August 18, 2023

US Housing Affordability Hits Worst Point in Nearly Four Decades

📰 News Organizations

  • US Housing Affordability Hits Worst Point in Nearly Four Decades. The 30-Year Mortgage Rate in the US has moved up to 7.09%, the highest level since 2002. Elevated prices spurred by the supply crunch combined with higher rates, make this the least-affordable housing market since 1984.

  • Global Yields Reach 15-Year Highs as Rate-Hike Worries Build. Global bond yields rose with the US 30-year reaching the highest point since 2011 and other benchmarks returning to 2008 levels amid resilient economic data.

  • US 10-Year Treasury Yield Surges to Highest Level After Digesting Fed Minutes. The 10-year yield finished the Aug. 16 trading session at 4.29%. The highest close since October 2007. Higher yields tend to hurt stock prices since they make equity returns look comparatively less attractive.

  • Coinbase Wins Approval to Sell Crypto Futures in US. Coinbase has secured approval from the National Futures Association to operate a Futures Commission Merchant and offer access to crypto futures. The offering will launch within weeks.

  • Visa Faces DOJ Scrutiny for How It Prices ‘Token’ Technology. The payment giant’s policies are being probed for charging retailers more if they don’t use Visa’s proprietary “tokenization” technology. Merchants get charged more if they shun Visa’s tokens.

  • Walmart’s Sales and Profits Rise, Fueled by Consumers Looking for Deals. Sales grew 6.3% in the most recent quarter. The sales of groceries and health and wellness products increased from the prior year, continuing a trend of shoppers prioritizing necessities amid higher prices.

  • Amazon Is Imposing Fee on Sellers Who Ship Products Themselves. Thousands of third-party sellers who ship products themselves will start paying a 2% fee on each sale in October. That’s on top of the commission — usually 15% — that merchants already pay Amazon.

🐦 Twitter

  • Data from Bank of America show that savings and checking balances for income groups spanning $50k to >$250k are higher than they were in 2019. Those at top end of earning spectrum have seen slowest growth in savings balances. Source.

  • The Leading Economic Index declined in July for the 16th month in a row, the longest down streak since 2007-08. The Conference Board is now forecasting a "short and shallow recession in the Q4 2023 to Q1 2024 timespan." Source.

  • Exxon Mobil has $30 billion in cash equivalents that adjust higher with rate hikes, and has $37 billion in long-duration fixed-rate debt locked in at low rates. Their assets earn more interest than they pay on their liabilities, and that spread improves the higher rates go. Source.

  • United States Steel is up more than 3% today on rumors that ArcelorMittal $MT is considering making a competing takeout bid. This is the 3rd company to express potential interest in acquiring $X this week alone. Source.

  • The housing market affordability index is now ~10% below the 2006 lows. This is officially the least affordable housing market in US history. Even if home prices fell 30% from current levels, affordability would still be worse than pre-pandemic. Source.

  • A San Francisco Fed study estimates that US consumers have about $190 billion of excess savings left and that it'll likely be depleted during the current quarter. Source.

The reason rent control shoots asking rents to the moon: Incremental demand can’t act on the full supply of housing. Instead, it’s all focused on the tiny portion of the supply that happens to be vacant (due to turn-over or being newly-constructed) at any particular moment.

Moses Kagan

📓 Online Publications

  • Bitcoin Buckles 4% to $27.7K as Interest Rates Surge Higher. Among the factors behind the selling is a continued surge in global interest rates, particularly in the U.S., where the 30-year Treasury bond rose to 4.42%. That's helped put a damper on risk assets in general.

  • Binance Shuts Down Crypto Payments Service Amid Refocus. Binance shuts down its buy-and-sell service Binance Connect. The service was disabled on Aug. 16 as the crypto exchange wants to refocus on its main products and long-term goals.

  • Singapore Finalizes Regulatory Framework For Stablecoins. MAS said stablecoins issued in Singapore must track a single currency in the form of the Singaporean Dollar or a G10 fiat currency. It aims to facilitate the use of stablecoins as a credible digital medium of exchange.

  • PayPal Teams Up With Ledger On Fiat Onramp For US Users. Ledger Live users can now purchase BTC, ETH, LTC, and BCH via a PayPal account, subject to state laws. PayPal noted that users who have previously purchased crypto via a PayPal account can access the service.

  • Tether Discontinues USDT Support on Bitcoin, Kusama, and Bitcoin Cash. It's discontinuing support due to the lack of significant traction over an extended period. The company said it remains committed to the Bitcoin ecosystem, with a focus on the RGB protocol for future growth.

  • First EU Spot Bitcoin ETF hits Euronext Amsterdam Exchange. Europe will welcome a first-ever spot Bitcoin ETF after the long-expected launch of Jacobi Asset Management’s Jacobi FT Wilshire Bitcoin ETF. The new ETF is set to trade under the BCOIN ticker.

🎧 Podcasts

  • UK Inflation Slows To 6.8% In July As Energy Prices Fall. That was thanks to lower gas and electricity costs. But if you strip out volatile energy and food prices, core inflation still looks concerning. Wages are going up and companies feel they have to get higher revenues to pay those wages. Source(1:20)

  • Fitch Cuts WeWork Credit Rating Further Into Junk Territory. The US office space company’s rating is now even further in junk territory. Fitch said the change was because of worse-than-expected second-quarter earnings and the replacement of several board members with people who have backgrounds in restructuring. Source(5:22)

  • Food Delivery Struggles. Food delivery wanes as takeout and in-person dining gain favor, impacting brands like Sweetgreen, Kava, and Chipotle. Analysts link this trend to cost-consciousness and reduced lockdowns, discouraging couch-based delivery orders due to additional fees. Source(11:32)

  • Bond Market Signals Raise Concerns for Stock Market Outlook. Stocks generally struggle in recessionary environments, and if the bond market's signal aligns with this trend, confirmed by a bull steepening in the treasury curve, the outlook for stocks becomes less promising. Source(24:47)

  • Mortgage Rates to Plateau Due to Inventory Shortage. Erin Sykes thinks the mortgage rates will plateau for 1 to 2 years because of the inventory shortage in hot markets. She expects a pullback of prices in some markets in the range of 5-10% while other markets hold steady which will lead to mortgage rates plateauing. Source(43:15)