June 17, 2023

US National Debt Hits All-Time High of $32 Trillion

📰 News Organizations

  • US National Debt Hits All-Time High of $32 Trillion. The national debt as of June 16 is at an all-time high of $32.04 trillion, according to the Treasury’s daily statement. This represents about $25 trillion in debt held by the public and about $7 trillion in intragovernmental debt. While the US was able to avoid a default under the debt ceiling, the broader problem* is that we keep ignoring the growing debt itself.

  • Uber Introduces Video Ads in All Apps. Uber announces the introduction of video ads* in its primary app, which will be displayed while users wait for their drivers and during their trips, extending to tablets installed in specific Uber cars.

  • Music Publishers Sue Twitter for Copyright Infringement. Music publishers representing notable artists like Taylor Swift and Beyoncé file a lawsuit against Twitter, claiming copyright infringement due to the use of unlicensed songs in videos* posted by users, seeking damages exceeding $250 million.

  • Justice Department to Investigate PGA Tour's Deal with LIV Golf. The U.S. Department of Justice's antitrust division announces its intention to review the proposed merger between the PGA Tour and Saudi-funded LIV Golf, following a request from Democratic Senators Elizabeth Warren and Ron Wyden, sparking scrutiny over potential antitrust issues.*

  • Gas Prices Dip as Summer Travel Boosts Demand. With an average of $3.58 per gallon, down from last year's record high of $5, gas prices have eased as Americans embark on summer travel. Global oil prices have been influenced by recession concerns,* China's slow economic restart, and consistent Russian crude supply, resulting in prices around $75 per barrel, compared to over $120 last summer.

  • Micron Invests $600 Million in China Expansion Despite Blacklisting. Micron announces a $605 million investment to expand its operations* in China, including the acquisition of packaging equipment from Taiwan's Powertech Technology within an existing Micron plant and the construction of a new packaging and testing facility in the province of Xi'an, China.

  • Intel to Establish $4.6 Billion Semiconductor Facility in Poland. Intel reveals plans to invest $4.6 billion in constructing a semiconductor assembly and test facility in western Poland, as part of the European Union's efforts to bolster chip production* amid increasing geopolitical tensions.

  • Improbable Unveils Metaverse Plan to Compete with Microsoft, Meta. Virtual reality startup Improbable, backed by SoftBank, introduces its project called MSquared, a network of metaverses capable of hosting numerous users, aiming to provide a virtual space for living, working, and interaction, positioning itself as a rival to Microsoft and Meta.*

  • Binance Exiting Netherlands After Failing Regulatory Approval. Binance announces its departure from the Netherlands due to the inability to register as a virtual asset service provider with the Dutch regulator. The platform will no longer accept new users starting Friday, and services such as token purchases, trading, and deposits will cease from July 17.

🐦 Twitter

  • We’re missing 20% of the existing home sales market. I don’t know what level of mortgage rates or how much time it’ll take for it to come back but it’s a catalyst for increased economic activity someday. Source.

  • Over the past month, we have seen a sharp increase in positioning across Hedge Funds, Retail, Asset Managers, CTAs, and ETF Flows. The 4-week change in positioning reached the most extreme level we have seen in 7+ years (since early ‘16). Source.

  • The core structural drivers of inflation currently are 1) fiscal deficits and 2) supply constraints. Reducing the fiscal deficit, or increasing supply (i.e. energy abundance and AI/automation), are what directly tackle inflation. Everything else just suppressed it for a time. Source.

  • Gas station retail sales running out of fuel … y/y % change dropped to -20.5% in May, worst since the pandemic shutdown … rate is worse than drop during the 2001 recession, but same as where it was in early 2015 (no official recession, but an energy-driven earnings recession). Source.

  • The Fed Funds Rate is now over 1% higher than the US inflation rate. The last time monetary policy was this tight with a Fed Funds Rate above 0% was back in October 2007. Source.

  • Job cuts at the largest US banks this year are poised to surpass 11,000. “This is probably one of the most challenging job markets we’ve seen since the 2008 financial crisis.” Source.

Investment capital is the variance between what you earn and what you spend. If you spend everything you earn you will never have any investment capital.

Steve Burns

📓 Online Publications

  • Foreign Real Estate Investors Are Coming To Buy American Homes. Despite a recent decline in the dollar volume of existing-home purchases by foreigners, the demand for U.S. real estate from foreign investors is expected to rise due to increased wealth and a growing interest in U.S. assets.

  • US Housing Market Faces 39% Decrease in Available Homes. Redfin's analysis reveals a 23% drop in new listings, resulting in a 39% reduction* in the number of homes available for sale compared to the same period five years ago, indicating a significant shortage in the US housing market.

  • Lumber Prices Experience Approximately 25% YoY Decrease. Lumber prices, currently at $522 per 1000 board feet, have seen a seasonal decline, deviating from the typical price surge in April or May due to a slowdown in the housing market, resulting in a lack of significant price increases this spring.

  • Pixar's 'Elemental' Unlikely to Resolve Disney's Animation Challenges. Disney's animation problem, caused by competition from more innovative studios, cannot be resolved solely through another sequel. Disney's latest Pixar project, 'Elemental,' which portrays a love story between water and fire creatures, is not expected to have a significant impact on the audience, highlighting the larger issue Disney faces in the animation landscape.

  • US Net Worth Reaches $149 Trillion, Driven by Stock Market Rally. Following a slow 2022, the stock market's resurgence earlier this year contributed to a $2.4 trillion increase in net worth among U.S. investors. Despite the decline in home values during the first quarter, gains in brokerage accounts and retirement plans compensated for the losses, leading to overall growth in net worth. Read more here.

🎧 Podcasts

  • Ticketmaster, SeatGeek to Show Full Ticket Prices Up Front as Biden Targets ‘Junk Fees’. The Biden administration announced commitments by Live Nation and its Ticketmaster unit as well as SeatGeek to make pricing more transparent on their ticket-buying platforms later this year. Last year, President Biden urged for a crackdown on so-called junk fees that are tacked on to goods from concert and sporting-event tickets to hotel stays and airline tickets. Source(10:22)

  • Housing Market Resilience. Despite a significant shock, the housing market has remained resilient due to interest rate adjustments, resulting in stagnant existing home sales as homeowners are reluctant to switch from their lower-rate mortgages. This has led to increased demand for new homes, defying historical trends of housing market downturns. Source(14:31)

  • Expect Persistent Interest Rates And Inflation Through The Decade. A hard landing is improbable as long as China continues to print trillions of dollars through extensive quantitative easing. Considering their significant role in the global economy, if China were to increase money printing, it would lead to widespread inflation. Source(20:15)

  • Problems Brewing in Goldman Sachs. Recent articles on Goldman Sachs reveal multiple issues within the company. These include the discontinuation of Green Sky, a failed customer acquisition strategy, executives departing, and internal conflicts involving former CEO Blankfein expressing concerns about David Solomon's focus on non-work-related activities. Source(50:31)