The Higher Standard

Latest Episodes:

Inflation Breakdown and How to Interview for a Job Jul 18, 2023

Show notes

Goldman Sachs has embraced a new plan to avoid a third straight quarter of disappointing investors on earnings day. Breaking with its own long-standing convention, Goldman executives have been actively downplaying expectations for results that will be disclosed next week. The outcome: Analysts have slashed their estimates for quarterly profit by almost half since mid-June — the biggest revision before an earnings report under CEO David Solomon. That translates into one of the steepest profit drops among peers, and a return on equity that could slip below 5%.

In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss an analysis by Realtor.com indicating that rent in the 50 largest U.S. cities is now cheaper than it was a year ago, with significant decreases in southern cities that were real estate hotspots during the pandemic. Median rent prices in these cities dropped by 0.5% in the last year.

Chris and Saied look at a report stating that former Celsius CEO Alex Mashinsky was arrested Thursday, as federal regulators announced his bankrupt crypto exchange Celsius would pay a $4.7 billion fine.

They also offer some thoughts on the consumer price index (CPI) which has increased 3% from a year ago, the lowest level since March 2021. On a monthly basis, the index, which measures a broad swath of prices for goods and services, rose 0.2%.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

Why one month of data is not enough for a 'wait and see' approach to the economy.
Why core inflation is a better metric, and why food and energy data is too volatile.
Goldman Sachs new tactic of downplaying its earnings.
And so much more...

Resources:

"US Inflation Hits Two-Year Low, Giving Hope for End to Fed Hikes" (Bloomberg)

"Goldman breaks its own rule to flag results much worse than rivals" (Bloomberg Business via Instagram)

"These are the US cities where the rent has fallen the most since last year" (CNBC via Instagram)

"Former Celsius CEO arrested, company agrees to pay $4.7 billion settlement" (CNBC via Instagram)

"Inflation rose just 0.2% in June, less than expected as consumers get a break from price increases" (Chart of the Day via Instagram)

"Inflation Eased to 3% in June, Slowest Pace in More Than Two Years" (The Wall Street Journal)

"Inflation rose just 0.2% in June, less than expected as consumers get a break from price increases" (CNBC)

Interest Rates, Yield Curve, The Banks, Outies & Conspiracies Jul 14, 2023

Show notes

There is good news on inflation in store for Americans. The Labor Department is expected to report that overall inflation fell to about 3% in June, the lowest in two years. Excluding volatile food and energy prices, core consumer price inflation is expected to drop to around 5%, an 18-month low, from 5.3%. Economists think core inflation could ebb further in coming months, to between 3.5% and 4%, depending on the price index. The bad news: Getting inflation down further from there, to the Federal Reserve’s 2% target, will prove difficult if the economy keeps chugging along. That could force the Fed to keep monetary policy tight until the labor market weakens.

In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss a Labor Department report indicating that nonfarm payrolls increased 209,000 in June and the unemployment rate was 3.6%. That compared with the Dow Jones consensus estimates for growth of 240,000 and a jobless level of 3.6%.

Chris and Saied look at comments from JPMorgan Chase CEO Jamie Dimon, following the winning bid for First Republic, a lender to rich coastal families that had $229 billion in assets, who claimed that "This part of the crisis is over."

They also offer some thoughts on Fitch analyst Chris Wolfe's assertion that half the country’s banks will likely be swallowed by competitors in the next decade.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

Why the printing of trillions of dollars by the Fed in 2020-2022 led to a spike in inflation.
Why over 40 million Americans will have to restart their student loan payments in the coming months.
Why the inverted yield curve is such an important topic.
And so much more...

Resources:

"Treasury yields fall as investors look to key economic data" (CNBC)

"America’s Biggest Banks Are Going to Need More Capital" (The Wall Street Journal)

"Everyone Wants Interest on Their Deposits. That’s Bad for Main Street Banks" (The Wall Street Journal)

"Last Mile of the Inflation Fight Will Be the Hardest" (The Wall Street Journal)

"Payrolls rose by 209,000 in June, less than expected, as jobs growth wobbles" (CNBC)

"Job openings fall by half a million" (CNBC)

"The American banking landscape is on the cusp of a seismic shift. Expect more pain to come." (CNBC)

BS Jobs Report, Bankruptcies, and Haroon Ends The Show Jul 11, 2023

Show notes

The Commerce Department is reporting that the US economy expanded at a much faster pace in the first three months of the year than previously estimated. Consumer spending accounts for about 70% of America’s gross domestic product, the broadest measure of the economy, so it’s nearly impossible to enter a recession when spending is growing. Over the pandemic, historic levels of stimulus cash boosted household income significantly. Spending, meanwhile, was severely curtailed as the economy shut down. Personal saving rates soared as a result, with US households amassing about $2.3 trillion in savings in 2020 and through the summer of 2021, according to Federal Reserve economists. That’s about $2 trillion more than they would have saved under normal circumstances.

