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Succinct Summary: There are some signs that consumer spending may be softening, but policymakers are still very focused on fighting inflation. Financial markets are expecting additional rate hikes and showing signs of significant stress. The Fed may not have our back anymore, and that could lead to a prolonged period of weak financial returns.
Macro
There are some signs that consumer spending may be softening
“In June, we said that we were starting to see some small changes in customer behavior, but that it was difficult to separate them from the effects of post-pandemic normalization. We can now see tangible changes in behavior purely relating to increases in the cost of living. Whether it's switching to Tesco's own brand to take advantage of our great prices or making more subtle changes, such as switching from fresh to frozen, we can see customers prioritizing value wherever they can.“ - Tesco ($TSCDF) Group Chief Executive Ken Murphy
“We saw a big dropoff in July. And then that softness continued into August, where we ended up in a mid-teen decline for comps. And there's not one single thing that I can point to that we can say, oh, because this happened in July is why we saw the dropoff. I mean there's lots of, I think, pressures out there. I talked about the broad inflationary pressures. Obviously, consumers are having to make decisions -- I just think consumers are prioritizing their spend a little differently. But there's not one single thing that I can point to, like, oh, this happened, and that's why we saw the decline. I think it's just a continuation, kind of the deterioration of the overall consumer -- Moving into September, we're seeing the same softness that we saw in August " - Carmax (KMX 0.00%↑) CEO William Dash
“The lower end of the socio-economic levels is stressed right now and we are seeing that in terms of mix and accelerated private brands, which is a major focus area for us and the interchange between food service and food sourced at retail taking home is still very dynamic in this environment” - United Natural Foods (UNFI 0.00%↑) CEO Sandy Douglass
“Our front-end performance, however, trailed expectations due to cautious consumer spending in this environment and continued supply chain challenges” - Rite Aid (RAD 0.00%↑) CEO Heyward Donigan
“As discussed in our April and July earnings calls, we saw a notable change in consumer buying patterns beginning this March and April. This trend continued throughout the second quarter, accelerating in some categories, resulting in a larger overall slowdown in demand than we expected in our organic business. Consumers further tighten their purchasing patterns in some categories in response to higher-than-expected inflation on basics such as rent, gasoline, and food, and the impact of higher-than-expected interest rates rippling through the global economy -- Within our diversified portfolio, we can see consumers generally trading down or delaying purchases in some discretionary categories such as beauty appliances and home-related categories.” - Helen of Troy (HELE 0.00%↑) CEO Julien Mininberg
“It's no surprise that inflationary trends for food, energy and housing have affected restaurant traffic in the U.S. over the past 6 months. We saw similar restaurant traffic trends during the Great Recession as consumer discretionary income came under pressure. While traffic at quick service restaurants has held up relatively well, it has come at the expense of casual dining and full-service restaurants as consumers increasingly choose less expensive options when dining away from home." - Lamb Weston (LW 0.00%↑) CEO Thomas Werner
But policymakers still see inflation as stubbornly high
“On the price stability side of the Fed's mandate, inflation remains stubbornly and unacceptably high, and data over the past few months show that inflationary pressures remain broad-based. My focus, therefore, is on bringing inflation back down to our 2% target.” - Federal Reserve Governor Lisa Cook
“Inflation is very high in the United States and abroad, and the risk of additional inflationary shocks cannot be ruled out. In August, CPI (consumer price index) inflation on a 12-month basis was 8.3% in the United States, 9.9% in the United Kingdom, 9.8% in Sweden, 9.1% in the euro area, 8.7% in Mexico, 7.0% in Canada, and 5.7% in Korea.” - Federal Reserve Vice Chair Lael Brainard
"...we've been used to 2% inflation for the last 25 years, we have to get used to the fact that inflation is not going to be 2% anytime soon. it takes a long time as Paul Volcker said to get it out of the system." - Carlyle Group (CG 0.00%↑) Co-founder & co-chairman David Rubenstein
"This inflation is here to stay” - JPMorgan (JPM 0.00%↑) Asset & Wealth Management CEO Mary Callahan Erdoes.
