Good Monday AM,

First and most importantly, a very happy and healthy New Year to anyone and their families who are celebrating Rosh Hashana. 

I hope we all got some ‘R’ and ‘R’ over the weekend.

The bruising last week was bad, and this week has started where last week’s left off. No relevant domestic economic data today, but we are not in a domestic economy. In a race to not be last to turn the lights off, look at the pretty picture below. Speaks volumes as to how connected the world is. The positive spin for the US is, we have taken the more aggressive path (our slope is steeper), and I do think we will be poised to come out of the recession sooner than other countries. That said, the world is going to slow down substantially over the next few quarters and years.

Speaking of raising rates:

UK bonds sold off for a second day on Monday, with traders ramping up bets on the scale of interest-rate hikes by the Bank of England. The plunge in UK gilts sent 10-year yields above 4% for the first time since 2010. The pound hit a historic low of $1.0350/dollar as the probability of sliding to parity with the dollar this year hit 60%. The UK’s foreign currency holdings are a fraction of the huge stockpiles built up by some of its peers, making unilateral intervention to prop up the pound a tall order.

The slide below caught my eye as it is really a proxy for the US Consumer and the S Economy. It is tough to imagine anything economically positive in the short term if this chart is correct. I believe the US Consumer is smarter than any economist, as they (and we all) deal with our budgets in the moment at ground level, not on a quarterly basis from an office as economists do.  

More of a talking point:

Apartment rents are falling from record highs across the U.S. for the first time in nearly two years, offering the prospect of relief to millions of tenants who have seen steep increases during the pandemic. August apartment asking rents nationally fell 0.1% from July, according to a report from property data company CoStar Group. It was the first monthly decline in rent since December 2020. Apartment-listing website Rent.com showed a 2.8% decrease in rent for one-bedroom apartments during the same month. Keep in mind that last month’s rent declines are modest compared with the 23% overall increase in rent since August 2020, according to Realtor.com, and there is no guarantee that rents won’t move up again. As more households feel priced out of the sales market because of rising mortgage rates and near-record sales prices, overall demand for rentals is unlikely to fall drastically. 

Not the year to be buying IPO’s…

Roughly 87% of companies that went public in the U.S. last year are trading below their offering prices, down more than 49% on average as of Friday’s close, according to Dealogic. By rough comparison, the S&P 500 is down 23% this year, while the tech-heavy Nasdaq Composite has fallen 31%. With the Dow Jones industrial average sinking below 30,000, it has wiped out everything investors had gained since November 2020

Please remain safe and stay healthy!