In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss a warning from the Federal Trade Commission, indicating that scammers are likely to target student loan borrowers after the Supreme Court struck down the Biden administration’s debt forgiveness plan, and as loan repayments are poised to restart in the fall.

Chris and Saied look at a report from payroll processing firm ADP, showing that private sector jobs surged by 497,000 for the month, well ahead of the downwardly revised 267,000 gain in May and much better than the 220,000 Dow Jones consensus estimate. The increase resulted in the biggest monthly rise since July 2022.

They also offer some thoughts on comments from Epiq Bankruptcy, a provider of US bankruptcy filing data, which claims that Chapter 11 bankruptcy filings jumped 68% in the first half of 2023 from a year earlier.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

Why Forbes thinks inflation is keeping the housing market afloat for now.
Why the credit tightening cycle has not yet begun.
Why office mortgage delinquencies have suffered the biggest six-month spike in 20 years.
And so much more...

Resources:

(Chart of the Day via Instagram)

"The Fed can’t decide how much money US households have left" (CNN)

"Mortgage rates hit the highest point of the year" (Yahoo! Finance)

"America's economy rapidly shifts south" (Axios)

"Bankruptcy filings surge in first half of 2023 in US, Epiq says" (Reuters)

"CRE Nightmare For CMBS Holders: Office Mortgage Delinquency Rate Suffers Biggest 6-Month Spike Ever" (Zerohedge)

"Private sector companies added 497,000 jobs in June, more than double expectations, ADP says" (CNBC)

"Payrolls report Friday likely to show a jobs market that is still hot" (CNBC)

"Fed sees more rate hikes ahead, but at a slower pace, meeting minutes show" (CNBC)

"FTC warns about student loan scams following Supreme Court decision" (CNBC)

"Corporate America Faces a Bankruptcy Boom" (New York Times)

"Inflation Keeps The Housing Market Afloat — For Now" (Forbes)

"Some Fed Officials Supported Raising Rates in June" (The Wall Street Journal)

The Special 4th of July Episode Jul 07, 2023

Show notes

Millions of Americans will have to prepare to repay the entire balance of their student debt now that the Supreme Court has overturned President Biden’s loan-forgiveness plan. After a three-year pause in payments and months of uncertainty and legal challenges, the program won’t be allowed to move forward. The Biden administration’s forgiveness plan would have wiped out up to $20,000 in federal student-loan debt for qualified borrowers. The court ruled in a 6-3 decision Friday that the Education Department doesn’t have the authority to implement a program that would change student loans this way.

In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss comments by Wharton professor Jeremy Siegel, who says he is not ruling out an interest rate cut by the Federal Reserve by the end of the year, despite market expectations.

Chris and Saied look at a Commerce Department report, indicating that the core personal consumption expenditures price index, a number closely watched by the Federal Reserve, increased 0.3% for the month. On the year, core PCE inflation increased 4.6%, though the headline number was up just 3.8%.

They also offer some thoughts on data from Redfin, showing that nationwide, the median U.S. home sale price fell 4.1% ($17,603) year over year in April to $408,031. That’s the biggest drop on record in dollar terms and the largest decline since January 2012 in percentage terms. April marked the third consecutive month of year-over-year declines following roughly a decade of increases.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

The concept of emergency regulatory authority for the President.
Why US corporate bankruptcies are on the rise.
Why the only thing that will bring house prices down is more supply.
And so much more...

Resources:

"Supreme Court Throws Out Biden’s Student-Loan Relief Plan" (Bloomberg)

"US corporate bankruptcies are on the rise" (QZ)

"This economist says he can’t rule out a Fed interest-rate cut by year-end. Here’s why." (MarketWatch)

(Reventure Consulting via Instagram)

"Homes in Austin and Boise are Selling for $80,000 Less Than a Year Ago" (Redfin)

"Median Sales Price for New Houses Sold in the United States" (St. Louis Federal Reserve)

"Key Fed inflation measure shows prices rose just 0.3% in May" (CNBC)

"What the Supreme Court’s Rejection of Student-Loan Forgiveness Means for You" (The Wall Street Journal)

"People Hire Phone Bots to Torture Telemarketers" (The Wall Street Journal)

GDP Revised, Trillians of M&A & Don't Be a Richard Jul 04, 2023

Show notes

The U.S. economy showed much stronger-than-expected growth in the first quarter than previously thought, according to a big upward revision Thursday from the Commerce Department. GDP increased at a 2% annualized pace for the January-through-March period, up from the previous estimate of 1.3% and ahead of the 1.4% Dow Jones consensus forecast. This was the third and final estimate for Q1 GDP. The growth rate was 2.6% in the fourth quarter.

