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KFC starts selling chicken feet and necks in China to battle soaring costs

Yum China's CEO said soaring inflation has led to the fast food chain offering chicken feet for the first time since entering the market 35 years ago. A KFC store in Xixi Ancient Town, Yancheng City in China's Jiangsu Province.Getty Images KFC China is including chicken feet and necks in its new "super abundant bucket". The CEO of Yum China said rising oil prices were behind the change rather than consumer demand. The company said it had also brought back the buffet option at Pizza Hut restaurants. KFC has started selling chicken feet in China in an attempt to deal with soaring costs, its CEO has said.Yum China, which owns KFC as well as the Pizza Hut and Taco Bells chains, told investors on an earnings call last week that chicken feet had finally made it onto the menu to combat rising energy prices.Joey Wat, the company's CEO, told CNN Business Yum was trying to make maximum use of materials to cut costs. "I can report back that for this year, for 2022, we are finally selling chicken feet," she said.Chicken feet are a delicacy in China, but it was rising costs that prompted the move rather than consumer demand."Prices of commodities such as cooking oil and beef as well as utilities have risen significantly this year," Wat said on the July 29 call."On the labor side, we expect labor inflation to soften, given different the downward economic pressure. However, the increased mix in delivery sales will likely increase rider costs."Wat said KFC China had launched the "super abundant chicken bucket," which included several parts of the chicken, and brought back the buffet option at Pizza Huts.She said: "This bucket features chicken feet, chicken wing tips, necks and other parts traditionally favored by Chinese people. For some of the analysts who asked me before when would we start to sell chicken feet, we are officially selling chicken feet right now after 35 years.""We try to absorb this commodity price increase, with ... full utilization of the chicken," Wat told CNN, saying the company would use everything "except the feather, I guess."Wat told investors that the moves were designed to avoid having to lay off any of its 450,000 employees in China after reporting a 16% decline in revenues year-on-year.Read the original article on Business Insider.....»»

Category: personnelSource: nytAug 6th, 2022

Black Monday: All Hell Breaks Loose As Stocks Plunge Into Bear Market, Curve Inverts, Cryptos Crater

Black Monday: All Hell Breaks Loose As Stocks Plunge Into Bear Market, Curve Inverts, Cryptos Crater For all those claiming that stocks had priced in 3 (or more) 50bps (or more) rate hikes, we have some bad news. All hell is breaking loose on Monday, with futures tumbling (again) into bear market territory, sliding below the 20% technical cutoff from January's all time high of 3,856 and tumbling as low as 3,798.25 - taking out the May 10 intraday low of 3,810 - before reversing some modest gains. S&P 500 futures sank 2.5% and Nasdaq 100 contracts slid 3.1%, in a session that has seen virtually everything crash. Dow futures were down 567 points at of 730am ET. The global selloff - which has dragged Asian and European markets to multi-month lows and which was sparked by a hotter than expected US CPI print which heaped pressure on the Federal Reserve to step up monetary tightening - accelerated on Monday as panicking traders now bet the Fed will raise rates by 175 bps by its September decision, implying two 50-bp moves and one hike of 75 bps, with Barclays and now Jefferies predicting such a move may even come this week. If that comes to pass it would be the first time since 1994 the Fed resorted to such a draconian measure. The selling in stocks was matched only by the puke in Treasuries, as yields on 10-year US Treasuries reached 3.24%, the highest since October 2018, yet where 2Y yields sold off more, sending the 2s10s curve to invert again... ... for the second time ahead of the coming recession, an unprecedented event. The US yield curve appears destined to invert again in coming weeks after Wednesday’s CPI data: BBG We'll get two concurrent recessions — zerohedge (@zerohedge) May 12, 2022 Meanwhile, the selloff in European government bonds also gathered pace, with the yield on German’s two-year government debt rising above 1% for the first time in more than a decade and Italian yields exploding and nearing 4%, ensuring that another European sovereign debt crisis is just a matter of time (recall that all Italian net bond issuance in the past decade has been monetized by the ECB... well that is ending as the ECB pivots away from QE and NIRP). The exodus from stocks and bonds is gaining momentum on fears that central banks’ battle against inflation will end up killing economic growth. Inversions along the Treasury yield curve point to fears that the Fed won’t be able to stave off a hard landing. “The Fed will not be able to pause tightening let alone start easing,” said James Athey, investment director at abrdn. “If all global central banks deliver what’s priced there are going to be some significant negative shocks to economies.” Going back to the US market, big tech stocks slumped in US premarket trading as bets that the Federal Reserve hikes rates more aggressively sent bond yields higher, and Nasdaq futures dropped. Cryptocurrency-exposed stocks cratered as Bitcoin continued its recent decline to hit an 18- month low, precipitated by news that crypto lender Celsius had halted withdrawals... ... which sent Ethereum to the most oversold level in 4 years. Here are some of the biggest U.S. movers today: Apple shares (AAPL US) -3.1%, Amazon (AMZN US) -3.4%, Microsoft (MSFT US) -2.8%, Alphabet (GOOGL US) -3.7%, Netflix -3.8% (NFLX US), Nvidia (NVDA US) -4.5% Tesla (TSLA US) shares dropped as much as 3.1% in US premarket trading amid losses across big tech stocks, while the electric-vehicle maker also filed to split shares 3-for-1 late Friday. MicroStrategy (MSTR US) -18.4%, Riot Blockchain (RIOT US) -15%, Marathon Digital (MARA US) -14%, Coinbase (COIN US) -12.5%, Bit Digital (BTBT US) -10%, Silvergate Capital (SI US) -11%, Ebang (EBON US) -4% Bluebird Bio (BLUE US) shares surge as much as 86% in US premarket trading and are set to trim year-to- date losses after the biotech firm’s two gene therapies won backing from an FDA advisory panel. Chinese education stocks New Oriental Education (EDU US) and Gaotu Techedu (GOTU US) jump 8.3% and 3.4% respectively in US premarket trading after peer Koolearn’s endeavors into livestreaming e-commerce went viral and sent its shares up 95% in two sessions. Astra Space (ASTR US) shares slump as much as 25% in US premarket trading, after the spacetech firm’s TROPICS-1 mission saw a disappointing launch at the weekend. Invesco (IVZ US) and T. Rowe (TROW US) shares may be in focus today as BMO downgrades its rating on the two companies in a note saying it favors alternative asset managers over traditional players as a way to hedge beta risk against the current macro backdrop. In Europe, the Stoxx 600 also extended declines to a three-month low, plunging mover than 2%, with over 90% of members declining, as meeting-dated OIS rates price in 125bps of tightening, one 25bps move and two 50bps hikes by October.  Tech leads the declines as bond yields rise, with cyclical sectors such as autos and consumer products also lagging as recession risks rise.  The Stoxx 600 Tech Index falls as much as 4.3% to its lowest since November 2020. Chip stocks bear the brunt of the selloff: ASML -3%, Infineon -4.2%, STMicro -3.6%, ASM International -2.9%, BE Semi -2.8%, AMS -5.3% as of 9:36am CET. As if inflation fears weren't enough, French banks tumbled after a first round of legislative elections showed that President Emmanuel Macron could lose his outright majority in parliament. Here is a look at the biggest movers: Atos shares decline as much as 12%; Oddo says the company’s reported decision to retain and restructure its legacy IT services business in a separate legal entity is bad news for the company. Getinge falls as much as 7.6% after Kepler Cheuvreux cut its recommendation to hold from buy, cautioning that headwinds and supply chain challenges may intensify as Covid-related tailwinds abate. Elior plunges as much as 15% amid renewed worries over inflation and rising interest rates impacting a caterer that’s still looking for a new CEO following the unexpected departure of the previous one. Valneva falls as much as 27% in Paris after saying its effort to salvage an agreement to sell Covid-19 shots to the European Union looks likely to fail. Subsea 7 drops as much as 13% after the offshore technology company lowered its 2022 guidance, with analysts noting execution challenges on some of its offshore wind projects. French banks decline after a first round of legislative elections showed that President Emmanuel Macron could lose his outright majority in parliament. Societe Generale shares fall as much as 4.5%, BNP Paribas -4.2% Euromoney rises as much as 4.4% after UBS raises the stock to buy from neutral, saying the financial publishing and events firm’s “ambitious” growth targets for 2025 are broadly achievable. Earlier in the session, Asian stocks also declined across the board following the hot US CPI data and amid fresh COVID concerns in China. Nikkei 225 fell below the 27k level with sentiment not helped by a deterioration in BSI All Industry data. Hang Seng and Shanghai Comp. conformed to the downbeat mood with heavy losses among tech stocks owing to the higher yield environment and with mainland bourses constrained after the latest COVID outbreak and containment measures. The Emerging-market stocks index dropped about 3%, falling for a third day in the steepest intraday drop since March, as a fresh high in US inflation sparked concerns that the Fed may need to be more aggressive with rate hikes. In FX, the Bloomberg dollar rose a fourth day as the dollar outperformed all its Group of 10 peers apart from the yen, which earlier weakened to a 24-year low with NOK and AUD the worst G-10 performers. In EMs, currencies were led lower by the South Korean won and the South African rand as the index fell for a fifth day, the longest streak since April.  The onshore yuan dropped to a two-week low as a jump in US inflation boosted the dollar and China moved to re-impose Covid restrictions in key cities. India’s rupee dropped to a new record low amid a selloff in equities spurred by continuous exodus of foreign investors. The euro fell for a third day, touching an almost one-month low of 1.0456. Sterling fell after weaker-than-expected UK GDP highlighted the risks to the economy, with a global risk-off mood adding pressure on the currency, UK GDP fell 0.3% from March. The yen erased earlier losses after earlier falling to a 24-year low while Japanese bonds tumbled, prompting a warning from the Bank of Japan as its easy monetary policy increasingly feels the strain of rising interest rates globally. Bank of Japan Governor Haruhiko Kuroda said a recent abrupt weakening of the yen is bad for the economy and pledged to closely work with the government hours after the yen hit the lowest level since 1998. Bitcoin is hampered amid broad-based losses in the crypto space with the likes of Celsius pausing withdrawals/transfers due to the "extreme market conditions". Currently, Bitcoin is at the bottom-end of a USD 23.7-27.9 range for the session. In rates, the US two-year yield exceeded the 10-year for the first time since early April, an unprecedented re-inversion. The 2-year Treasury yield touched the highest level since 2007 and the 10-year yield the highest since 2018. Treasuries continued to sell off in Asia and early European sessions, leaving 2-year yields cheaper by 15bp on the day into the US day as investors continue to digest Friday’s inflation data. Into the weakness a flurry of block trades in futures added to soaring yields. Three-month dollar Libor jumps 8.4bps. US yields remain close to cheapest levels of the day into early US session, higher by 13bp to 6bp across the curve: 2s10s, 5s30s spreads flatter by 5bp and 5.5bp on the day -- 5s30s dropped as low as -16.6bp (flattest since 2000) while 2s10s bottomed at -2bp. US 10-year yields around 3.235%, remain cheaper by 8bp on the day and lagging bunds, gilts by 2.5bp and 5bp in the sector. Fed-dated OIS now pricing in one 75bp move over the next three policy meetings with 175bp combined hikes priced by September, while 55bp -- or 20% chance of a 75bp move is priced into Wednesday’s meeting. A selloff of European government bonds gathered pace as traders priced in a more aggressive pace of tightening from the ECB, with traders now wagering on two half-point hikes by October. The Bank of Japan announced it would conduct an additional bond-buying operation, offering to purchase 500b yen in 5- to 10-year government bonds Tuesday after 10-year yields rose above the upper limit of its policy band. In commodities, oil and iron ore paced declines among growth-sensitive commodities; crude futures traded off worst levels. WTI remains ~1% lower near 119.30. Spot gold gives back half of Friday’s gains to trade near $1,855/oz. Base metals are in the red with LME tin lagging While it's a busy week ahead, with the FOMC meeting on deck where the Fed is set to hike 50bps, or maybe 75bps and even 100bps, there is nothing on Monday's calendar. Fed Vice Chair Lael Brainard will discuss the Community Reinvestment Act in a pre-recorded video and an audience Q&A; she is not expected to discuss monetary policy given the FOMC blackout period. Market Snapshot S&P 500 futures down 2.4% to 3,803.50 STOXX Europe 600 down 2.0% to 414.12 MXAP down 2.7% to 161.61 MXAPJ down 2.8% to 534.45 Nikkei down 3.0% to 26,987.44 Topix down 2.2% to 1,901.06 Hang Seng Index down 3.4% to 21,067.58 Shanghai Composite down 0.9% to 3,255.55 Sensex down 3.2% to 52,585.17 Australia S&P/ASX 200 down 1.3% to 6,931.98 Kospi down 3.5% to 2,504.51 Brent Futures down 1.9% to $119.71/bbl Gold spot down 0.8% to $1,857.56 U.S. Dollar Index up 0.39% to 104.55 German 10Y yield little changed at 1.54% Euro down 0.3% to $1.0484 Brent Futures down 1.9% to $119.69/bbl Top Overnight News “Sell everything but the dollar” is resounding across trading desks as investors reprice the risk that the Federal Reserve hikes rates more aggressively than previously thought Investors rushed to price in more aggressive Federal Reserve rate hikes Monday as the US inflation shock continued to reverberate, sending two-year Treasury yields to a 15-year high and strengthening the dollar UK Prime Minister Boris Johnson risks reopening divisions that tore his Conservative Party apart in 2019, with his government set to propose a law that would let UK ministers override parts of the Brexit deal he signed with the European Union Crypto lender Celsius Network Ltd. paused withdrawals, swaps and transfers on its platform, fueling a broad cryptocurrency selloff and prompting a competitor to announce a potential bid for its assets French President Emmanuel Macron has a week to convince voters to give him an outright majority in parliament to ease the way for the controversial social and economic reforms he promised. Shares in France fell on the results A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks declined across the board following the hot US CPI data which rose to a 40-year high and amid fresh COVID concerns in China. Nikkei 225 fell below the 27k level with sentiment not helped by a deterioration in BSI All Industry data. Hang Seng and Shanghai Comp. conformed to the downbeat mood with heavy losses among tech stocks owing to the higher yield environment and with mainland bourses constrained after the latest COVID outbreak and containment measures. Top Asian News Beijing government said the scale of Beijing’s latest outbreak linked to bars is ferocious and explosive in nature after the city reported 166 cases in a bar cluster and with 6,158 people determined as close contacts linked to the bar cluster, while Beijing announced to halt offline sports events from today and the district of Chaoyang is to launch mass COVID testing on June 13th-15th, according to Reuters. Shanghai re-imposed a ban on dine-in restaurant services in most districts and punished officials for a management lapse at a quarantine hotel, according to Business Times. At least three Chinese cities of Beijing, Nanjing and Wuhan are trialling a shorter quarantine period of 7+7 days for international arrivals at entry points, according to Global Times. Beijing government spokesperson says that the Beijing COVID-19 bar outbreak still presents risks to the community; Beijing City reports 45 new local cases of 3pm, according to a health official, via Reuters, adding that the COVID-19 bar outbreak is still developing and epidemic control is at a critical juncture. Chinese Defence Minister Wei said China firmly rejects accusations and threats by the US against China, while he added the US Indo-Pacific strategy will create confrontation and that Taiwan is first and foremost China’s Taiwan. Wei also said those that pursue Taiwan's independence will come to no good end and that China will fight to the end if anyone attempts to secede Taiwan from China, according to Reuters. Furthermore, Wei reiterated that Beijing views the annexation of Taiwan as a historic mission that must be achieved which its military would be willing to fight for but added that peaceful unification remained the biggest hope of the Chinese people and they are willing to make the biggest effort to achieve it, according to FT. China urges local governments to raise revenue and sell assets to resolve debt risks, via Reuters. Urges local govt's to lower the debt burden; adding, they will crackdown on illegal debt raising. Japanese Defence Minister Kishi met with his Chinese counterpart in Singapore and said Japan and China agreed to promote defence dialogue and exchanges, while Japan warned China against attempting to alter the status quo in the South and East China sea, according to Reuters. Australian and Chinese defence ministers met in Singapore on Sunday for the first time in three years at the sidelines of the Shangri-La Dialogue summit with the talks described as an important first step following a period of strained ties, according to AFP News Agency. European bourses are hampered across the board, Euro Stoxx 50 -2.5%, in a continuation of the fallout from Friday's US CPI and amid fresh COVID concerns in China. US futures are in-fitting with this price action, ES -2.4% (sub-3800 at worst), ahead of the FOMC where the likes of Barclays now look for a 75bp hike after the May inflation release. Sectors in Europe are all in the red and feature Travel & Leisure as the underperformer given further cancellations going into the summer period. Top European News UK Northern Ireland Secretary Lewis said the government will publish legislation on the Northern Ireland Protocol on Monday and that the bill will rectify the issues in the protocol, according to Reuters. Reports suggest that the new law could see European judges blocked from having the final say on Northern Ireland-related disputes, according to the Telegraph. UK Tory MPs accused PM Johnson of ‘damaging the UK and everything the Conservatives stand for’ as he plans to release legislation on Monday to tear up the Northern Ireland protocol, according to FT. UK government ministers are drawing up plans to cut the link between gas and electricity to help reduce household bills for millions of families, according to The Times. UK Foreign Minister Truss says she has spoken to EU VP Sefcovic about the Nothern Ireland protocol and the preference is for a negotiated solution; adding, the EU needs to be willing to change the protocol. French President Macron’s majority in parliament is at risk as an IFOP initial estimate showed that Macron’s centrist camp is seen qualified for winning 275-310 out of 577 seats after the first round of the French lower house elections, while the IPSOS initial estimate shows the centrist camp is qualified for winning 255-295 seats, according to Reuters. Note, 289 seats are required for a majority FX Greenback extends US inflation data gains as near term Fed hike expectations crank up; DXY hits 104.750 to eclipse May 16 high and expose 105.010 YTD peak. Pound undermined by negative UK GDP and output prints plus NI protocol jitters, Cable perilously close to 1.2200 and EUR/GBP tops 0.8575. Aussie hit by heightened Chinese Covid concerns and demand implication for commodities, Kiwi feeling contagion and Loonie lurching as oil prices retreat; AUD/USD sub-0.7000, NZD/USD near 0.6300 and USD/CAD just shy of 1.2850. Euro and Franc make way for outperforming Buck, but Yen claws back losses on risk dynamics allied to technical retracement; EUR/USD under 1.0500, USD/CHF above 0.9900 and USD/JPY below 134.50 vs 135.20 apex overnight. Yuan falls as Beijing suffers ferocious and explosive virus outbreak and Shanghai reimposes restrictions in most districts, USD/CNH pivots 6.7500 and USD/CNY straddles 6.7350. Commodities WTI & Brent are hampered amid the broader market pressure; though, did experience a fleeting move off lows during a break in the newsflow. Currently, the benchmarks are lower by circa. USD 2.00/bbl given Friday's CPI, China COVID, geopolitics around US-China-Taiwan and Iran-IAEA developments (or lack of) following last week's camera removal. Iraq set July Basrah medium crude OSP to Asia at a premium of USD 3.30/bbl vs Oman/Dubai average and set OSP to Europe at a discount of USD 7.60/bbl vs dated Brent, while it set OSP to North and South America at a discount of USD 1.70/bbl vs ASCI, according to Reuters citing Iraq’s SOMO. Libya’s Minister of Oil and Gas Aoun said Libya is currently losing more than 1.1mln bpd of oil production and that most oil fields are closed except for the Hamada field and the Mellitah complex, while the Al-Wafa field continues operations from time to time, according to The Libya Observer. QatarEnegy signed an agreement with TotalEnergies (TTE FP) for the North Field East expansion project, while it will announce subsequent signings with partners in the gas field expansion in the near future and possibly at the end of next week, according to Reuters. Norwegian Oil and Gas Association reached an agreement in principle with three unions of offshore workers to avert a strike although two of the unions will ask members before signing a deal, according to Reuters. Spot gold is pressured by circa. USD 15/oz amid a stronger USD and pronounced yield action; however, the yellow metal is yet to drop below USD 1850/oz and the 10-, 21- & 200-DMAs at USD 1852, 1847 & 1842 respectively. Fixed Income Bond bears still in control and pushing futures down to fresh troughs, at 145.85 for Bunds, 112.33 for Gilts and 115-30+ for 10 year T-note. Cash yields test or breach psychological levels, like 1.50%, 2.5% and 3.25%, while 2-10 year US spread inverts briefly on rising recession risk. Monday agenda very light, but big week ahead including top tier data and multiple Central Bank policy meetings. Central Banks BoJ announces new offer for bond buying programme in which it is to purchase JPY 500bln in 5yr-10yr JGBs tomorrow and will increase amount of offers for its bond buying as needed. BoJ fixed-rate bond purchases exceed JPY 1tln, at their highest since 2018, via Bloomberg; Further reported that the BoJ accepts JPY 1.5tln of bids for the daily offers to purchase 10yr bonds. BoJ Governor Kuroda says they must support the economy with monetary easing to achieve higher wages; adding, the domestic economy is still in the midst of a COVID recovery. Increasing raw material costs are increasing downward pressure, recent sharp JPY dalls are undesirable. Additionally, Japan's Finance Minister says a weak JPY has both merits and demerits. BoJ buys JPY 70.1bln in ETF, according to a disclosure. DB's Jim Reid concludes the overnight wrap This week is squarely and firmly all about the FOMC meeting on Wednesday. We go into it with the 2yr US note up +25bps on Friday and another c.+10bps this morning in Asia. The 2s10s curve has flattened around 20bps since Friday morning to c.2bps as we type. So some dramatic moves. The problem as we enter the next couple of Fed and ECB meetings is that the central banks haven't quite been able to let go of forward guidance and are a little trapped. To recap, forward guidance has prevented the Fed and the ECB from hiking as early as they needed to, largely because both saw the need to gradually wind down asset purchases over several months first as promised. However this hasn't deterred them, and they have continued to try to flag their intentions to the market in advance with the Fed having previously all but signalled a 50bps this Wednesday, as well as in July, with the ECB now signalling 25bps in July and a strong possibility of 50bps in September. Providing clarity is admirable but in the wake of another shocking US CPI print on Friday, should a 75bps hike not be a serious consideration? It seems strange that most think policy needs to be restrictive but that it's going to take several meetings to get there from a still highly accommodative position. Without the recent Fed guidance, 75bps would be firmly on the table for Wednesday. This is highly unlikely this week, but our economists think they could break cover from their own guidance and leave the door open for 75bps in July. DB Research has long been at the hawkish end on inflation and the Fed, and on Friday our US economists further raised their hiking expectations. In addition to 50bps at the next two meetings they have now added 50bps in September and November, before a return to 25bps in December (to 3.125%). They now see the peak at 4.125% in mid-2023. This is closer to the 5% view in the "Why the upcoming recession will be worse than expected" (link here) that David Folkerts-Landau, Peter Hooper and myself published back in April. If we do have a terminal Fed rate approaching a 5-handle it does raise the question as to where 10yr yields top out. My guess would be a slightly inverted curve but it would likely mean the 4.5-5% range discussed in the note from April, mentioned above, is within reason. We'll recap details of the big US CPI print in last week's recap in the second half of this piece, but it wasn't just this that was the problem on Friday, as the University of Michigan long-term inflation expectations series hit 3.3% (3.0% last month) which was the highest since 2008. This series first hit 3% last May so has actually been range trading for a year, which has been a hope for the doves. However it now risks breaking out to the upside. It's not just the Fed this week as the BoE (Thursday) and the BoJ (Friday) will also meet. For the UK, a preview from our UK economists can be found here. The team expects a +25bps hike this week and have updated their terminal rate forecast from 1.75% to 2.5%. Staying in the UK, labour market data releases will be out tomorrow with retail sales on Friday. The week will conclude with a decision from the BoJ and how they address pressures from the yen hovering around a 20-year low, as well as the growing monetary policy divergence between Japan and other G7 economies. Our chief Japan economist previews the meeting here. He expects a shortening or even the abandonment of yield curve control in H2 2023. In data terms we go back to the US for the main highlights, with PPI (tomorrow) and retail sales (Friday) the main events. China's key May indicators on Wednesday will also have global implications as we await industrial production, retail sales and property investment numbers. Elsewhere in the US, we have June's Philadelphia Fed business outlook (Wednesday), and May industrial production and capacity utilisation (Friday) numbers. April business inventories will be out on Wednesday and provide markets with a check on corporate stockpiling after Target's renewed warning last week. Finally, a slew of housing market data is due. This includes the June NAHB housing market index (Wednesday) and May building permits and housing starts (Thursday). The impact of rising mortgage rates will be in focus. In Europe, Germany's ZEW survey for June (tomorrow) is among the key data highlights. We will also see April industrial production and trade balance data for the Eurozone on Wednesday and Eurozone construction output and April trade balance data for Italy on Friday. ECB speakers will also be on the radar for investors as they tend to start to break the party line on the Monday after the ECB meeting. A lengthy line up includes ECB President Lagarde on Wednesday and six other speakers. Asian stock markets have started the week on a weaker footing with all the major indices trading deep in the red after a rough week on Wall Street. The Hang Seng (-2.81%) is leading losses across the region in early trade amid a tech sell-off whilst the Shanghai Composite (-1.20%) and CSI (-1.07%) are both sliding as a resurgence of Covid cases in China is threating global growth. Elsewhere, the Nikkei (-2.64%) is also sharply down this morning, with the Kospi declining as much as -2.50%, hitting its lowest level since November 2020. As discussed at the top, 10yr USTs (+2.81 bps) have moved higher to 3.18% while the 2yr yield (+9.8 bps) has exploded higher to 3.16%. Will we see a fresh inversion in the hours and days ahead? Oil prices are lower with Brent futures -1.36% to $120.35/bbl and WTI futures -1.48%, falling below the $120/bbl mark. On the FX side, there is no respite for the Japanese yen from rising Treasury yields as the currency hit a fresh 24yr low, declining -0.50% to 135.08 versus the dollar. DMs equity futures point to further losses with contracts on the S&P 500 (-1.33%), NASDAQ 100 (-1.87%) and DAX (-1.37%) all trading in negative territory. Moving on to the French legislative elections. In the first round, exit polls indicate that President Emmanuel Macron is at risk of losing his outright majority after a strong showing by the left-wing alliance in the first round of the country’s parliamentary election. According to the official results, Jean-Luc Mélenchon's left-wing NUPES alliance (+25.61%) finished neck and neck with Mr Macron's Ensemble (+25.71%), in terms of votes cast in Sunday's first round. An average of 5 pollsters expect Macron to win 262-301 seats, with 289 needed to keep his majority. So a nervy wait ahead of the second round. Turning back to review last week now. The business end of the week had two huge macro events that sent markets into some degree of upheaval. On Thursday, the ECB met, confirming the end of net APP purchases this month, paving the way for liftoff in July. Beyond July they opened the door for 50 basis point hikes if inflation persists or deteriorates. Judging by their upgraded forecasts, they are now in the ‘persists’ camp. President Lagarde in the press conference took great pains to commit to fighting inflation in a hawkish tone shift. The bigger market reaction was on the apparent lack of progress on any implementation tool designed to avoid fragmentation. President Lagarde tried to downplay the lack of new tool, leaning on PEPP reinvestment flexibility, but the market wasn’t comfortable that this would be enough. All told, 2yr bunds increased +30.9bps (+13.6bps Friday) on the tighter expected policy path, with the end-2022 policy rate implied by OIS markets ending the week at 0.99%, a new high and in line with our Euro economists updated call (their full review and new call here). The lack of an immediate anti-fragmentation tool saw peripheral spreads underperform, moving to new post-Covid wides, as 10yr BTPs increased +35.9bps (+16.0bps Friday) with 10yr Spanish bonds increasing +34.0bps (+15.6bps Friday), versus a 10yr bund increase of +24.3bps (+8.6bps Friday). The Friday moves above were given a further boost by yet another above consensus US CPI report, with YoY inflation gaining +8.6% in May versus expectations it would stay consistent with the prior month’s +8.3% reading. FOMC officials have consistently cited deceleration in MoM readings as necessary to find clear and convincing evidence that inflation was stabilising and returning to target, evidence which they surely didn’t get on Friday, as MoM inflation increased +1.0% from +0.3% in April, beating lofty expectations of +0.7%. The dramatic beats drove the expected path of Fed tightening sharply higher, with 2yr Treasury yields increasing +40.9bps on the week after a +25.0bp gain Friday, it’s largest one-day move since June 2009. The expected fed funds rate by the end of the year reached a new high of 3.22%. The curve aggressively bear flattened, as the reality that the Fed will have to induce slower growth to tame inflation set in; 10yr yields gained +22.0bps on the week and +11.2bps on Friday, with almost all of the increase coming in real yields. That brings 2s10s to 8.8bps, its flattest since its early-April rebound after its brief inversion. The sharp global policy repricing weighed on equity indices. All major transatlantic indices fell, including the STOXX 600 (-3.95% week, -2.69% Friday), DAX (-4.83%, -3.08%), CAC (-4.60%, -2.69%), S&P 500 (-5.05%, -2.91%), NASDAQ (-5.60%, -3.52%), FANG+ (-2.87%, -3.37%), and Russell 200 (-4.26%, -2.60%). That brings the STOXX 600 -14.49% below its YTD highs reached in the first days of the year, with the S&P 500 -18.40% below the same corresponding metric. Both indices ended the week hovering just above YTD lows. US CDX HY and Euro Crossover were +58bps and +47bps on the week and around +30bps and +25bps wider on Friday. Both are now at their post covid wides. Tyler Durden Mon, 06/13/2022 - 07:57.....»»