Therefore, more rate hikes are likely
“[We even saw] the latest CPI numbers and -- we were surprised that inflation was still very pervasive and much stronger than people had predicted. Just reinforces our view, we've probably got another 150, 175 basis points of rates to go. So I started by saying, right, nobody has a crystal ball, nobody really knows. But it feels like there's still another 150-plus basis points to go in rate moves in order to get this type of inflation under control. The Fed has avoided using the (inaudible)-word right? But when their specific goal is to cool down consumer demand, that just sounds like recession in a nicer way. And so I think the central banks know there's really no getting around recession." - Apollo Global Management (APO 0.00%↑) Co-President Scott Kleinman
“Like when you think about where that sticky inflation is coming from. A significant amount of it is caused at least a part by the labor market. And we're going to need to get to a point where we see slack created in the labor market before we can start thinking more seriously about the Fed easing off. The problem is we're just not seeing that right now. Now for a couple of months, we did see the data starting to indicate that maybe it was getting a little bit softer, but even that in the last couple of months has reversed. And I think that's kind of driven a good bit of the sell-off that we've seen kind of since the rally from June, I believe, into what to August. You started to get stronger labor market data. And that just says that the Fed has space to keep fighting inflation, and that means more hikes” - Manning & Napier (MN 0.00%↑) Senior Analyst of the Global Strategies Group Jason Symoniak
“It will take time for the full effect of tighter financial conditions to work through different sectors and to bring inflation down. Monetary policy will need to be restrictive for some time to have confidence that inflation is moving back to target. For these reasons, we are committed to avoiding pulling back prematurely.” - Federal Reserve Vice Chair Lael Brainard
Inflation may start to slow soon
“...there are reasons to expect core goods inflation to slow in coming months. Wholesale used vehicle prices have declined considerably, but there is some uncertainty about how long it will take for that decline to show up in consumer prices. Similarly, new car prices should moderate over time as the production of new vehicles continues to ramp up. Overall, a broad range of goods have seen declines in supplier delivery times and freight prices. And core import prices have fallen in each of the past four months, driven by lower commodity prices and an appreciating dollar.” - Federal Reserve Governor Lisa Cook
“We're seeing some green shoots obviously in some commodities and I think that does bode well. We are obviously much longer into an inflation cycle than anybody hoped we would be. This thing is persisted longer than ever. But I do see positive things shaping up. But as you can imagine, when you contract in some of these commodities, those contracts don't necessarily drop off. At the very minute, you start seeing positive news on the forward curve. So that negative sourcing factor is -- it's just a reality of being at the end of one of these cycles. And the good news is, I feel good about how our purchasing team has managed this because when you're coming to the end of an inflation cycle, you don't want to be overly long, right?” - Conagra Brands (CAG 0.00%↑) CEO Sean Connolly
“While the strong dollar is curbing exports, a beneficial effect from the greenback’s strength is being seen via lower import costs. With supply chain delays also easing substantially again in September and shipping costs falling, upwards pressure on firms’ costs has moderated sharply, which will feed through to lower goods prices to consumers.” - S&P Global (SPGI 0.00%↑) Market Intelligence Chris Williamson Chief Business Economist
“It takes time for changes to come through,” - Costco (COST 0.00%↑) CFO Richard Galanti
As people still expect inflation to come back down
“I think I'm probably going to come at it from a bit of a more positive angle and say that one of the things you've got in the 1970s, that thankfully we have not seen now is inflation expectations becoming unanchored. So however you looked at it back then, forward-looking expectations of inflation came significantly off of the lows in the norms that they were at in the 70s, which made the Fed's job much, much harder than it would have been otherwise. If you think about that, if you think the prices are going to go up, you're going to demand more -- you're going to demand higher wages. Your boss is going to have to pay you more, potentially, and it quickly becomes kind of a self-reinforcing cycle. Thankfully, this time, it looks like, at least for now, to date, we have avoided that sort of scenario. I mean even when you look at inflation breakevens, those have come off their highs just in the last couple of weeks and months. So fortunately, on that front, I don't think the setup is the same now as it was back then, which is certainly a positive” - Manning & Napier (MN 0.00%↑) Senior Analyst of the Global Strategies Group Jason Symoniak
