Taxes, production, logistics, business, banking, federal control, government intervention into the economy, subsidies, foreign investment and other factors as required.
“Rice prices are on the verge of hitting new 15-year highs as the damage effects of the El Nino weather phenomenon across Asia have damaged farmlands, leading to dwindling supplies.
Thai white rice 5% broken hit $640 per ton this week. These prices are back to levels not seen since October 2008. Prices are up over 50% since the start of 2022.”
Analyst Comment: India has been restricting Rice exports amid low production in an effort to curb potential shortages in the nation. Higher rice prices typically mean higher civil unrest. Stay tuned for increased protest activity and unrest throughout Asia, Africa and the Middle East.
“For the five days, from Thanksgiving Day to Black Friday to Cyber Monday, internet sales topped $38 billion, exceeding Adobe’s forecast of $37.2 billion.”
Almost 10% of those sales were through buy now pay later schemes.
Analyst Comment: Despite a freight recession and slow downs in real estate, consumer spending has remained strong. However, as savings has largely ran out, spending is being funding through credit cards, buy no pay later, loans on retirement accounts and other forms of credit. This level is spending is not sustainable, especially at current interest rates. We expect a sharp decline in consumer spending in Q1 to Q2 2024.
Median sales price for new single-family homes dropped 3.1% from October and is down almost 18% from a year ago. Meanwhile the number of new houses sold continue to drop while inventory rises.
Analyst Comment: Real estate has a lot more bleeding to do before the bubble fully deflates. The bigger question is how much of banking will it take with it, and how much damage will the fed and the gov let happen before turning the money printers back on?
“California landlords are owed at least $1.8 billion in unpaid rental debt, ranking the state number two in the nation for total rental debt as COVID-19 era eviction moratoriums have ended, with evictions on the rise in some areas.
Los Angeles landlords alone are owed an estimated $860 million… In New York, which has the most rental debt in the nation estimated at $1.9 billion, 19 percent of households were behind on rent in September, with the state consistently above the national average for the past three years.”
“The IRS announced on Tuesday that it is delaying a controversial tax reporting requirement targeting Americans who made more than $600 online through third-party payment apps like Venmo or PayPal.
The rule change – approved by Democrats in March 2021 with the passage of the American Rescue Plan – would have required payments platforms, including Venmo, PayPal, Etsy and Airbnb, to send Form 1099-K to the IRS and users if their transactions totaled more than $600 over the course of the year.
Instead, the IRS will treat 2023 as “an additional transition year,” meaning that payment apps will not be required to send users Form 1099-K unless their gross income exceeded $20,000 or they had 200 separate transactions within a calendar year. Beginning in 2024, that basic reporting threshold will be increased from $600 to $5,000.”
“Toyota car buyers repeatedly complained that they took out auto loans through the automaker’s financing arm but then faced incredible hurdles when they tried canceling extra insurance products that boosted their monthly car loan payments.
On Monday, the Consumer Financial Protection Bureau announced that the consumer watchdog agency ordered Toyota Motor Credit to pay $48 million to harmed borrowers.”
Almost 15% of Europe’s natural gas continues to be imported from Russia. Despite all the sanctions and crackdowns, Europe is still reliant on Russian energy products.
Shipping giant Maersk has now cut 10,000 jobs or 9% of its workforce amid “worsening market conditions.”
Total Auto Loan balance have doubled from around $800 billion in 2008 to $1.6 trillion in 2023.
Meanwhile, 60-day delinquencies are up past 6% for Subprime while prime auto loans maintain a very low delinquency rate.
Analyst Comment: Regional banks, commercial real estate, freight, tech, residential housing, and auto loans and the most troubled sectors. With layoffs hitting across multiple sectors, in a few months delinquencies will likely climb on mortgages and auto loans, putting additional pressure on banking.
The Federal Home Loan Banking system, which pushed hundreds of billions of dollars into small banks during the banking collapse earlier this year, is pulling back on these loans:
“…during the week beginning March 13, 2023, the FHLBanks funded $675.6 billion in advances, the largest one-week advance volume in FHLBank System history.”