Category: blogSource: zerohedgeJun 13th, 2022

12 Nightmarish Economic Trends That We Should Expect To See During The 2nd Half Of 2022

12 Nightmarish Economic Trends That We Should Expect To See During The 2nd Half Of 2022 Authored by Michael Snyder via TheMostImportantNews.com, If you thought that the economic news was crazy during the first half of 2022, just wait until we get to the second half.  So many of the problems that we are experiencing now are going to continue to intensify, and Americans are becoming more pessimistic about economic conditions with each passing day.  In fact, as you will see below, a whopping 85 percent of us believe that it is “very likely” or “somewhat likely” that the economy will go through a recession at some point during the next year.  Of course the truth is that if all we have to suffer through is a “recession”, we would be extremely fortunate.  Our leaders have lost control of the economy, and many of us are extremely concerned about what is coming next.  The following are 12 nightmarish economic trends that we should expect to see during the second half of 2022… #1 Gas prices will continue to surge higher, and many Americans will be shocked by how high they eventually go.  If you can believe it, in Washington State at least one gas station has now reprogrammed their gas pumps “to make room for double-digit pricing”… At the 76 Gas Station in Auburn, Washington located at 1725 Auburn Way North, gas pumps have been reprogrammed to make room for double-digit pricing. In March, they still had single-digit programming. A spokesperson at 76 confirmed to The Post Millennial that the gas pumps were reprogrammed to allocate for double-digit pricing. Although not confirming that they are expecting prices to increase up to $10.00 or more, the current trend suggests the possibility. Supplies of fuel will continue to get even tighter in the months ahead.  Earlier today, I heard from a reader on the east coast and a reader in the middle of the country that both said that diesel is now being rationed where they live.  So far, I have not been able to confirm that this is happening on a widespread basis. #2 We are being warned that there could be extended blackouts in some parts of the nation during the summer months.  It is being reported that the middle of the country is particularly at risk… About 100 million Americans face power blackouts this summer as roasting weather, overstretched powerplants and unreliable green energy sources combine to create a perfect storm of problems. States stretching from the Great Lakes to the Pacific Ocean which are home to tens of millions of Americans could have a hard time producing enough power for their residents this summer. The ‘MISO’ part of America’s power grid – whose full name is the Midcontinent Independent System Operator is at greatest risk of a large-scale outage. #3 Everyone pretty much agrees that food prices will continue to rise.  Of course they have already reached levels that are absolutely insane… Take the case of Jeff Good, who co-founded three restaurants in Jackson, Mississippi. Around 18 months ago, a 40-pound box of chicken wings cost him about $85. Now, it can go as high as roughly $150. Expenses for cooking oil and flour have nearly doubled in the past five months, he said. But it’s not just ingredient prices going up. He’s paying more for labor and services, too. Even the company that maintains his air conditioners has tacked on a $40 fuel charge per visit. To cope, he’s raised menu prices. A 15-piece order of chicken wings, a signature dish at his Sal and Mookie’s pizzeria, went for $13.95 before Covid hit. Now, wing costs can vary so much they’re labeled at “market price,” like some restaurants do with lobster. At peaks, the menu price can be be about $27.95 — but that represents a barely-there margin — and Good estimates the “real cost” is closer to about $34. He’s trying to decide whether to keep raising prices or take wings off the menu. I don’t know about you, but I don’t ever see myself paying 34 dollars for an order of chicken wings. #4 As our supply chains endure even more stress, shortages will continue to intensify.  The extreme baby formula shortage that we are witnessing right now is just a preview of coming attractions… Two children in Memphis have been hospitalized after needing IV fluids and nutritional support due to the baby formula shortage. The preschooler and toddler, both from different families, were rushed to Le Bonheur Children’s Hospital after their parents failed to secure formula as shelves across America go bare. #5 The UN is telling us that we are heading into the worst global food crisis since World War II.  In some parts of Africa, the number of people suffering from “extreme hunger” has already more than doubled… More than 23 million people are experiencing extreme hunger in Ethiopia, Somalia and Kenya, according to a new report by Oxfam and Save the Children. That’s up from over 10 million last year. The region’s worst drought in 40 years is being exacerbated by conflict and the pandemic. And the war in Ukraine has sent food prices soaring to record levels. #6 Widespread hunger will almost certainly lead to more civil unrest.  Recent events in Sri Lanka give us an indication of what may be coming… Protesters in Sri Lanka have burned down homes belonging to 38 politicians as the crisis-hit country plunged further into chaos, with the government ordering troops to “shoot on sight.” Police in the island nation said Tuesday that in addition to the destroyed homes, 75 others have been damaged as angry Sri Lankans continue to defy a nationwide curfew to protest against what they say is the government’s mishandling of the country’s worst economic crisis since 1948. #7 The Federal Reserve is likely to continue to aggressively raise interest rates.  In fact, Fed Chair Jerome Powell is openly admitting that his institution’s battle against inflation could cause “some pain” in the months ahead… Federal Reserve Chairman Jerome Powell warned Tuesday the U.S. could feel “some pain” as the central bank raises interest rates to fight inflation, insisting the Fed would do whatever it takes to curb price growth. During a live interview for The Wall Street Journal’s “Future of Everything” summit, Powell said the Fed will continue to raise interest rates until inflation starts to fall and the forces driving prices higher fade, even at the risk of a deeper economic slowdown. #8 Higher interest rates will be devastating for the housing market in the United States.  And that is very troubling news, because home sales have already fallen for three months in a row… Home sales fell for the third consecutive month in April as rising mortgage rates and affordability challenges pushed many would-be home buyers out of the market. #9 Defaults are likely to continue to rise higher.  Just like we saw right before the last financial crisis, defaults on subprime loans are really starting to surge… Consumers with low credit scores are falling behind on payments for car loans, personal loans and credit cards, a sign that the healthiest consumer lending environment on record in the U.S. is coming to an end. The share of subprime credit cards and personal loans that are at least 60 days late is rising faster than normal, according to credit-reporting firm Equifax. In March, those delinquencies rose month over month for the eighth time in a row, nearing their prepandemic levels. Delinquencies on subprime car loans and leases hit an all-time high in February, based on Equifax’s tracking that goes back to 2007. #10 As the economy slows down, we should expect layoffs to increase and jobless claims will eventually start to spike.  In fact, we just learned that they have now hit a four month high. #11 Needless to say, all of this bad economic news is going to be really bad for stock prices.  The S&P 500 has already nearly fallen into bear market territory, and many believe that what we have witnessed so far is just the beginning. #12 Many are warning that a recession is either already here or will arrive soon.  And Americans are increasingly becoming more pessimistic about the economy.  One survey that was recently conducted found that 85 percent of Americans believe that it is “very likely” or “somewhat likely” that there will be a recession at some point in the next year… An overwhelming majority of Americans are expecting there to be a recession within the next year, according to a Quinnipiac University poll released Wednesday. The poll found that 85 percent of Americans think it is likely for the country to go through an economic recession in the next year. Of those who responded, 45 percent said it is “very likely,” and 40 percent said “somewhat likely” for a recession. The sort of historic economic meltdown that I have been warning about for years is rapidly approaching, and the mood of the nation will dramatically shift as conditions greatly deteriorate. Already, we are starting to see a tremendous amount of anger out there.  Earlier today, I came across the following post on a very popular Internet discussion forum… Just want to vent. I am from middle Missouri, I am a single mom of 2 teens. My day job pays well and pays the bills well, a year ago my income would support us, bills, food, gas etc. i now have to work a second job just to feed us and put gas in my car. Eggs here went from .99 a carton to 1.99, ground beef went from 2.89 a pound to 4.99, and it goes on and on. Gas went from 1.90 to 4.29 a gallon. I am out of my mind scared it will only get worse. I have democrat friends that say “that’s how the economy works”. No it’s because Biden was giving out “covid” bucks to non working people taking advantage of the system, giving our money to Ukraine, shutting down gas lines in the US etc. I can understand her anger. Most Americans are working as hard as they can, but our standard of living is being systematically destroyed by the very foolish policies of our leaders. Unfortunately, we are still only in the very early chapters of this crisis. It looks like the second half of this year will be even more challenging than the first half, and that is going to have enormous implications for all of us. *  *  * It is finally here! Michael’s new book entitled “7 Year Apocalypse” is now available in paperback and for the Kindle on Amazon. Tyler Durden Fri, 05/20/2022 - 16:22.....»»

Category: dealsSource: nytMay 20th, 2022

Futures Slip As Traders Read Between Powell"s Lines

Futures Slip As Traders Read Between Powell's Lines After yesterday's torrid, Powell-inspired meltup which saw the S&P soar the most since May 2020 (just days after its biggest drop since June 2020)... In the past week, S&P 500 has had both its best day since May 2020 and its worst day since June 2020 [Past performance is no guarantee of future results] pic.twitter.com/BA9p6MDzWZ — Liz Ann Sonders (@LizAnnSonders) May 5, 2022 ... U.S. futures paused their surge after Jerome Powell eased fears that the Federal Reserve will unleash an even more aggressive tightening path and took a 75bps rate hike off the table. As of 745am EDT, S&P 500 futures dropped 0.6%, while Nasdaq 100 contracts fell 0.8%, as investors digested Powell’s vow to curb inflation, while acknowledging it could inflict some “pain” to the economy. In fact, an example of just what the Fed is fearing came earlier today when the BOE hiked 25bps as expected, but warned a stagflationary recession is be imminent as the central bank now expects GDP to contract while inflation rises double digits in the coming months, which is precisely what happens when central banks are far behind the curve.  In other assets, the dollar jumped to session highs as cable tumbled to July 2020 lows, 10Y yields were flat around 2.95 while bitcoin traded off yesterday's highs between 39K and 40K. “Alongside tightening monetary policy, a number of risks - persistently high inflation, indications that consumer demand is softening, and the economic consequences of the Russian invasion of Ukraine - have raised investors’ concerns about the strength of future economic growth,” said Richard Flynn, U.K. managing director at Charles Schwab. “In this context, market volatility is likely to continue.” For those who missed yesterday's white knuckle session, the US central bank raised the benchmark rate by a half percentage point on Wednesday, the steepest increment since 2000, in order to keep inflation under control. By ruling out a more aggressive hike, the central bank gave a boost to equity markets, with the S&P 500 posting its biggest daily advance since 2020. The Nasdaq 100 closed 3.4% higher, but is still down 17% this year. “We are puzzled why the market thinks that Fed hikes are going to stop inflation,” said Nancy Davis, founder of Quadratic Capital Management. “We see inflation as driven by massive government spending, supply chain disruptions and, more recently, by Russia’s invasion of Ukraine.” Sure, the Fed is powerless to do anything against inflation, but it has to do something. Policy makers are trying to juggle the need to quell the fastest inflation in four decades against hard-won economic growth. In Europe, German factory orders plummeted, highlighting the toll from the war. The soaring price of commodities further complicates efforts to subdue price pressures. “The combination of high inflation and a weakening global economic outlook has fueled concerns about how far central banks will be able to raise interest rates without overburdening the economy,” Fraser Lundie, head of public fixed income markets at Federated Hermes, wrote in a note to clients. In premarket trading, EBay plunged 6.9% as analysts said macro headwinds, including the war in Ukraine, inflation and consumer confidence, will pressure results in the near term. The e-commerce firm gave a lackluster sales and profit outlook for the second  quarter, as a pandemic-driven sales bump fades. U.S.-listed Chinese stocks dropped again as investors mulled an expanding list of firms that face potential security delistings and the Federal Reserve’s rate decision. JD.com (JD US) shares trade down 2.8%, Pinduoduo (PDD US) -3.5% and Bilibili (BILI US)  -5% in premarket. Some other notable premarket movers: Albemarle (ALB US) shares jump 14% in premarket trading after the company boosted its profit and sales guidance for the full year, citing continued strength in pricing in the Lithium and Bromine businesses. . Hycroft Mining (HYMC US) shares surge as much as 36% in U.S. premarket trading after the precious metals producer gave an update for the first quarter, with the firm saying that its strengthened balance sheet allows it to cut debt, complete technical studies and launch an exploration program. Qorvo (QRVO US) analysts said that guidance from the radio frequency solutions fell short of expectations amid weakness in China and high inventory, prompting price target cuts among brokers. Qorvo shares fell 4.9% in postmarket trading on Wednesday after forecasting adjusted earnings per share for the first quarter that missed the average analyst estimate. Booking Holdings (BKNG US) impressed analysts with April bookings topping 2019 levels and positive comments on summer travel. The shares rose 7.7% in postmarket trading after the company’s first-quarter revenue and gross bookings both beat the average analyst estimate. Twilio (TWLO US) analysts highlighted the gross margin performance and reiteration of guidance as encouraging points in the communication-software provider’s results, though some were left wanting more from the firm’s revenue beat. The shares rose 3.8% in after-hours trading Wednesday after adjusted earnings per share for the first quarter beat the average analyst estimate. Fortinet (FTNT US) analysts lauded the infrastructure software company’s solid quarter in light of continued supply chain pressures. The company’s shares rose 7% in extended trading on Wednesday after it reported first-quarter results and raised its full-year forecast. Etsy (ETSY US) analysts were overall positive on the e-commerce firm’s results, though noted that challenges relating to the macroeonomic backdrop and the reopening of economies weighed on the company’s outlook. Etsy shares fell 10% in postmarket trading Wednesday after its forecast for second-quarter revenue fell short of the average analyst estimate. In Europe, the Stoxx 600 was up 1% after rising as much as 1.8%. FTSE 100 up 1.1%, and DAX +1.4%, with most indexes well off session highs. Tech, real estate and industrials were the strongest performing sectors, autos and insurance underperform as gains are faded. Positive results from large caps including Airbus SE, Shell Plc, UniCredit SpA and ArcelorMittal SA also helped brighten the mood. Some notable European movers: Airbus jumps as much as 8.5% on a “solid” 1Q, with adjusted Ebit “significantly” above consensus, Bernstein says, with Jefferies noting key highlight is plan to ramp up A320 production. Shell shares rise as much as 3.6% after company reports record profit for the quarter. Jefferies said the results signaled “strong” second-half buyback acceleration. UniCredit jumps as much as 7.6%, the most intraday since March 29, after reporting revenue for the first quarter that beat estimates. Analysts note “solid” earnings ex-Russia. S4 Capital shares soared as much as 20% on Thursday after Martin Sorrell’s media company said it will publish its results for last year tomorrow, following a lengthy delay. Outokumpu shares rise as much as 9.3% after the Finnish steel maker presented its latest earnings, which included several beats to consensus estimates, including on adjusted Ebitda. Argenx shares rise as much as 6.7% after the Belgian immunology firm posted its latest earnings, which included a large beat on sales for its key drug Vyvgart (efgartigimod). Netcompany shares rise as much as 6.1%, the most intraday in a month, after the software developer reported 1Q earnings that are broadly in line with estimates. Verbund dropped the most in two months after the Austrian Chancellor said he’s asked the finance and economy ministries to develop new rules to administer windfall profits at state-controlled companies. Virgin Money shares slide as much as 6.7% after the lender reported first-half results. Goodbody linked the share price drop to several factors, including the bank not announcing a buyback. Hikma Pharmaceuticals fell as much as 11%, the most since April 2020, after the company reduced guidance for its generics division. Peel Hunt calls update “obviously disappointing.” Earlier in the session, Asia’s stock benchmark rose, poised to snap a three-day decline, as the Federal Reserve’s policy announcement calmed fears about super-sized hikes. The MSCI Asia Pacific Index climbed as much as 1.2% before paring gains to around 0.4%. Tech and materials were the biggest boosts to the Asia gauge as most sectors rose, with TSMC and Infosys hauling up the measure. Bucking the trend, China’s stock gauge closed lower after a three-day holiday in a sign that Beijing’s vow to boost growth has failed to alleviate concerns over the outlook.  The Fed delivered a 50-basis-point increase that was in line with expectations on Wednesday, and said a bigger hike was not being actively considered. Benchmarks in the Philippines and Vietnam were among the top gainers in the region. Japan and South Korea markets were closed for holidays.  Tech stocks will likely “see a further rally until the next U.S. consumer price inflation reading next week,” said Jessica Amir, a market strategist at Saxo Capital Markets Australia. “The rate hikes weren’t as much as feared,” bond yields have pared and volatility is subsiding, she added. The rally marked a reprieve for Asia’s beaten-down shares, which remain mired in a bear market. The regional benchmark is underperforming U.S. and European peers this year, hurt by the impact of China’s strict Covid-19 restrictions and rising inflation around the region. In FX, the Bloomberg Dollar Spot Index jumped as cable tumbled on the BOE's recession warning, clawing back some of its post-FOMC losses when Powell ruled out a more aggressive pace of monetary tightening. The greenback traded higher against all of its Group-of-10 peers and the Treasury yield curve bear-flattened, trimming some of Wednesday’s aggressive bull steepening which followed the FOMC outcome. The euro fell back below $1.06 and yields on short-dated European bonds fell as ECB hike bets were pared. German factory orders plummeted, highlighting the toll from the war. The pound plunged after the Bank of England warned of a stagflationary recession even as it hiked another 25bps. Norway’s krone held a loss after the central bank kept its key policy unchanged, as widely expected among analysts, and confirmed its plan to deliver a fourth increase in borrowing costs next month. Australia’s dollar pared yesterday’s gains; weaker-than- expected Chinese economic data raised concerns over demand for the nation’s commodity exports and weighed on the Australia’s sovereign bond yields. China’s yuan dropped as weak economic data hit sentiment. The USD/CNH rose 0.4% to 6.6489; USD/CNY gains 0.2% to 6.6194 after China’s services activity slumped to its weakest level in more than two years in April as Covid outbreaks and lockdowns continued to pummel consumer spending and threaten economic growth. The Caixin China Services purchasing managers’ index crashed to 36.2 in April, the lowest since February 2020, as Covid outbreaks and lockdowns continued to pummel consumer spending, threatening economic growth. In rates, the Treasury front-end briefly extends losses, following move in gilts after Bank of England hiked 25bp with three voters looking for a bigger 50bp move. U.S. 10-year yields traded around 2.95%, little changed after retreating from day’s high; gilts outperform. Yields cheapened as much as 6bp across front-end of the curve before retreating; U.K. 2-year yields erased the 3bp increase that followed the Bank of England policy announcement; front-end led losses flatten 2s10s, 5s30s spreads by ~2bp and ~4bp on the day.  Bear-flattening move has 5s30s spread near session lows into early U.S. session, unwinding portion of Wednesday’s post-Fed bull-steepening. Fed speakers resume Friday with six events slated. In the aftermath of Wednesday’s policy announcement, overnight swaps are now pricing in close to 50bp rate hikes at the next three policy meetings. Dollar issuance slate empty so far; session has potential to be busy given a number of expected issuers have so far stood down this week. Three-month dollar Libor dropped -3.54bp at 1.37071%, its first decline since April 5.   Looking at today's calendar, we get the BoE policy decision (a hike of 25bps as noted earlier, but accompanied by a very dovish warning of recession in late 2022) and UK local elections. Otherwise from central banks, we’ll hear from the ECB’s Lane, Holzmann and Centeno. Data releases include the weekly initial jobless claims from the US and nonfarm productivity. Finally, earnings releases today include Shell. Market Snapshot S&P 500 futures down 0.7% to 4,267.00 MXAP up 0.4% to 167.94 MXAPJ up 0.4% to 556.06 Nikkei down 0.1% to 26,818.53 Topix little changed at 1,898.35 Hang Seng Index down 0.4% to 20,793.40 Shanghai Composite up 0.7% to 3,067.76 Sensex up 0.3% to 55,834.32 Australia S&P/ASX 200 up 0.8% to 7,364.65 Kospi down 0.1% to 2,677.57 STOXX Europe 600 up 1.2% to 446.50 Brent Futures up 0.4% to $110.56/bbl Gold spot up 0.5% to $1,890.84 U.S. Dollar Index up 0.34% to 102.94 German 10Y yield little changed at 1.01% Euro down 0.3% to $1.0587 Top Overnight NEws from Bloomberg ECB Executive Board member Fabio Panetta said economic expansion has almost ground to a halt in the euro area and faces further “high costs” as policy makers battle record inflation On the eve of the 25th anniversary of its independence, the U.K. central bank is widely expected to hike interest rates to 1% -- the highest since the financial crisis -- and lay out how it intends to take uncharted steps toward unwinding more than a decade of bond purchases U.K. Prime Minister Boris Johnson will meet his Japanese counterpart Fumio Kishida in London where they are expected to discuss a plan to support Asian nations in diversifying away from Russian oil and gas Boris Johnson has been engulfed by scandal for months and came close to being ousted by members of his Conservative Party. On Thursday, voters across the U.K. are likely to give him their own kicking. Local election results typically deliver losses for ruling parties, especially if they’ve been in power for 12 years as the Tories have The Reserve Bank of New Zealand’s Monetary Policy Committee will return to a full complement of seven for the first time this year when it meets later this month. Assistant Governor Karen Silk joins the RBNZ on May 16 and will be an internal member of the committee from that date The dollar fell Wednesday by the most in nearly a month on a trade-weighted basis following the latest Federal Reserve policy decision yet pairs some of those losses as the move was more down to short-term positioning A more detailed breakdown of global markets courtesy of Newsquawk Asia-Pac stocks traded positively as the region reacted to the FOMC meeting where the Fed hiked rates by 50bps as expected and announced to begin reducing the balance sheet from next month, while Fed Chair Powell dispelled concerns of a more aggressive  75bps rate hike. ASX 200 was firmer with gold miners buoyed by higher prices and as the energy sector benefitted from the proposed Russian oil embargo. Hang Seng and Shanghai Comp were higher following the mainland’s return from the Labour Day holidays but with advances initially contained by several headwinds including an extension of COVID restrictions in Beijing, the deterioration in Caixin Services and Composite PMIs, while the US SEC added over 80 companies to its list for possible delisting and HKMA also hiked its base rate by 50bps in lockstep with the Fed. Top Asian News Concerns Mount Over Asset Sales; Stocks Fall: Evergrande Update S&P 500 Remains Expensive Despite Yield-Driven Drop: Macro View North Korea Lifts Sweeping Lockdown After One Day, Yonhap Says India’s Surprise Rate Hike Spurs Aggressive Tightening Bets European bourses are firmer across the board, Euro Stoxx 50 +1.3%, benefitting from the perceived less-hawkish Fed and associated Wall St./APAC performance. Stateside, futures are softer across the board though the likes of the ES remain in relative proximity to overnight best levels, ES -0.5%. Back to Europe, sectors are mostly positive with Real Estate and Tech the outperformers while defensive-biased names are lagging. Top European News UniCredit Takes $2 Billion Hit on Russia to Cover Potential Exit U.K. April Composite PMI 58.2 vs Flash Reading 57.6 BMW Profit Beats Estimates on Strong Demand for Top-End Cars Norway Rate Hike Locked and Loaded for June to Quell Inflation FX: Dollar finds its feet after FOMC fall out on less hawkish than factored in policy guidance from Fed chair Powell, DXY back within reach of 103.000 vs 102.340 low. Aussie* undermined by much weaker than forecast building approvals, mixed trade, technical and psychological resistance; AUD/USD closer to 0.7200 than 0.7250 and AUD/NZD fades just shy of 1.1100. Sterling weak on super BoE Thursday on prospects that MPC may be more circumspect after latest 25 bp hike; Cable down around 1.2550 vs 1.2635 peak and EUR/GBP firm on 0.8400 handle. Euro underpinned by rebound in EGB yields and option expiries as 1.8 bn rolls off 1.0600. Loonie cushioned by crude alongside Norwegian Crown after no change in rates by Norges Bank that is sticking to schedule for next quarter point hike in June; USD/CAD mostly sub-1.2750 and EUR/NOK capped below 9.9000. Turkish Lira deflated as CPI soars even further beyond target and PPI over 100%. Polish Zloty awaits 100 bp hike from NBP and Czech Koruna 50 bp courtesy of CNB. Brazil's Central Bank raised the Selic rate by 100bps to 12.75%, as expected, while it left the door open to further monetary tightening at a slower pace and considered it appropriate to advance the process of monetary tightening significantly into even more restrictive territory. BCB also stated that inflationary pressures arising from the pandemic period have intensified due to problems related to the new COVID-19 wave in China and the Ukraine war, according to Reuters. Norges Bank: Key Policy Rate 0.75% (exp. 0.75%, prev. 0.75%). Reiterates that the next hike will “most likely” occur in June. Adds, the Krone has recently depreciated and is now weaker than projected. Fixed Income Very volatile moves in bonds between the FOMC, BoE and NFP, with Treasuries flipping from bull-to-bear steepening. 10 year note soft within wide 119-09+/118-19+ range, Bunds flat between 153.79-152.74 parameters and Gilts firm in catch-up trade either side of 118.00. Bonos and Oats off best levels after digesting Spanish and French multi-tranche debt issuance Commodities WTI and Brent have been pivoting relatively narrow ranges ahead of today's JMMC/OPEC+ gatherings, currently posting gains of USD 0.30/bbl. OPEC+ is expected to maintain its policy of increase the output quota by 432k BPD in June, lifted from the 400k BPD in May as part of the pacts terms; newsquawk preview here. Spot gold is bid but lost the USD 1900/oz mark in early-European trade, a figure it has spent the morning modestly below. Norway's labour unions said initial wage talks with oil firms broke down and they will proceed with mediation, according to Reuters. Crypto Bitcoin is subdued and returned to existing session lows of USD 39.4k amid coverage of the below WSJ story; more broadly, Bitcoin has been steady at the lower-end of the morning's ranges. US Senators Warren and Smith have sent a letter to Fidelity over its Bitcoin 401(k) plan which would allow investors to allocate as much as 20% of their portfolios into Bitcoin, according to WSJ; senators suggest that Bitcoin could be too risky for savers. US Event Calendar 08:30: 1Q Unit Labor Costs, est. 10.0%, prior 0.9% 08:30: 1Q Nonfarm Productivity, est. -5.3%, prior 6.6% 08:30: April Continuing Claims, est. 1.4m, prior 1.41m 08:30: April Initial Jobless Claims, est. 180,000, prior 180,000 DB's Jim Reid concludes the overnight wrap I'm normally asleep at around 945pm each evening but tense football games often disturb that equilibrium and last night was the ultimate sleep disrupter. I was just about to close down my iPad in bed and fall asleep as Man City we're two goals ahead in injury time in the Champions League semi. I stayed the extra minute and in that minute Real Madrid scored twice, took the game into extra time and ultimately won a stunning tie. I finally turned my iPad off 10 minutes before the end but couldn't sleep so turned it on again after they won. Liverpool vs Real Madrid will be an epic final! So all in all a hectic evening trying to watch the Fed while my wife and I watched Ozark (stressful in its own right) and then the football. I'm worn out this morning. So after all that, the Fed intentionally or unintentionally decided that the market has had enough stress for now and clamped down on the more hawkish potential near-term paths for policy. As a result equities soared, yields fell (especially at the front-end), credit tightened, the dollar slumped and oil built on its earlier rally. Let's very briefly get the boring bit out of the way in a line or two. Basically the FOMC rose rates by +50bps and signalled they would begin to reduce the size of their balance sheet in June, both in line with our expectations (Our full US econ review is here). However the most pressing question for markets was how willing the Committee was to consider future rate increases of +75bps. Market participants didn't have to wait long for an answer, as Chair Powell quickly noted that +75bp hikes were not actively being considered, while +50bp hikes were on the table for the "next couple" of meetings. In line, market pricing for the next two meetings ended the day at +100bps, having stripped out any of the small, but recently growing, premium priced in for +75bps over the June and July meetings. The firm rebuke led to a rally in Treasury yields, led by the short-end, as 2yr yields fell -14.0bps, while 10yr yields were a relatively benign -3.7bps by comparison. The move in nominal 10yrs again masked divergence in the decomposition driven by the market’s dovish interpretation, with breakevens widening +4.9bps to 2.88%, while real yields fell -8.6bps, still managing to finish the day in positive territory at 0.05% though. Elsewhere in the presser, the Chair made multiple mentions of the Committee’s intention to “expeditiously” get policy towards more neutral levels given the monumental inflation-fighting task at hand. He demurred when asked if policy would ultimately need to reach a restrictive rather than just neutral stance, but did not rule it out. He still maintained hope that the Fed could engineer a soft landing after this hiking cycle, but to be fair, it is hard to imagine him saying anything else. He cited strong household and consumer balance sheets as reasons for why the economy could withstand the hiking cycle, when indeed, that very strength when inflation is at multi-decade highs is why policy will probably need to reach restrictive levels not currently appreciated by market pricing. In my opinion the Fed can control the near-term market expectations but beyond that it is all about the inflation data. If it doesn't improve then 50bps will be live at every meeting and not just the "next couple", and 75bps risks will be back on the table. This is all for another day though. When all was said and done, the market took -11.7bps out of policy tightening during 2022, with futures implying fed funds hitting 2.77% after the December meeting. Futures are still implying that the Fed will hit its terminal rates sometime in the third quarter next year, but that rate was around -18bps lower following the meeting at 3.24%. Indeed the breathing space given by the removal of the price hike premiums sent US equities on a tear. Little changed heading into the meeting, the S&P 500 ended the day +2.99% higher, its largest one-day gain since May 2020. Every sector ended in the green, with a full 477 companies posting gains, the most since February. The gains were broad-based, with every sector but real estate (+1.09%) gaining at least 2%, though energy (+4.12%), communications (+3.68%) and tech (+3.51%) were the standouts. In line, the NASDAQ (+3.19%) and FANG+ index (+3.40%) outperformed, on the drop in discount rates. In Asia, mainland Chinese stocks returned following a few days of holidays and are in positive territory with the Shanghai Composite (+0.95%) and CSI (+0.28%) higher. Meanwhile, the Hang Seng (+0.76%) is trading up, but paring its early morning gains. Elsewhere, the S&P/ASX 200 (+0.67%) is climbing while the Japanese and Korean markets are closed for public holidays. Outside of Asia, contracts on the S&P 500 (-0.08%) and NASDAQ 100 (-0.07%) are fractionally lower. Stoxx 50 futures are +2.4% due to a post Fed catch-up effect. Early morning data showed that China’s services sector activity contracted further in April as the Caixin services PMI tumbled to 36.2, its lowest level since the initial onset of the pandemic in February 2020 and compared to March’s reading of 42. Back now to life pre the Fed. Earlier we had seen sovereign bonds sell off in Europe, with yields on 10yr bunds marginally up +0.7bps to 0.97%, having regularly traded above the 1% mark during the session. Those moves were echoed across the continent and there was a further widening in peripheral spreads, with the gap between Italian 10yr yields over bunds widening by +6.7bps to 198bps. That’s their 11th consecutive move wider, and takes the spread to its highest closing level in almost two years. We’ve also seen a similar move with the Spanish spread, which is at its highest in nearly two years as well, at 109bps. It is likely we'll get a decent reversal this morning though. That selloff in sovereign bonds came as oil prices reversed their declines so far this week, with Brent Crude up +4.93% to $110.14/bbl after EU President Von der Leyen proposed a ban on Russian oil in the latest sanctions package. Von der Leyen said this would be done “in an orderly fashion”, with the proposal seeing Russian crude oil phased out within 6 months, and refined products by year-end. Nevertheless, Hungary’s foreign minister said that “In its current form the Brussels sanctions package cannot be supported”, which risks holding up the package since it has to have unanimous agreement among the 27 member states. Bloomberg reported people familiar with the matter saying that Hungary and Slovakia would be granted a longer period until the end of 2023 to enforce the sanctions. Although energy stocks benefited from the rise in prices yesterday, they were mostly the exception in Europe, where the broader STOXX 600 underwent a larger -1.08% decline. This morning, Brent crude (+0.43%) is extending its gains. Looking forward now, central banks will remain on the agenda today as well, with the Bank of England decision at mid-day where the consensus and market pricing are expecting a 25bps hike, which would take Bank Rate up to its highest level since the GFC, at 1%. In his preview (link here), our UK economist is in line with this, and expects the core message from the MPC to remain similar to March, highlighting the uncomfortable and intensifying trade-off between growth and inflation. He’s also expecting that the MPC will confirm its intension to start selling gilts, but doesn’t think we’ll get the details until August, with sales commencing early September. Staying on the UK, we’ve got local elections taking place today as well that’ll be an important mid-term milestone for both the government and opposition, and our UK economists have put together a preview (link here). Last year the Conservatives had a very good set of results as the economy reopened amidst the vaccine rollout. But whereas they were 9 points ahead of Labour in the polls a year ago, they’re now 6 points behind them according to Politico’s average, so it’s a very different context. However, given most of the seats up for grabs today were last fought in 2018 when the Conservatives and Labour were roughly level in the polls during Theresa May’s premiership, the scale of Conservative losses may not be as big as the polling swing over the last 12 months would otherwise imply. One important contest to watch out for will be the Assembly elections in Northern Ireland, where the Irish nationalist Sinn Féin party are leading in the polls, and could become the largest party for the first time since Irish partition in the 1920s. Politico’s poll of polls puts Sinn Féin on 26%, ahead of the unionist DUP on 19%. On the data side yesterday, we saw the ADP’s report of private payrolls for April, which showed weaker-than-expected growth of 247k in April (vs. 383k expected). That comes ahead of tomorrow’s US jobs report, where our economists are expecting that nonfarm payrolls will have risen by +465k in April. Then there was the ISM services index for April, where the headline felt to 57.1 (vs. 58.5), but the prices paid index rose to a record 84.6. Over in Europe meanwhile, the final composite PMI for the Euro Area in April was in line with the flash reading at 55.8, and March’s retail sales fell by -0.4% (vs. -0.3% expected). To the day ahead now, and the highlights will include the aforementioned BoE policy decision and UK local elections. Otherwise from central banks, we’ll hear from the ECB’s Lane, Holzmann and Centeno. Data releases include German factory orders and French industrial production for March, the final UK services and composite PMIs for April, and the weekly initial jobless claims from the US. Finally, earnings releases today include Shell. Tyler Durden Thu, 05/05/2022 - 08:13.....»»

