The Fed announced another 75 basis points increase in interest rates on Wednesday. Jerome Powell during the FOMC's Press Conference said, "We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t.” Those words were like laxatives to the market. The market dropped more than 3% right after the meeting and hit new lows for the year. This should come as no surprise for anyone who reads this newsletter. Jerome has been very clear that his only objective at the moment is bringing inflation back to the range of 2%. To accomplish this, he is on his Paul Volcker (Fed Chairman who increased rates to over 20% and caused a recession to deal with inflation in the 1980s).
The US is not the only nation increasing its interest rates. Every other developed market minus Japan has announced rate hikes. I mean they all look like the old Houston Rocket team with James Harden with the way they are jacking up these rates. But much like that team, this is not great. This could cause a global recession next year as money tightens everywhere.
Market Results:
Tale of the Tape
Economy
Laid OFF
Depending on what part of the economy you are looking at, things can either look pretty good or look HORRIBLE when it comes to the labor market. In the world of Real Estate, things are looking about as bad as Man U looked at the beginning of the season. With interest rates hitting a 14-year high, new home purchases and refinancing of existing homes are falling faster than me, when I meet a beautiful woman. Buyers have dipped out of the market, although median home prices have fallen 6% from June from $413,800 to $389,500
Almost every real estate firm is either having major layoffs or closing up shop. Charmaine Steele told Axios that after being laid off by Better.com in March, she interviewed at EIGHT mortgage companies and got nothing. She also mentioned that shortly after those interviews, she found out those firms had layoffs as well.
Real Estate brokerage Compass has a second round of layoffs
Redfin, the popular real estate website, laid off 8% of its staff
Better.com has had four rounds of mass layoffs
Rocket Mortgage has had two rounds of layoffs
Mike Fratantoni, the chief economist at Mortgage Bankers Association, told Axios, "The housing market tends to lead the broader economy both into and out of recessions."
The good news: We should not see any spillover effects of the real estate market on the economy as a whole. There are much more stringent limitations on who could buy a house after 2008. Plus most people have their mortgage under 5%.
My Takeaway: Anything connected to an industry that needs access to easy money, is seeing a really hard time right now. Investors are getting tougher on startups and no longer providing unlimited capital for them to run their businesses unprofitably. Hence the layoffs we see from unprofitable tech companies and tech companies, in general, trying to sure up their balance sheet. Lenders and Banks are no longer getting new buyers for businesses or real estate so they are cutting costs (Goldman Sachs, JP Morgan, and Bank of America announced layoffs recently) to ensure their profits.
However, we are seeing hiring in segments of the economy that aren't enabled by cheap money. American Express just announced they will be picking up 1500 new software engineers, developers, and coders. This is after adding more than 3600 technical workers to date this year.
Regardless of where your career may lie in the economy, it is always a good idea to prepare when things are going good than when things go bad. As I always say get that emergency fund in place and be mindful of how you are spending your money. This is a reminder for me as well cause I cannot lie, I have kinda been on a buying spree recently. Life always comes at us much faster than we anticipate. Time to buckle in and get ready for a bumpy ride. Hope you got your seatbelts on.
Broken Record
Amazon sent a memo to its employees after its debut of Thursday Night Football broadcast on Prime Video. The memo stated they broke the record for Prime sign-ups over a three-hour period. Meaning this one NFL game generated more subscriptions for Amazon Prime than Cyber Monday, Black Friday, and even Prime Day. According to Jay Marine, global head of Amazon’s sports division, “By every measure, Thursday Night Football on Prime Video was a resounding success.”
My Takeaway: Amazon continues to find ways to get its claws into each and every one of us. Its latest claw is entertainment and media. Prime now has over 200 million subscribers. I am one of those subs and I can tell you, I do not plan on canceling any time soon. Especially after getting this Amazon Prime credit card. I am LOCKED IN! This is also why I have been buying the stock hand over fist while it continues to decline (NOT FINANCIAL ADVICE).
Big Tech is taking over Sports. Apple announced it will sponsor the Super Bowl halftime show with Apple Music and remember Apple already owns the rights to MLS and the MLB. This was a spot held by Pepsi for years. Apple is also in talks with the NFL to get the NFL Sunday Ticket which is currently owned by DirectTV. For Big Tech going into media is just another way to build out their ecosystem and ensure people use their platforms. Paying hundreds of billions of dollars is not a big deal when you can recoup that in one-quarter of good performance.
Stats of the Week
The number of paid sick days you get by law in the US
The US is the only advanced economy that does not offer any kind of paid sick leave
Some cities and states do enforce a sick leave policy
Why does the richest nation in the world not offer this?
Very simple, profits over people. As long as people are viewed as a cost center versus an asset, businesses will not put the dollars to invest in them
Plus businesses have the ear of the government through lobbying and campaign donations so don't expect any significant changes to happen soon
How labor is fighting back?
Last week, I talked about the railroad strike that was barely averted
Well, with labor markets being as tight as it is and workers being harder to find for businesses. It is creating the perfect avenue for more strikes to force the hand of businesses
Will this actually change the way the US operates?
I highly doubt it. Because it is extremely hard to herd cats and people are like cats with their own needs and expectations.
The number of books that were banned in the US schools last school year.
All the books fell into one of two categories, either the books dealing with race or the books that featured LGBTQ characters
Texas had the highest number of banned books with 801
Looking Ahead
Well too bad, we will be getting no relief next week. I expect the Stock Market to continue on its path of absolute destruction. As a 28-year-old, I am celebrating this moment in time.
Why?
Because I get to buy assets for a lower than their value or at least lower than what they were worth at the beginning of the year. To me, this is like buying my groceries for 20% off with nothing being wrong with the food I am buying. I have to buy food anyway, why not get it for cheaper? Same thing when buying assets that we have to buy in order to build wealth. So no freaking out, we have time to recover from this downturn.
My Favorite Indicator
On Tuesday, we get the updated numbers from the Consumer Confidence Index, which is my favorite indicator. Because as we have seen over the last year, things can be okay but how we feel makes things much worse than they appear. I think with gas prices continuing to decline, people will probably be feeling decent about the economy. Although inflation had a small uptick over the last month. Gas has a weird way of weighing on our minds more than any other thing we buy on a regular basis.
Sports I Care About Update
This week was International Break for club soccer, so another moral victory for Man U.
What is up with the teams I pull for this year?
Baltimore last week allowed Dolphins to have a 21-point comeback in the 4th quarter after dominating the whole game. 🤦🏾♂️ Just hope they don’t poop the bed again this week
Thank you for Rocking With ME
If you enjoy the newsletter SHARE IT.
Remember GENEROSITY > greed
God bless Each and Everyone of y’all
✌🏾
Extras
Read this from Axios
There was a brief but noteworthy moment when big bank CEOs testified before the House Financial Services Committee yesterday, Axios' Courtenay Brown writes.
Rep. Al Green (D-TX) asked the seven CEOs — who are all white — to raise their hands if a person of color would lead their respective banks in the next 10 years.
Just one did: Bill Rogers Jr., the CEO of Truist who took the helm last year.
Hurricane Fiona over the last weekend felt upon Puerto Rico and knocked out power to almost the entire island
It is just a bit over 5 years since Hurricane Maria hit PR had and caused a major issue with power and infrastructure.
They had just barely gotten everything back up and running
PR is not the only place getting wrecked by Fiona. The Dominican Republic is also getting hit hard by the Hurricane as well
Also, Japan is facing a "super typhoon", 9 million people have been told to evacuate their homes.
All this is more signs of the Climate Change kicking into high gear. 1 in 1000 year storms are quickly becoming every year storm
Just pray for those families affected by these terrible situations
By as soon as 2070, if not sooner, Christians will no longer be the majority in culture in the US. This is according to a new research by the Pew Research Center. This makes sense, the US is an oddity on the global stage. It is the only rich nation that has such a large population of people that still claim to be Christians or Spiritual. All that has been changing and will continue to change moving into the future. As of 2020, 64% of Americans were Christians but if my social circles are anything to go by, that number is dropping fast. I am a Christian and honestly it makes sense that the numbers should be declining. Biblically speaking, Christianity was never a religion or faith of the masses.