To The Moon

News and my thoughts from last week (16Sep24)

• Russia at the United Nations: If the decision is made to lift restrictions allowing Ukraine to strike inside Russia, it will mean war between NATO countries and Russia. 

  Is funding the defense industry more important than the peace of the continent? A pen can be mightier than a bullet - please continue to pursue peace through negotiations.

• The End of U.S. Dollar Dominance? Experts believe that an impending collapse of the Bretton Woods system—established post-WWII to tie the U.S. dollar to gold and stabilize global trade—has set the stage for seismic shifts in global finance. With Nixon’s 1971 gold exit, unchecked money printing began, leading to the U.S.'s spiraling debt and weakening global power. Now, BRICS nations are pushing for a new trade system free of dollar dominance, while crypto offers a decentralized alternative to traditional banking. Can the U.S. maintain its influence, or is a new financial era on the horizon? Source: ZeroHedge/Epoch Times

• DSV to create global logistics giant with $15.9 billion Schenker takeover - Reuters. Will there be more consolidation to come? Is there room for the smaller family-owned logistics businesses?

• We miss 100% of the shots we do not take. A good reminder from Howard Marks.

• Is it better to look at the market via people's psychology and behavior?

• MORE THAN 30,000 BOEING EMPLOYEES ARE SET TO GO ON STRIKE TODAY BOEING WILL HALT PRODUCTION OF MOST OF ITS AEROPLANE’S THIS WILL BE THE FIRST BOEING EMPLOYEE STRIKE IN 16 YEARS - X user Gurgavin

• Biden-Harris administration is finalizing plans to allow Ukraine to strike inside Russia. Russian President Putin said the US and NATO will enter a direct war with Russia if Ukraine uses Western-made missiles to strike inside Russia.

• Higher interest rates have created 63 'problem banks' and $517 billion in unrealized losses, FDIC says (June 2024) - Business Insider

• AMAZON HAS JUST RASIED ITS PAY FOR DRIVERS AFTER THEY THREATENED TO UNIONIZE PER WSJ 

  Is this inflationary?

• Should we be light on detail and heavy on slogans, or should we be doing vice versa? Thanks JDV for sharing this.

From X user OpenskiesX:

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U.S CPI (MoM) (AUG) ACTUAL: 0.3% VS 0.2% PREVIOUS - EST 0.2% U.S CPI (YOY) (AUG) ACTUAL: 2.5% VS 2.9% PREVIOUS - EST 2.5% U.S CORE CPI (YOY) (AUG) ACTUAL: 3.2% VS 3.2% PREVIOUS - EST 3.2% U.S. SHORT-TERM INTEREST-RATE FUTURES DROP AFTER CPI REPORT, AS TRADERS TRIM BETS ON FED RATE CUTS US AVERAGE 30-YEAR MORTGAGE RATE FALLS 14 BPS TO 6.29 %, LOWEST SINCE FEB 2023

• Mark Cuban: “If you tax unrealized gains, you're going to k*ll the stock market”

Some highlights from X user The Kobeissi Letter

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The Restaurant Performance Index (RPI) fell -1.3% in July to 97.7 points, the lowest level since the 2020 lockdowns. This index tracks the health of the restaurant industry in the US by measuring sales, customer traffic, labor, and overall business conditions. Since 2021, this metric has fallen by ~8.0%, marking the largest drop since it was launched in 2002. Such a low level in the index has only been seen during recessions. Americans are pulling back on dining out as prices have been sharply rising and recently hit new all-time highs. Since 2020, food prices away from home have increased by 27.0%, and fast food prices have jumped by 31.0%. Eating out is officially a luxury.

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What is happening in the housing market? The average interest rate on a 30-year mortgage has fallen from 7.8% to 6.2% in a matter of months. However, mortgage demand remains near 30-year lows, according to Reventure. Even as rates come down, buyers are not willing to step in to this market. It's only a matter of time before sellers will need to drop prices to begun spurring demand. Is the housing market at a pivot point?

Initial cost and total costs of ownership are part of the forces driving market demand. Price can fall to meet the demand, but we still have issues with limited supplies.

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Over the last 5 years, the median US home price has skyrocketed by ~40% to $445,000. At the same time, the median size of a home has declined by ~130 square feet, or 7%. To put this in perspective, a home in the US would cost a median of $160 per square foot in 2019. Now, the median home cost is $238 per square foot, a near 50% increase in 5 years. Meanwhile, a six-figure household income is now required to comfortably afford a home in the US. Housing affordability has never been worse.

Can the income catch up?

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The Bloomberg US Labor Market Surprise Index dropped to -0.7 points, its lowest in 13 years. This gauge measures reported job market data compared to consensus estimates. Over the last few months, the index has seen one of the sharpest drops in 18 years and sits at its second-lowest level since the 2008 Financial Crisis. This means most of the labor market data has surprised downward by a wide margin. Recent misses include non-farm payroll numbers, job openings, ADP employment, and ISM Services Employment. What is happening with the job market?

@TigerStars

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