Category: blogSource: zerohedgeMay 5th, 2022

85 gifts under $100 for everyone in your life - thoughtful and affordable gift ideas

From a personalized photo book to an educational cooking class, here are 85 gift ideas under $100 for every type of giftee. When you buy through our links, Insider may earn an affiliate commission. Learn more. Hollis Johnson/Crystal Cox/Alyssa Powell/Business Insider With a $100 budget, you can buy anything from a smart speaker to a fun cooking class. These 80+ gift ideas cover a wide range of interests and needs and are also unique. If your budget changes or you don't have a budget at all, we have guides that hit all price points. Table of Contents: Masthead StickyAlthough gift-giving is a fun way to show the people you care about love and appreciation, it can easily become expensive. Fortunately, with a budget of $100 you can purchase the latest tech accessories; useful kitchen tools; luxury beauty and skincare products; and quirky, just-for-fun goodies. These 80+ gift ideas cover everything your giftee will need and also includes thoughtful, unique finds. We've tested, purchased, and gifted many of these items ourselves, which means they're sure to impress no matter the occasion.We also have guides for gifts under $25 and gifts under $50. If you're not shopping by budget we have gift guides that cover many price points and interests. Shop the 85 best under-$100 gift ideas below:This list includes a Sponsored Product that has been suggested by Casper. It meets our editorial criteria in terms of quality and value.* An artistic swatch collab with MoMA MoMA Design Store Swatch x MoMa watch, available at Moma Design Store, from $80What better way to show off their love for art than a watch inspired by famous paintings. Swatch collaborates with New York's Museum of Modern Art to create these unique watches that resemble artworks from MoMa's collection. A travel photo album Artifacts Uprising Hardcover Travel Photo Book, available at Artifact Uprising, from $72This customizable photo book takes you back to every travel adventure so you'll never forget it. Whether it's a week trip or an extended stay, the travel photo album captures every excursion with charming designs on up to 210 pages. A fresh flower bouquet Urban Stems Urban Stems bouquets, available at Urban Stems from $45If you don't know what to gift, flowers are always appreciated. A beautiful bouquet delivered right to them is the kindest way to say congrats and show you're thinking of them. A set of multipurpose starter seasonings Omsom The Best Seller Set, available at Omsom, $45Spice up their summer with this fun set of four seasoning starters that can be used on everything from barbecue to savory tofu and chicken. The perfect pillow for side sleepers Casper Original Casper Pillow, available at Casper, $65The Original Casper Pillow will help your favorite side sleeper align their neck with their spine while sleeping. We named this pillow the best for side sleepers in our guide to the best pillows. You can customize the pillow even more by choosing its size and height.*Sponsored by Casper A grow it yourself garden kit Uncommon Goods Vegetable Grow Kit & Garden Cookbook, available at Uncommon Goods, $35With this vegetable grow kit, they'll be able to grow their meals right in their backyard. The kit includes a cookbook, step-by-step gardening instructions, and the seeds to grow 11 different vegetables. A mini fireplace Food52 Personal Concrete Fireplace, available at Food52, $99Keep them warm and entertained this summer with this small personal fireplace, which is safe for use indoors and for cooking fun treats like s'mores.  A gift card from Bookshop Bookshop Bookshop gift card, available at Bookshop, from $10Bookshop allows readers to support small bookstores online. The retailer sells gift cards that your recipient will be able to use to shop online from their favorite indie bookstore. The gift cards never expire and can be bought in increments from $10 to $1000. An interactive pottery kit Sculpd Sculpd Pottery Kit, available at Sculpd, $65This pottery kit offers a unique activity to do with your loved ones. Each kit comes with enough supplies for two people, with add-on supplies also available for purchase so that more can participate. The kit also includes a step-by-step instructional booklet. A set of cocktail mixers that taste like summer Williams Sonoma Casamigos Cocktail Gift Set, available at Williams Sonoma, $49.95Co-founded by actor George Clooney, Casamigos is a favorite brand of many tequila lovers. The company's newest addition is a cocktail gift set of uniquely flavored mixers and rimmers. The mixers are exclusively available at Williams Sonoma and include blackberry basil and citrus flavors. A gift card from Hello Fresh Hello Fresh Gift Card, available at Hello Fresh, from $70The best gifts are for items or services your recipient wouldn't think to purchase for themselves. A gift card from Hello Fresh checks all of these boxes, as it offers a welcome reprieve from grocery shopping and meal planning. Choose from four amounts based on your recipient's household size and needs. We also wrote a full guide to Hello Fresh that includes a breakdown of its special features, how to get started with an account, and more. A bag made for hosting mini picnics Amazon Picnic at Ascot Insulated Wine and Cheese Cooler Bag, available at Amazon, $58Our pick for best picnic basket for carrying bottles, this insulated bag is a great gift for those who want to have a small picnic complete with their favorite drinks and small snacks. A set of sustainable coasters Joanna Buchanan Ruffle Edge Straw Coasters, available at Joanna Buchanan, $48Add a pop of color to their indoor and outdoor eating spaces with these colorful straw coasters. The coasters come in a set of four, are handwoven in the Philippines, and are made of sustainable materials. A savory seasoning starter pack Momofuku Pantry Starter Pack, available at Momofuku, $55Spice up their pantry with this flavorful seasoning set. The starter pack includes spicy seasoned salts, restaurant-grade soy and tamari sauces, and chili crunch. Momofuku's site also includes several recipes to make using the ingredients from the set. A mini travel kit Away The Travel Wellness Kit, available at Away, $55Keep them well stocked with travel essentials by gifting them Away's Travel Wellness Kit. The set comes inside of The Mini which is a smaller version of their popular suitcase and is available in multiple colors. Accompanying The Mini is a hand sanitizer, anti-bacterial hand wipes, dissolvable soap leaves, and a mask with five replacement filters. A pair of cozy slippers Zappos Scuffette II Slippers, available at Zappos, $89.95Help them keep their feet warm while working from home with these fuzzy slippers. These high quality slippers are made of suede and have a sheepskin collar, and are a very useful gift that your recipient may not think to purchase for themselves. A wine gift set Amazon Wine Lovers Set with Opener and Preserver, available at Amazon, $49.99Help elevate your recipient's wine experience by gifting this wine lover's set. The included wine preserver is a great gift for those that live alone or like to take their time with their wines. The sleek charging base and modern design make this a gift your recipient will be proud to display on their kitchen counter. A sturdy wallet Amazon Bellroy Low Slim Leather Wallet, available at Amazon, $75Replace their tired and tattered wallet with this slim leather billfold from Insider Reviews' favorite wallet brand Bellroy. It's made with ethically sourced leather that will age wonderfully and last many years. A Disney+ subscription Alyssa Powell/Business Insider Subscription, available at Disney+, $7.99/month or $79.99/yearIt gives you unlimited access to movies and shows from Disney, Pixar, Marvel, Star Wars, National Geographic, and 20th Century Fox, and costs just $7.99 a month or $79.99 a year after a free seven-day trial. Read everything there is to know about Disney+ over here.And if you need some binge-spiration, here are all the new movies available to stream. A sleek fitness tracker that includes heart rate monitoring Fitbit Fitbit Inspire 2, available at Best Buy, $99.95Fitbit's affordable Inspire 2 tracker has no shortage of useful features to keep them informed about their physical activity. The heart rate monitor lets them be more strategic about their workouts by tracking calorie burn, resting heart rate, and heart rate zones. A hair towel that cuts drying time in half Amazon Aquis Original Microfiber Hair Turban, available at Amazon, $20.49Aquis' cult-favorite hair towels have inspired a slew of rave reviews online, including one from our own team of product reviewers.The towels are made from a proprietary fabric called Aquitex that's composed of ultra-fine fibers (finer than silk) that work to reduce the amount of friction the hair experiences while in its weakest state.  A memorable date night option Eatwith/Instagram Gift Card, available at Eatwith, from $30Eatwith offers cool dining experiences that bring together delicious menus, professional chefs, and interesting guests. Typically held in person, in major cities like New York, Paris, and London, Eatwith is now offering online classes you can take from anywhere that bring unique cooking experiences right into your kitchen. In addition to experiences led by professional chefs from around the world, Eatwith has recently added classes taught by MasterChef contestants. A pair of comfortable wool shoes Allbirds Wool Runners, available at Allbirds, $98While Allbirds has hinted that it's on track to become more than just a shoe brand, we'll always be partial to its original sneakers made from merino wool. We've been wearing and loving the comfortable style for more than two years, and you can't go wrong gifting a pair of these shoes.  Coffee from a different country, delivered every month Atlas Coffee Club/Instagram 3-Month Gift Subscription, available at Atlas Coffee Club, $60It's a worldwide coffee tour without the expense of airplane tickets. Atlas Coffee Club delivers single origin coffee and always includes a postcard from the country, brewing tips, and flavor notes with each month's shipment.  A small skincare tool that removes 99.5% of dirt, oil, and makeup residue Amazon Foreo Luna Facial Cleansing Brush, available at Amazon, $99Our team swears by these gentle yet effective cleaning brushes. They have hygienic silicone bristles and come in five different models for different skin types. The Luna is small enough to bring on the go, so your recipient can maintain their skincare routine no matter where they are. A digital photo frame Amazon NIX 8-Inch USB Digital Photo Frame, available at Amazon, $69.99Include a USB stick of your favorite photo memories together with this gift. The high-tech photo frame will shuffle through and display crisp photos and videos, and it can also be mounted on a wall. If you can stretch your budget, the more popular WiFi version is the same idea but more convenient to use because it works right from your phone's gallery.  An easy-to-use trimmer Philips Norelco Philips Norelco OneBlade Face + Body Trimmer, available on Amazon, $39.95What separates the Philips Norelco OneBlade from other trimmers and shavers is the unique blade. It uses a fast-moving OneBlade cutter with a protection system on both sides of the blade to prevent knicks. The base of the blade will contour to his face, allowing for a comfortable shave or trim without irritation — and it works for wet or dry shaving. A convenient wireless charging pad Amazon Anker PowerWave Wireless Charging Pad, available on Amazon, $13.99A wireless charger is a great gift for anyone with a glass-backed smartphone that supports the feature. Our reviewer called this one "the perfect wireless charging pad." It charges quickly, looks nice, and can even accommodate thick phone cases. Membership to a popular nationwide book club Book of the Month 6-Month Subscription, available at Book of the Month, $89.99If they prefer the incomparable feel of a hardcover book, set them up with a Book of the Month membership. It offers five curated titles, mainly from up-and-coming authors, to choose from every month.  A solution to their back pain Amazon Upright Go Posture Trainer, available at Best Buy, $79.99This gift is for anyone who is always complaining about their back pain or poor posture. Upright Go is an innovative and discreet device that sticks to the top of their back and helps them improve their posture, day by day.  A fan-favorite cookbook with original illustrations Amazon "Salt, Fat, Acid, Heat" by Samin Nosrat, available at Amazon, $16.67This is the perfect cookbook for those just getting into cooking. Chef and New York Times columnist Samin Nosrat outlines the foundations of cooking and presents it in a fun, engaging way alongside original illustrations.  Their favorite specialty meals, no matter where they are Goldbelly Meals, available at Goldbelly, from $25Goldbelly makes it possible to satisfy their most specific and nostalgic cravings no matter where they live in the US — a cheesecake from Junior's, deep dish pizza from Lou Malnati, and more. Browse the iconic gifts section for inspiration. Smart bulbs to deck out their home with the best ambiance Amazon Philips Hue White Smart Light Bulb Starter Kit, available at Amazon, $99.99Gift this to a friend who wants to equip a full room or apartment with smart lights. This kit includes four white bulbs, which you can control with Alexa, Google Assistant, and HomeKit, and a Philips Hue Bridge that connects them to your router. You can automate the bulbs with timers and schedules, and create gorgeous lighting effects. With the Philips Hue Sync feature, they can even sync up with the audio of your music, movies, or games. A book about their favorite burger spot Amazon Shake Shack: Recipes & Stories, available at Amazon, $22.03While this book doesn't contain the actual recipes for the burger or the famous sauce, it will get your burger-loving recipient pretty close to the real deal. They can make delicious burgers, fries, and shakes at home, then conduct the classic Shake Shack vs. In-n-Out comparison.  A stylish accessory with a hidden charger Mark & Graham Power Up Lightning to USB Tassel Keychain, available at Mark & Graham, from $44.99The leather keychain is as functional as it is attractive: it has an iPhone lightning input and USB stick so they can charge their phone in their bag. Some colors include free monogramming while others have a $10 monogram fee.  A reusable bag featuring a fun print Baggu Standard Baggu, available on Baggu, $16There are plenty of reusable nylon shopping bag options out there, but where Baggu really stands out from the crowd is its variety of quirky and colorful prints. These useful bags are the perfect gift for everyone in your life. A fun and educational online cooking class Cozymeal/Instagram Gift Card, available at Cozymeal, from $50Gifting experiences is on the rise. With a Cozymeal class, they'll learn how to make anything from fresh pasta to beautiful charcuterie boards. In addition to cooking classes, Cozymeal offers online mixology classes and virtual wine tastings. A set of trackers for the absent-minded Amazon Tile Pro (2-Pack), available at Amazon, $59.99When they can't find their phone, all they have to do is click their Tile button to make their phone ring, even if it's on silent.  An electric toothbrush that you won't want to hide away Goby Moonstone Electric Toothbrush, available at Goby, $85In addition to its sleek design, the Goby Toothbrush stands out for its soft brush head, normal and sensitive brushing speeds, and convenient USB charging shell.  Ready-to-prepare meals that save them time Daily Harvest The 9-Item Gift Card, available at Daily Harvest, $75Your recipient will be able to fill a box with smoothies (including protein smoothies for gym rats), harvest bowls, soup, and more meals that are ready to take on the go. Daily Harvest's healthy offerings are perfect for the busy, wellness-minded people in your life.  A case that sanitizes dirty phones Phone Soap PhoneSoap Smartphone Sanitizer, available at PhoneSoap, $79.95Most of us carry our phones with us everywhere — and we mean, everywhere. PhoneSoap kills 99.9% of common household germs, including bacteria that lead to E.Coli, Salmonella, Staph, the flu, and the common cold. Especially with the pandemic, your recipient will love knowing that their phone is squeaky clean.  A pretty leather wrap for taking chargers and cables on the go Mark & Graham Leather Charger Roll Up, available on Mark & Graham, from $22.99Mark & Graham's Leather Charger Roll Up is made from soft, supple leather and has three separate pockets to stash cables and chargers on the go. Get it monogrammed for free. A delicious and unique hot sauce Truff/Instagram Truff White Truffle Hot Sauce, available at Amazon, $31.49The limited-edition hot sauce is infused with white truffle, packing a sweet heat you'll want to add to burritos, pizza, wings, or any other dish you want to make a little more interesting.  Membership to a huge outdoor co-op Connie Chen/Business Insider REI Membership, available at REI, $20An REI membership offers a lifetime of benefits for a one-time purchase. That includes 10%-back dividends, special offers, access to in-store REI Garage sales, and special pricing on REI classes and events. Find out more here. Extremely comfortable, flattering lounge pants MeUndies MeUndies, Lounge Pants, available at MeUndies, $68These are some of the best lounge pants we've ever tried. If they're spending more time in casual wear, they'll spend an inordinate amount of time in these. We also appreciate that the silky MicroModal and sleek cut make them perfectly acceptable for wearing in public to grab the mail. A bike horn that can go as loud as a car Priority Bicycles Priority High Power Horn, available at Priority Bicycles, $29.99Born out of a research project between Priority Bicycles and Toyota, this bike horn can get as loud as the one in a car. This is an excellent safety accessory for bikers. A silky hand cream La Mer/Instagram La Mer Hand Treatment, available at Nordstrom, $90Of all La Mer's premium skincare products, the Hand Treatment is a brand favorite. This creamy formula is the perfect texture to help heal dry hands. The internet's favorite olive oil Brightland/Instagram Awake Olive Oil, available at Brightland, $37Brightland's olive oils make great gifts for cooks and anyone who loves to entertain. The white bottles protect the EVOO from light damage and look nice displayed on a countertop.  A cool and smooth pajama shirt Ettitude/Instagram Bamboo Lyocell Sleep Shirt, available at Ettitude, from $64.40Luxury sheets will break your budget, but the next best thing to get them a good night's sleep is this comfortable and attractive PJ shirt. It's made from organic bamboo lyocell, which is breathable and moisture-wicking, not to mention more sustainable to produce than traditional cotton.  Premium distilled whiskey Uncle Nearest Whiskey Uncle Nearest Whiskey, available at ReserveBar, starting at $49Founded in Tennessee, Uncle Nearest is an award-winning, Black-owned whiskey brand that was inspired by the first known African-American master distiller, Nathan "Nearest" Green. If you're shopping for someone who enjoys a quality glass of whiskey or a whiskey-based cocktail every now and then, a bottle of Uncle Nearest won't disappoint. A sleek knife block Material Kitchen The Stand, available at Material Kitchen, $90We're big fans of Material Kitchen's minimalist approach to kitchen essentials — like this magnetic, angled knife block made from heavy-duty wood.  Soft and environmentally friendly socks made from hemp United by Blue SoftHemp Sock, available at United by Blue, $16The cozy socks are also sustainably made and made from a hemp yarn that's four times more durable than cotton, a win-win all around.  A simple but luxurious body wash Necessaire Necessaire The Body Wash, available at Sephora, $25New startup Necessaire formulates its body care products with vitamins A, B3, C, E, and omega-6 and omega-9. The subtly scented Body Wash will leave their skin feeling clean, soft, and nourished.  An indoor plant The Nice Plant Blooming Energy Box, available at The Nice Plant, $45.99Indoor plants are much more than an extra responsibility. They help purify the air, have been proven to reduce stress, and look good aesthetically. The Nice Plant's Blooming Energy Box includes a small plant and a few other useful things, like a sage smudge stick, palo santo bundle, and room spray, to make their home more peaceful and relaxing.  A high-quality leather band for an Apple Watch Amazon Bullstrap Full-Grain Italian Leather Watch Band, available at Amazon, $89Bullstrap's Italian Leather Watch Bands are the perfect way to add some elegance to an Apple Watch. They come in several colors of leather and are compatible with all generations of the Apple Watch. A pair of sparkly hoops Mejuri Sapphire Hoops, available at Mejuri, $60Traditional hoops get an embellishment of white sapphire in this affordable piece from Mejuri.  Premium underwear that's worth every penny Tommy John Tommy John Men's Second Skin Boxer Brief 3-Pack, available at Tommy John, $97It's not an exaggeration to say Tommy John could be the most comfortable boxers your recipient has ever worn. The Second Skin, in particular, is a standout — smooth, soft, stretchy, and breathable.  A cool drink accessory worth celebrating Brumate BrüMate 12oz Insulated Champagne Flute, available at BrüMate, from $22.99Brumate's insulated flute prevents the disappointment of bubbly that has gone warm and flat. It holds almost half a bottle of champagne and comes in 30 pretty colors.   A whimsical candle from a new brand Otherland/Instagram 3-Candle Set, available at Otherland, $89As our candle-loving editor points out, "Does the world really need another fancy candle brand?" Otherland's candles are so creative and interesting that you won't be able to resist gifting at least a few.  A travel-friendly vanity case Paravel Mini See All Vanity Case, available at Paravel, $65They can stop using unsightly and wasteful Ziploc bags once they have this stylish and structured case in their possession. The exterior material is resistant to water and stains, and the clear window lets them easily identify the case's contents.  A gold bracelet that displays their zodiac sign Aurate Zodiac Bracelet, available at Aurate, $90The delicate gold vermeil bracelet is a piece they'll want to wear every day. Aurate's beautiful gold jewelry is not only more affordable than traditional fine jewelry, but it's also ethically sourced, representing a new wave of jewelry brands to know about.  A mini duffel crossbody with a distinctive look Dagne Dover Extra Small Landon Carryall, available at Dagne Dover, $110Dagne Dover excels at making functional and versatile bags like work totes and this extra small version of its popular neoprene duffel. Inside, they'll find a compartment just large enough for the day's essentials, pockets to keep them organized, and a detachable key leash.  A streaming stick that gives them access to more than 500,000 movies and TV episodes Amazon Roku Streaming Stick +, available at Amazon, $44.99Roku's Streaming Stick+ is exceptional for its 4K, HDR, and HD streaming, and long-range wireless receiver. Installing it is an easy process and starts by plugging the stick into the TV.  Sweet treats they won't be able to stop eating Milk Bar The Chocolatey Classic, available at Milk Bar, $75Instead of the usual box of chocolates, gift some of the best-known and most delicious treats from NYC institution Milk Bar. The set contains 12 soft and chewy cake truffles, six assorted and an adorable mini birthday cake.  A box that lets them explore the exciting world of sake Tippsy Sake Gift Box, available at Tippsy, $59While online wine clubs abound, Tippsy is quietly cultivating a community of sake lovers. It offers an abundance of knowledge and premium sake options to anyone who's interested in exploring this underrated alcohol further.   A compact and lightweight hand mixer Amazon Kitchenaid 5-Speed Ultra Power Hand Mixer, available at Target, $49.99Not all baking tasks require a full stand mixer. KitchenAid's hand mixer doesn't take up a lot of space but gets a variety of jobs done by offering five-speed options. You'll also have fun picking out a unique color for your recipient.  A game that tests their penchant for puns Amazon Pun Intended Game, available at Amazon, $24.99It's a battle of who can devise the most clever puns in this family-friendly card game that requires a quick mind and even faster writing skills. Game on.  A custom map of a special location Grafomap Custom Map Poster, available at Grafomap, $49Grafomap is the site where you can commemorate important places, be it their hometown, college town, or the city where you two met. The custom design function is easy to use and you can choose to get the final map poster framed or printed on canvas.  A waterproof outdoor speaker Amazon Ultimate Ears Wonderboom Speaker, available at Amazon, from $99.99The surprisingly powerful speaker fits in the palm of their hand and can go swimming with them in the pool or ocean. It's also dustproof and therefore suitable for hikes and other outdoor adventures.  A sleep mask made with high-quality mulberry silk Nordstrom Slip Slipsilk Sleep Mask, available at Nordstrom, $50Few things are more luxurious than sleeping with a silk mask. Thanks to its all silk construction, your recipient's face will feel cool all night long.  A plush bathrobe Parachute Classic Bathrobe, available at Parachute, $99It's all too tempting to stay wrapped up in this Turkish cotton bathrobe long after they've stepped out of the shower. The thick robe is our pick for the best bathrobe you can buy.  A chai sampler Amazon Vadham Chai Tea Reserve Set, available at Amazon, $29.99This set of loose-leaf teas made it into Oprah's Favorite Things back in 2018. It's filled with three variations of chai that any tea lover will appreciate.  A cult-favorite fragrance Le Labo/Instagram Le Labo AnOther 13 Eau de Parfum, available at Nordstrom, from $86Le Labo is famous for its distinctive packaging and subtle yet inviting scents. The AnOther is musky and woodsy, but it's balanced out with ingredients like jasmine petals.  The outdoor game you see everyone playing at the park Amazon Spikeball Game Set, available at Dick's Sporting Goods, $69.99It's a gorgeous day out and you can't help but notice a few groups having fun while playing some kind of new ball game. Chances are it's Spikeball, the volleyball-esque game that your recipient can set up in any large outdoor space. It takes just 10 minutes to learn the rules.  A pair of blue light-blocking glasses that look good enough to wear outside of the house MVMT Ingram Crystal Everscroll Glasses, available at MVMT, $62.40Help them protect their eyes from harsh screens with a pair of blue-light-blocking glasses. Their eyes won't feel as strained, and they might be able to drift off to sleep more quickly.  A set of monogrammed hand towels Weezie Stitched Edge Hand Towels, available at Weezie, $30The extra time and thought put into a personalized gift are worth it. You can add custom embroidery (+$15 per towel) to Weezie's fluffy and absorbent towels.  Smart plugs that let them control their appliances with their phone Amazon Kasa Smart WiFi Plug, available at Amazon, $17.68Through the corresponding app, they can schedule when their lights turn on and off, or use voice commands with Alexa, Google Assistant, and Cortana. It's a suitable entry-level smart plug for someone looking to get into home automation.  A personalized photo book Artifact Uprising Color Series Photo Book, available at Artifact Uprising, from $22Photo books are a great gift for anyone in your life and can be used to commemorate vacations, weddings, special events, or even just everyday life. With three book sizes, multiple color and theme options, and the opportunity to choose a cover image, this gift is sure to make your recipient feel special. A flavorful seasoning collection Spicewalla The Grill & Roast Collection, available at Spicewalla, $18.99With grill and BBQ season slowly approaching, a set of tasty seasonings is key to making delicious foods. They can use the spices in this collection to add flavor to meats, seafood, vegetables, and even rice. The coziest moccasins we've ever worn L.L.Bean Women's Wicked Good Moccasins, available at L.L.Bean, $79Can you practically feel the soft fluffiness of these slippers through your screen? L.L.Bean supposedly sells a pair of these cushioned sheepskin shoes every seven seconds during December, proving that they are worth the purchase. An everyday stainless steel frying pan that professional cooks love Made In Frying Pan, available at Made In, $65Pros like Tom Colicchio trust Made In's cookware to perform in some of the country's top kitchens, so rest assured it's good enough for your recipient. The quickly growing startup is behind a couple of our favorite pieces of cookware.  A gorgeous coffee table book that helps cure their travel bug Amazon 1,000 Places to See Before You Die (Deluxe Edition): The World as You've Never Seen It Before, available at Barnes & Noble, $50.99Patricia Schultz's original "1,000 Places" captured imaginations with its compelling curation of experiences all over the world. The newly released deluxe edition features a beautiful gold-embellished cover and more than 1,000 new photographs.  A fun, cult-favorite board game Amazon Settlers of Catan Board Game, available at Walmart, $35.20The Settlers of Catan relies upon strategy and sometimes luck to build civilizations — and it can last for hours.  A beautiful piece of handmade drinkware JFR Glass Antique Silver Glass, available at JFR Glass, $45Each hand blown glass from JFR Glass is unique. The glasses aren't just pretty — they're also functional and sturdy. They're dishwasher-safe and UV-resistant, so your recipient can enjoy the pieces forever.  An interactive state park map UncommonGoods State Parks Explorer Map, available at UncommonGoods, $28This state park map is sure to come in handy this spring and summer as many of us will be venturing into the outdoors. Choose from ten maps that each list over 30 parks in states such as New York, California, and Connecticut. The map includes a sheet of gold stickers so you can mark your progress after each park visit. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 25th, 2021

