Market Update 10.10.22

01  The Fed has indicated they could make a fourth increase of 0.75 point at their Nov. 1-2 meeting and raise the rate above 4.5% early next year. Many economists feel the FED is not giving these hikes enough time to evaluate their impact and could do more damage to the economy than is necessary to bring down inflation. Some Fed critics say the current surge in inflation is the result of global disruptions rather than an overheated U.S. labor market, and they are pointing to signs that prices have begun to fall for a swath of goods and services, including commodities, freight shipping, and housing. Housing costs have contributed notably to inflation in recent months amid large increases over the past year in residential rents. But housing demand is falling sharply as the 30-year mortgage rate nears 7%, a 16-year high.  A portfolio invested 60% in stocks and 40% in bonds is down nearly 20% this year.  (WSJ)

02  The 6 largest US banks by assets - JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Wells Fargo and Morgan Stanley - will collectively provision about $4.5bn in loan-loss reserves in third-quarter earnings. (FT)

03  Economist Peter Diamond, winner of the Nobel Prize in economics in 2010, and considered by his peers as among the smartest of economists, is concerned that the labor market is going through an historic transformation in the post-Covid pandemic economy – one that the Fed should not meddle with. And if the central bank does try to meddle, the damage could be enormous. His view is that the labor market is being hit by supply shocks, as American workers have gotten tired of harsh working conditions and are demanding change..... (Marketwatch)

 

04  Some popular home building trends appear to be continuing: Main floor primary suites and main floor guest suites and studies remain a trend within new construction as do large scullery pantries, wine bars and walls,....and impressive outdoor living spaces. (Triangle Business Journal)

05 The most searched architectural style on GOOGLE over the past years in major cities around the US is.......MID CENTURY MODERN (by far!) Second was 'Modern Architecture'.  For interiors, BOHO - or Bohemian - was searched most....Bohemian styles are defined by a lack of structure, opting instead for carefree layers of pattern, texture, and color. While there are some common practices with the bohemian look, there are no hard and fast rules like there are with modern or minimalist. Freedom!!!!!  (Architectural Digest)

06 In 2021 the Internet Crime Center received an average of more than 2,300 cybercrime complaints a day, about one every 37 seconds. Business email compromises, or BECs, a type of scam where hackers infiltrate corporate accounts to send fake wire requests, such as an invoice or a contract payment, targeting homebuyers by asking them to transfer their down payment to a title company or a lawyer handling the closing process. Instead—by missing an impossibly subtle detail in an email, such as a spelling error or an extra character, indicating it’s a fake—they mistakenly wire tens or hundreds of thousands of dollars to a hacker. BUYERS BEWARE! (BLOOMBERG)

 

07  A decade-long party for homeowners may be coming to an end. The cost of servicing mortgages in the UK, Europe and the US has spiralled at the same time as disposable incomes have been squeezed, and predictions of a downturn or even a house price crash are now common. Some predict a 10% price drop over the next 2 years, although this should vary substantially from area-to-area, property type , building, etc. While many compare this to the 2008 crash, one huge difference that all seem to agree with is that much tighter lending standards in the past decade do indeed make this moment different: Back then, over 14% of mortgages were highly leveraged with loan to value ratios equal to, or greater than, 90%. Since then, banks tightened their lending criteria with only 4% having the same borrowing levels today. And already the 'big money' is buying up any excess inventory 'bargains'.......combined with reduced construction and much, much lower inventory levels. (FT)

 

08  Here is Condé Nast Traveler’s 35th Reader’s Choice Awards for Best Big U.S. City: