News and my muse ~ SF CRE crisis, inflation, Debt Ceiling, Layoffs - Sonos, TrueCar & Citi

News and my muse ~ SF CRE crisis, inflation, Debt Ceiling, Layoffs - Sonos, TrueCar & Citi

• June is normally one of the best months of the year in trucking and sets the tone for the rest of the year. Unfortunately, its not providing much of a relief for struggling carriers. Trucking spot rates (net of fuel) are now lower than 2019.

• <The Kobeissi letter> BREAKING: Median asking rent for a US home rises 1.4% in May to $1,995/month. Meanwhile, the average new car payment is now $800/month. On top of this, the average American is paying $430/month in credit card debt. This means the average person is now paying $3,225/month for rent, credit card bills and a new car payment. Inflation is real.

• JPMorgan analysts estimate the US will need to borrow $1.1 trillion in short-dated Treasury bills by the end of the year, reports the Financial Times.

• <SF Chronicle> Westfield stopped paying its $558 million mortgage and is surrendering its namesake SF mall, the biggest in the city, to lenders in the wake of Nordstrom's planned closure and plunging foot traffic (down ~42% from 2019) and sales (down ~1/3)

• (SF) Overall, the city is forecasting a $728 million deficit over the next two fiscal years and as much as a $1.2 billion annual deficit by 2028. That could mean a lot of cuts to city services.

• <The Street> The billionaire Elon Musk sounds the alarm on the real estate market, saying it's suffering from higher interest rates while the economy has slowed sharply.

• <CNBC> Goldman posted almost $400 million in first-quarter impairments on real estate loans, according to Solomon

• Citi is making another 50 cuts in its London investment banking team. This is 5% of the 1,000 person headcount in that particular unit and follows "hundreds" of job cuts, amounting to 1% of Citi's total staff in March.

• This is a good overview of how 8 mega-cap stocks drive the growth in 2023. My muse - what happens to the rest? The economy could tank if they do not do well too.

• Exports from China shrank 7.5% yoy by USD 283.5 billion in May 2023, as global demand was insufficient to sustain a recovery in outbound shipments. Among major trade partners, exports to the US plunged by 18.2% from a year earlier, while those to the EU slumped by 26.6%.

https://tradingeconomics.com/united-states/imports Imports to the United States increased by USD 4.8 billion from a month earlier to USD 323.6 billion in April 2023, recovering from two consecutive months of decreases. Imports of goods went up by USD 5.2 billion, amid higher purchases of automotive vehicles, parts, and engines (up USD 2.0 billion), finished metal shapes (up USD 1.5 billion), nonmonetary gold (up USD 1.1. billion), organic chemicals (up USD 0.9 billion) and cell phones and other household goods (up 1.7 billion). On the other hand, imports of crude oil (down USD 0.8 billion) and natural gas (down USD 0.8 billion) decreased. Also, imports of services decreased by USD 0.4 billion, due to transport (down USD 0.4 billion) and travel (down USD 0.2 billion).

US imports look to be in a downtrend since Jan 2023. Let us monitor this closely.

• <CNBC> Sonos lays off 7%, or about 130 employees

• <NYTimes> In 2021, Chinese companies were responsible for 30% of foreign investment in Nuevo León, second only to the United States at 47%. Some of these will make finished products for sale in the US. But much is focused on a broader refashioning of the global supply chain.

• More weak data for #China China' #retail sales grew 12.7% y/y in May, vs expected 13.6%, prev 18.4%. #Industrial production rose 3.5% y/y in May, vs expected 3.6%, prev 5.6% Fixed-asset #investment grew 4% y/y in Jan-May, vs expected 4.5%, prev 4.7% for Jan-Apr

• <Yahoo Finance> Morgan Stanley analysts see a fall for commercial real estate ‘worse than in the Great Financial Crisis’—BofA disagrees for 3 key reasons

• <Automotive News> TrueCar is laying off nearly a quarter of its workforce and appointed COO Jantoon Reigersman as its new CEO to help the vehicle listings company amid a restructuring. The Santa Monica, Calif., company will cut 102 positions, or 24% of its workforce.

Unrealized losses of Banks' securities

Unrealized losses on bank balance sheets will get bigger. They are 6x what they were in 2008.

• <Forbes> 2023 Media Layoffs: Bell Canada Enterprises Cuts 1,300 Employees

• <CNA> The layoffs may impact up to 30% of its staff at the unit, including employees in U.S. SoftBank's Vision Fund unit, which has booked heavy investment losses, had headcount of 349 at the end of March, according to a company report.

• If I can summarize what we see in the market, we are in a bull run over weakening fundamentals. There is much to be both excited & cautious about.

• <CNBC> Fed Chair Jerome Powell: We’re constantly watching banks and credit conditions for our rate settings

• <Watcher Guru> According to report, the BRICS alliance has formally received applications from 25 countries to join the bloc.

• <Fox> National debt hits $32 trillion two weeks after debt ceiling deal The government can keep borrowing without any limit through 2024

@TigerStars

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