The 9 Best Businesses To Start Over 60

For those with the itch, starting a business over the age of 60 is entirely doable. Age can give many advantages, including experience and wisdom. Here are 9 retirement business ideas to put that experience to good use. Consulting Consulting is a favorite business activity among retired seniors.  For starters, consulting is perfect for crafting […] For those with the itch, starting a business over the age of 60 is entirely doable. Age can give many advantages, including experience and wisdom. Here are 9 retirement business ideas to put that experience to good use. Consulting Consulting is a favorite business activity among retired seniors.  For starters, consulting is perfect for crafting your own hours and rates. After decades of developing expertise in a career, why not put that to good use? if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Marc Wolfsfeld is a semi-retired IT consultant in West Jordan, Utah. After years of working in his business full-time, he decided to cut back operations instead of completely retiring. Mr. Wolfsfeld explained, “I work very part-time hours, but I’m always on call for my clients. If they need software updates or there’s a network problem, I’m there in a heartbeat. It gives me the opportunity to stay active and make extra income without much stress.” He isn’t alone in his desire for flexible working hours. According to labor statistics by the American Economic Journal, 60% of not working Americans in their 60s or 70s would return to work if they had a more flexible schedule. Consulting offers an opportunity to do just that. Consulting is a natural opportunity for many knowledge workers. Retired professionals in finance, law, business management, HR, marketing, and medicine all have many doors open to them in this regard. Make and Sell Crafts Retirees often take up a hobby to fill the time and quickly find that it’s a great way to make extra money. The craft business is a perfect example. The rise of Etsy has shown that handmade crafts can be big business. Many types of crafts sell well, including: Home decor Jewelry Art Toys Dolls Embroidery and quilts Usually, the cost of the materials is quite low, which makes for a nice profit margin on the products sold. The main investment is the time, creativity, and expertise in making them. If you’re already a crafty person, this can be an ideal small business. Items can be sold at a farmer’s market, flea market, festival, or small shop. If you feel comfortable selling online, you can open an Etsy shop or sell on Facebook Marketplace or Craigslist.  You can advertise your business through word of mouth at events or through social media.  You don’t need a website or a graphic designer to have an effective internet presence. This is because social networks like Instagram and Pinterest enable you to draw a lot of attention to visually appealing products like arts and crafts.  Craftwork isn’t limited to artsy crafts.  The same business idea applies to any type of artisanship: woodwork, metal work, clothing design, baking cakes, or anything else that can be made from home.  Robert Mauk is a retired teacher in Modesto, California, who does woodworking.  Mr. Mauk commented, “Too many of my fellow retired teachers don’t remain active during retirement, and as a result, the quality of their lives often quickly declines, and I am not comfortable not being productive and creative.” “I always liked working with wood as a medium for my artwork, through craft and furniture. I worked with my Dad at a young age, and I think that sparked my interest in working with wood,” he continued.  “I have stopped working on major kitchen and bathroom remodeling jobs. I now concentrate on wood sculpture, wood turning, and furniture projects so that there is no climbing in attics and down into crawl spaces.” Dog Walking  Dog walking is the perfect small business idea for animal lovers. Pet ownership has increased over the past decade, and it’s expected to increase even more. Analysts at Morgan Stanley expect the pet industry to almost triple in size over the next decade.  That means there is a bigger demand for animal-related products and services, including dog grooming, doggy daycare, and dog walking.  Dog walking is a great way to get outside and exercise. However, if the business expands, hiring younger workers to do the legwork is also an option.  According to TimeToPet.com, dog walkers typically charge between $19 and $29 for a 30-minute dog walk. If you walk multiple dogs at the same time, the money made per hour goes up substantially. Of course, the rate varies based on the location and other factors. As mentioned before, other related services include dog daycare and dog grooming. If you like taking care of animals, there are a few different directions you can take the business. Keep in mind that you don’t just have to do customer service with the animals, but with their owners, too.  Grow and Sell Plants Gardening has long been a favorite retirement hobby. Why not grow your love of plants into extra income? Growing plants from seeds is difficult for many people. That’s why they’re willing to pay for already-grown plants.  This includes flowers, bushes, shrubs, trees, garden starts, vines, potted plants, wall plants, patio plants – you name it.  If you’re comfortable with strangers coming to your home, it can be a 100% home-based business. You can grow the plants in pots in your backyard, greenhouse, or patio, and sell them directly to the public. Or, if you’d rather not, lease a shop or open an online business. It may not seem like a lucrative business idea, but a visit to your local nursery should dissuade you of that notion. Small plants commonly sell for $20-100, and your costs are limited to water, dirt, and some pots. Many gardeners make extra cash by selling their excess produce and flowers. It’s a great way to grow from hobbyist to entrepreneur.  Invest in Real Estate Real estate investment is a capital-intensive business, but it can also be a steady source of cash flow.  It helps to have good credit and some capital in this industry, but you don’t have to be rich to get started.  The median retirement savings for people between the ages of 55 and 64 is $107,000, which isn’t nearly enough to retire. But it’s usually enough to put a down payment on a modest investment property.  There are a few different types of residential investing: Buying, fixing, and flipping houses Rental investing Short-term rental investing Fixing and flipping houses requires more work than renting out houses, but you also make more money in the short term.  Short-term rental investing can be done through sites like Airbnb and Vrbo. In effect, you can run a bed and breakfast from any house that you own. The great thing about this is that you can get started with the house that you’re already living in by renting out rooms or the basement. Many retirees consider downsizing after their children grow up and leave the nest. Instead of downsizing, renting out the extra space as a short-term or long-term rental may be a quick way to start producing income.  Open a Franchise Franchises have been popular with small business owners for a long time. There are good reasons for this. There’s no way around it: starting a business is hard. In addition to the work and capital you need to put up, you need to know what you are doing. That’s where franchising comes in. In exchange for paying an upfront franchise fee and recurring royalties, you get step-by-step guidance on how to start a business. The best franchises have well-known brands and national marketing that bring in customers automatically.  If you buy into a franchise, you don’t have to come up with a business plan or worry about supply chain logistics. The best franchises have employee training resources on everything from customer support to handling finances. One of the most famous franchise restaurant chains in the United States was started by an older entrepreneur: none other than Colonel Sanders.  Harlin Sanders started the Kentucky Fried Chicken franchise when he was in his 60s and worked in some facets of the restaurant business until his death at age 90.  Though he churned through or failed at many different jobs and careers in his long life, he realized that he had an amazing fried chicken recipe worth sharing with the world. His restaurants and his accompanying franchise business made him quite wealthy by the end of his life. Today, KFC is a brand with a worldwide presence.  Buying into a well-established franchise probably won’t lead to worldwide success, but it can be a steady business venture for the right person.  Beyond restaurants, franchises exist in many different industries, including: Convenience stores like 7-11 Hardware stores like Ace Hardware Hotels like Marriott International Fitness gyms like Planet Fitness Franchises aren’t cheap. In addition to paying hefty startup fees, there are usually capital costs such as buying equipment, hiring employees, and leasing space.  Franchise startup costs average $150,000, but much of that cost can be covered through a business loan or financing of some sort. The day-to-day operations of most well-run franchises can be done by a manager. Once the business is up and running, the business owner usually doesn’t need to put in many hours to keep it going.  Offer Move Management Services RetiredBrains surveyed their readers about what businesses they had started in retirement, and some variation of “Move Manager” came up more than once.  This is a service that involves helping people move. The physical lifting work is still done by a moving company, but the move manager organizes the process.  According to these service providers, downsizing seniors and overwhelmed young families need help managing the details of the moving process, and they’re willing to pay for it. This often involves cleaning out garages, packing, labeling, organizing, and planning the various pieces of the move. Part of this could involve senior relocation services, which help seniors find a trustworthy and affordable retirement home.  Many houses are filled with old possessions and unused things. A big part of the move management service involves selling, throwing away, or donating unwanted items.  Once the client is in their new home, unpacking and organizing everything requires work as well.  Academic Tutoring Tutoring is a great business for people that love children and teens. Retired school teachers find that tutoring is a great way to bring in income during retirement, without the stresses of classroom management and school administration.  According to Tutors.com, average prices for tutoring vary quite a bit. They can range from $25 to $80 per hour, depending on the location, type of tutoring, and other factors. Traditionally, private tutors typically visit students in their homes or other places of their parents’ choosing. However, online tutoring has become more popular in recent years and tutoring centers are another option.  Test preparation for the SAT and other standardized tests is a particular area of high demand, which can command higher rates for tutors well versed in it. Get Paid to Write Writing is a paid activity that can be done well at any age. There are a variety of ways to get paid as a writer. Business ideas for writing include: Freelance work for publications and companies Self-publishing a book Blogging Ghostwriting on behalf of others Technical writing Copywriting Gerri Detweiler of Sarasota, Florida, worked for many years as a writer, speaker, and educator in the credit industry. She decided to transition from full-time, in-house work to freelance writing and consulting.  Mrs. Detweiler has published books and is also working on an online course.  Mrs. Detweiler shared, “I recently became self-employed again after more than a decade in full-time roles. While I’ve enjoyed working with colleagues in those jobs, I appreciate the flexibility of working for myself. Freelancing has allowed me to travel and work around the US as well as internationally.  “I’m heading to Greece in December 2022 for an extended period of time and this work allows me to do that without worrying too much about office hours and time zone differences. “Writing, in particular, allows for a great deal of flexibility. It also allows me to delve into topics that are interesting but that I otherwise might not have the time to study. For example, this year I wrote about crypto credit cards, and I enjoyed researching that space. “I’m also interested in remote work and am starting to write about that as well. As long as I remain curious I’ll continue to write, even if it’s just for myself!” Conclusion The average human lifespan is longer than ever before. Rather than retire early, many Baby Boomers are choosing a middle path of part-time work and part-time play.  Entrepreneurship isn’t easy, but it has its perks. A flexible, fulfilling business may be the perfect vehicle for such a lifestyle. Article by Garit Boothe, Due About the Author Garit Boothe is a financial blogger and entrepreneur. He studied economics at The George Washington University in Washington, DC, for one year before dropping out to be a missionary in Argentina. After coming home to the United States, he worked in a variety of jobs, side hustles, and businesses until landing in digital marketing. He currently runs a digital marketing agency focusing on fintech companies and writes for his personal finance blog. Updated on Aug 3, 2022, 3:27 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkAug 3rd, 2022

Small Businesses Hanging By A Thread As Sentiment Sinks To New Lows

After an onslaught of challenges over the last two years, American small business owners are feeling less positive about the future of their business and the economy. The last few years of the crisis have been anything but easy to navigate, as Covid lockdowns and restrictions caused a massive blow to thousands of small businesses […] After an onslaught of challenges over the last two years, American small business owners are feeling less positive about the future of their business and the economy. The last few years of the crisis have been anything but easy to navigate, as Covid lockdowns and restrictions caused a massive blow to thousands of small businesses who weren’t able to ride out economic turmoil. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   As tides started turning in the summer of 2021, with vaccine campaigns being rolled out and restrictions starting to ease, new economic threats soon started revealing themselves. Now, more than two years since the start of the global pandemic, small business owners face rising inflation, aggressive interest rate hikes, and gas prices that have hit record highs over the last few months. On top of this, a tight roped supply chain, and an even tighter labor l[n market have left many business owners constrained in the potential growth and flow of their business. According to a June 2022 survey by global banking giant, Goldman Sachs, 78% of surveyed small business owners believe that the U.S. economy has worsened over the last three months. In the same survey, a staggering 89% of business owners shared that broader economic challenges, including inflation, supply chain issues, and workforce shortages have hurt their business. These, and other ongoing economic challenges are putting a tight grip around the throats of many small business owners who can’t seem to catch a break. Business And Economic Sentiment Is Falling, Fast It’s been a daunting time for many entrepreneurs who have in recent times entered the market. The National Federation of Independent Business measured its lowest reading in June 2022, as small business optimism dropped 3.6 points to 89.5, marking the sixth consecutive month below its 48-year average of 98. Expectations over small business conditions worsened even more, as readings on the index nose-dived to a net negative 61%, the lowest it’s ever been in more than 40 years. Expectations for better conditions have decreased every month of the year so far, causing a worrisome outlook for the road ahead. Although the U.S. economy managed to see an exodus of new business applications and registrations throughout most of 2020 and 2021, as mass layoffs and depleted savings caused millions of so-called entrepreneurs to enter the market in the hopes of building their business empire. This dream soon came crashing down, as many realized that the aftermath of the pandemic was a lot worse than what they initially expected. Even as states lifted restrictions and reopened their economies, Federal aid programs such as the Paycheck Protection Program (PPP) helped direct some needed cash flow towards businesses and companies that saw profits plummet during the early months of the pandemic. Even with the aid and stimulus programs, checks soon started drying up, as cash reserves depleted faster than many initially thought. Continued Concern Over The Pandemic-Driven Impact Although the severity surrounding the pandemic has started to wind down, business owners are still concerned over pandemic-driven problems. The U.S. Chamber of Commerce Small Business Index found that a majority of small business owners, roughly 68%, still report a continued concern over the impact of Covid-19 on overall business operations. For some owners, around one in six, Covid remains a top challenge to their small business. As some owners view the pandemic as something of the past, the repercussions are lasting, with many citing it as the main cause why economic conditions have worsened over the last few months. Workforce Troubles A report found that small businesses were losing jobs during the first three months of the year, even as the U.S. economy added on average more than 540,000 jobs per month. Even with a red-hot labor market, smaller businesses, those with 50 or fewer staffers are struggling to find and retain employees, even as employers posted a staggering 11.5 million job openings in March of this year. Businesses with fewer employees are struggling to fill open positions, more worrisome is that owners are finding it increasingly difficult to get candidates to even apply for job openings. At first, when many employees were laid off or had their hours slashed, some managed to come out of the downturn quite easily, others quickly looked to change their course of direction, as the gig economy started taking shape. Now two years later, employees and those who recently entered the labor market have found remote and flexible job offers more attractive than in-person job roles. Business Owners Are Experiencing Higher Levels Of Burnout Between May and June this year, technology platform Podium found that roughly 72% or seven in ten owners are feeling burned out from the pandemic’s impact. Owners cited that inventory shortages, supply chain disruptions, lack of separation between work and home, and challenging communication efforts are among the top-ranked issues. Besides these challenges, the same survey by Podium found that owners cite inflation and rising gas prices as the top two threats impacting revenue growth potential. Over in the United Kingdom, business owners are also struggling to keep up with rising costs. A recent report found that 61% of business owners have yet to increase their prices, but know that the situation is inevitable. Moreover, many UK business owners are increasingly finding it difficult to keep up with administrative burdens as well, as many have already been looking to implement digital software and technologies that can help in the process of making tax digital (MTD), process online payments and orders, and help to more effectively communicate with clients. Back in the U.S., the overall market consensus is that owners are working more now than they ever did to keep up with soaring demand. So far there has been a 20-percentage point increase in the number of hours owners are working compared to 2017. Attracting potential hires, and keeping them has left many employers to increase wages faster than ever. In December 2021, a Paychex index found that businesses with less than 50 employees rose hourly wages to an average of $29.88, a $1.17 increase from November 2020. Rising inflation has perhaps been the biggest trigger, as employers pushed wages by a record 4.1% annual rate to attract potential employees. Even with the higher hourly pay, owners aren’t able to keep staff, causing them to either cut down on their operations or jump right in to get the job done themselves as they fight for survival. Aggressive Rate Hikes Are Only Causing More Red Tape The Federal Open Market Committee (FOMC) has been aggressively raising its base interest rates since around March of this year. A tightening monetary policy means that the Federal Reserve is actively making it harder and more expensive for individuals to take out loans or borrow money from banks and credit unions. On the other hand, the aggressive hikes are also seen as part of the Fed's arsenal to combat soaring inflation, which hit a fresh forty-year high in June. By the end of July, the Federal Reserve announced that it’s expecting to increase rates again by three-quarters of a percentage point as a way to battle higher-than-expected inflation. Higher rates have made it increasingly hard on small business owners who are struggling to keep up with mortgage and bond payments. Additionally, entrepreneurs who were looking to take out loans to start their businesses also now have cold feet, and it is more expensive to get their business off the ground as continuous hikes are hurting prime rates. Even with the ongoing rate hikes, experts suggest that the Fed has perhaps been too aggressive in its actions, and has only pushed the U.S. economy closer to the brink of recession, signaling a worrying outlook on the months ahead for business owners. The Bottom Line Looking forward, small business owners are battling major headwinds coming in from all directions. As if the pandemic-induced lockdowns and restrictions weren’t already hurting growth and revenue, new economic challenges have been pushing small business owners to teeter on the brink. The next few months ahead could only reveal an even more difficult road, as rate hikes, and higher-than-expected inflation further push down business performance. The tight labor market, coupled with a looming recession has only added fuel to the fire, leaving business owners exhausted and burnt out. After this season, business owners could see some light at the end of the tunnel, but that may still take a few months before they are finally out of the woods. Regardless of who the owner is, or what business they have, it’s clear that overall sentiment is not looking positive, and business owners should brace themselves from even more choppy conditions to come. Updated on Jul 29, 2022, 5:27 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJul 29th, 2022

Uber-Bear Mike Wilson Is Almost Ready To Turn Bullish... Except For One Thing

Uber-Bear Mike Wilson Is Almost Ready To Turn Bullish... Except For One Thing One week ago, before he hinted at turning bullish as a result of record bearish sentiment when he said that while he anticipates poor fundamentals for H2 2022, "sentiment says stocks/credit rally in coming weeks", Bank of America's Chief Investment Strategist Michael Hartnett - who until now had proven himself as Wall Street's most bearish and most accurate analyst - predicted that the Fed will pivot in November, effectively unleashing the next bull market in early 2023 (soaring commodity prices notwithstanding), and naturally the big trade on Wall Street remains frontrunning said pivot because by the time Powell capitulates much of the reversal will already be in the books. More importantly, with Hartnett - who recently said "At SPX 3600 Nibble, At 3300 Bite, At 3000 Gorge" - becoming tactically bullish, that meant that Morgan Stanley's in-house Michael (that would be chief US equity strategist Wilson) had seemingly assumed the title of biggest Wall Street bear. Or did he? After all, the last time we heard from him he was warning stocks would plunge to 3,000 as the "slowdown was even worse than he expected." Well, in his latest Weekly Warm-up Note (available in its entirety to professional subscribers) which was written somewhat cryptically for the clearly spoken Wilson, he echoes the latest observations from Goldman's flow trading desk, namely that "with equity markets seemingly shrugging off bad news on the economy and earnings, we explore the idea that it may be trying to get ahead of the eventual pause by the Fed that is always a bullish signal." So yes, seemingly even Wilson has decided that it is more prudent to chase momentum upward during this particular rally, while keeping his bearishness on the backburner. However, unlike some of his bearish colleagues, Wilson hedges that "the problem this time is that the pause is likely to come too late." Let's deconstruct Wilson's argument which begins with a question: "Is the Market Trying to Price a Fed Pause?" (incidentally a question which we answered one month ago in "Fed Rate-Hikes To End This Year, Followed By 3% Of Rate-Cuts & QE".) According to Wilson, since the June lows, the US equity market has been range trading between those lows and 3950. However, this past week the S&P 500 peeked its head above the 50 day moving average, touching 4000 for a few hours. And while Wilson naturally is unconvinced this is anything but a bear market rally, "it does beg the question is something going on here we are missing that could make this a more sustainable low and even the end to the bear market?" Of course, we posed that exact same question one month ago, when quoting a Goldman trading who observed the "First Real Buying In 3 Weeks" and we asked if this is "The Start Of The Next Big Move Higher" (so far we are certainly higher compared to the depths of June if nowhere near the January all time highs). Going back to Wilson, he writes that from a fundamental standpoint, he is "more convicted in our view that bottoms up NTM S&P 500 earnings estimates are too high and have meaningful (i.e. 10%+) downside from the recent peak of $240. So far, that forecast has only dropped by 0.5% making it difficult for us to agree with the view the market has already priced it." Of course, Wilson concedes, he could also be wrong about the earnings risk and perhaps the current $238 is an accurate reflection of reality. However, given the extraordinary deterioration in earnings revision breadth, he still thinks the evidence is building for his view (the recessionary one even though Morgan Stanley still cowardly refuses to make a recession its base case) to play out over the next several months. As earnings get worse, financial conditions are only getting tighter with the ECB finally joining the hiking party last week with it's own 50bps move, the largest in 22 years. Here Wilson, just like us, couldn't help but be reminded of the infamous 25bps hike by the ECB in July 2008, when Europe was already in a recession and just 2 months before the Lehman bankruptcy and onset of the Great Financial Crisis, not to mention that other hike just months before the peak of the European sovereign debt crisis, which only culminated after Draghi vowed to do whatever it takes. Last week's move was eerily similar in many ways. Obviously, the rationale for raising rates now is to join the fight against inflation while also defending the Euro against the US Dollar. However, as Wilson correctly notes, the battle on inflation should have begun a year ago, not now when demand destruction is already well developed and likely to take care of inflation on its own. If that wasn't enough, the ECB's rate hikes in 2011 also look unnecessary in hindsight with recession likely already baked before those two 25bps increases. Could this time be different? It seems unlikely with Eurozone GDP growth fast approaching zero and likely to move into negative territory soon. And so, with most of Morgan Stanley's leading indicators on growth rolling over hard, Wilson thinks this is the more important variable to watch for stocks at this point rather than inflation or the Fed's reaction to it. Having said that, he does agree with the narrative that inflation has likely peaked from a rate of change standpoint with commodities as the best real time evidence of that claim: We think the equity market is smart enough to understand this too and more importantly that growth is quickly becoming a problem. Therefore, part of the recent rally may be the Equity market looking forward to the Fed's eventual attempt to save the cycle from recession and with time running short on that front, that opportunity is now or never. Of course, there are a few shades of gray between "now" and "never", and when looking at past cycles, Wilson admits that there is always a period between the Fed's last hike and the eventual recession--i.e. the Fed is typically long done raising rates before the recession arrives. This is in sharp contrast to the European Central Bank which was still tightening when the last two recessions began. More importantly, this period between the last Fed hike and the eventual recession has been a good time to be long the S&P 500 and many stocks/sectors. In short - and as we have been saying since last December - the Equity market always rallies when the Fed pauses it's tightening campaign prior to the oncoming recession. In some cases, the rally is so powerful, the S&P 500 usually makes a new all time high before everything comes crashing down. The point that Wilson wants to make here is that "IF the market is starting to think the Fed is about to pause rate hikes after next week's move, this would provide the best fundamental rationale for why equity markets have rallied so sharply over the past few weeks and why it might signal a more durable low." Or, a simple way of saying all of the above is that someone read our article from last month "Fed Rate-Hikes To End This Year, Followed By 3% Of Rate-Cuts & QE" and traded on it... So why would markets be thinking the Fed is about to pause or slow rate hikes, as Eurodollar futures clearly are, pricing in almost one full hike in Q1 2023... ... or even end QT prematurely, as former NY Fed guru Marc Cabana said will happen? Part of the reason is the fact that the Fed is already having their desired effect on demand and so it seems quite plausible inflation could look considerably lower in 6 months time. Second, the bond market is sending similar signals with rate cuts now getting priced as early as the Fed's early February 2023 meeting (see above) and the terminal rate and 2 year yields starting to fall as today's auction showed. This is also in line with Wilson's own thinking and why he has been bullish on long duration Treasuries over the past several months. Of course, lower back end rates (both nominal and real) can also be interpreted as good for longer duration growth stocks, particularly relative to value/cyclicals. This, Wilson notes, "helps explain not only the rally in the S&P 500 but also the relative outperformance of the Nasdaq and other growth indices relative to value stocks." Putting it all together, Wilson agrees with the overarching case for a Fed-pivot driven rally... but there is one problem. As he explains, "the problem with this thinking beyond a near term rally is that it's unlikely the Fed is going to pause early enough to kick save the cycle." He explains why: While we appreciate that the market (and investors) may be trying to leap ahead here to get in front of what could be a bullish signal for equity valuations, we remain skeptical that the Fed can reverse the negative trends for demand that are now well established, some of which have nothing to do with monetary policy--i.e. payback in demand and out of sync cost structures with too little pricing power to offset at this point. Furthermore, the demand destructive nature of high inflation that is presenting itself today will not easily disappear even if inflation declines sharply because prices are already out of reach in areas of the economy that are critical for the cycle to extend--i.e. housing, autos, food, gasoline and other necessities. Here Wilson reminds us of a key thing which the high school intern in charge of White House economic policy may want to note, namely that "lower inflation does not mean negative price changes for many of these items and to the extent deflation does return via discounting to drive demand, rest assured that will not be good for profit margins and/or earnings revisions." Adding insult to injury, the survey shows consumer intentions to spend over the next 6 months continues to deteriorate rapidly, even for things like travel and leisure, the area of spend that was supposed to offset the obvious payback on goods spending that is now well established. Moreover, in speaking with his industry analysts, Wilson has encountered increasing concern about deteriorating volume demand in many categories of discretionary spend and discounting returning. Finally, and most ominously, consumer delinquencies are picking up too in several categories of spend with AT&T mentioning this specifically for cell phone bills which tends to be one of the last things people stop paying. Car payments are the other one that is last to stop and here too Morgan Stanley is hearing hearing about rising delinquencies from recent buyers who borrowed more than they should have been allowed based on inflated incomes from the stimulus checks. And then there is the market: In addition to 2 year UST yields and the terminal rate falling, the 2s-10s curve remains inverted by approximately 20bps, the most in nearly two decades. And while the bond market has been preoccupied with the generationally high inflation readings and the Fed's reaction to it, Wilson thinks it is now starting to contemplate the impact of both on growth. In that regard, the bond market is catching up to the equity market. Ironically, the equity market is taking the lower yields signal as a positive for stocks, particularly growth stocks as it starts to give credibility again to the soft landing scenario after having moved away from that view so aggressively in June. Morgan Stanley's take is that this view could persist into August if the Fed throws the markets a bone next week and insinuates it has done enough for now. While that's not the bank's house call or view for next week's meeting, anything can happen in what has been an extremely unpredictable Fed that virtually no one has gotten right this year as they deviated so much from their "guidance" due to inflation surprising so much on the upside. Even Wilson's more hawkish view than consensus at the beginning of the year, which was the primary feature of Wilson's Fire and Ice narrative, was far surpassed as the Fed was forced to play catch up in a way that was totally mispriced by markets just 6 months ago. We can't say that today with the curve inverted and the terminal rate still 175 basis points above the current Fed Funds rate. As a final comment for equity investors to consider, Wilson asks if the Fed was so off on its guidance this year due to the surprising economic and inflation outcome, perhaps this is a precursor to how bad company guidance for the year will turn out to be. The bottom line for the Uber-bearish strategist is that "the Fed is looking more like the ECB this cycle in that they are likely to still be tightening when recession arrives this time making the window to trade the pause much shorter than usual with less upside as well." Unless, of course, one successfully frontruns the crowd and buys when everyone else is selling just as the Fed capitulates and pivots, sending risk assets into orbit if only for a few seconds... Much more in the full note from Wilson available to pro subscribers in the usual place. Tyler Durden Mon, 07/25/2022 - 15:45.....»»