Analyst Comment: Regional banking has remained in severe distress and has only survived through massive liquidity injections. If those are pared back, it’s going to get ugly in banking again.
“For global sugar markets, it’s beginning to look a lot like one of the worst shortages in history.
Consecutive years of deficits, weather damage in key crops and shipping bottlenecks are reminding the world’s top sugar trading company of 2010 and 2011, when prices of the sweetener hit a three-decade high…
India isn’t expected to ship any sugar for the season that just started, a shift from two seasons ago when exports were as much as 11 million tons. That means markets are depending on Brazil, Angelo said, making prices extremely sensitive to issues like untimely rains that threaten to disrupt harvests or delay ship loadings.
Sugar is already piling in Brazilian ports when the country’s infrastructure is stretched to the maximum capacity. Bumper soy and corn crops are making the sweetener compete for space in ports and railroads, while recent heavy rains increased the amount of time ships have to wait to load.”
“General Motors has reached a tentative deal with United Auto Workers to end their strike, GM and the union confirmed Monday.
GM joins Stellantis and Ford, which reached deals in the last week.
The tentative agreements, which must be ratified by union members at each of the respective carmakers, could end the strike against the Big 3 that began last month.”
“GDP, adjusted for inflation (“real GDP”), jumped by an annualized rate of 4.9% in Q3 from Q2, following the 2.1% increase in Q2 and the 2.2% increase in Q1, according to the Bureau of Economic Analysis today.”
Analyst Comment: GDP reporting has become very unreliable as the Biden admin is deliberately skewing GDP and employment figures to make the economy appear stronger. This is evidenced by the recent divergence in GDP and GNI numbers, where historically they are very closely correlated.
“The makers of three popular weight loss drugs, all of which have known physical and mental health risks, announced last week that they are testing the products for children as young as age 6.
Novo Nordisk, maker of Ozempic and Wegovy, and Eli Lilly, maker of Mounjaro, have approval for the drugs in the U.S. and European Union (EU) for people ages 12 and up.
Novo Nordisk is reportedly already in phase 3 trials with children 6-12, testing its Saxenda product, an older and less potent version of its bestselling drugs. Eli Lilly began recruiting children for its trials last week.”
“Lebanon’s national carrier Friday said it was cutting more than half of its flights as tensions along the border with Israel prompted more Western countries to warn against travel to Lebanon.”
Railroad giant CSX had $3.57 billion in third quarter revenue, down 8% year-on-year.
Analyst Comment: Just a few months ago, rail providers were overwhelmed with freight leading to widespread delays. The decline in top line revenue is further evidence of a recession in freight, and an early indicator of a wider recession in the US economy.
“Family insurance premiums for employer-sponsored health insurance have risen 7 percent on average to $23,968 this year… On average, workers contributed $6,575 toward their family premiums in 2023, up roughly $500 from last year…”
“Baby boomers are becoming homeless at rates not seen since the Great Depression. That’s according to fresh statistics from the Biden administration’s own Department of Housing and Urban Development…
While homelessness has been steadily growing in our once-great cities, older adults have historically been a very small percentage of this population. In the early 1990s, only about one-tenth of the homeless were over 65. Today, it’s half, and rising quickly.”
“The national median price of previously owned houses, condos, and co-ops fell to $394,300 in September, down by 4.7% from the peak 18 months ago, in June 2022, according to data from the National Association of Realtors (NAR) today.
Sales of previously owned houses, condos, and co-ops crashed to a seasonally adjusted annual rate of 3.96 million homes in September, the lowest since the depth of the housing bust in 2010.”
Analyst Comment: The most interesting thing is many houses aren’t moving. People are holding onto existing properties purchased under lower mortgage rates. With time, that will change. There is a tsunami of underwater rentals and Air BnBs that will soon come on market as desperate owners have to offload to try to stay solvent or through bankruptcy. That’s when the bubble really rips open.
“Pakistan‘s embattled national airline carrier this week cancelled dozens of domestic and international flights because it could not afford to pay its fuel bills, officials said Wednesday.
State-run Pakistan International Airlines (PIA), long accused of being bloated and poorly run, has found funds drying up as the government struggles with a balance of payments crisis caused by crippling debt repayments…
Decades of mismanagement and instability have hobbled Pakistan’s economy, and this year Islamabad was forced into yet another bailout from the International Monetary Fund (IMF) to avert default.”
