August 13, 2023

US Budget Deficit Tops 1.6 Trillion Dollars

📰 News Organizations

  • US Budget Deficit Tops $1.6 Trillion Amid Lower Tax Revenue, Higher Spending. In the first 10 months of the current fiscal year, the budget gap topped $1.6 trillion, higher than the $1.375 trillion deficit in all of FY 2022, according to the latest Monthly Treasury Statement.

  • U.S. Whole Prices Pick Up in July, PPI Shows. Wholesale prices rose 0.3% in July, higher than expected. A higher PPI means that prices for industrial products have increased. This can have a number of implications for the economy, including higher inflation and slower economic growth.

  • US Housing Market Recoups $3 Trillion Lost in Recent Slowdown. A shortage of listings has pushed up prices, boosting the total value of US homes to a record $47 trillion, according to a report from brokerage Redfin Corp.

  • Cruise, Waymo Get Approval to Expand Driverless Vehicles in San Francisco. A big win for the self-driving car companies. Waymo said after the vote it will begin charging fares for rider-only trips in the city in the coming weeks and will be gradually inviting more people on the wait list

  • FC Barcelona to List Media Unit in NY in $1 Billion SPAC Deal. The club agreed to combine the unit with a SPAC owned by Swiss private equity fund Mountain Partners. The deal is expected to close in the fourth quarter and the company will trade on Nasdaq under the ticker “BRME.”

  • UBS Sheds Swiss Government Aid for Credit Suisse Takeover. UBS said it had ended its participation in the programs after reviewing Credit Suisse’s noncore assets and funding at both banks. Analysts said it was a good sign that UBS isn’t expecting to register huge losses on the assets.

🐦 Twitter

  • The apartment/BTR/SFR story of the year is rental supply. SFR is outperforming both apartments and BTR. Interestingly, the publicly traded SFR and apartment REITs are performing far better than the market overall. Source.

  • Elevated inflation will persist as long as nominal wage growth significantly outpaces productivity growth. Wage growth data today shows 5-6% wage growth on a matched basis among those with the highest propensity to spend. Too high for inflation to durably fall to target. Source.

  • Relief continuing to build on the shelter front with a 3-month annualized change in CPI owners’ equivalent rent easing to 6% in July. Still, lots of progress is needed, but a marked improvement from a recent peak of ~9%. Source.

  • US Federal Government Spending has increased 234% since 2000 versus a 74% increase in overall inflation (CPI). That's an annualized increase in spending of 5.5% per year, more than double the 2.5% annualized increase in CPI. Source.

  • 8.2% of homes in the United States are now worth $1 million or more. This has doubled since June 2019 as the housing market continues one of its hottest runs of all time. Source.

Unemployment, recession, debt, inequality, deindustrialization & declining living standards aren't economic problems. They're symptoms of the only real economic problem: inflation.

Saifedean Ammous

📓 Online Publications

  • New Listings Near Pandemic Low for July. Seller listing activity remains muted, as newly listed homes continued to decline in July compared to the previous year by 20.8%. Potential home-sellers, locked in to previously low rates, are continuing to sit on the sidelines.

  • The Long-Term Housing and Population Shift. A key driver of the westward movement was the availability of water, and this boosted population growth in California, and in several other states like Arizona, and Nevada while a key driver of the southward movement was more air conditioning.

  • Bank Repossessions Rise. Just over 3,300 properties were repossessed by lenders in July. That was a 4% increase from June and a 9% jump from a year earlier. The slight decline in foreclosure filings is being seen by analysts as another sign of a rebounding housing market.

  • Home Prices Continued to Rise in Second Quarter. 60% of the nation’s 221 largest metro areas posted gains, but prices are still lower than a year ago, according to the latest NAR report. Many of the markets posting the largest gains in the second quarter were located in the Midwest.

  • Homes Are Staying On The Market Longer. For 55 weeks in a row, the time a home stays on the market is up compared with the same time one year ago. This benefits buyers. If homes sit on the market longer, eager sellers might be more inclined to accept a lower offer.

🎧 Podcasts

  • US Inflation Is Still On The Right Track. The US inflation report is largely positive, with notable progress in every category despite a slight increase in the headline number. The FT’s Kate Duguid says investors think that this will put the Fed on pause for September. Source(2:04)

  • Energy Drink Company Celsius Reported Another Good Quarter. Revenue surged 112% to a record 326 million, exceeding expectations. The stock also experienced notable gains, rising 20% over the past week and 72% year-to-date and was the second-largest energy drink sold on Amazon. Source(16:42)

  • The Dollar Is Poised To Serve As A Sacrificial Tool In Revitalizing The Economy. Dale Pinkert thinks that its decline could lead to nominal increases across the board. This might create an illusion of stability, yet these apparent gains, like a 30% market recovery coinciding with a 30% dollar decline, could belie the true extent of actual returns. Source(19:40)

  • First Class IPOs Are Coming. Brad Gerstner thinks that as the world normalizes, worries over Covid, hyperinflation, and economic instability are giving way to an uptick in M&A and a new wave of IPOs. Notable IPOs like Bytedance, Databricks, and Stripe are expected, alongside Unicorn IPOs. Source(56:04)

  • Disinflation Signs Are Appearing. Air ticket prices have dropped 18% year-over-year and there's actual disinflation in China. This could lead to surprise over the increased availability of affordable products and services, potentially impacting salaries due to reduced company earnings. Source(1:29:58)