Category: blogSource: zerohedgeJul 25th, 2022

3 signs it"s getting less competitive to buy a home

Prices in hot markets are dipping and buyers are scrambling to cancel contracts — good news for people intimidated by the competitive buying process. A young couple buys a new home.Getty Images The US real estate market is slowing down.  It's because inflation and interest rates have priced out many potential buyers.  As demand wanes, there are three key signs competition is easing. Over the last few years, purchasing a home has felt a lot like competing in a triathlon.However, instead of vying for a trophy, home buyers have duked it out for the nation's limited amount of housing inventory. Spurred on by historically low mortgage rates and the desire for larger living spaces during the pandemic, intense buyer competition led to severe bidding wars that have driven home prices to new highs. But with inflation at a forty-year high and housing affordability at an all-time low, the housing market's white hot demand is fizzling out.As the race to homeownership slows down, experts told Insider there are three key signs that buying a home is becoming less competitive. There are fewer bidding wars  The Federal Reserve's efforts to bring the economy into equilibrium have effectively put an end to pandemic-era mortgage deals.That's because their attempts to combat soaring inflation have resulted in interest rate hikes that have pushed mortgage rates to unaffordable levels.As prospective homebuyers now face monthly mortgage payments that are more than $400 higher than they were just a year ago, many would-be buyers are putting their homeownership dreams on pause. With fewer buyers in the market, those who can still afford to purchase a home are experiencing fewer bidding wars — and that means homebuyer competition is easing.Indeed, the bidding-war rate dipped below 50% in June, real estate brokerage Redfin said in a housing report link. June not only represented the lowest share since May 2020 – a time when the Covid-19 pandemic nearly brought the housing market to its knees – but it was the fifth consecutive month of declines. "Homes are now getting one to three offers, compared with five to 10 two months ago and as many as 25 to 30 six months ago," Jennifer Bowers, a Redfin agent, said in the report. "Offers also aren't coming in as high above the list price as before."Sales prices coming in below asking prices Almost 80% of Americans now believe it's a bad time to buy property, according to Fannie Mae's Home Purchasing Sentiment Index, citing interest rates and inflation as the big reasons. As a result, an increasing number of home sellers are lowering their asking prices, according to Redfin — about half of the metro areas in their recent analysis showed that more than 25% of home sellers dropped their asking prices in May. And more than 10% of home sellers dropped their price in all 108 metros that they looked at. "There are two kinds of sellers in today's market: Those who already know the market has cooled, and those who are learning about the cooling market as they go through the selling process," Daryl Fairweather, chief economist at Redfin, said in a statement. According to her, the former is "willing to price slightly below comparable homes in their neighborhood right away" while the latter "may have to drop their price if their home doesn't attract buyers within a few weeks."More people are backing out of contracts  The housing market was cutthroat for most of the pandemic, with aspiring homebuyers fighting to get their feet in the door — but now those feet are getting cold. About 60,000 home-purchase agreements fell through in June, or 14.9% of homes contracted last month, according to Redfin. That's the highest rate ever recorded, except for March and April 2020, when the beginning of the COVID-19 pandemic halted nearly all homebuying. Two factors are pushing that trend, the firm's researchers said: the cooling housing market is giving buyers room to negotiate, but others have no choice but to pull out of their contracts, because higher mortgage rates have priced them out of homeownership.At the end of May, 78% of US homebuyers said they were pulling back from the housing market due to rising interest rates in a Forbes survey. And many who remain in the market are adding contingencies to their housing contract, allowing them to rescind an offer if a property fails an inspection, for instance. It's a sign homebuyers are gaining the upper hand against sellers and retaking the power to back out of unsatisfactory deals. Rising housing costs brought on by economic instability have led to less competition in the real estate market. As buyers bide their time and become more selective, sellers are losing the leverage they've wielded for the past two years. For Americans who can still afford a home purchase, this could mean they now stand a better chance at getting the homes they want. Read the original article on Business Insider.....»»

Category: smallbizSource: nytJul 24th, 2022

Logistics Warehouse Activity May Cool As Interest Rates Heat Up

Logistics Warehouse Activity May Cool As Interest Rates Heat Up By Mark Solomon of FreightWaves Nothing in the second-quarter data indicates that the 12-year bull market for U.S. logistics warehousing, and the trends of e-commerce growth and the need for businesses to maintain high inventory levels that have driven the surge, are close to ending.  The industrial construction pipeline hit an unprecedented 699 million square feet in the quarter, up 112% from pre-pandemic levels and 177% above the 10-year average, according to Cushman & Wakefield, a real estate services firm. New leasing activity for the year is tracking to exceed 800 million square feet, which would mark only the second year ever at such a lofty perch, Cushman said.  Nationwide vacancy rates plunged in the quarter to 3.1%, 120 basis points below a year ago, according to Cushman data. Every U.S. region that Cushman canvasses reported under 4% vacancy rates for the second consecutive quarter. Twenty markets reported vacancy rates of less than 2%. In Chicago, the country’s largest industrial market with more than 1.2 billion square feet of inventory, 8.1 million square feet were developed, the greatest second-quarter completion total in the market’s history, according to Colliers International Group Inc, a real estate services firm. According to Colliers data, 20 projects totaling 8.1 million square feet commenced during the quarter in the Chicago market. Colliers said that the Chicago market experienced in the quarter an uptick in vacancy rates for speculative development, where projects are undertaken with no formal end-user commitment, as well as a drop in leasing activity for the category. However, those changes reflect how tight the market has become and are likely more of a blip on the radar than a meaningful trend. Two weeks into the third quarter, though, anecdotal evidence is pointing to a break in the action. Institutional investors who have pumped billions of dollars into the industrial market in search of higher yields in a low interest rate environment have hit the pause button, concerned about how to price real estate returns in an environment of higher interest rates and of the future direction of borrowing costs with the Federal Reserve in aggressive tightening mode.  Jack Rosenberg, Colliers’ Chicago-based national director of logistics and transportation who represents industrial tenants, said that “cap rates,” which determine the annual return on a property’s investment by dividing its value with its net operating income, have begun to creep up due to the higher cost of money. A higher cap rate means the investment will likely yield less than it would have if interest rates were lower.   Lack of clarity into the speed, extent and duration of rate hikes will slow, if not stop, development, Rosenberg said. That’s because no one knows what cap rates will look like in 12 to 18 months when the project is leased and is ready to be sold. One major developer and a significant investor, neither of whom Rosenberg would identify, are in “pencils down” mode, industry lingo for a corporate pause. Projects slated to begin this fall are being pushed into next spring. In the meantime, sale prices per square foot have been dropping, and buyers are requesting changes in their favor to contractual terms of projects currently under contract. The angst over the Fed’s actions extends to developers as well. Lisa DeNight, national industrial research director at Newmark Group, a real estate services firm, said higher capital costs are leading some developers to halt or abandon projects. Some developers are even selling development sites. Unsurprisingly, “new construction starts have begun to slow, but still remain historically elevated,” she said. A different cycle This isn’t the first rate tightening cycle the industrial market has managed through since 2010. What’s different about this cycle is that it dovetails with construction cost inflation, labor shortages and long lead times for materials due to continued global supply chain disruptions.  As bottlenecks ease and commodity prices decline due to market expectations that higher rates will curtail end demand, more supply will hit the markets and will do so at lower prices. However, that won’t occur until 2023 at the earliest, according to Newmark. The average permitting and construction process for new industrial projects is taking five months longer than it did in 2019, DeNight said, and the average order lead times for a critical commodity like roofing materials remain at 30 to 50 weeks. Progress on obtaining necessary building permits continues to be hamstrung by understaffed local governments. “Every stage of the construction timeline has been hampered by two years of challenges that are unlikely to subside during the balance of 2022,” DeNight said. Despite higher rates, most projects now underway will be seen through to completion, said John Morris, Americas president of industrial & logistics for real estate services firm CBRE Group Inc. Morris said that the 12- to 18-month lead time for end-to-end project completions means that it will take five or six quarters for the impact of rate hikes to be dramatically felt in the industrial market. For now, occupier demand remains strong as e-commerce sales stay elevated and as tenants ensure they can occupy facilities ahead of the peak holiday season. Overall occupier demand is about 95% of what it was at this time a year ago, Morris said. Any slowdown will come from the supply side and not from demand, he said.  Rosenberg said that none of his clients have indicated they are putting their leasing needs on hold, although he acknowledged that the people he works directly with are typically the last to know if a project is being shelved. Carolyn Salzer, Americas head of logistics and industrial research at Cushman, said the supply-demand scales continue to favor lessors. “Right now, there just isn’t enough space out there for occupiers in general,” Salzer said. “What we have heard is that if a tenant needs to be in a market, they will make it work.”  Tenants will have more leverage should supply begin to exceed demand, which, if it happens, will be a 2023 story,  she added. The variable in all this is whether higher rates will trigger a recession, which could trigger a sustainable drop in consumer demand. Should consumers pull back, occupiers’ appetites will dull quickly, leading to a decline in rents and an increase in vacancy rates. However, should the economy avoid a contraction and new development continues to slow, then competition for available space is likely to surge and rents will soar.   The many crosscurrents buffeting industrial real estate have produced a degree of murkiness that stakeholders are unaccustomed to. When asked for directional clarity, Rosenberg replied, “I’ll say, ‘Who the hell knows’ because nobody knows.” Tyler Durden Sun, 07/17/2022 - 17:30.....»»

Category: blogSource: zerohedgeJul 17th, 2022

If You Invested $1000 in Dollar Tree 10 Years Ago, This Is How Much You"d Have Now

Investing in certain stocks can pay off in the long run, especially if you hold on for a decade or more. How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.What if you'd invested in Dollar Tree (DLTR) ten years ago? It may not have been easy to hold on to DLTR for all that time, but if you did, how much would your investment be worth today?Dollar Tree's Business In-DepthWith that in mind, let's take a look at Dollar Tree's main business drivers. Founded in 1986 and headquartered in Chesapeake, VA, Dollar Tree Inc. is an operator of discount variety stores offering merchandise and other assortments. Its stores successfully operate in major metropolitan areas, mid-sized cities and small towns. The company offers a wide range of quality everyday general merchandise in many categories, including housewares, seasonal goods, candy and food, toys, health and beauty care, gifts, party goods, stationery, books, personal accessories, and other consumer items. Its stores are supported by a nationwide logistics network and distribution centers.Dollar Tree also owns an e-commerce platform – DollarTree.com – which sells its merchandise in bulk to individuals and small businesses as well as organizations. Through its online platform, the company advertises its in-store events and showcases its special and seasonal promotions for featured products. Further, it acquired Family Dollar Stores, Inc. on July 6, 2015.The company operates in two reporting business segments: Dollar Tree and Family Dollar.Dollar Tree: Being the major operator of discount variety stores, this segment offers merchandise at the fixed price point of $1.00. The segment has nearly 7,652 stores operating under the Dollar Tree and Dollar Tree Canada banners, 12 distribution centers in the United States and two in Canada. Dollar Tree stores primarily range from 8,000 - 10,000 selling square feet.Family Dollar: This segment operates general merchandise discount retail stores with competitively-priced merchandise in the neighborhood stores. It has nearly 7,827 stores, which sell merchandise at prices ranging from $1.00 to $10.00. These stores primarily range from 6,000 - 8,000 selling square feet. The segment includes store operations under the Family Dollar brand and 11 distribution centers.   As of Jan 29, 2022, the company operated 16,077 stores in 48 states and five Canada provinces.Bottom LineWhile anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Dollar Tree ten years ago, you're probably feeling pretty good about your investment today.A $1000 investment made in July 2012 would be worth $3,109.04, or a gain of 210.90%, as of July 8, 2022, according to our calculations. This return excludes dividends but includes price appreciation.Compare this to the S&P 500's rally of 188.08% and gold's return of 5.54% over the same time frame.Looking ahead, analysts are expecting more upside for DLTR. Shares of Dollar Tree have outpaced the industry in the past year on robust earnings surprise trend, which continued in first-quarter fiscal 2022. The company reported 10th startight quarter of earnings beat in the quarter. The also top line beat estimates and improved year over year. Results benefited from the completion of the $1.25 multi-price point initiative at the Dollar Tree stores, as well as robust margins, despite the increase in freight costs and SG&A expenses. Following the robust first-quarter fiscal 2022 performance, Dollar Tree raised its guidance for fiscal 2022 and provided a decent second quarter view. However, the company witnessed soft sales and comps, along with margin declines, for the Family Dollar banner in the fiscal first quarter. Higher freight and supply-chain disruptions are likely to persist in fiscal 2022. The stock has jumped 5.59% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 9 higher, for fiscal 2022; the consensus estimate has moved up as well. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dollar Tree, Inc. (DLTR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJul 10th, 2022

Here"s Why Investors Should Retain Yum China (YUMC) Stock

Yum China's (YUMC) focuses on simplifying its menu to streamline operations and drive growth. However, inflationary pressures are a concern. Yum China Holdings, Inc. YUMC will likely benefit from its digital initiatives, menu simplifications and unit expansion efforts. Also, focusing on the loyalty program bodes well. However, higher expenses and coronavirus-induced soft traffic are a headwind.Let us discuss the factors highlighting why investors should retain the stock for the time being.CatalystsYum China is capitalizing on the benefits of its technology. The company is increasingly shifting toward digital and content marketing to expand the customer base. It has adopted a high-grade delivery strategy that includes collaborations with aggregators to source traffic and fulfills orders by the company’s KFC riders. YUMC launched a digital mini program to make community purchasing easier. Digital orders during first-quarter 2022 contributed 88% to KFC and Pizza Hut's company sales. During the quarter, the company’s delivery contributed nearly 36% to KFC and Pizza Hut's company sales, up nearly five percentage points from the prior-year quarter’s levels. Coming to loyalty membership, Yum Brands created a robust loyalty program with more than 370 million loyalty members cumulatively. Pizza Hut membership increased by 100 million members. In the first quarter, member sales accounted for nearly 62% of system sales.The company focuses on digital R&D Center to drive operational excellence through consolidating and expanding dedicated resources to develop solutions and services. This involves using technologies in big data, artificial intelligence, middle office and digital SaaS to drive end-to-end digitalization. The initiative allows the company to boost in-house digital capabilities across various functions like customer experience concerning membership programs; efficient store operations and decision making; smart delivery in order queuing, trade zones and rider routing; and supply-chain management. The company stated that it has set aside $1-1.5 billion for investment in the digital and technology space over the next five years. As part of this initiative, the company intends to invest $100-200 million and hire up to 500 in the Digital R&D Center to support its business.Yum China focuses on simplifying its menu to streamline operations and drive growth. During the first quarter of 2022, the company benefited from cross-selling opportunities arising from community purchasing. Notably, positive customer feedback was witnessed with respect to optimized menu offerings such as fried chicken combo (KFC), fried rice and ready-to-cook steak and pasta (Pizza Hut) and Hawker, Fried Chicken and Burritos DIY package (Taco Bell). Going forward, the company remains optimistic with respect to its new business opportunity and anticipates the initiative to boost awareness of its emerging brands.Yum China is focused on relentless unit growth of restaurants to drive incremental sales. During first-quarter 2022, Yum China opened 522 gross new restaurants driven by the development of the KFC and Pizza Hut brands. As of Mar 31, 2022, the company's total restaurant count was 12,117, up 1,392 stores year over year. In 2022, Yum China expects to open 1,000-1,200 new stores.ConcernsImage Source: Zacks Investment ResearchShares of Yum China have declined 23.7% in the past year compared with the Industry’s 17.8% fall. The dismal performance was primarily caused by the coronavirus crisis. In the first quarter 2022, the company’s operations were affected by the Omicron variant. The company stated that many cities across China had been fully (or partially) locked down to counter the crisis. Also, it emphasized on the enforcement of the “dynamic zero-COVID” policy in the region, thereby leading to reduced traveling, fewer social activities and softened consumption demand. The company anticipates the Omicron variant to have a severe impact on its operations in the upcoming quarter.The company has been continuously shouldering increased expenses, which have been detrimental to margins. Restaurant margin in first-quarter 2022 was 13.8%, down 490 basis points from the year-ago quarter's levels. The downside was primarily due to sales deleveraging, higher inflation in commodity, wage and utility costs, and an increase in rider cost related to rising delivery volume. The company anticipates the inflationary environment to continue in the second quarter of 2022.Zacks Rank & Key PicksYum China currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Some better-ranked stocks in the Zacks Retail-Wholesale sector are Dollar Tree Inc. DLTR, BBQ Holdings, Inc. BBQ and Arcos Dorados Holdings Inc. ARCO.Dollar Tree sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 13.1%, on average. Shares of the company have gained 57.2% in the past year.The Zacks Consensus Estimate for Dollar Tree’s 2022 sales and earnings per share (EPS) suggests growth of 6.7% and 40.5%, respectively, from the year-ago period’s levels.BBQ Holdings carries a Zacks Rank #2 (Buy). BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have decreased 43.2% in the past year.The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and EPS suggests growth of 46.1% and 67.6%, respectively, from the year-ago period’s levels.Arcos Dorados carries a Zacks Rank #2. Arcos Dorados has a long-term earnings growth of 34.4%. Shares of the company have risen 14.7% in the past year.The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 16.6% and 83.3%, respectively, from the year-ago period’s levels. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dollar Tree, Inc. (DLTR): Free Stock Analysis Report Arcos Dorados Holdings Inc. (ARCO): Free Stock Analysis Report Yum China (YUMC): Free Stock Analysis Report BBQ Holdings, Inc. (BBQ): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJul 5th, 2022

Inter Parfums (IPAR) Gains on Solid Brands & Partnerships

Inter Parfums (IPAR) is benefiting from strength in its brand portfolio. The company's focus on product launches to boost assortment strength is impressive. A robust brand portfolio is working well for Inter Parfums, Inc. IPAR. The company is benefiting from solid growth across European and U.S. operations. These upsides have boosted first-quarter 2022 results, with the top and the bottom line increasing year over year. Quarterly earnings beat the Zacks Consensus Estimate.Besides, management is committed to effective product launches and strategic partnerships to boost growth.Let’s discuss in detail.Image Source: Zacks Investment ResearchSolid Performance & Bright ViewDuring the first quarter of 2022, Inter Parfums’ net sales came in at $250.7 million, up 26% year over year. The Europe-based product sales came in at $182.2 million, up 14% from 2021 levels. U.S.-based product sales amounted to $68.5 million, surging 77% from first-quarter 2021 levels. Inter Parfums’ largest brands delivered solid sales performance. Montblanc, Jimmy Choo, Coach and GUESS brand sales increased 22%, 7%, 22% and 36%, respectively. Its mid-sized brands like Abercrombie & Fitch, Kate Spade, Oscar de la Renta and Van Cleef & Arpels also delivered double-digit sales gains. Additional sales from initial product rollouts from MCM and Moncler brand were an upside. Initial sales of Ferragamo and Ungaro legacy scents also drove the quarterly sales. Inter Parfums’ earnings came in at $1.10 per share, up from 87 cents per share reported in the year-ago quarter.The company’s 2022 view suggests year-over-year top-and bottom-line growth. For 2022, Inter Parfums anticipates net sales of approximately $975 million. The metric reflects growth from $879.5 million reported in 2021. Management expects earnings per share (EPS) of $3.00 for 2022. The company reported an EPS of $2.75 in 2021.Product Launches & Strategic PartnershipInter Parfums’ focus on product launches to boost assortment strength is impressive. The company is benefitting from an impressive fragrance industry worldwide. Management is on track to officially rollout the Moncler in the second quarter. The company’s new Jimmy Choo Man Aqua and Lanvin Mon Éclat also debut in the second quarter. Throughout the year, management will unveil many extensions and flankers in many of the company’s brands. Inter Parfums expects Donna Karan and DKNY fragrances to join its brand portfolio in July. Management is keen on undertaking new licensing and acquisitions.Inter Parfums is on track to expand its business through new licenses or acquisitions. In December 2021, Inter Parfums, through its subsidiary Interparfums Italia, signed a 10-year exclusive global licensing agreement with Emanuel Ungaro. The partnership aims to create, develop and distribute fragrances and fragrance-related products under the Emanuel Ungaro brand. In October 2021, Inter Parfums finalized the agreement with Salvatore Ferragamo S.p.A. Per the agreement, Inter Parfums now holds the exclusive worldwide license for the production and distribution of Salvatore Ferragamo brand perfumes.Is All Rosy for Inter Parfums?Inter Parfums is battling inflation with rising prices of components like glass, cardboard, wood and aluminum. A significant increase in energy and shipping costs is a major hurdle. Management noted that the Russian invasion of Ukraine has adversely impacted its operations across both countries. Apart from these, temporary China lockdowns and supply chain obstacles were a downside for first-quarter 2022 results.Additionally, Inter Parfums’ has been grappling with higher selling, general and administrative (SG&A) expenses for a while. During the quarter, SG&A expenses amounted to $97.4 million, up 30% from $74.9 million reported in the year-ago quarter.That being said, we believe that the abovementioned upsides are likely to keep this Zacks Rank #3 (Hold) company’s growth story going. IPAR’s stock has gained 1.8% in the past year against the industry’s 42.2% decline.Looking for Better-Ranked Staple Bets? Check TheseSome better-ranked stocks are Sysco Corporation SYY, United Natural Foods UNFI and Pilgrim’s Pride PPC.Sysco, which markets and distributes various food and related products, sports a Zacks Rank #1 (Strong Buy). SYY has a trailing four-quarter earnings surprise of 9.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Sysco’s current financial year sales and EPS suggests growth of 32.6% and 124.3%, respectively, from the year-ago reported number.United Natural Foods distributes natural, organic, specialty, produce and conventional grocery and non-food products. UNFI currently sports a Zacks Rank #1.The Zacks Consensus Estimate for UNFI’s current financial year sales and EPS suggests growth of 7.2% and 4.9%, respectively, from the year-ago period’s reported figures. United Natural Foods has a trailing four-quarter earnings surprise of 29.9%, on average.Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, carries a Zacks Rank #2 (Buy). PPC has a trailing four-quarter earnings surprise of 31.4%, on average.The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial year EPS suggests growth of 63.2% from the year-ago reported number. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sysco Corporation (SYY): Free Stock Analysis Report Pilgrim's Pride Corporation (PPC): Free Stock Analysis Report United Natural Foods, Inc. (UNFI): Free Stock Analysis Report Inter Parfums, Inc. (IPAR): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJul 1st, 2022

Smucker"s (SJM) Pricing & Coffee Business Solid, Costs High

The J.M. Smucker (SJM) has been benefiting from the recovery in the Away from Home division, a solid coffee business and pricing amid the rising cost inflation. The J. M. Smucker Company SJM has been benefiting from the recovery in the Away from Home division and a focus on core strategies. The company’s coffee business has been impressive, in particular, due to increased at-home consumption. Also, robust pricing initiatives have been helping the company amid the rising cost inflation.The company recently initiated a voluntary recall of certain Jif peanut butter products made at its Lexington, KY facility and sold mainly in the United States. The move was a result of potential salmonella contamination. The product recall impacted the company’s performance in the fourth quarter of fiscal 2022 and is likely to affect the fiscal 2023 top and bottom lines. That said, the abovementioned upsides are likely to continue working well for this Zacks Rank #3 (Hold) company.What’s Working for The J.M. Smucker?The J. M. Smucker is progressing well with core priorities, which include driving commercial excellence, reshaping the portfolio, streamlining the cost structure and unleashing its organization to win.  The company is benefiting from the revival of the Away from Home division. This was witnessed in the fourth quarter of fiscal 2022, with net sales advancing 12% to $271.2 million in the International and Away from Home segment. Excluding the impact of the natural beverage and grains businesses’ divestiture, as well as the negative impacts of currency movements, net sales escalated 13%. The continuation of these trends is likely to be an upside, especially with things getting back to normal.The J. M. Smucker’s overall coffee portfolio looks encouraging as at-home coffee habits created during the pandemic and at-home consumption remain high. In the fourth quarter, net sales for Coffee grew 11%, backed by all brands in the company’s market-leading at-home coffee portfolio. Management stated that there is solid momentum in its Coffee business. At-home consumption now forms more than 70% of coffee-drinking occasions, per management’s fourth-quarter earnings call. In the quarter, SJM’s coffee brands were three of the top four fastest-growing at-home coffee brands. Moreover, the company outperformed the category in all areas, including one cup, mainstream, instant and premium.Moving on, The J. M. Smucker benefited from the positive net price realization in the fourth quarter of fiscal 2022. During the quarter, net sales amounted to $2,033.8 million, which beat the consensus mark of $1,981 million. The top line advanced 6% year over year. Excluding non-comparable net sales related to divestitures and currency movements, net sales increased 9%. The uptick in comparable net sales can be attributed to the positive net price realization in each company segment. Solid results reflected the continued consumer demand for coffee and at-home food, together with strength in the company’s brands.In fiscal 2023, management remains focused on sustaining its solid momentum by investing in growth areas like Uncrustables and teaming up with retailers to restock Jif products after the recent recall. For fiscal 2023, the company anticipates net sales to rise 3.5%-4.5% year over year. Excluding non-comparable sales related to the private label dry pet food and natural beverage and grains businesses’ divestitures, net sales are anticipated to improve nearly 6% at the midpoint of the net sales guidance. The view reflects the positive impacts of elevated net pricing to counter cost inflation in many categories.Image Source: Zacks Investment ResearchKey HeadwindsThe J. M. Smucker is encountering cost inflation and supply-chain and transportation challenges along with isolated labor shortages. In the fourth quarter of fiscal 2022, the adjusted gross profit fell 10% to $655.2 million. The adjusted gross margin contracted from 37.9% to 32.2%, bearing some impacts of escalated costs, mainly stemming from higher commodity and ingredient, packaging and manufacturing costs.In its fourth-quarter earnings release, management stated that pandemic-related impacts, together with cost inflation and a volatile supply chain, continue to affect the company’s results and cause risks for fiscal 2023. SJM expects cost inflation to have an impact of the mid-to-high teen percentage on the total cost of products sold in fiscal 2023. The adjusted gross margin is expected to be nearly 33-34% in fiscal 2023. Excluding the impact of the product recall in fiscal 2022 and 2023, the gross margin is likely to contract 30 basis points. Management’s earnings per share (EPS) guidance for fiscal 2023 includes the expected impact of inflated costs as well as elevated selling, distribution and administrative (SD&A) expenses. SD&A expenses are expected to rise about 9%, mainly due to higher compensations, elevated pre-production expenses and greater marketing expenditure.Shares of the company have risen 1.6% in the past year compared to the industry’s decline of 3.1%.3 Solid Staple StocksSome better-ranked stocks are Sysco Corporation SYY, Pilgrim’s Pride PPC and Campbell Soup CPB.Sysco, which engages in marketing and distributing various food and related products, sports a Zacks Rank #1 (Strong Buy). Sysco has a trailing four-quarter earnings surprise of 9.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for SYY’s current financial-year sales and EPS suggests growth of 32.6% and 124.3%, respectively, from the year-ago reported number.Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, carries a Zacks Rank #2 (Buy). Pilgrim’s Pride has a trailing four-quarter earnings surprise of 31.4%, on average.The Zacks Consensus Estimate for PPC’s current financial-year EPS suggests growth of almost 43% from the year-ago reported number.Campbell Soup, which manufactures and markets food and beverage products, currently carries a Zacks Rank #2. Campbell Soup has a trailing four-quarter earnings surprise of 10.8%, on average.The Zacks Consensus Estimate for CPB’s current financial-year sales suggests growth of 0.5% from the year-ago reported figure. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Campbell Soup Company (CPB): Free Stock Analysis Report The J. M. Smucker Company (SJM): Free Stock Analysis Report Sysco Corporation (SYY): Free Stock Analysis Report Pilgrim's Pride Corporation (PPC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJul 1st, 2022

Opportunists are flipping Teslas for profits of up to $7,000 as EV production struggles to meet demand, report says