In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss data from Realor.com, indicating that the number of homes for sale this month was actually 7% higher than June of last year. However, in just the last week, that comparison went negative, with the number of homes for sale falling below year-ago levels for the first time in 59 weeks.

Chris and Saied look at a report from the Labor Department, shown that initial jobless claims decreased by 26,000 to 239,000 in the week ended June 24, lower than all the estimates given in a recent survey of economists.

They also offer some thoughts on cryptocurrency's lack of government regulation and the opportunities it offers to traders wishing to bypass government red tape. However its lack of formal oversight also makes it ripe for abuse.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

Why luxury watch prices are near their lowest level in two years.
Why positive GDP growth means the economy is in expansion mode.
Why mortgage rates are about to go higher.
And so much more...

Resources:

"First-quarter economic growth was actually 2%, up from 1.3% first reported, in major GDP revision" (CNBC via Instagram)

"World's dealmakers are down $1 trillion in one of worst years for M&A and IPOs in decades" (Bloomberg Business via Instagram)

"Dealmakers Adrift as $1 Trillion Vanishes in First Half" (Bloomberg)

"Prices for luxury Swiss watches are near the lowest in almost two years on the secondary market" (Businessweek via Instagram)

"House hunting is already tough. Guess what? It’s about to get harder" (CNBC)

"First-quarter economic growth was actually 2%, up from 1.3% first reported in major GDP revision" (CNBC)

"He lost $340,000 to a crypto scam. Such cases are on the rise" (NPR)

https://www.npr.org/2023/06/25/1180256165/crypto-scam-senior-victims-spirebit

"US Jobless Claims Drop by Most Since 2021 in Holiday Week" (Bloomberg)

"Airbnb Could Be in Trouble — Here’s What You Need to Know" (Architectural Digest)

San Francisco Needs Batman, Return To Office & Home Sales Jun 30, 2023

Show notes

In New York and London, owners of office towers are walking away from their debt rather than pouring good money after bad. The landlords of downtown San Francisco’s largest mall have abandoned it. A new Hong Kong skyscraper is only a quarter leased. The rot inside commercial real estate is like a dark seam running through the global economy. Even as stock markets rally and investors are hopeful that the fastest interest-rate increases in a generation will ebb, the trouble in property is set to play out for years.

In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss a prediction from Chapman University economists, calling for a mild national recession in the second half of the year, driving down the coastal community's year-end local median sales price to $885,000 — an 11 percent drop from $993,000 in June and 19 percent off the $1.1 million high of spring 2022.

Chris and Saied look at announcements from several big companies, including Apple, JPMorgan Chase, and Amazon, who are attempting new pushes to “return to office” after previous attempts foundered. However, the pandemic has showed that many jobs can be done remotely, while a tight labor market and successful pandemic policy has given employees the confidence to push for better working conditions.

They also offer some thoughts on data from Moody’s Investors Service, which indicates that corporate defaults rose last month, with 41 in the U.S. so far this year. That’s more than double the same period last year.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

Why office real estate values are heading for a sharp crash and likely won't recover by 2040.
Why average US office vacancies currently sit around 50%.
The Case-Shiller index shows the first year-over-year decline in 11 years.
And so much more...

Resources:

"Cinemark closing theater complex at Westfield" (NBC via Instagram)

"OC home prices expected to fall by 11% as recession looms" (TheRealDeal via Instagram)

"Silicon Valley vacancy jumps to 17% as tech firms shed floors" (TheRealDeal via Instagram)

"Return to office? How COVID-19 and remote work reshaped the economy" (Princeton University Press)

"Corporate bankruptcies and defaults are surging – here’s why" (CNBC)

"The World’s Empty Office Buildings Have Become a Debt Time Bomb" (Bloomberg)

"U.S. new home sales jump in May; median house price falls" (Reuters)

"U.S. Home Prices Posted First Annual Decline Since 2012 in April" (The Wall Street Journal)

"Airbnb CEO says this is ‘loneliest time in human history’ and we need to ‘rebuild physical community’" (Fortune)

"The office real estate crash will be so sharp and deep that Capital Economics thinks office values are unlikely to recover by 2040" (Fortune)

"The Debt Crisis Looming in Commercial Real Estate" (Bloomberg)

Titanic Tragedy, Jerome Powell is Grilled & The Data Is Talking Jun 27, 2023

Show notes

Fed Chairman Jerome Powell has affirmed that more interest rate increases are likely ahead until additional progress is made on bringing down inflation. Speaking a week after FOMC officials decided for the first time in more than a year not to push rates higher, the central bank leader indicated that the move likely was just a brief respite rather than an indication that the Fed is done hiking.

