Building Woahs

Office Building Woahs

2023 is already shaping up to be the year when the tsunami of office building defaults, foreclosures, and large losses for lenders and equity investors comes on with full force. Cracks have already appeared, and it is only going to get worse. The office building sector is impaired,

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Deconstructing Construction Employment

Construction Employment

Give me a word

Give me a sign

Show me where to look

Tell me, what will I find?

What will I find?

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And Yet

And Yet Labor Economy Government Bonds

Last week was pretty important in confirming the trend change in interest rates and solidifying a slowdown in economic activity. Evidence of the economy slowing is reflected in more U.S. firms cutting their earnings guidance versus raising them.

Number of US firms with corporate guidance announcements in 2022

As the above chart shows,

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Going into Labor

Labor Jobs Inflation Employment 2-Year Treasury Notes

Last week I wrote about how important the 2-Year Treasury note yield was to ascertain how close the Fed was to stopping its rate hikes and how high the Federal Funds Rate may reach. Based on past cycles and declaring that the 2-Year yield had peaked at 4.73% in November,

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Four Eyes on The Two-Year

Four Eyes on The 2 Year Treasury

Introductory note: I wear contacts and glasses, so that’s why I have four eyes paying close attention to the 2-Year Treasury Note yield.

The Federal Reserve has embarked on six tightening cycles since 1988, with the most recent having commenced in March 2022 and one that is still in process.

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From Housing to Labor and Back Again

From Housing to Labor and Back Again

I think this chart is what keeps Jay Powell up at night. If he were convinced beyond a reasonable doubt that we were still in the same low inflation regime that had been present for decades prior to Covid,

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To Russia with Sanctions

Russia Sanctions Russian Economic Sanctions

I have had somewhat of a morbid fascination trying to ascertain the impact of sanctions on the Russian economy and everyday life. Information hasn’t been that easy to come by. The most public evidence that Russia has been holding up comes from still robust revenues from energy exports and the surprising strength of the ruble.

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Labor, Housing, and Fed Policy

It’s becoming even more clear that in order to stifle inflation, the Fed is going to have to induce a recession.

The following chart shows that it takes a recession to stamp out inflation or bring it down even more,

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In Search of Goldilocks

Goldilocks economy

Last week the Fed raised short-term interest rates by 0.75%. This was entirely expected by the market. Given that this was already priced in, it stands to reason that the only source of new information would be what the Fed would communicate in its statement that’s released in conjunction with announcing the interest rate hike along with Chairman Jay Powell’s press conference.

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