Manufacturers have been struggling to keep up with the surging demand for electric cars, leading buyers to look elsewhere. A Tesla supercharger station in Burbank, California.Kent Nishimura /Getty Images Tesla owners are buying and selling their cars for profit, The Los Angeles Times reported. Some owners claimed they made profits of up to $7,000, according to the newspaper. Manufacturers are struggling to meet surging demand for EVs, leading buyers to look elsewhere. People are buying and reselling their electric cars for profits worth thousands of dollars as demand for EVs surges amid ongoing production problems. Tesla owners are "flipping" their cars for thousands more than they paid to buyers who would otherwise have to wait months to get a new vehicle from the manufacturer, The Los Angeles Times reported.One Tesla flipper claimed he made profits of $4,000 and $7,000 on two separate sales, the newspaper reported.Dennis Wang told The LA Times that he plans to sell his Tesla Model S in the next three months and has already ordered two more cars. Another Tesla owner claimed a profit of $5,000 after selling a car just nine months after taking delivery, per the report.Insider could not independently verify the sellers' profit claims.Interest in electric vehicles has surged amid soaring gas prices, leaving many manufacturers struggling to keep up with demand and forcing customers on to long waiting lists. The industry has also been struggling to obtain enough computer chips due to supply chain issues, pushing up the cost of all cars.EV manufacturers including Tesla have increased prices, but flippers are still making profits."In terms of Teslas, the price of new vehicles increased so much last year, and waiting periods are so long for new vehicles, that the value of used cars skyrocketed," Recurrent, a company tracking EV sales, told The LA Times.Insider found a number of Tesla Model Ys listed for almost $80,000 on Edmunds.com. The car starts at just $57,440 on the Tesla website. A 2022 Tesla Model X was also listed on Facebook marketplace for $149,000, with the seller quipping: "Why wait 6 months when you can get this one now." Meanwhile, the UK's biggest car maker, Jaguar Land Rover, is trying to stop dealers sending cars to China and other markets where they can fetch significantly higher prices than in Britain, The Telegraph newspaper reported.A Land Rover Evoque starts at £32,620 ($39,367) in the UK but costs at least £47,463 ($57,273) in China and £55,065 ($66,449) in South Africa, according to company prices cited in the report.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJul 1st, 2022

The 2022 Market Disaster... More Pain To Come

The 2022 Market Disaster... More Pain To Come Authored by Matthew Piepenburg via GoldSwitzerland.com, If you think the current market disaster hurts; it’s gonna get worse despite recent dead cat bounces in U.S. equities. The Big 4: Dead Bonds, Rising Yields, Tanking Stocks & Stagflation For well over a year before fantasy-pushers and politicized, central-bank mouth pieces like Powell and Yellen were preaching “transitory inflation,” or hinting that “we may never see another financial crisis in our lifetime,” we’ve been patiently and bluntly (rather than “gloomily”) warning investors of the “Big Four.” That is, we saw an: 1) inevitable liquidity crisis which would take our 2) zombie bond markets to the floor, yields (and hence interest rates) to new highs and 3) debt-soaked nations and markets tanking dangerously south into 4) the dark days of stagflation. In short, by calmly tracking empirical data and cyclical debt patterns, one does not have to be a market timer, tarot-reader or broken watch of “doom and gloom” to warn of an unavoidable credit, equity, inflation and currency crisis, all of which lead to levels of increasing political and social crisis and ultimately extreme control from the top down. Such are the currents of history and the tides/fates of broke(n) regimes. And that is precisely where we are today—no longer warning of a pending convergence of crises, but already well into a market disaster within the worst macro-economic setting (compliments of cornered “central planners”) that I have ever experienced in my post-dot.com career. But sadly, and I do mean sadly, the worst is yet to come. As always, facts rather than sensationalism confirm such hard conclusions, and hence we turn now to some equally hard facts behind this market disaster. The Ignored Hangover For well over a decade, the post-2008 central bankers of the world have been selling the intoxicating elixir (i.e., lie) that a debt crisis can be solved with more debt, which is then paid for with mouse-click money. Investors drank this elixir with abandon as markets ripped to unprecedented highs on an inflationary wave of money printed out of thin air by a central bank near you. In case you still don’t know what such “correlation” looks like, see below: But as we’ve warned in interview after interview and report after report, the only thing mouse-click money does is make markets drunker rather than immune from a fatal hangover and market disaster. For years, such free money from the global central banks ($35T and counting) has merely postponed rather than outlawed the hangover, but as we are seeing below, the hangover, and puking, has already begun in a stock, credit or currency market disaster near you. Why? Every Market Crisis is a Liquidity Crisis Because the money (i.e., “liquidity”) that makes this drunken fantasy go round is drying up (or “tightening”) as the debt levels are piling up. That is, years and years of issuing IOU’s (i.e., sovereign bonds) has made those IOU’s less attractive, and the solution-myth of creating money out of thin air to pay for those IOUs is becoming less believable as inflation rises like a killer shark from beneath the feet of our money printers. The Most Important Bond in the World Has Lost Its Shine As we’ve warned, the UST is experiencing a liquidity problem. Demand for Uncle Sam’s bar tab (IOU’s) is tanking month, after month, after month. As a result, the price of those bonds is falling and hence their yields (and our interest rates) are rising, creating massive levels of pain in an already debt-saturated world where rising rates kill drunken credit parties (i.e., markets). Toward this end, Wall Street is seeing a dangerous rise in what the fancy lads call “omit days,” which basically means days wherein inter-dealer liquidity for UST’s is simply not available. Such omit days are screaming signs of “uh-oh” which go un-noticed by 99.99% of the consensus-think financial advisors selling traditional stocks and bonds for a fee. As the repo warnings (as well as our written warnings) have made clear since September of 2019, when liquidity in the credit markets tightens, the entire risk asset bubble (stocks, bonds and property) starts to cough, wheeze and then choke to death. Unfortunately, the extraordinary levels of global debt in general, and US public debt in particular, means there’s simply no way to avoid more choking to come The Fed—Tightening into a Debt Crisis? As all debt-soaked nations or regimes since the days of ancient Rome remind us , once debt levels exceed income levels by 100% or more, the only option left is to “inflate away” that debt by debasing (i.e., expanding/diluting) the currency—which is the very definition of inflation. And that inflation is only just beginning… Despite pretending to “control,” “allow” and then “combat” inflation, truth-challenged central bankers like Powell, Kuroda and Lagarde have therefore been actively seeking to create inflation and hence reduce their debt to GDP ratios below the fatal triple digit level. Unfortunately for the central bankers in general and Powell in particular, this ploy has not worked, as the US public debt to GDP ratio continues to stare down the 120% barrel and the Fed now blindly follows a doomed policy of tightening into a debt crisis. This can only mean higher costs of debt, which can only mean our already debt-soaked bond and stock markets have much further to go/tank. Open & Obvious (i.e., Deadly) Bond Dysfunction In sum, what we are seeing from DC to Brussels, Tokyo and beyond is now an open and obvious (rather than pending, theoretical or warned) bond dysfunction thanks to years of artificial bond “accommodation” (i.e., central-bank bond buying with mouse-click currencies). As we recently warned, signals from that toxic waste dump (i.e., market sector) known as MBS (“Mortgage-Backed Securities”) provide more objective signs of this bond dysfunction (market disaster) playing out in real-time. Earlier this month, as the CPI inflation scale went further (and predictably) up rather down, the MBS market went “no bid,” which just means no one wanted to buy those baskets of unloved bonds. This lack of demand merely sends the yields (and hence rates) for all mortgages higher. On June 10, the rates for 30-year fixed mortgages in the U.S. went from 5.5% to 6% overnight, signaling one of the many symptoms of a dying property bull as U.S. housing starts reached 13-month lows and building permits across the nation fell like dominoes. Meanwhile, other warnings in the commercial bond market, from Investment Grade to Junk Bonds, serve as just more symptoms of a dysfunctional “no-income” (as opposed to “fixed income”) U.S. bond market. And in case you haven’t noticed, the CDS (i.e., “insurance”) market for junk bonds is rising and rising. Of course, central bankers like Powell will blame the inevitable death of this U.S. credit bubble on inflation caused by Putin alone rather than decades of central bank drunk driving and inflationary broad money supply expansion. Pointing Fingers Rather than Looking in the Mirror Powell is already confessing that a soft landing from the current inflation crisis is now “out of his hands” as energy prices skyrocket thanks to Putin. There’s no denying the “Putin effect” on energy prices, but what’s astounding is that Powell, and other central bankers have forgotten to mention how fragile (i.e., bloated) Western financial systems became under his/their watch. Decades of cramming rates to the floor and printing trillions from thin air has made the U.S. in particular, and the West in general, hyper-fragile; that is: Too weak to withstand pushback from less indebted bullies like Putin. But as we warned almost from day 1 of the February sanctions against Russia, they were bound to back-fire big time and accelerate an unraveling inflationary disaster in the West. The West & Japan: Overplaying the Sanction Hand As we warned in February, Russia is squeezing the sanction-makers with greater pain than history-and-math-ignorant “statesmen” like Kamala Harris could ever grasp. From here in Europe, Western politicians are beginning to wonder if following the U.S. lead (coercion?) in chest-puffing was a wise idea, as gas prices on the continent skyrocket. In this backdrop of rising energy costs, Germany, whose PPI is already at 30%, has to be asking itself if it can afford tough-talk in the Ukraine as Putin threatens to cut further energy supplies. In this cold reality, the geniuses at the ECB are realizing that the very “state of their European Union” is at increasing risk of dis-union as citizens from Italy to Austria bend under the weight of higher prices and falling income. As of this writing, the openly nervous ECB is thus inventing clever plans/titles to “fight fragmentation” within the EU by, you guessed it: Printing more money out of thin air to control bond yields and cap borrowing costs. Of course, such pre-warned and inevitable (as well as politicized) versions of yield curve controls (YCC) are themselves, just well…Inflationary. Even outside the EU, the UK’s Prime Minister is discussing the idea of handing out free money to the bottom 30% of its population as a means to combat inflating prices, equally forgetting to recognize that such handouts are by their very nature just, well…Inflationary. (By the way, such monetary policies are an open signal to short the Euro and GBP against the USD…) Looking further east to that equally embarrassing state of the union in Japan, we see, as warned countless times, a tanking Yen out of a Japan that knows all too well the inflationary sickness that a non-stop money printer can create. Like the UST, the Japanese JGB is as unloved as a pig in lipstick. Prices are falling and yields are rising. As demand for Japanese IOU’s falls, yields and rates are rising, compelling more YCC (i.e., money printing) from the Bank of Japan as the now vicious (and well…inflationary) circle of printing more currencies to pay for more debt/IOUs spins/spirals fatally round and round. By the way, and as part of our continued warning and theme of the slow process of de-dollarizationwhich the sanctions have only accelerated, it would not surprise us to see Japan making a similar “China-like” move to buy its Russian oil in its own currency rather than the USD. Just saying… Don’t Be (or buy) a Dip As indicated above, trying to combat inflation with rate hikes is not only a joke, it creates a market disaster when a nation’s debt to GDP is at 120%. To fight inflation, rates need be at a “neutral level,” (i.e., above inflation), and folks, that would mean 9% rates at the current 8%+ CPI level. That aint gonna happen… At $30T+ of government debt and rising, the Fed can NEVER use rising rates to fight inflation. End of story. The days of Volcker rate hikes (when public debt was $900B not $30T) are gone. But the fickle Fed can raise rates high enough to kill a securities bubble and create “asset-bubble deflation,” which is precisely what we are seeing in real time, and this market disaster is only going to get worse. In short, if you are buying this “dip,” you may want to think again. As June trade tapes remind, the Dow dipped below 30000, and the S&P 500 reported an ominous 3666, already losing more than 20% despite remaining grossly over-valued as it slides officially into bear territory. As for the NASDAQ’s -30% YTD loss, well, it’s embarrassing… Many, of course, will buy this dip, as many forget the data, facts and traps of dead-cat bounces. Toward this end, it’s worth reminding that 12 of the top 20 one-day rallies in the NASDAQ occurred after that market began a nearly 80% plunge between 2000 and 2003. Similarly, the S&P saw 9 of its top 20 one-day rallies following the 1929 crash in which that market lost 86% from its highs. In short: These bear markets are not even close to their bottom, and today’s dip-buy may just be a trap, unless you think you can time a one-day rally amidst years of falling assets. Markets won’t and don’t recover from the bear’s claws until spikes are well above two standard deviations. We are not there yet, which means we have much further to fall. Capitulation in U.S. stocks won’t even be a discussion until the DOW is below 28,400 and the S&P blow 3500. Over the course of this bear, I see both falling much further. As we’ve warned, mean-reversion is a powerful force and we see deeper lows/reversions ahead: Toward that end, we see an SPX which could easily fall at least 15% lower (i.e., to at least 1850) than the “Covid crash” of March 2020. Based upon historic ranges, stocks won’t be anywhere near “fair value” until we see a Shiller PE at 16 or a nominal PE of 9-10. Index bubbles have been driven by ETF inflation which followed the Fed liquidity binge—and those ETF’s will fall far faster in a market disaster than they grew in a Fed tailwind. And if you still think meme stocks, alt coins or the Fed itself can save you from further market disaster, we’d (again) suggest you think otherwise. Looking at historical data on prior crashes from 1968 to the present, the average bear crash is at around -33%. Unfortunately, there’s nothing “average” about this bear or the further falls to come. The Shiller PE, for example, has another 40% to go (down) before stocks approach anything close to “fair value.” In the 1970’s, for example, when we saw the S&P lose 48%, or even in 2008, when it lost 56%, U.S. debt to GDP levels were ¼ of what they are today. Furthermore, in the 1970’s the average consumer savings rate was 12%; today that rate is 4%. Stated simply, the U.S., like the EU and Japan, is too debt-crippled and too GDP-broke to make this bear short and sweet. Instead, it will be long and mean, accompanied by stagflation and rising unemployment. The Fed knows this, and is, in part, raising rates today so that will have something—anything—to cut in the market disaster tomorrow. But that will be far too little, and far too late. And, Gold… Of course, the Fed, the IMF, the Davos crowd, the MSM and the chest-puffing sanction (back-firing) West will blame the current and future global market disaster on a virus with a 99% survival rate and an avoidable war in a corner of Europe that neither Biden nor Harris could find on a map. Instead, and as most already know, the real cause of the greatest market bubble and bust in the history of modern capital markets lies in the reflection of central bankers and politicians who bought time, votes, market bubbles, wealth disparity and cancerous inflation with a mouse-click. History reminds us of this, current facts confirm it. For now, the Fed will tighten, and thereby unleash an even angrier bear. Then, as we’ve warned, the Fed will likely pivot to more rate cuts and even more printed (inflationary) currencies as the US, the EU and Japan engage in more inflationary YCC and an inevitable as well as disorderly “re-set” already well telegraphed by the IMF. In either/any scenario, gold gets the last laugh. Gold, of course, has held its own even as rates and the USD have risen—typically classic gold headwinds. When markets tank and the Fed pivots, yields on the 10Y could fall as global growth weakens—thus providing a gold tailwind. Furthermore, the USD’s days of relative strength are equally numbered, as is the current high demand for US T-Bill-backed collateral for that USD. As the slow trend toward de-dollarization increases, so will the tailwind and hence price of gold increase as the USD’s credibility decreases. In the interim, the fact that gold has stayed strong despite the temporary spike in the USD speaks volumes. In the interim, Gold outperforms tanking stocks by a median range of 45%, and when the inflationary pivot to more QE returns, gold protects longer-term investors from grotesquely (and increasingly) debased currencies. And when (not if) the re-set toward CBDC (central bank digital currencies) finally arrives, that blockchain eYen and eDollar will need a linkage to a neutral commodity not to an empty “faith & trust” in just another new fiat/fantasy with an electronic profile. As we’ve been saying for decades: Gold Matters. Tyler Durden Thu, 06/30/2022 - 07:20.....»»

Category: blogSource: zerohedgeJun 30th, 2022

Futures, Oil Tumble As Attention Turns To Coming Recession, Powell Senate Testimony

Futures, Oil Tumble As Attention Turns To Coming Recession, Powell Senate Testimony Tuesday's euphoric market mood has U-turned into sheer despair with most of yesterday's gains gone overnight as attention turns to the coming US recession (now made official by Bill "The Fed Should Crush Donald Trump" Dudley who just published an Op-Ed "The US Economy Is Headed for a Hard Landing") and as traders await Jerome Powell before Senate testimony. S&P 500 futures declined 1.2%, down 45 points to 3,722 while Nasdaq 100 futures were down 1.5% by 715 a.m. in New York, indicating more declines for heavyweight technology stocks, which have already been hammered by rising rates.  Treasury yields and oil both slumped while the broader commodity sector tipped back toward pre-war levels, as traders increasingly price in a recession. Optimism evaporated that policy makers can achieve a soft landing as they navigate a course of aggressive monetary tightening to tame inflation. Fed Chair Jerome Powell is expected to reinforce the commitment to fighting price pressures when he speaks in front of US lawmakers Wednesday even as a growing number of banks warn that the Fed chair is pushing Biden's economy into a recession. Previewing Powell's appearance before the Senate Banking Committee as part of the Fed’s semiannual Monetary Policy Report, DB economists write that they expect him to reiterate the same themes he gave at his post-meeting press conference last week, where he signaled that they’d likely be deciding between 50bps and 75bps at the July meeting. Fed funds futures are currently implying that another 75bps move is more likely, with +71.8bps currently priced in, but don’t forget that there’s still plenty yet to happen ahead of that meeting in just over a month, including the subsequent CPI release and jobs report for June, and as we found out at the last meeting, it’s not implausible that unexpected data releases throw the previous guidance off course. “Overall, we have a very cautious outlook for equity markets and we would be sellers of all rallies,” said Marija Veitmane, senior strategist at State Street Global Markets. “We continue to see strong inflation and central banks determined to crush it, even if the price for that is economic slowdown.” Meanwhile, fears about the economy spread to commodities, putting oil in line for a monthly loss: “Markets are flip-flopping between recession fears and inflation fears,” UBS Wealth Mgmt chief economist Paul Donovan said in a note. “Today it is recession fears.” In premarket trading, major US technology and internet stocks were lower in premarket trading, poised to snap the two-session rising streak amid mounting concerns of a global recession. Stocks related to cryptocurrencies fell as the price of Bitcoin briefly slipped below $20,000 after rebounding strongly on Tuesday. Alibaba and other US-listed Chinese stocks pare losses in premarket trading after a Bloomberg News report that Jack Ma’s Ant may apply to become a financial holding company as soon as this month. Other notable premarket movers: La-Z-Boy’s (LZB US) shares jumped as much as 8.9% with KeyBanc saying that the furniture maker’s sales and EPS remain strong. The company reported adjusted earnings per share for the fourth quarter that beat the average analyst estimate. Precision BioSciences (DTIL US) shares jump as much as 40% in US premarket trading amid a collaboration and license agreement with Novartis effective June 15. Ormat Technologies (ORA US) shares fell 4.6% in postmarket trading on Tuesday after the company said it will offer $350 million aggregate principal amount of Green Convertible Senior Notes due 2027 in a private offering to institutional buyers. Equity Residential (EQR US) stock may be in focus as it was raised to outperform from sector perform at RBC on the view that the apartment owner is well placed to weather a downturn. Keep an eye on Cigna (CI US) shares as Morgan Stanley upgraded the stock to overweight from equal-weight. The brokerage also downgraded Anthem to equal-weight from overweight. Watch Scotts Miracle-Gro (SMG US) shares as they were downgraded to equal-weight from overweight at Wells Fargo, which said there’s “just not much to get excited about” for the stock in the second half of the year. US equities have been roiled in the past few months amid worries that aggressive monetary tightening by the Fed would spark an economic recession. The S&P 500 is in a bear market after a rout that erased almost $2 trillion from the benchmark last week, and is tracking declines of nearly 9% in June alone. Fed Bank of Richmond President Thomas Barkin said the central bank should raise rates as fast as it can without causing undue harm to financial markets or the economy.  Elsewhere, Joe Biden plans call on Congress to enact a gasoline tax holiday to cool soaring pump prices and alleviate the pressure on consumers. The move is expected to do nothing at all for gas prices. In Europe, the Stoxx 600 Index was down 1.6% after rallying for three days in a row; the Euro Stoxx 50 dropped as much as 2.3%, Italy’s FTSE MIB underperforms.  The FTSE 100 outperformed as the pound weakened after UK inflation rose to a fresh four-decade high in May after broad increases in the cost of everything from fuel and electricity to food and beverages. Risk assets slumped with most European cash equity indexes erasing the week’s gains as recession fears, hot inflation data and energy concerns weigh on sentiment. Miners, energy and autos lead broad losses across all Stoxx 600 sectors. Here are the biggest European movers: European mining stocks sink as a selloff in iron ore worsened amid signs of weakening global demand, while steel shares were pressured by downgrades from JPMorgan. Rio Tinto dropped as much as 3.6%, Glencore -6.1%, Salzgitter -15%, ArcelorMittal -8.2%, Voestalpine -11% Umicore shares plunged as much as 17% after the materials technology company announced plans to spend EU5b by 2026, “meaningfully” higher capital expenditure than Jefferies had expected. Saipem shares tumble as much as 19% after the company set terms for a EU2b capital hike, offering about 2 billion new shares at EU1.013. The subscription period will run from June 27 through July 11, with the final results to be announced on July 15, according to terms seen by Bloomberg. Samhallsbyggnadsbolaget i Norden and Swedish real estate peers added to months of declines as European equities resumed their selloff, with fresh concerns about the possibility of recession. SBB falls as much as 13%, Sagax -6%, Fabege -4%, Castellum -3.7% Kone shares drop as much as 7.5% after the Finnish elevator manufacturer was downgraded at Goldman Sachs and Berenberg, which both cited headwinds from China and the impact of slowing economic growth. Energy stocks are among the worst-performing sectors as oil slumps amid concerns about the US economy, while the Biden administration is set to step up its fight against higher gasoline prices. Shell declines as much as 4.6%, TotalEnergies -4.6%, Repsol -5.1% Accor shares drop as much as 3.8% after the hospitality company said it entered into exclusive negotiations to sell a 10.8% stake in Ennismore for EU185m. JD Sports shares gain as much as 5.2%. The company reported FY results that are in line overall with consensus expectations, and the market should be reassured that the sneaker seller’s recent performance is still on track, according to RBC. NatWest shares gain as much as 4% after the stock was raised to buy from hold at Jefferies, which said its re-rating potential is now more obvious. The UK government also extended its plan to sell more of its stake in the group by a year. Earlier in the session, Asian stocks resumed their slide Wednesday as renewed fears of a crackdown hit Chinese technology shares. The MSCI Asia Pacific Index slipped as much as 1.7%, cutting short a rebound in the previous session. TSMC, Alibaba and Tencent were the biggest drags, with a gauge of Chinese tech firms in Hong Kong falling more than 4%. Shares of online drug sellers slumped on a report that Beijing may ban third-party platforms from offering medicines over the internet. Elsewhere, a sub-gauge on the region’s information tech companies headed for the lowest close since September 2020 amid growing worries over a global recession. South Korea’s benchmark slumped 2.7% as the tech-heavy market continued to face selling pressure amid foreign outflows. The Asian stock benchmark is hovering near a two-year low as the prospect of a slowdown in the US driven by aggressive interest-rate hikes unsettle investors. Tesla Inc. Chief Executive Officer Elon Musk said Tuesday that a recession in the US looks likely in the near future, adding to the growing drumbeat of warnings. “Markets are still looking for the catalyst for a more sustained rebound as headwinds surrounding tightening financial conditions,” said Jun Rong Yeap, a market strategist at IG Asia Pte, adding that gains from any technical rebound may be capped by some wait-and-see sentiments. After falling more than 18% this year, a technical indicator is suggesting the MSCI’s Asian benchmark has reached oversold levels and may be poised for a reprieve. Investors will now shift their focus to Federal Reserve Chair Jerome Powell’s testimony on monetary policy to Congress later Wednesday, which may provide further clues on inflation and rates outlook.  Indian markets snapped a two-day advance as growing concerns of slowing global growth potentially leading to a recession dragged down world equity markets.  The S&P BSE Sensex dropped 1.4% to 51,822.53 in Mumbai, while NSE Nifty 50 Index fell by an equal measure. Reliance Industries, a major drag on both the key gauges, declined 3%, its biggest plunge since May 9.  All of the 19 sectoral indexes compiled by BSE Ltd. slipped, led by a measure of metal companies. All but four of 30 companies in the Sensex declined.  All major stock markets, including Asia, traded lower as investors fear that aggressive monetary tightening moves by global central banks could lead to an economic downturn. “Traders are advised to keep a hedge position, while investors should focus on stock selection,” according to Religare Broking analyst Ajit Mishra. The monsoon’s progress, a correction in oil prices and currency movements will be important factors to watch for the Indian stock market’s outlook, he said.  In rates, havens were re underpinned with major yield curves bull-steepening. A Treasury rally was led by the front-end of the curve, following wider gains across gilts after UK May inflation matches median estimates, trimming expectations for more aggressive BOE rate hikes. US yields richer by 10bp-6bp across the curve with front-end-led advance steepening 2s10s by ~2bp, 5s30s by ~4bp; 10-year yields around 3.20%, richer by nearly 8bp on the day, while gilts outperform by additional 6bp in the sector. Short-dated gilts outperform, richening ~13bps in 2s after another hot inflation print. Gilts lead bunds, Treasuries higher, with traders pulling back from wagers on three 50 basis-points hikes by year end after UK inflation accelerated in line with estimates in May. MPC-dated OIS rates pare back some of the more aggressive pricing seen in recent days. German 10y yields fall 10bps to near 1.67%, Treasury 10-year yield eases ~6bps to near 3.22% ahead of Fed Chair Powell’s semi-annual testimony on monetary policy. Peripheral spreads widen, with long-dated BTPs underperforming.  In FX, early in the session we saw a push toward the dollar, which subsequently was partly faded, but in any case it snapped two days of losses to rise by around 0.2% and the greenback advanced versus all of its Group-of-10 peers apart from the yen. JPY and CHF were the strongest performers in G-10 FX, NZD and AUD underperform. Antipodean currencies and the Norwegian krone were the worst performers and each of them fell by more than 1% against the greenback. The euro traded near $1.05 after dropping to a day low of 1.0469 in early European trading. The yen rebounded after making a fresh multi-decade low versus the greenback. The yen not only held the lead in short-term realized volatility, but traders also bet that it won’t lose its crown any time soon. Demand for low-delta exposure in the Japanese currency is by far the highest among the Group-of-10 peers, with Antipodean and Scandinavian currencies trailing. In commodities, West Texas Intermediate tumbled to $104 a barrel, with prices falling alongside other raw materials including copper. WTI sunk as much as 5.7% before recovering back above $104. Base metals trade poorly; LME tin falls 4.9%, underperforming peers. Spot gold falls roughly $8 to trade near $1,825/oz. Concerns about a broad economic slowdown are eclipsing the fallout from the war in Ukraine and signs of still-tight supply.  Bitcoin is pressured and briefly dipped again below the USD 20k mark, to a trough of USD 19.95k. Though, it remains someway from last week's USD 17.5k low. Looking at the day ahead now, and the main highlight will be Fed Chair Powell’s testimony before the Senate Banking Committee. Other central bank speakers include the Fed’s Barkin, Evans and Harker, as well as BoE Deputy Governor Cunliffe. Otherwise, data releases include UK and Canadian CPI for May, as well as the European Commission’s preliminary consumer confidence indicator for the Euro Area in June. Market Snapshot S&P 500 futures down 1.7% to 3,702.50 STOXX Europe 600 down 1.6% to 401.86 MXAP down 1.7% to 156.08 MXAPJ down 2.3% to 517.35 Nikkei down 0.4% to 26,149.55 Topix down 0.2% to 1,852.65 Hang Seng Index down 2.6% to 21,008.34 Shanghai Composite down 1.2% to 3,267.20 Sensex down 1.2% to 51,918.86 Australia S&P/ASX 200 down 0.2% to 6,508.54 Kospi down 2.7% to 2,342.81 German 10Y yield little changed at 1.69% Euro down 0.2% to $1.0509 Brent Futures down 3.8% to $110.24/bbl Brent Futures down 3.9% to $110.18/bbl Gold spot down 0.4% to $1,825.23 U.S. Dollar Index up 0.23% to 104.67 Top Overnight News from Bloomberg   A more detailed summary of Global Markets courtesy of Newsquawk Asia-Pac stocks were subdued after the risk-on mood from Wall Street waned overnight amid pressure in commodities and with global markets lacking any fresh macro catalysts. ASX 200 pared early gains as resilience in energy and defensives was offset by losses in tech and financials. Nikkei 225 was indecisive after the Japanese currency bounced off its weakest level since 1998. Hang Seng and Shanghai Comp. were subdued amid ongoing COVID woes as Macau closed most public services through to Friday and with the Chinese city of Zhuhai also shutting entertainment venues in some areas, while there was some encouragement for the property sector with Chinese property developers planning to meet with banks regarding relief measures in July. Top Asian News Chinese property developers are planning to meet with banks regarding relief measures in July, according to Shanghai Securities News. Chinese Premier Li Keqiang’s struggle to revive China’s economy under the zero-Covid policy championed by President Xi Jinping has spurred rumours of rifts between the country’s top two leaders and considerable speculation over succession plans, according to SGH Macro Advisors. BoJ April meeting minutes stated board members agreed on no change in the BoJ's stance of taking additional easing steps as needed and a member noted that rising raw material costs would hurt the economy so they must keep powerful monetary easing. Furthermore, it was stated that Japan's monetary policy challenge is to address too-low inflation, unlike in western economies, while a member said it is inappropriate to change the monetary policy stance as Russia's invasion of Ukraine added to the downside risks for Japan's economy. European bourses are subdued, Euro Stoxx 50 -1.9%, as Tuesday's positivity waned in the APAC session as commodities slipped in relatively limited newsflow. Unsurprisingly given this dynamic, the Basic Resources and Energy sectors are the European laggards, amid broader cyclical pressure. Stateside, futures are in-fitting with the above action, ES -1.4%, where participants are awaiting the first session of testimony from Chair Powell, newsquawk primer available here. Ant Group is reportedly to apply, as soon as this month, for a key financial license, via Bloomberg citing sources. Toyota (7203 JT) expects global vehicle production in July to be around 800k. China's CPCA says domestic car rales rose 39% in the week to June 13th Y/Y, +55% M/M, via Reuters. Top European News UK PM Johnson is of the view that the government must win its battle with the rail unions and is prepared for the stand-off to last months, according to The Times. Italy is reportedly preparing EUR 3bln of aid to curb energy bills, according to la Repubblica Italian Foreign Minister Di Maio quit the 5-Star Movement (5SM) to set up a new group, according to Reuters. FX Dollar regains bullish momentum on risk dynamics ahead of Fed testimony; DXY on a firmer footing, but capped ahead of 105.000 within 104.950-430 range. Yen also in demand as a safe haven as sentiment sours, USD/JPY reverses course from around 136.71 to sub-136.00 at one stage. Kiwi and Aussie undermined by risk-off mood, with latter also hampered by heavy decline in iron ore; NZD/USD hovers above 0.6250 and well below 1bln option expiries at 0.6300, AUD/USD capped around 0.6900. Loonie, Nokkie and Peso ruffled by collapse in WTI and Brent crude, USD/CAD rebounds towards 1.3000, EUR/NOK tests 10.5000 and USD/MXN straddles 20.1800. Euro holds around 1.0500 and 10 DMA close by amidst hawkish ECB vibe, Pound pivots 1.2200 after somewhat mixed UK inflation data. Central Banks ECB's de Guindos says he expects inflation to ease after the summer but stay near current levels in the coming months; Governing Council is yet to discuss details of the anti-fragmentation tool. New tool should be different from the prior OMT tool as the circumstances are different, will also differ from APP and PEPP. Norwegian Gov't names Paal Longva as Deputy Norges Bank chief. Fixed Income Bonds bounce firmly as risk sentiment turns bearish again on global inflation and recession concerns. Bunds up to 144.87 before fading after a reasonable 2038 German auction. Gilts top out at 111.89 and largely ignored mixed UK inflation metrics vs consensus. 10 year T-note hovers closer to 116-19 overnight peak than 115-28+ trough pre-Fed chair Powell and 20 year supply plus other Fed speakers. Commodities WTI and Brent are, alongside broader commodities, pressured with fresh catalysts somewhat thin and focused on known themes. Currently, they are lower by over 4% on the session and ahead of Biden's announcement on gas prices; though, if implemented, such measures could serve to push demand and ultimately prices higher. US President Biden will deliver remarks on gas prices at around 14:00EDT/19:00BST on Wednesday and will call on Congress to implement a suspension to the federal fuel tax. Subsequently, multiple Democratic sources said that the effort to to suspend the federal gas tax for three months stands almost no chance of passing, according to Politico. IEA warns Europe to prepare for a complete shutdown of Russian gas exports and that governments should keep ageing nuclear plants open and take other contingency measures, according to FT. World Steel says global steel output -3.5% Y/Y in May at 162.7mln tonnes (prev. -5.1% Y/Y in April); China crude steel output -3.5% Y/Y to 96.6mln tonnes (prev. -5.2% Y/Y in April). Spot gold is softer in-line with other metals, though the magnitude is more contained given its haven allure; broader action that sees LME Copper clipped despite the expected commencement of Chile strike action. US Event Calendar 07:00: June MBA Mortgage Applications, prior 6.6% Central Bank Speakers 09:00: Fed’s Barkin Speaks to West Virginia Chamber of Commerce 09:30: Powell Delivers Semi-Annual Testimony Before Senate Panel 12:00: Fed’s Barkin Speaks to the Federal City Council 12:50: Fed’s Evans Discusses Economic Outlook 13:30: Fed’s Harker and Barkin Discuss the Economic Outlook DB's Jim Reid concludes the overnight wrap Whilst the question of whether we’re about to face a recession is still dominating markets, risk assets posted a sharp rebound yesterday as the US got back from holiday. In fact by the close of trade, the S&P 500 (+2.45%) had put in its strongest daily performance in nearly a month, with every sector higher on the day and energy (+5.13%) doing most of the legwork. Even though the chart book showed that before yesterday the S&P was on course for the worst H1 since 1932 we did show in the CoTD (link here) that the top 5 H1 declines over the last 90 years were all followed by strong H2 performance. Before you think it's safe to come out from behind the sofa, S&P futures are around -1% lower this morning as the recession narrative makes a bit of a comeback. European futures are indicating that yesterday's gains (STOXX 600 +0.35%) will be eradicated which could end a three day winning streak. Oil prices are lower overnight with Brent Crude futures weakening -3.23% to $110.95/bbl while WTI futures are down -4.69% at $105.46/bbl amid a push by US President Joe Biden to bring down soaring fuel costs by calling for a temporary suspension of the 18.4-cents a gallon federal tax on gasoline. The demand destruction narrative is making a comeback in Asia as well. Today's big event is Fed Chair Powell's appearance before the Senate Banking Committee as part of the Fed’s semiannual Monetary Policy Report that they deliver to Congress. According to our US economists, they expect him to reiterate the same themes he gave at his post-meeting press conference last week, where he signalled that they’d likely be deciding between 50bps and 75bps at the July meeting. Fed funds futures are currently implying that another 75bps move is more likely, with +71.8bps currently priced in, but don’t forget that there’s still plenty yet to happen ahead of that meeting in just over a month, including the subsequent CPI release and jobs report for June, and as we found out at the last meeting, it’s not implausible that unexpected data releases throw the previous guidance off course. With all that to look forward to, Treasuries built on their selloff from last week, with the 10yr yield up +4.9bps to 3.27% as it echoed the higher yields we’d seen in Europe the previous day. In Asia, US 10yr yields (-1.89 bps) have dipped back down to 3.25%. They haven't had much in the way of Fedspeak to go off over the last 24 hours, although Richmond Fed President Barkin (a non-voter this year) said he “didn’t have a problem” with Powell’s guidance for the decision next month, and that he was in favour of the 75bps hike they did. Those moves in Treasuries also led to a steepening in the curve, with the 2s10s slope up +3.4bps to 7.2bps as they edged slightly further away from the inversion territory that they’ve briefly fallen into twice this year now. In Europe there was more of a divergence between core and peripheral yields however, and those on 10yr bunds (+2.2bps) closing at a post-2014 high, just as those on BTPs fell by -1.2bps. Some of the most significant news over the last 24 hours has been on the FX front, where the Japanese Yen fell to a fresh low for the 21st century of 136.71 per US Dollar this morning before bouncing back to 136.20 as I type. You’ve got to go all the way back to 1998 for the last time the currency was trading at a weaker level though. Prime Minister Fumio Kishida did not seem too concerned about BoJ monetary policy divergence and the impact on weakening the yen, saying in a debate policy needed to remain easy, perhaps lending more political support to the BoJ’s policies. Stocks across Asian markets are trading lower this morning, with the Kospi (-1.89%) the largest underperformer followed by the Hang Seng (-1.26%) after a two-day winning streak earlier this week. Markets in mainland China are also sliding with the Shanghai Composite (-0.33%) and CSI (-0.62%) both weak. Elsewhere, the Nikkei (+0.04%) gave up its early gains, hovering just above the flatline as I type. Bitcoin is at $20,332 in Asian trading. Here in the UK, gilts underperformed their counterparts elsewhere in Europe following remarks from BoE Chief Economist Pill that they would act “more aggressively” if required. In response, 10yr gilt yields rose +5.0bps to reach a fresh post-2014 high of 2.65%. Overnight index swaps are continuing to price in 50bp moves by the BoE at the next 3 meetings, with a path that would leave Bank Rate above 3% by year-end. There were also reports that former Italian Prime Minister Giuseppe Conte was considering leaving Mario Draghi’s coalition. While Draghi’s party would still likely retain a majority in both chambers of Parliament, it would leave a very narrow path to push through legislation to fix the economy or to resist dissent from coalition members – a theme all too familiar to Senate Democrats in the US. There wasn’t much in the way of data yesterday, although US existing home sales fell broadly as expected to an annualised rate of 5.41m in May (vs. 5.40m expected), which is their lowest level since June 2020 as the numbers were recovering after the initial wave of the pandemic. To the day ahead now, and the main highlight will be Fed Chair Powell’s testimony before the Senate Banking Committee. Other central bank speakers include the Fed’s Barkin, Evans and Harker, as well as BoE Deputy Governor Cunliffe. Otherwise, data releases include UK and Canadian CPI for May, as well as the European Commission’s preliminary consumer confidence indicator for the Euro Area in June. Tyler Durden Wed, 06/22/2022 - 07:52.....»»