In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss a forecast by London-based research firm Capital Economics, indicating that US office buildings are unlikely to regain their peak pre-pandemic values until at least 2040 as demand for desk space weakens.

Chris and Saied look at a Labor Department report, stating that initial jobless claims held at 264,000 in the week ended June 17 after a slight upward revision to the previous week’s figures. This was above the median forecast of a survey of economists, who estimated 259,000 new claims.

They also offer some thoughts on data from S3 Partners LLC, showing that total US short interest, or the amount traders have spent betting against US equities, exceeded $1 trillion this month as the S&P 500 Index extended its advance. The tally reached the highest since April 2022 before retreating slightly with stocks down for a third straight day.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

Why the FOMC has never explained the reasoning behind the four separate 75-point rate increases.
Why housing makes up the largest component of the COnsumer Price Index (CPI) report.
The definition of a bull market.
And so much more...

Resources:

"Senator Elizabeth Warren pressures Federal Reserve Chair Jerome Powell on the SVB and FirstRepublic bank failures" (Bloomberg via Instagram)

"Higher Interest Rates Hit Home Prices Again" (The Wall Street Journal)

"Powell expects more Fed rate hikes ahead as inflation fight ‘has a long way to go’" (CNBC)

"Fed Chair Powell says smaller banks likely will be exempt from higher capital requirements" (CNBC)

"US Office Owners Get Dire Warning: Rebound Unlikely Before 2040" (Bloomberg)

"US Jobless Claims Hold at Highest Level Since October 2021" (Bloomberg)

"Short Bets on US Stocks Hit $1 Trillion, Most Since April 2022" (Bloomberg)

"Existing Home Sales Unexpectedly Improve in May Amid Multi-Family Gains" (MSN)

Dr. Doom's Ridiculous Glasses, MJ v. Prince and Why Economists are Late Jun 23, 2023

Show notes

US Federal Reserve officials struck a hawkish tone in their first comments since the central bank held the policy interest rate steady at its meeting this week but signaled that rate hikes will likely resume. Federal Reserve Governor Christopher Waller said that changes in US credit conditions since the failure of Silicon Valley Bank in early March were 'in line' with financial tightening that was already underway due to Federal Reserve interest rate increases - comments that downplayed the idea a worse-than-anticipated contraction in credit might make further Fed rate increases less necessary.

In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss a report by John Burns Real Estate Consulting, indicating that the monthly premium on home ownership is up to $1,030 per month — up 17 percent from this month last year, when the difference favored renters by $884 per month.

Chris and Saied look at the staggering $1.3 billion every day the government pays in interest on its debt. This means that a substantial portion of taxpayer money is being allocated solely to cover the interest costs of the national debt.

They also offer some thoughts on Economist Nouriel Roubini's doubling down on dire warnings about the US, saying the nation is headed for a recession as a combo of higher interest rates, sticky inflation, and a credit squeeze barrel the economy.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

Nouriel Roubini's assertion that recession is now 'certain.'
Why economists are saying say it's a near-certainty that housing inflation will fall.
Why the hiring boom is hiding the fact that employees are working fewer hours.
And so much more...

Resources:

"...there will 'certainly' be a recession: Nouriel Roubini" (Yahoo! Finance via YouTube)

"Fed policymakers deliver hawkish vibe after pause decision" (Reuters)

"Why economists say it’s a near certainty that housing inflation will soon fall" (CNBC)

"The government is paying $1.3 billion in interest on its debt every day" (Wealth via Instagram)

"Tech-Stock Boom Pits AI Against the Fed" (The Wall Street Journal)

"Lots of Hiring, but Not So Much Working" (The Wall Street Journal)

"Biden Touts Job Growth in First Re-Election Campaign Rally" (The Wall Street Journal)

"A recession is ‘at our doorstep,’ but investors are falling for a goldilocks scenario, Wells Fargo says. It ‘isn’t going to end all that well’" (Yahoo! Finance)

"U.S. Apartment Values 'Will Plunge A Further 20%,' Economists Say, But Wall Street Still Sees Major Upside In These REITs — Be Greedy When Others Are Fearful?" (Yahoo! Finance)

"Buying costs $1000 more per month than renting" (TheRealDeal via Instagram)