September 25, 2023

S&P 500 Drops for Third Straight Week

📰 News Organizations

  • S&P 500 Drops for Third Straight Week. The S&P 500 fell 0.2% Friday and closed down 2.9% for the week. The rising Treasury yields weigh on stocks. The fear is that stronger-than-expected growth will force the Fed to maintain its restrictive stance.

  • FTC Poised to Sue Amazon for Antitrust Violations. The lawsuit to be filed this week is expected to focus on the marketplace, and Prime subscription. This marks the agency’s fourth swipe at Amazon this year for antitrust violations.

  • SEC slaps Citadel Securities LLC with $7 Million Fine. The fine is for violating order marking requirements. The SEC estimated that the firm marked millions of certain short sale orders as long sales, and vice versa, between September 2015 and September 2020.

  • Wells Fargo Preps for Wealth Battle After $1 Billion Turnaround. The banking giant is trying to lure hundreds of independent advisers to join its platform as part of a larger push to expand the firm’s business catering to rich clients.

  • Berkshire Sells 4.8 Million Shares of HP. The most recent sales occurred from Wednesday through Friday at an average price of about $27 a share. The sales last week were the first since the company finished buying the stock in April 2022.

  • McDonald's To Raise Royalty Fees For First Time. The fast-food giant hasn’t hiked royalty fees in nearly three decades. While the change won’t affect many operators initially, backlash will likely come, due to the company’s rocky relationship with its U.S. franchisees.

🐦 Twitter

  • Credit markets are suddenly painting a less rosy view of the future forward. As stocks plunged and Treasury yields rose, credit spreads also increased. US investment-grade bond yields are now at the highest levels going back to Nov., and edging toward post-2009 highs. Source.

  • With the surge in interest rates again today, the earnings yield for the Russell 3000 index is now below 10-year yields for the first time in 21 years. To add, the same measurement for the S&P 500 is only 16bps from turning negative. Source.

  • Without increasing oil and gas capex, we risk energy deficits and acute inflation across the commodities complex. This may lead to multiple oil-led energy crises in this decade, potentially much more severe than the gas crisis seen in Europe in 2022. Source.

  • Higher US yields, including a 10-year nearing 4.50%, are more of a problem for the rest of the world than the US itself -- directly, via more onerous borrowing costs, as well as indirectly (e.g., by pushing the dollar stronger). Source.

  • Limited for-sale housing is flowing through to tight single-family rental inventory and supporting rents, as most single-family rentals are for-sale to for-rent conversions via the MLS. Our national single-family rent index has stabilized recently at ~4% YOY new lease growth. Source.

  • Taking into account mortgage rates, incomes, and house prices, September 2023 stands out as the least affordable month for U.S. housing this century. Source.

Generational financial crises occur when the number of debt claims reaches extraordinarily high levels and interest rate cuts can't paper over it anymore.

Lyn Alden

📓 Online Publications

  • Uber Eats Will Accept SNAP EBT Payments in 2024. The Uber Eats announcement follows similar moves from other delivery services such as Instacart, Amazon, and Walmart, which already accept EBT payments, giving consumers more flexibility in their grocery shopping.

  • Black Knight: Mortgage Delinquency Rate Decreased Slightly in August. At 3.17%, the U.S. delinquency rate improved by 4 basis points in August. The number of properties in the foreclosure process is down 14,000 properties year-over-year.

  • Home Sales Last Month Were The Lowest Since August 2010. Sales in the West have declined against the long-run average more than in other regions (though the Northeast is not far behind). Transactions are holding up better in the Midwest and in the South.

  • Surprisingly Strong Jobs Report Sends Interest Rates Soaring. The drop in unemployment claims on the heels of hawkish Fed warnings sends 10-year Treasury yields soaring to a 15-year high, with mortgage rates likely to follow.

  • The Home Price Problem. With the supply side of home inventory being squeezed, home prices have remained stubbornly elevated. Until more homes hit the market, it seems that home prices are basically staying put, hovering at a median of $435,000 in August.

🎧 Podcasts

  • Surprising Energy Price Trends. Despite multiple factors that should have pushed energy prices lower in the past six months, such as the Elon-Saudi deal and geopolitical developments, energy markets have remained on an upward trajectory. Source(2:43)

  • Fossil Fuels Are Here To Stay. Fossil fuels represent a highly efficient fuel source for motor transportation, providing a substantial amount of energy relative to their volume. This high level of efficiency is likely to maintain their preference among people seeking efficient energy. Source(3:10)

  • Regime Change as Investment Opportunity. Investors should view "regime change" as an opportunity. This approach underscores the significance of ongoing research and data analysis for informed decision-making in financial markets.Source(3:55)

  • Lachlan Murdoch Inherits Media Empire. Rupert Murdoch is stepping down as chair of Fox and News Corp. This marks the end of an era for the powerful media billionaire, but he still promised to stay on as chair emeritus. Source(1:41)

  • Geopolitical Crisis: Canada vs. India. A crisis between Canada and India is threatening travel, trade, and economic ties after Canadian Prime Minister Justin Trudeau accused Indian government agents of assassinating a Canadian Sikh activist in British Columbia. Source(7:00)