Category: worldSource: nytJun 22nd, 2022

The Bill Gurley Chronicles: Part 2

The Bill Gurley Chronicles: Part 2 By Alex of the Macro Ops Substack What if there was a way to distill all the knowledge that someone’s written over the last 25 years into one, easy-to-read document? And what if that person was a famous venture capital investor known for betting big on companies like Uber, Snapchat, Twitter, Discord, Dropbox, Instagram, and Zillow (to name a few)?  Well, that’s what I’ve done with Bill Gurley’s blog Above The Crowd.  Gurley is a legendary venture capital investor and partner at Benchmark Capital. His blog oozes valuable insights on VC investing, valuations, growth, and marketplace businesses.  This document is past two to the one-stop-shop summary of every blog post Gurley’s ever written, part 1 can be found here. February 2, 2004: The Rise Of Open-Standard Radio: Why 802.11 Is Under-Hyped (Link) Summary: WiFi will dominate wireless communications for the same reason Ethernet dominated networking and x86 dominated computing: high switching costs. This wide-scale adoption causes capital to flow into the standard as companies look to differentiate on top of the existing platform. In doing so, it further entrenches the “open-standard” incumbent.  Favorite Quote: “Open standards obtain a high “stickiness” factor with customers as a result of compatibility. Once customers invest in a standard, they are likely to purchase more and more supporting infrastructure. As their supporting infrastructure grows, their switching costs rise dramatically with respect to competitive alternate architectures. Customers are no longer tied simply to the core technology, but also to the numerous peripherals and applications on which they are now dependent. All of these things make challenging an accepted open standard a very difficult exercise.” March 24, 2004: All Things IP: The Future Of Communications In America (Link) Summary: South Korea and Japan are leading the world in broadband speed and connectivity. South Korea, for example, sports 80% broadband adoption. The US on the other hand, less than 50%. Different players battle for the future of US communication. Free services like Skype offer high-quality VoIP calls. But it’s the cable companies, with their mega-cable infrastructure, that lead the way. At the end of the day follow the money. Comcast went after Disney not because of distribution, but because of content. Favorite Quote: “Now, while voice should be free, that doesn’t mean that it will be free. The two conditions outlined above are nontrivial. First and foremost, it is not at all clear that we have enough competition in the U.S. broadband market. Innovations in the wireless market, particularly recent innovations around mesh architectures, have the opportunity to change this. As of right now, however, many users simply lack choice. Additionally, the many state municipalities around the country are eager to place their hands on VoIP. A poorly executed policy could in fact “increase” the long term pricing on voice services for all users (for example, would you really tax a free service?).” May 6, 2004: Entrepreneurialism And Protectionism Don’t Mix (Link)  Summary: Protectionism and entrepreneurialism don’t work together. One prides itself on open dissemination of ideas, talent and problems (entrepreneurialism). The other (protectionism) desires to keep what’s theirs and turn a blind eye to competition. There are seven reasons why these two ideologies don’t mix: it hurts the economy (comparative advantage), start-ups don’t receive government subsidies (that encourage protectionism), disincentivizes diversity, more start-ups start with a global presence, the hot markets are ex-US, it goes against our global open standards (WiFi, etc.) and its inconsistent with the entrepreneurial mindset.  Favorite Quote: “It is hard to imagine a successful entrepreneur arguing that he or she deserves a job over someone else that is equally skilled and willing to work for a lower wage. The entire spirit of entrepreneurialism is based on finding ways to do something better, faster, and cheaper. It is the whole nature of the game. If someone can do something better somewhere else, it simply means it’s time to innovate again – with intellect and technology, not politics.” October 19, 2004: The Revolutionary Business Of Multiplayer Gaming (Link)  Summary: Multiplayer gaming is an incredible business featuring five “Buffett-Like” business characteristics: recurring revenue (subscription pricing), competitive moats (switching costs), network effects/increasing returns, real competition with others and high brand engagement. Those that fail to realize the importance (and power) of the video game business model (40%+ operating margins) will miss a huge investment opportunity.  Favorite Quote: “Some skeptics argue that MMOG is still a “niche” business and that the same half-million users are migrating from Everquest to Ultima Online to City of Heroes. Under this theory, MMOGs will never be mass market and will never really “matter” in the $20 billion interactive entertainment business. However, with billion dollar businesses now dotting the NASDAQ, it becomes harder and harder to invoke such skepticism. And if new paradigms, architectures, and broadband speeds allow for titles that meet the needs of a wider demographic, ignoring MMOGs may be equivalent to ignoring the successor to television.” March 11, 2005: Believe It Or Not: Your State Leaders May Be Acting To Slow The Proliferation Of Broadband (Link) Summary: In 2005, rumors circulated that laws would pass eliminating a city’s right to offer telecommunications services to its citizens. Gurley suggested states should say “no way” to this offering, and opined six reasons why (straight from the post):  The primary reason for the proposition is to reduce or eliminate competition for incumbent telcos An oligopoly doesn’t make a marketplace Taking rights from municipalities will have negative overall impact on American innovation  Even if a city has no intention of deploying wireless services, it is still in that city’s best interest to retain the right to do so In 2005, isn’t it reasonable for a city to choose to offer broadband as a community service?  A founding American principle — localized government whenever possible Favorite Quote: “In what is ostensibly the cornerstone “democracy” on the planet, one would think that the citizens in each of America’s cities could simply “vote” on the services they believe make sense for their city to provide.  Running a wireless network in a city like Topeka, Kansas simply has no overriding impact on the state as a whole.  As Thomas Jefferson aptly wrote in a letter to William Jarvis in 1820, “I know of no safe depository of the ultimate powers of society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform them.”” March 21, 2005: The State Of Texas Refuses To Block Municipal Broadband (Link) Summary: Gurley’s post before this one did its job and Texas removed the harsh language around cities offering broadband access to its citizens. According to Gurley, the battle moved to Colorado.  Favorite Quote: “This proposed bill, in its original form, would prohibit a city from helping any new carrier whatsoever get started.  It’s a pure and blatant anti-competitive move.  It’s been modified slightly, but it is still one of the harshest proposals of any state, and once again created only to help the incumbent carriers by removing competition.  Consumers do not benefit from this language.” March 24, 2005: Texas Two Step – Backwards (Link) Summary: After celebrating the removal of restrictive broadband language three days prior, Texas reinserted the notion. What’s crazy is that the member who reinserted the language, Robert Puente, serves in a district where a large telco company has its headquarters. Hmm …  Favorite Quote: “It is shocking that these local reps really don’t care if broadband deployment in America continues to fall further and further behind the rest of the world.  Just shocking.” June 2, 2005: Texas Sets Key Precedent For Other States In Refusing To Ban Municipal Wireless (Link) Summary: It’s interesting that fixed broadband incumbents in Texas are so opposed to wireless broadband. The incumbents claim wireless is a weaker form of their product. But if it’s so weak, why do they want it banned from their state? Why won’t they let natural competition run its course? If it is indeed weak, there shouldn’t be a reason to impose sanctions and restrictions.  Favorite Quote: “The reason the pro-broadband movement was successful is because they organized, they gathered the real data on the success of municipal wireless deployments, and they were able to inform the citizens about this effort by the incumbents and their key legislators to use regulation to restrict competition.  They leveraged the Internet, blogs, and mailing lists, and made a huge difference.  The tech community also played a role with the AEA, the Broadband Coalition, and TechNet all speaking out against this effort to intentional slow technical progress.  These lessons and resources are now focusing on other states to ensure the Texas outcome.” July 12, 2005: DVD Glut (Link) Summary: Gurley saw the rise of TiVo and its effect on the DVD industry. Why would people pay for DVDs when they can record their favorite movies on TV and watch them whenever they want? There is no practical use for DVDs outside nostalgia and collection.  Favorite Quote: “Could it be that people are watching Shrek 2 on Tivo and saving that on Tivo for future viewing?  Could it be that other activities, such as Internet usage, is infringing on DVD time?” July 19, 2005: Do VCs Help In Building A Technology Platform? (Link) Summary: There are two important implications for venture capital’s lack of investment in Microsoft’s .NET platform. First, VCs are investing on the Open Platform. This is likely due to (what Gurley calls) “a more benign” platform. Such a platform allows for more creativity and application. Second, VCs aren’t investing in .NET applications because Microsoft’s simply going up the software vertical (owning each spot). There is a lack of opportunity within the existing .NET framework.  Favorite Quote: “Venture Capitalists look to the public markets for clues on where to go next.  There is no point in investing in technologies that don’t lead to liquidity events.  What the article stresses is that the majority of VC money these days is being spent on top of the Open Source platform rather than the Microsoft’s .Net platform.” July 22, 2005: Wifi Nation… (Link) Summary: This article gives us an excuse to talk about Innovator’s Dilemma. Clayton Christensen coined the term in his book with the same title. Wikipedia defines the term as, “the new entrant is deep into the S-curve and providing significant value to the new product. By the time the new product becomes interesting to the incumbent’s customers it is too late for the incumbent to react to the new product.” In short, WiFi is disrupting the incumbent broadband and their end consumers. Also, WiFi isn’t built for the incumbents. It’s built for the next generation.  Favorite Quote: “What you will see, and what many continue to deny, is that Metro-scale Wifi isn’t a theory, its a reality.  The networks are live.  They perform way better than EVDO or any cellular alternative. They are cheaper to deploy.  AND, there is huge momentum around more and more networks.” Years: 2006 – 2008 April 5, 2006: Why SOX Will Lead To The Demise Of U.S. Markets (Link) Summary: Sarbanes-Oxley (SOX) killed the small and micro-cap public market spirit. Like most regulations, the creators of SOX thought their stipulations would preserve the growth of public markets. Instead it stunted growth. SOX is an expensive requirement for smaller public companies. The costs disincentivize companies from going public. In return, US capital markets offer less opportunities than global companions. Will this lead to more money flowing overseas? Favorite Quote: “Ironically, the two gentlemen that created SOX did it with the intention of “preserving” U.S. capital market leadership. Their fear was that people viewed our markets as too risky, and so they created SOX to ensure that investors would “trust” our markets.” April, 2006: As Wifi Grows, So Do The PR Attacks (Link) Summary: There will always be haters when new technology replaces old, resentful incumbents. Can you blame them? WiFi completely destroyed their business model. Of course they’re going to run sham campaigns. But that’s the beauty of the Innovator’s Dilemma. WiFi doesn’t care about fixed broadband and incumbents. It’s serving its new wave of customers who want something incumbents can’t offer. Look for this in other up-and-coming technologies.  Favorite Quote: “Better performance than EVDO at a much lower cost.  You won’t stop this with an AP article.  Are their issues?  Sure, but I drop 5 cell calls a day in Silicon Valley and that technology (cellular voice) is over 25 years old.”  April 27, 2006: MMOs (MMORPGs) Continue To Rock (Link) Summary: Gurley again emphasizes the importance of MMO video games — particularly out of Asia. In fact, he mentions that Nexon (Japanese gaming company) plans to file on the JSE. Gurley believes the JSE filing is directly correlated with Sarbanes Oxley (from the article above). Regardless, the real winners in the video game industry are coming from Asia. Winning games will be based on community and entertainment, rather than pure competition. It’s no wonder Fortnite is so popular today. Gurley gave us clues almost 20 years ago.  Favorite Quote: “Many of the rising stars of multi-player interactive entertainment are more social than interactive. They also target much broader demographics than gaming ever dreamed of hitting. Consider three sites targeted at younger children and teens that are all doing extremely well — NeoPets, HabboHotel, and GaiaOnline (Benchmark is an investor in HabboHotel).” June 19, 2008: Back To Blogging (Maybe)… (Link) Summary: Gurley returned from his writing break to mention a few of his favorite reading sources. Gurley notes that he reads each of these websites every morning:  TechCrunch GigaOm Marc Andressen’s Blog Favorite Quote: “The bottom line is I have been really busy. Busy with our investments here at Benchmark, and busy with three growing kids at home.  But in the end, I am quite fond of writing, and I have been inspired by some of the great writing of others.” June 30, 2008: Bleak VC Quarter? Why? (Link) Summary: June 2008 marked another dreary quarter for venture capital. Not one single VC-backed company went public. At first glance, this seems bad for venture capital. But looking deeper, it’s not venture capital that’s the issue. It’s the public market. Between regulations and SOX costs, small companies are opting to remain private at record numbers. As Gurley notes, fund managers want high growth and capital appreciation. But these small growth companies don’t want the issues of being a public company.  Favorite Quote: “This passionate desire to be public is completely gone in Silicon Valley. For reasons you could easily list – Sarbanes Oxley; 12b1 trading rules; shareholder litigation; option pricing scandals; personal liability on 10-Q filing signatures – it is simply not much fun being a public executive.” July 22, 2008: BAILOUT What? (Link) Summary: Fascinating how relevant this quote is for 2020. What we’ve seen from the US government during the COVID pandemic is a double-downed effort on its bailout precautions. Even going so far as to buy bond ETFs on the open market! Capitalism requires failure. It requires weak businesses to fall by the wayside in exchange for stronger competitors.  Favorite Quote: “Is our government really going to bail out equity investors in a failed business enterprise? I totally get keeping America afloat, but it is critical that failed businesses FAIL. They must FAIL. You can’t provide band-aids to equity failure. The whole system will come to a halt. Risk that pans out must result in failure. it is a crucial part of the system.” December 1, 2008: Benchmark Capital: Open For Business (Link) Summary: Gurley and the Benchmark team continued investing while the rest of their VC peers cowered in fear during the bowels of the Great Recession. Investing when others are fearful is not only a sign of a great VC firm, but any great company.  Favorite Quote: “I can’t speak for other firms, but make no mistake about…Benchmark Capital is wide open for business and we are eager to invest new capital behind great entrepreneurs.  Right now.  In this environment.  Today. You may wonder why I feel the need to make this pronouncement, and you may even consider this a stunt.  It is not.   We have made fourteen new investments this year, and are actively considering new investments each and every day.” December 5, 2008: Do VCs Help In Building A Technology Platform; Part 2 (Link) Summary: Microsoft offers three years of free software/service to startups. This is a clear signal that Microsoft understands the power of platforms and where companies choose to build their products. Otherwise, as Gurley notes, why offer it for free? This comes on the heels of three new cloud platform technologies entering the space: Facebook, Salesforce and Amazon AWS. VCs may not choose which platform wins, but they choose which platform gets capital. And to some, that’s the same thing.  Favorite Quote: “It obviously would be overstating it to suggest that VCs help “choose” the platform that wins. That said, it is a powerfully positive indicator if VCs show confidence in a new platform by shifting where they deploy their capital.” Years: 2009 – 2011 February 1, 2009: Google Stock Option Repricing: Get Over It (Link) Summary: Retail investors, bloggers, and financial pundits argued that Google’s Stock Options Repricing hurt the “common” shareholder. Gurley thinks stock options shouldn’t matter because common shareholders gave up their rights (more or less) when investing in Google shares. The fact is, Google’s founder and original shareholder shares carry 9/10ths voting power. That means minority (aka second-class citizen) shareholders get 1/10th. In other words, deal with it.  Favorite Quote: “So my reaction to anyone who owns Google stock and is sore over this decision — Get Over It.  You bought a stock where you gave up the ability to vote on such things, and if you don’t like it, sell the stock.  But you have no right to complain, as the rules were laid out from the beginning.” February 11, 2009: Picture Proof Of The Innovator’s Dilemma: SlideRocket (Link) Summary: With a team of 3 engineers and a fraction of Microsoft’s budget, SlideRocket created (arguably) a better version of PowerPoint. According to Gurley, SlideRocket is a perfect example of the Innovator’s Dilemma. PowerPoint took (probably) billions of dollars in R&D and thousands of engineers to create. SlideRocket did it with 4 orders of magnitude less resources.  Favorite Quote: “One subtlety of this is that it allows others to catch up and basically recreate the same thing for a fraction of the cost.   In SlideRocket’s case, it appears that a team of 3 engineers with primary work done by the founder, have recreated PowerPoint (leveraging Flex of course).”  February 18, 2009: Just Say No To A VC Bailout: A Green Government Venture Fund Is A Flawed Idea (Link) Summary: Some VC investors wanted a bailout from the government during the GFC. Gurley originally thought this was a far-cry from a lone complainer. Then he read an article by Thomas Friedman suggesting the same thing: a bailout for VC targeted at green-tech companies. According to Gurley, VC bailouts are flawed for six reasons: There are no lack of capital in VC VCs don’t deserve a bailout Those that need bailout are (likely) bad ideas Excess capital hurts markets Good companies don’t lack for capital Use customer subsidies instead of government-backed VC investment Favorite Quote: “Great ideas have never suffered from a lack of capital availability.  Bringing extra government dollars to the investment side will only ensure that marginal and sub-par companies get more funding dollars, which historically has had a perverse and negative effect on the overall market.” February 22, 2009: Just Say No To A VC Bailout – Part 2 (Link) Summary: Continuing the rant from the previous blog post, Gurley hits on three main criticisms with Friedman’s cry for a VC bailout. First, Friedman suggested that the US Treasury give the Top 20 VC firms up to $1B to “invest in the best VC ideas”. When you consider the 2% annual fee each year that VC’s take, you’re effectively giving these firms an additional $4B in partners’ fees. Finally, Gurley hammers home the idea that to win in green-tech you need to incentivize the customer on the demand side. Create a positive ROI proposition for the customer to use the product or service.  Favorite Quote: “The key is to create an ROI positive investment for the end customer through subsidies.  Ethanol isn’t falling to succeed because of a lack of capital — it’s a problem with customer ROI.  Invest through subsidies in making the market huge and ROI positive.  Capital alone will not solve the problem as the ethanol case proves.” February 27, 2009: Perfect Online Video Advertising Model: Choose Your Advertiser (Link) Summary: Gurley reveals his “perfect online video advertising model” in which consumers can choose their advertiser. It works like this. Before an online premium or VOD show starts, the content creators present the consumer with a list of 4-9 sponsors for the programming. Then, the consumer picks which sponsor they’d like to see when the inevitable ad runs during their program. The benefit to this is that content creators would know their customers’ interests to the tee, which would allow them to raise prices on advertising channels (read: higher revenue).  Favorite Quote: “Just because I am a male between 18-24 and watching “Lost” doesn’t mean I want an XBOX.  You are more likely to guess that i might want it, but you would be 10X better off if I chose XBOX as my sponsor at the start of the show.  Then you would KNOW I have an interest — no more guessing. Making predictions is always a dangerous game, but I am fairly certain that this will be the video ad model of the future.  It makes way too much sense not to work.” March 2, 2009: Looking For Work: Are You An Insurance Agent? (Link) Summary: One of Gurley’s investments had an unusual circumstance during the GFC: they had excess demand for work. LiveOps, a virtual SaaS call center on the cloud, leverages a network of work-from-home call center operators. At the time of writing, LiveOps had 20,000+ live call-center agents working from home assisting companies like Aegon, Colonial Penn, and American Idol.  Favorite Quote: “Their core technology is a SAAS “contact center in cloud.” Just like anyone’s call center, it is a four-9’s operation that is highly resilient. What’s different, and very unique, is that the agents on the other end don’t actually work for LiveOps – they work for themselves. So far, over 20,000 “crowd-sourced” agents are now working from home on behalf of LiveOps customers – companies like Aegon, Colonial Penn, etc. One really cool customer example is American Idol. For Idol Gives Back, AI’s charity campaign, over 4000 LiveOps agents handled over 200,000 calls in less than five hours. Only a crowd-sourced play could handle such a ramp.” March 9, 2009: How To Monetize A Social Network: MySpace And Facebook Should Follow TenCent (Link) Summary: Social networks had trouble monetizing their websites. MySpace and Facebook failed to generate revenue like Yahoo, which did $7B at the time of writing. The problem wasn’t growing the userbase (both sites had tremendous user growth). It was the dependence on advertising to generate the lion’s share of their revenues. Gurley compares MySpace and Facebook to Tencent (700.HK). The two primary drivers of revenue for Tencent are digital items and casual game packages and upgrades. These are significantly higher-margin businesses than advertising. At the end of the day, social networks are social status symbols. This means if you want to leverage your business, you need to provide users with ways to improve their social status. Favorite Quote: “If you removed the Chanel logo from them, and offered them for $50 cheaper, you could not sell a pair.  Not one.  Why?  People are buying an image that they want to project about themselves.  Without the logo, they fail to make that statement.  The same is true for watches, clothes, cars, sodas, beers, cell phones, and many more items.  People care greatly about how they are perceived and are willing to part with big bucks to achieve it.  Digital items are merely the same phenomenon online.” March 26, 2009: Note To Timothy Geithner: Do Startups & Venture Capitalists Really Need More Regulation? (Link) Summary: The US government levied Sarbanes-Oxley on all public companies after the whole Enron, WorldCom saga. The purpose? Protect investors from future frauds. While the efficacy of “Sarbox” remains in question, one thing doesn’t: the cost on small public companies. Sarbox costs ~$2-$3M to implement. This makes it nearly impossible for small companies to go public because the Sarbox costs eat away all potential operating profits. Overburdening small companies could restrict the pipeline of new public IPOs.  Favorite Quote: “And remember that the largest companies in America that were created in the last 35 years (MSFT, GOOG, AAPL, CSCO, INTC) were all small venture-backed companies at one point in time.  Do we really want to inappropriately restrain or throttle the future pipeline of such companies in America?” May 2, 2009: Swine Flu: Overreaction More Costly Than The Virus Itself? (Link) Summary: It’s amazing how relevant this blog post became during the COVID-19 pandemic. Gurley suggests that in some cases, overreacting to news (like swine flu) can have far worse consequences than the natural course of the virus itself. For example, Mexico’s economy teetering on the brink of insolvency as tourism represents a third of their economy. The argument for overreacting is that it prepares people for the worst-case scenario. Yet that decision has consequences. Consequences we can’t see, and might not see for a long time.  Favorite Quote: “Some people rationalize that this hysteria serves a noble purpose, in that it prepares us for the worse.  This, however, ignores the fact that there are tremendous real economic costs to overreaction, and that sometimes overreaction has far-reaching negative impacts which can be many times greater than that of the original problem.” May 8, 2009: Second Life: Second Most Played PC Title, #1 In Minutes/User (Link) Summary: Gurley’s investment in Linden Lab paid off big time in May 2009 when Linden’s hit game Second Life ranked as the #2 most-played PC title. The game trailed World of Warcraft in number of users, but ranked first in number of minutes played per user. Data like this further reiterates Gurley’s earlier claims that selling goods online (digital signs of social status) can make for a great business. It also shows people love distracting themselves from their everyday lives.  Favorite Quote: “The truth of the matter is that the company is quite large, it’s growing, it’s profitable,  it has hired a number of great people over this time frame, and as the data shows it’s kicking butt. Note that the data also shows SecondLife actually leads WOW in terms of minutes played per user.”   May 10, 2009: Bill Gurley’s Online Video Market Snapshot (Link) Summary: Gurley did an on Hollywood talk about the massive changes in the Online Video Market. The link has an 18-minute video where Gurley outlines five things that matter in the coming online video market battle:  Great content is super expensive Affiliate fees are a “huge fucking deal”  The Netflix Business model is widely misunderstood HBO and the NFL are incredibly well-positioned companies Wireless will not save the day  Favorite Quote: I didn’t have a favorite quote from this post as it was mainly a link to the video and slide deck. I highly recommend watching the video and scanning through the deck. It’s 18 minutes long but you can watch at 1.5-2x speed without issue.  Tyler Durden Sun, 06/19/2022 - 17:30.....»»