But the Fed doesn’t have our back right now
“We've clearly transitioned from the Fed "having our back" to the Fed being again inflation fighting machine and kind of looking at the drivers of inflation kind of what's going on under the hood, it's fair to wonder when that's going to change." - Manning & Napier (MN 0.00%↑) Senior Analyst of the Global Strategies Group Jason Symoniak
“All those factors that cause a bull market, they're not only stopping, they're reversing. Every one of them. We're going from QE to QT unless you live in England this week. They're really unfolding. So when I put all of that together, the one thing I bristle about when I hear people on your network, is they say: Well, I'm bearish, but I'm bullish for the long term. Look, you can have a period of 15, 20 years, 10 years where the market doesn't go anywhere. That doesn't mean you can't make money. You could have made plenty of money in the '70s. At various times we had two 60 per cent rallies. I'm not saying, you know, go get another job when you can't do stocks. I'm just saying we've had a hurricane behind us for 30 or 40 years, and it's reversing, and I wouldn't be surprised -- in fact, it's my central forecast -- the Dow won't be much higher in ten years than it is today” - Duquesne Family Office CEO Stanley Druckenmiller
International
The risk of nuclear war is now highest since the Cuban crisis
“I don’t think there’s any such thing as the ability to easily (use) a tactical nuclear weapon and not end up with Armageddon. For the first time since the Cuban missile crisis, we have a direct threat of the use of nuclear weapons if, in fact, things continue down the path they are going. We are trying to figure out what is Putin’s off-ramp. Where does he find a way out? Where does he find himself where he does not only lose face but significant power? -- We have not faced the prospect of Armageddon since Kennedy and the Cuban missile crisis. We’ve got a guy I know fairly well. He’s not joking when he talks about the potential use of tactical nuclear weapons or biological or chemical weapons because his military is, you might say, significantly underperforming" - US President Joe Biden
“Nuclear war probability is rising rapidly” - Tesla (TSLA 0.00%↑) CEO Elon Musk
Rate hikes are putting pressure on developing countries
“There’s still time to step back from the edge of recession. We have the tools to calm inflation and support all vulnerable groups. This is a matter of policy choices and political will. But the current course of action is hurting the most vulnerable, especially in developing countries and risks tipping the world into a global recession” - UNCTAD Secretary-General Rebeca Grynspan
The strong dollar will be a headwind to earnings growth
“The unfavorable impact of foreign exchange was reflected in the net sales decrease for our International segment” - Conagra Brands (CGA 0.00%↑) CFO Dave Marberger
“Reported year-over-year net sales were up 4%, including the FX headwind of $7.5 million, driven by the strengthening of the U.S. dollar, primarily related to the euro and GBP” - Enerpac Tool Group (EPAC 0.00%↑) CFO Anthony Colucci
“Q3 sales increased 3% from the year-ago period as anticipated. In constant currency, sales grew 6%...Now turning to our 2022 financial outlook…We also expect there will be a 3 percentage point unfavorable impact of currency rates on sales and a 2 percentage point unfavorable impact on adjusted operating income and adjusted earnings per share” - McCormick (MKC 0.00%↑) CFO Michael R. Smith
“Foreign currencies YoY relative to the U.S. dollar negatively impacted total and comparable sales as follows: Canada by approximately 5.3%; Other International by approximately 14.7%; and Total Company by approximately 2.8%” - Costco (COST 0.00%↑) Assistant VP of Financial Planning & IR
Financials
There are signs of heavy stress in the financial system
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The BOE stepped in to stop major dislocations in British financial markets
"So very simply, typically, government paper, especially in a developed market, is high-quality collateral that people can borrow against. So pension funds in an effort to increase their yields to meet their liabilities had levered up against their gilt holdings. Now we saw massively, massively outsized moves in the gilt market in response to policy proposals that we saw which led to a decrease in the price of gilts, which led to margin calls. Now when you get margin calls, you don't sell them if you want to sell, you sell that you have to sell and then the most liquid asset available happens to be gilts. So now you're in a situation where gilt prices are falling, so people have to sell gilts to meet obligations caused by fuel prices falling. And you can see how that leads to a vicious cycle very, very quickly. And the BOE had to step in and arrest that -- it's difficult to know what is going to break in any environment. What's less difficult to know is that when you're in an environment where things can break. And we kind of started here and maybe we've come circle with this. This is the type of environment where things can break. And that's an example potentially of that happening” - Manning & Napier (MN 0.00%↑) Senior Analyst of the Global Strategies Group Jason
Free money creates bad behavior
“I think it's a microcosm of everything we're talking about. We've had 30 trillion of QE globally over the last ten years. When you have free money and you have bond buying for that period of time, it creates bad behavior, okay? So the pension funds and the insurance companies, they're buying bonds, repoing, taking the repo money and levering that up with equities and all kinds of stuff to try and enhance their returns. And by the way, doing so when gilts were yielding, what, 2.8 and inflation is 10 or 15, that doesn't happen if you don't have the environment created the last ten years. So you're the Bank of England and you've got this situation on your hands now which is quite serious because I think 30% of mortgages there or at least 30%are heading toward being variable rate. What do you do? Well, what you don't do is go and take taxpayer money and buy bonds at 4% when your inflation rate is over 10. You don't cure inflation with an inflationary act. And buying bonds, you know, 7, 8, 9 points under the inflation rate, of course, the markets are curing it, because they've got a Band-Aid, everybody is blinking. But this is creating long-term problems down the road. That 30 trillion has created all sorts of stuff that's probably under the hood. I used this term a week ago, I didn't know about this thing happening, and you're going to see more of it because that's what happens during asset bubbles. Behavior changes.” - Duquesne Family Office Chairman & CEO Stanley Druckenmiller
Consumer
Supply chain dislocations are still leading to bloated inventories for retailers
“We're definitely feeling the effects of congestion in, particularly in our domestic distribution network right now. We're seeing that actually throughout the system, both as the product arrives from the port all the way down through to when it gets delivered to customers. And that's just creating innumerable challenges. For us, we're definitely seeing some inefficiency on the operating expense side of things. As we deal with that congestion, we're seeing issues with both customers taking deliveries on a timely basis and then their ability to process and then get into their own stores. So our expectation is, this will continue for another couple of quarters at least. In the interim, we're going to continue to see elevated inventory levels” - Skechers (SKX 0.00%↑ ) CFO John Vandemore
“...our North America inventory grew 65% versus the prior year, with in-transit inventory growing approximately 85%. This reflects the combination of late delivery for the past two seasons plus early holiday orders that are now set to arrive earlier than planned and a prior year that was impacted by factory closures in Vietnam and Indonesia. As a result, we are taking decisive action to clear excess inventory, focusing on specific pockets of seasonally late products, predominantly in apparel -- we expect this to have a transitory impact on gross margins this fiscal year” - NIKE (NKE 0.00%↑) CFO Matthew Friend
“Total inventories increased 43% compared to the end of the corresponding prior year period. The primary drivers of the increase are approximately one-third relating to COGS inflation and the normalization of last year’s unusually low inventory level. Another third of the increase relates to intentional earlier receipts of core inventory to mitigate supply chain risks and the U.S. implementation of a new ERP system. The final third was driven by an increase of goods in transit” - Levi Strauss (LEVI 0.00%↑)
Maybe the movie business isn’t dead
“...the highly anticipated follow-up to his 2019 hit Knives Out will be the first-ever Netflix film to debut across all three major US theatrical chains: AMC, Regal, and Cinemark -- The limited-time-only sneak preview event will play in approximately 600 theaters in the U.S. with additional theaters around the world” - Netflix (NFLX 0.00%↑)
“Streamers really want movies. Movies are driving platforms has, in my opinion, made the movie business economically stronger than the entire time I've been in the movie business. We have reacted to that by putting more capital into the movie business during the pap while everybody else was scaling back -- We're making more movies because we believe in the business and also attracting the best filmmakers because of the model. We have the best distribution scheme we have the best marketing” - NBCUniversal CEO Jeff Shell
Linear TV too?
