Federal Reserve Bank of Cleveland President Loretta Mester has said that she does not think the U.S. central bank is at a point yet where it can hold interest rates steady for a period of time, given how stubborn inflation is. Federal Reserve Chair Jerome Powell has signaled the central bank may pause further rate hikes as it assesses the impact of its past tightening, as well as the effect of recent bank sector stress on lending and credit.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 JPMorgan sees treasuries as the best hedge against a slowdown, and sees the possibility of 10-year rates falling below 2.5% in the event of a deep recession. The 10-year Treasury rate was trading around 3.53% on Wednesday, after rising as high as 4.09% earlier in the year.Chris and Saied look at comments from Atlanta Federal Reserve Bank President Raphael Bostic, who said that, if he were voting on monetary policy today, he would vote to hold interest rates steady, but added there is still a lot of data to come before the Fed's meeting in June.They also offer some thoughts on Elon Musk's assertions that he doesn’t care if his inflammatory tweets scare away potential Tesla buyers or Twitter advertisers.Join Chris and Saied for this fascinating and informative conversation.Enjoy!What You’ll Learn in this Show:Why most people believe that a recession is inevitable at this point.Why, despite the fanfare in the media, we're not yet in a credit tightening cycle.The importance of looking at the actual data, not the intentions.Why Atlanta Fed President Raphael Bostic says he would not cut rates unless inflation fell farther than to mid to high 3%.And so much more...Resources:"Default Fears Rattle Main Street Investors" (The Wall Street Journal)"JPMorgan Asset Says Markets Are Right to Bet on US Rate Cuts" (Bloomberg)"Home Prices Posted Largest Annual Drop in More Than 11 Years in April" (The Wall Street Journal)"Fed's Mester says not yet at point where it can 'hold' rates" (Reuters)"Fed's Bostic: if vote on policy were today, would vote to hold steady" (Reuters)"Elon Musk: ‘I’ll say what I want, and if the consequence of that is losing money, so be it’" (CNBC)

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...

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)

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 Currency