Category: blogSource: zerohedgeJun 19th, 2022

Housing Crash Imminent: As Mortgage Rates Explode Price Cuts Soar And Buyer Demand Collapses

Housing Crash Imminent: As Mortgage Rates Explode Price Cuts Soar And Buyer Demand Collapses A little over a month ago, when mortgage rates were still "only" 5% we shared several devastating anecdotes from real estate agents and industry execs who validated our worst fears: US housing was imploding... fast, with subsequent observations only confirming this dire conclusion about the state of the most popular asset class among the US middle class. Fast forward to this week when things have gone from worse to catastrophic, because with 30Y mortgage rates soaring at the fastest pace on record to above 6%, or levels last seen just before the housing bubble burst... .... sending the average mortgage payment on a median mortgage up by almost $800 in just the past 6 months... making housing the most unaffordable in history... ... sending new home sales plunging at the fastest pace since the peak of the covid crisis after the longest negative streak since 2010... ... and homebuyer sentiment imploding to the lowest level in generations... Which brings us to the latest housing market summaries from real-estate brokerage RedFin, which are not pretty. The first shows that after the period of unprecedented gains for home prices and a uniformlly sellers market, has flipped, and according to Redfin, the highest share of sellers on record dropped their list price during the four weeks ending June 12 as mortgage rates shot up to levels not seen since 2008, collapsing the pool of potential home shoppers. In the Austin, Texas, and Nashville, Tennessee, metro areas, the share of new-construction offerings with price cuts has quadrupled from a year earlier, according to Redfin. They tripled in Phoenix and doubled in the Tampa, Florida, region. “We are in a different place — the builder can no longer name a price and say, ‘pay it or move along,” said Nicole Freer, a Houston agent who has slashed prices by $2,000 to $20,000 on homes she lists for builders. “They’re telling us: ‘Our managers have allowed us to negotiate again.’” Still, despite the clear cracks in housing, homebuying has never been more expensive. Due to delays in pricing, the typical buyer with a 30-year fixed-rate mortgage is looking at a monthly payment of $2,514, up from $1,692 a year ago! But those who remain in the market may notice they face less competition from other buyers. Homes are more likely to sit on the market for a few weeks, compared to last year when they would go under contract within a week... ... and home prices are being bid up less often than they were earlier in the spring. “The housing market isn’t crashing, but it is experiencing a hangover as it comes down from an unsustainable high,” said Redfin deputy chief economist Taylor Marr. “Housing demand has already cooled significantly to the point that the industry has begun facing layoffs. This week’s rate hikes will further stretch homebuyers’ budgets to the point that many more may be priced out. While a lot of home sellers are already dropping their prices, more homeowners will likely decide to stay put now that the mortgage rate on a new home is significantly higher than their current one.“ “If it weren’t for the surge in mortgage rates, the housing market would still be in a boom right now,” said Redfin Bay Area real estate agent James Cappello. “Demand from homebuyers was still extremely high as recently as February, but rates are making it really tough. Going from 3% to nearly 6% almost instantly has scared a lot of people out of the market.” There's more. In a subsequent report, Redfin reports that competition for existing inventory is collapsing with 57.8% of home offers written by Redfin agents facing competition on a seasonally adjusted basis in May, the lowest level since February 2021. That’s down sharply from a revised rate of 60.9% one month earlier and a pandemic peak of 68.8% one year earlier, and marks the fourth-consecutive monthly decline. On an unadjusted basis, May’s bidding-war rate was 60.8%, down from 67.8% in April and 71.8% in May 2021. As a result of declining competition, the typical home in a bidding-war received 5.3 offers in May, down from 6.8 in April and 7.4 in May 2021. “Homes are now getting one to three offers, compared with five to 10 two months ago and as many as 25 to 30 six months ago,” said Jennifer Bowers, a Redfin real estate agent in Nashville. “Offers also aren’t coming in as high above the list price as before. I recently listed a three-bedroom, three-bathroom home in a super cute neighborhood for $399,900. It ended up going under contract for $12,000 above the list price with an inspection, whereas three months ago, the buyer probably would have paid $60,000 over asking and waived the inspection.” In light of the above, it's not surprising that today Bloomberg reports that "the fastest-rising mortgage rates in decades have cooled demand so abruptly in many hotspots that it took the industry by surprise. Builders that were artificially limiting sales and auctioning houses to the highest bidder now have inventory to move." It’s part of a rapid shift in the US housing market as the Federal Reserve sharply raises interest rates to tame inflation, sending home-loan costs to the highest level since 2008 and straining buyers whose affordability limits were already being tested. Just this week, brokerages Compass and Redfin said they would slash jobs, as economic data showed housing starts dropped to the lowest level in more than a year and homebuilder sentiment is at a two-year low while homebuyer sentiment is the lowest on record. The market has certainly noticed the collapse in housing, and share prices for builders have collapse, with the Supercomposite Homebuilding Index tumbling 42% this year through yesterday, almost double the 23% drop in the S&P 500. Builders, who last year had so much power that people would wait in line overnight for homes they would meter out, are now contending with both falling demand and high material and labor costs. And with the Fed signaling more big rate hikes in coming months, they’re eager to get contracts signed before house hunters pull back even more. In Sarasota, Florida, would-be buyers are hesitating because homes are taking so long to build, and it’s impossible to know where borrowing costs will land by the time they’re completed, said Donnette Herring, a Realtor with Keller Williams. “Inflation makes them nervous,” Herring said.   The signs of a shift are still early. Conditions vary from region to region and even between subdivisions, including many where demand still far outpaces supply. And rather than cutting prices, many builders are offering incentives such as free upgrades, money toward closing costs and subsidized mortgage rates. But the market is changing fast, said Ali Wolf, chief economist at Zonda. Her company, which tracks new construction, began hearing of price cuts toward the end of May and into June.   “The builders that are cutting prices are also those that raised prices the most over the past six to 12 months,” she said. Many of those are in areas that were favored destinations for pandemic migrants who have been moving from pricey regions in search of cheaper homes and more space. In the Phoenix metropolitan area, 22% of new-home listings had price cuts from May 9 through June 5, up from 7% a year earlier, according to data from Redfin. In Tampa, the share jumped to 21% from 9% a year earlier, and in Austin, it climbed to 13% from just 3%. The cuts have come from both small private builders and big public ones, including D.R. Horton, Meritage Homes and Lennar according to listings in Florida, Texas and Arizona publicly available on sites such as Redfin and Realtor.com. A PulteGroup website shows 146 finished homes in Arizona, mostly with price reductions. Jim Zeumer, vice president of investor relations, said those appeared to be typical incentives used to sell spec houses -  those built without a buyer in place - that are complete or will be finished soon. “We will typically have one or two finished specs in a community but use incentives to manage inventory levels over the life of a community,” Zeumer said. During the recent boom, many builders were waiting until homes were nearing completion before allowing buyers to purchase them because of uncertainty around materials and labor costs. As a result, they have a flood of new homes that need to be matched up with buyers. In the Houston region, it’s the fast-growing areas further from the city, such as Conroe to the north and Alvin to the south, that are cooling the most, said Freer, the local agent. Builders who were only selling homes that were almost done now are telling her that they’ll take orders for “dirt.” Of her roughly 120 listings for builders, about 70% now have cuts, she said. Soon it will be 100%. A key metric to watch is the contract cancellation rate, said Rick Palacios, research director at John Burns Real Estate Consulting in Irvine, California. It topped 9% nationally in May, according to his company’s survey of builders, up from 6.6% in April. That’s still short of the 16% pace after the pandemic lockdowns first took hold two years ago. “The writing is on the wall that more supply is coming, no matter how you slice and dice the data,” Palacios said. “Builders are trying to get in front of that wave. We could have the double-whammy of the economy cooling and a lot of supply coming on. That’s not the best recipe to sell homes.” Tyler Durden Fri, 06/17/2022 - 15:20.....»»

Category: blogSource: zerohedgeJun 17th, 2022

4 Ways to Buy a Home in the Most Brutal Housing Market in Decades

Shopping for a home these days is a miserable slog. The buyers who walk away with a set of keys succeed against long odds, prevailing despite skyrocketing prices and relentless competition. Even as the U.S. housing market shows signs of cooling, buyers are still feeling enormous pressure to move quickly before interest rates rise further,… Shopping for a home these days is a miserable slog. The buyers who walk away with a set of keys succeed against long odds, prevailing despite skyrocketing prices and relentless competition. Even as the U.S. housing market shows signs of cooling, buyers are still feeling enormous pressure to move quickly before interest rates rise further, pushing more homes out of reach. At the center of this overheated market is a historic supply shortage. Simply put, there are nowhere near enough houses for all the people who want to buy them. The shortage could be described as a collapse, according to Jonathan Miller, president of Miller Samuel Real Estate Appraisers and Consultants, who tracks 40 housing markets around the country. Even if inventory tripled in some markets, home buyers would still be scrambling. “This is bordering on anarchy,” he says. “Demand has obliterated supply.” [time-brightcove not-tgx=”true”] The seeds of the crunch were planted in spring 2020, when Americans found themselves unshackled from their commutes and collectively decided the time was ripe for a move as they spread out in search of more space. At the same time, existing home­owners opted to stay put, while cash-flush investors snatched up single-­family homes at a startling clip. By March 2022, buyers had half as many homes to choose from as they had two years earlier. The homes sold twice as fast and cost 34% more, with buyers twice as likely to pay above list price, according to Redfin. Yet a bidding war also produces a winner. Often it’s a battered veteran of the pandemic market, couples who honed their negotiating strategies over the course of multiple disappointments, finally finding a house when success seemed hopeless. Along the way, they learned valuable lessons about how to outflank the competition and come away with not another defeat, but a home of their own. These are the stories of four buyers who prevailed­ and how they did it. Find a house before it hits the market Christopher Morris—VII for TIME Who they are: Katie and Tony Mancilla What they wanted: A bungalow in Tampa for under $800,000 What they got: A three-bedroom, two-bath bungalow for $725,000 How they did it: They swept in and made an offer on a house, sight unseen, before it hit the market. By working with a local broker, they were able to get details and information they would not have gotten on their own. “Bottom line, find someone to trust in the area,” Katie says. ******** Last year, Katie Mancilla was living with her husband Tony Mancilla in Los Angeles, but her heart was in Tampa. “I moved there during a very tough time in my life,” she says of the Florida city where she’d resided in 2014. “It helped me get through a lot.” But she didn’t want to live just anywhere in Tampa. She wanted to live in Palma Ceia, a coveted neighborhood of homes well over $1 million, but with a pocket of small bungalows, some listed within the couple’s $800,000 budget. “I love a home with a little bit more character,” Katie, 38, says of the bungalows, many built in the 1920s. She works in digital marketing; Tony, 35, works in health technology. House hunting in one of the hottest markets in the country is hard. Doing it while living 2,500 miles away is even harder. How do you find a home when all you have to go on are the Zillow pictures? So they leaned on their real estate agent, Devan Weisser of Century 21 List with Beggins. She became their eyes on the ground, giving them FaceTime tours of properties and making snap decisions on their behalf. “She would walk into some of these properties and say, ‘This just isn’t you,’” Katie says. In October 2021, the couple flew into Tampa for a weekend, touring half a dozen properties. None was right. Many were new construction that felt sterile and lacked the character Katie craved. Ready to give up on the idea of a single-­family home in Tampa, the couple looked at a condo apartment. But it was run-down and felt depressing. They left Tampa dejected and raw. “I was kind of at my wit’s end,” Katie says. “I had mentally backed out.” But the next day, Weisser spotted another real estate agent’s Insta­gram Stories teasing a bungalow that she had not listed yet. Located across the street from where Katie once lived, and a block from a park, it was perfect for the Mancillas, Weisser knew. At a private open house exclusively for brokers, Weisser gave the Mancillas a Face­Time tour, urging the couple to make an offer fast. “It was very, very charming,” says Weisser, who had helped Katie find her first home in Tampa back in 2014. “It had an old-school feel about it.” During the open house, Weisser spotted a photograph of the sellers and realized they were family friends with her husband. Now she had an edge: she knew what made the seller tick. The property, which would soon be listed for $659,000, had five offers within three hours of the broker’s open house. But Weisser knew that the sellers were a family-­oriented couple invested in the historic nature of the community, details she thought would give her clients a leg up. “This is a very special place to me, and I wanted to keep it that way,” Katie says. “A lot of people would have taken that lot and built a $2 million home on it.” Weisser is convinced that commitment helped put the Mancillas’ $725,000 offer over the top. “How do you stand out in a market?” she says. “We went a step further.” The sellers accepted. They closed in November. Make an all-cash offer (without any cash) Brent Humphreys for TIME Who they are: John and Sarah LeNoir What they wanted: A house in Austin for $300,000 What they got: A three-bedroom, two-bath house in Kyle, Texas, for $319,000 How they did it: With little in savings, they used an online home seller to turn their FHA loan offer into an all-cash one. “We thought it was completely out of reach before we dug deeper,” Sarah says. ******** On Dec. 27, 2021, John LeNoir was celebrating his 31st birthday at home in Austin with his wife Sarah LeNoir. Over a couple of beers and chicken korma, the subject of buying a house came up. Curled up on the sofa, Sarah scrolled through Zillow listings on her phone and started to imagine the impossible. “It’s been something that I personally did not believe was plausible,” says Sarah, 29, who works in nonprofit management. But that night Sarah saw a crack opening, one that might be large enough to squeeze through. The couple was chipping away at $18,000 in credit-­card debt, and they’d had a two-year reprieve from $600 monthly student-­loan payments because of the federal pause on them. Feeling giddy, they logged on to a local credit union’s website and applied for ­preapproval for a mortgage. A week later they learned that they qualified for a $300,000 home. But $300,000 doesn’t go very far in Austin, where the typical home value was $681,000 in April 2022, according to Zillow. In late February, a house came on the market in Kyle, about 30 minutes south of Austin. Listed for $280,000, with three bedrooms and two baths, it seemed within reach. But in less than 24 hours on the market, it had multiple offers. They called their credit union and got the green light to raise their borrowing limit. But to be competitive, they needed to offer more than preapproval on a Federal Housing Administration loan. So they turned to Opendoor, one of a number of startups that help buyers make cash offers. In this case, Opendoor would buy the home and sell it back to the LeNoirs at the same price. To qualify, they had to use a real estate agent affiliated with Opendoor, so the company would get the commission. Even without up-front costs, there were risks. If they backed out after the close, the company would keep their escrow deposit, and it could charge them if they took too long to transfer the property to their name. But before this could even happen, the couple needed cash to set aside in an escrow account if their offer was accepted. And in February, they had less than $2,000 in the bank. “I got spooked,” Sarah says. “I don’t want to make this offer and then not have the money.” Cash for the 3.5% down payment required for FHA loans would be coming. John, a supervisor at an insurance call center, was expecting a bonus, and they planned to supplement that with a loan against his 401(k). Home buyers can borrow up to $50,000 or 50% of the balance of their 401(k), whichever is lower, but must pay back the money with interest and cannot contribute to their 401(k) until the debt has been repaid. But neither sum was in hand. Their agent called the seller’s and explained that the LeNoirs could put only $1,200 in escrow, far less than is typical. The seller’s agent told them to put in an offer anyway. That night, before they’d ever seen their house, they offered $319,000 for it. The next day, they went to see what they’d just bid on. Sarah was smitten by the trapezoidal kitchen and large yard. “We were on pins and needles,” Sarah says. The next day, their offer was accepted. Opendoor closed on the sale within 30 days. Before the couple’s lease expires this summer, they’ll buy it back at the same price—or they’ll forfeit the $1,200 they put down. For now, they drive by frequently, waiting for the day they can call the little house in Kyle home. Write a love letter to woo a seller Alyson Aliano for TIME Who they are: Rauvynne Sangara and Natalia Alvarez What they wanted: A three-bedroom house in Los Angeles for around $1 million What they got: A three-bedroom house with a den in Pasadena for $1.05 million How they did it: Their buyers’ letter convinced the sellers that they would make good neighbors. “Don’t get discouraged,” says Sangara. “There are nice people out there that want to sell their house to good people and not just to the highest bidder.” ******** On a Thursday morning in January 2022, Natalia Alvarez and Rauvynne Sangara saw seven houses and bid on two: a dated single-story stucco house in Pasadena, Calif., and a three-­bedroom in Highland Park, Los Angeles. They didn’t think they had much of a shot at the Pasadena house. It was listed for $1 million, the top of their budget, and the couple figured the price would spiral in a bidding war, particularly since it had just hit the market. Besides, they had their heart set on the Highland Park house, which had been on the market for a few months already. They offered $1.08 million, more than $100,000 over the asking price. “We thought we had a great chance at this home,” says Alvarez, 32, an emergency physician. “We were really excited.” By then, they had been house hunting for three months, and had lost seven bidding wars. Their roughly $1 million budget didn’t go very far in Los Angeles, where the typical home value is just under $1 million, according to Zillow. They were also up against a deadline: Sangara, an ob-gyn, was pregnant with their first child, due in May, and they wanted to be out of their rental well before then. A few hours after they made the offers, Sangara, 32, refreshed her Zillow app and saw that the Highland Park listing had changed to “pending.” They knew they hadn’t gotten the house, because their real estate agent had not called them with any news. “We were heartbroken,” Alvarez says. Despondent, the couple went to brunch. “I had a full rack of ribs and a glass of rosé,” Alvarez says. “How do we move on from this?” They were back at home that evening licking their wounds when their real estate agent, Jeromy Robert of the Agency, called to confirm that they had indeed lost the Highland Park house. But he had surprising news. Their offer on the stucco house in Pasadena had been accepted. No counter­offer. No conditions. The sellers had simply accepted their offer of $1.05 million. Alvarez and Sangara were stunned. “We were like, why?” says Alvarez. “How did that happen?” Their agent said the sellers were struck by the letter the couple had included in their offer. Alvarez and Sangara hardly remembered this letter, written so long ago and included in every offer they’d made. “What was this magical letter that can get us a home?” says Sangara. Sangara dug up the letter she had written months ago. “We can picture our French bulldog, Jackson, running around the back yard and our first child (due in the spring!) sitting in the front yard saying hi to the neighbors,” it read. Alvarez could see why it worked: “It just made us sound like very wholesome people.” The three-bedroom house, set on a quiet street, with views of the San Gabriel Mountains in the distance, needed work. The kitchen was small and outdated with narrow cabinets and no dishwasher. The bathrooms were dated. But once Alvarez and Sangara moved in, they knew they’d landed in the right spot. “I didn’t realize it in the moment,” Alvarez says. “But this was the best home for us.” Let the sellers stay Caleb Santiago Alvarado for TIME Who they are: Hillary Horn and Griffin Ashe What they wanted: A four-bedroom house for less than $850,000 in the Denver suburbs. What they got: A four-bedroom, three-bath house for $762,000 in Arvada, Co. How they did it: They found a house that was too quirky for many buyers, but perfect for them, and let the sellers continue to live there rent free for two months. Horn says: “We got our house because we got better at playing the housing game.” ******** By March 2022, Hillary Horn and Griffin Ashe had seen over 100 houses in the Denver metro area, making offers on five of them. But with homes selling for $100,000 or $150,000 over list price, they couldn’t compete and stay within their $850,000 budget. “The market definitely kicked our butts,” says Horn, 29, who works for a mortgage company. Ashe, 32, works in consulting. But with each failed attempt, they fine-tuned their strategy in the hopes that eventually they’d strike gold. “There is really nothing that can help you buy a house other than having the most money or having the best terms,” Horn says. Since they couldn’t offer the most money, they decided they’d offer the best terms. They qualified for what is known as platinum approval from their lender, an approval where the lender fully underwrites the mortgage before an offer is made, essentially removing the mortgage contingency. They added an escalation clause, so that if anyone bid above their offer, they’d incrementally increase theirs up to a maximum limit. And they gave sellers 24 hours to respond so they wouldn’t lose an entire weekend to a house they had no chance of winning. “We thought if we just kept at it we’d find the one that worked,” Horn says. For four months, their weekends were filled with open houses, and their days were spent trolling Redfin. And then, they caught a break. One week in March four houses in their price range hit the market. Usually, there would be only one or two. More houses meant less competition. One house, a four-bedroom listed for $749,000, had no offers. “I walked into the house thinking why are there no offers?” Horn recalls. “What’s wrong with it, for real?” Renovated in 2018, the house was in great condition. And at 2,800 square feet, it was spacious. But two of the four bedrooms could be considered masters, with the larger one on the lower level, separated from the others. Horn suspected that the configuration didn’t appeal to families with small children. But it appealed to her. So she and Ashe made an offer that included all their standard bells and whistles. But they padded it with one more carrot: They knew the sellers were looking for a house to buy, too. So they offered the sellers the option to continue living in the house for free for up to 60 days after the sale closed. With only one other offer on the table, theirs was accepted at $13,000 above the list price. “We feel like we stole our house because we didn’t have to bid that high,” Horn says. Letting the sellers stay after the sale closed hasn’t been easy – Horn and Ashe had to make rent and mortgage payments in May. But Horn says it’s worth it. “It’s the peace of mind that we’re paying for,” Horn says. “We don’t have to be in this process anymore.”.....»»

Category: topSource: timeJun 15th, 2022

The fight against eye-popping inflation could hurt everything from retirements to mortgage rates — and possibly trigger the next recession

The Federal Reserve has the tools to counter the fastest surge in inflation since 1981 — but it could hurt Americans' finances in other ways. The US Federal Reserve building in Washington DCGetty Images The May inflation report showed prices soaring at the fastest pace since 1981. The Fed will now have to act even more aggressively to slow that price surge. It could mean pricier borrowing, tumbling stocks, and a potential recession. Friday's release showing inflation at a 41-year record in May dashed all hopes that rising prices had peaked in March.It means the Federal Reserve is under more pressure than ever to rein in inflation by hiking interest rates, a practice that reverberates through almost every aspect of the average American's finances. The central bank has long been expected to raise rates at each of its next two meetings, with one coming up next week. Now it's facing calls to get even more aggressive.The form that aggression could take is still up for debate, but one thing is clear: Inflation is getting worse at a time when it's already supposed to have peaked, and the Fed will have to be even more stringent if it's to solve the problem.A tougher stance, however, is bad news for many of the elements that precede a recession, ranging from stock prices to mortgage rates and credit cards to car payments.Investing is going to be a rollercoasterMarkets don't like uncertainty. A murky future breeds volatility, and investors prefer clear outlooks.It's no wonder, then, that the Friday inflation report sparked a wave of selling on Wall Street. The higher-than-expected print confirmed many investors' biggest fear: that the Fed will have to slow the economy even faster if its to get a handle on inflation.That process will begin in earnest on June 15, when the central bank reveals its latest policy move. Yet uncertainty around the path of inflation, future Fed actions, and whether policymakers will slow the economy too much will weigh on markets for months. Brokerage accounts and 401k balances are already well off their 2021 highs. As the Fed ramps up its efforts, stock moves will likely get even frothier.Stocks also fare better when interest rates are low, as alternatives like Treasury bonds don't offer the same appeal in a low-rate environment. As the Fed takes action, many of the names that thrived when rates sat near zero will encounter new scrutiny.Riskier assets could face an even larger plunge. Cryptocurrencies broadly declined on Friday as well, pulling valuations even further from their 2021 peaks. As investors prioritize safe-haven assets and brace for slower economic growth, they're likely to pull cash from crypto and other uncertain markets.Mortgages, car loans, and credit card debt will get much more expensiveThe Fed's benchmark rate affects borrowing costs throughout the economy. With inflation jumping to new highs, interest rates on all kinds of products are poised to soar.For one, potential homebuyers hoping for a break will be out of luck. The housing market was practically inaccessible through much of the pandemic, as bidding wars and a nationwide inventory shortage boosted prices at a historic pace.The Fed is set to cool that rally with its rate increases, but that doesn't mean homes will be affordable. The average rate on a 30-year fixed-rate mortgage is up more than 2 percentage points from the end of 2021. For potential buyers, that means financing a purchase will be much more expensive.Car loans will show a similar trend. Since most vehicles are bought with financing plans, rate hikes will directly translate to pricier rates for auto purchases.Even credit card debt will be harder to pay down. The average card rate sits at about 16.4%, and could rise to a new record high above 18%, according to Ted Rossman, senior industry analyst at Bankrate. Paying off a balance could then take longer and cost more in interest, especially for those only making minimum payments on their credit cards.A recession grows more likelyHigher consumer costs are one thing, but the bigger fear in economic circles is that the Fed is stuck. Doing too little to counter inflation could allow price growth to accelerate further. Today's inflation could even become permanent if long-term inflation expectations swing higher.Conversely, acting too aggressively could slow economic growth to a standstill. Demand could evaporate, leaving companies with diminished revenue. That would spark layoffs and quickly undo much of the pandemic-era recovery.Fed Chair Jerome Powell has signaled the Fed will prioritize cooling inflation over the labor market's recovery. It is "essential" to bring inflation lower, and the Fed "can't allow inflation expectations to become un-anchored," Powell said in a May 4 press conference.Whether the Fed can achieve a so-called "soft landing," in which inflation slows and unemployment remains low, has been the subject of intense debate for months. The May inflation reading, however, shrinks the target the Fed is trying to hit. The central bank must now hit the brakes on demand with even more force, and doing so comes with a fair amount of recession risk."The Fed's price stability resolve is going to be really tested now," Seema Shah, chief strategist at Principal Global Investors, said. "Policy rate hikes will need to relentlessly aggressive until inflation finally starts to fade, even if the economy is struggling."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJun 11th, 2022