“I think whenever there's a shift in businesses, people tend to get to the end of the movie without following the movie through. There's no question that linear is starting to decline you see it in your own behavior. But linear is still an incredibly important business and important to businesses and advertisers. Look at the NFL which we just renewed last year. Look at the numbers of the NFL or the Olympics. Linear is part of the overall ecosystem. [It produces] a lot of cash flow and a lot of viewers. People don't just go home and say, 'I want to watch linear or streaming. I want to watch a show.' sometimes it's a live NFL show, bingeing drama on the streaming service, sometimes watching a Chicago episode live because you saw it on peacock last week. It's more complicated than that picture. It's not over" - NBCUniversal CEO Jeff Shell
Neither is retail?
“Retail, we're also seeing a return to the mall, a return of the in-person shopper. So following a period of time during the pandemic, which had stay-at-home orders and forced store closures, e-commerce sales growth peaked in early 2021. And since that time, we've seen that growth come off dramatically. Physical retail, on the other hand, has picked up, as shoppers are able to return to in-person shopping again. And where we sit today, retail sales growth in physical brick-and-mortar stores is actually growing faster than e-commerce this year. And so where we sit is that consumer spending this year is up about 7% over last year, which was an exceptionally high year, and we're currently 31% above where we were pre-pandemic. What that has led to is a record number of new store openings. For the first time in almost 5 years now, we'll have new -- more new stores opening in the U.S. than closures. And these net new 2,600 stores will require an estimated 23 million square feet of space” - Brookfield Asset Management (BAM 0.00%↑) Real Estate Managing Partner & CEO Brian William Kingston
Holiday travel bookings are strong
“Well, right now, leisure travel has been well past where we were in '19. Interestingly, corporate travel is coming back to kind of 80% to 90% of where we were. We see our backlog roughly two or three months in front of us. What is of note on the leisure side is for the holiday period, we are seeing very strong, very early bookings into the United States by European travelers, mostly into Florida, for the Christmas period. And that's running at about 2x what it was this time last year. And so bookings have been positive out through the next couple of months, but equally to your question, in through the holiday period where it's proving quite strong” - Hertz (HTZ 0.00%↑) CEO Stephen Scherr
Cruise bookings are improving
“Since announcing the relaxation of our protocols last month, we have seen a meaningful improvement in booking volumes and are now running considerably ahead of strong 2019 levels. We expect to further capitalize on this momentum with renewed efforts to generate demand. We are focused on delivering significant revenue growth over the long-term while taking advantage of near-term tactics to quickly capture price and bookings in the interim -- Pricing for our 2023 book business is currently at considerably higher levels than in 2019, adjusting for FCCs. And it is very encouraging that since announcing our relaxation in protocols in mid-August, we have already seen a very meaningful improvement in booking volumes. We are now running considerably higher than 2019 levels. At the same time, we have seen a notable improvement in cancellation trends” - Carnival (CCL 0.00%↑) CEO Josh Weinstein
Only 7% of Americans have ever taken a cruise
“...only 7% of Americans have ever cruised. 7%." - Norwegian Cruise Line (NCLH 0.00%↑) CEO Frank Del Rio
Technology
The PC and semis market weakened a lot more than expected
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Tim Cook is not enthusiastic about the metaverse but is about AR
“I always think it’s important that people understand what something is. And I’m really not sure the average person can tell you what the metaverse is. I think AR is a profound technology that will affect everything. Imagine suddenly being able to teach with AR and demonstrate things that way. Or medically, and so on. Like I said, we are really going to look back and think about how we once lived without AR. Zoom out to the future and look back, you’ll wonder how you led your life without augmented reality,” Cook said. “Just like, today, we wonder: ‘How did people like me grow up without the internet?" - Apple (AAPL 0.00%↑) CEO Tim Cook
No cutting back on cybersecurity budgets
“Overall, we’re not seeing customers cutting back on the cybersecurity budgets, even in the middle market, given how critical it is to maintain their cyber defense. Therefore, there are no changes to the outlook that we have provided previously. We continue to expect the Cybersecurity business unit’s revenue to be broadly in line with fiscal year ‘22” - BlackBerry (BB 0.00%↑) CEO John Chen
Elon Musk will buy Twitter after all
“Buying Twitter is an accelerant to creating X, the everything app"- Tesla (TSLA 0.00%↑) CEO Elon Musk