“India, the world’s second-biggest sugar producer, extended its export restrictions in a renewed bid to protect domestic supplies, a move that’s likely to tighten the global market and raise costs for the food industry.
The government will continue its curbs on overseas shipments of the sweetener beyond Oct. 31, according to a notice from the Directorate General of Foreign Trade on Wednesday, confirming a Bloomberg News report last week.
India introduced a quota system in 2022-23 and limited sugar exports to about 6 million tons after late rains cut production, compared with an unrestricted 11 million tons a year earlier. It’s unclear at this stage the size of the quota, if any, for overseas shipments that will be allocated to millers for 2023-24.
Raw sugar futures are hovering near their highest level since 2011 on concerns about faltering supplies from India and Thailand. While the ban may cool India’s domestic prices, it’s a blow to global manufacturers of everything from fizzy drinks to chocolate and baked products.”
The city of Chicago is providing illegal immigrants up to $9,000 in rental assistance over sixth months.
“A bank run has begun in China at the Bank of Cangzhou on fears that the collapse of Evergrande made them insolvent.
Just a couple months ago, China’s largest property developer, Evergrande, filed Chapter 15 bankruptcy.
This week, Country Garden, another major Chinese developer, missed a debt payment.
All as China’s HY real estate index is down ~85% from its high.
Housing alone accounts for 25% of China’s entire GDP.”
“The Biden administration has warned U.S. banks and other financial institutions that they can’t reject illegal immigrants’ credit applications based solely or predominantly on their immigration status.
The Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) said in a recent statement that rejecting illegal immigrants for credit cards and various types of loans just because they are noncitizens is unlawful.”
“…air cargo market that has seen overall volumes fall by 8% to 10% since March 2022, finally hitting bottom in the late summer. Airfreight shipping prices have been 40% to 50% lower than last year for most of the year.”
Canada’s housing bubble is beginning the deflate… slowly.
“The Canada Home Price Benchmark Index for single family houses in fell for the third month in a row, in September by 1.3% from August, after having dropped by 1.1% and by 0.5% in the prior two months, to $815,300 (all prices in Canadian dollars).”
“Scientists have used the gene-editing technology known as CRISPR to create chickens that have some resistance to avian influenza, according to a new study that was published in the journal Nature Communications on Tuesday.
The study suggests that genetic engineering could potentially be one tool for reducing the toll of bird flu, a group of viruses that pose grave dangers to both animals and humans. But the study also highlights the limitations and potential risks of the approach, scientists said.
Some breakthrough infections still occurred, especially when gene-edited chickens were exposed to very high doses of the virus, the researchers found. And when the scientists edited just one chicken gene, the virus quickly adapted. The findings suggest that creating flu-resistant chickens will require editing multiple genes and that scientists will need to proceed carefully to avoid driving further evolution of the virus, the study’s authors said.”
Analyst Comment: Genetically engineered livestock is coming fast. Beware.
“A sweeping de-banking wave has swept across Canada, affecting over 800 citizens in its tide since 2018, a number which includes hundreds who rallied behind the banner of the Freedom Convoy…
In a deeper dive into the numbers, it’s revealed that the financial shackles tightened around 267 bank accounts and 170 Bitcoin wallets belonging to Freedom Convoy supporters, ensnaring an estimated $7.8 million. “
“Rick Santelli: if federal spending doesn’t come down we could see 14% treasuries.
Last time that happened in the 1970’s it brought 11% unemployment and 18% mortgages. Today, with $33 trillion in debt, it would be catastrophic.”
Analyst Comment: Many US financial analysts assume that the US is the cleaniest dirty shirt: We may be screwed but every other country is in worse economic condition and will break first. That’s an assumption that deserves to be questioned. With high borrowing in Washington, and modest treasury sales by historic buyers like China already yielding higher Treasury rates, we may be closer to a debt doom loop than most analysts realize.
Saudi Arabia and Russia agree to extend oil production cuts through the end of 2023.
Analyst Comment: Higher gas prices aren’t going away soon.