Amazon is really an infrastructure company
"In terms of strategy, I'd say Amazon isn't really a retailer. Amazon is an infrastructure company. Investing in Amazon is like investing in utilities. That's basically what you're investing in. It just happens to do retail, but the fundamentals of it, its supply chain, it's the logistics, it's the fulfilment centers, it's the cloud base, it's the distribution systems for content. It's the devices. Again, just ways of basically sending software into people's homes. For me, Amazon is a utility business. In the end, retail is probably not that important to it -- Scale is the fundamental. I think that if you start looking at Amazon's business today, it's probably getting very close to one of the single biggest logistics businesses on the planet. With further moves into last mile logistics, and operations, there are ways that you can then leverage all of that third-party business; Amazon is now selling logistics services – or large parts of it – which gives you economies of scale on distribution costs and so you can lower the cost of distribution. I think that there's so many ways that, through scale, you can lower your cost of operations" - Amazon (AMZN 0.00%↑) former EMEA Finance Director
Healthcare
Hospitals have some challenges with staffing
“...for the first time, I was getting to report some of our field from vacations now doctors taking vacations, which you always hear. And I shrugged my shoulders a bit, so I called some of our customers to check in, turned out to be true. Doctors had been taking vacations for a while. That on top of ongoing challenges, some of these hospital CEOs said, having a hard time staffing and recruiting more nurses. So they had a hard time in their OR suites. One hospital in particular in Boston told me they have 23 OR suites could only staff 15, although they had enough patient demand to really have all staff and the actual need it all as well for their own P&L, to keep cash flowing through. So a lot of that, Steve, challenges through to just serving their patients with a challenge as ICU beds are full and nursing staff to fill us were a challenge -- we're seeing some of it come back. The whole vacation thing is we think behind us now is September has come. We've seen [amedotes] back the hospitals now are catching up on some of their patient loads that they want to take care of. But it hasn't swung dynamically, Steve. So we're seeing some positive trends in September, but I'll still say we are not normal yet. I think the caregivers are under still pressure." - AngioDynamics (ANGO 0.00%↑) CEO James Clemmer
Industrials and Transport
The state of the supply chain
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Hertz is seeing much lower maintenance costs on EVs
“From a financial point of view for Hertz, the maintenance is appreciably lower on the electric vehicles. We're seeing it 40% to 50% lower, just given the nature of the car itself. But demand is there, very strong, and across all” - Hertz (HTZ 0.00%↑) CEO Stephen Scherr
Materials & Energy
Governments are trying to put downward pressure on energy markets
“So we're in a situation now where energy prices as a whole are extremely elevated and weighing on businesses, weighing on consumer activity, and it's become a serious problem. I think we're entering a period now where governments are starting to respond. And that's what we saw with the U.K., right? We saw the U.K. essentially pledge uncapped liabilities to cap energy prices that tax cuts that followed that led to serious concerns about the fiscal situation in the U.K., and we saw what we saw the gilt market with the pound. Now you're starting to see similar programs being talked about and potentially rolled out in Continental Europe." - Manning & Napier (MN 0.00%↑) Senior Analyst of the Global Strategies Group Jason Symoniak
But it may not be so easy
"I struggle with understanding how effective an oil price cap on Russian oil will be. Intervening in complex energy markets is going to be very difficult. Govts need to consult with market experts on what they can and cannot do in terms of interventions -- Don't mistake current price signals as sustainable when making energy investments" - Shell (SHEL 0.00%↑) CEO Ben van Beurden
"If you think about it, we are transitioning to coal - affordability and availability is key" - Saudi Aramco ($ARMCO) CEO Amin Nasser
There is little spare capacity in oil
“Today there is spare capacity that is extremely low. When you erode that spare capacity, the world should be worried because there isn't going to be a buffer for any interruption, for any unforeseen events” - Saudi Aramco ($ARMCO) CEO Amin Nasser
Lithium and copper demand are skyrocketing
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Real Estate
Shelter is a sticky element of inflation
“...shelter inflation is a key driver of overall inflation. Moreover, shelter inflation is a particularly persistent component of inflation and why I am focused on closely watching shelter inflation in determining my outlook for U.S. inflation. Unfortunately, the message is that shelter inflation will likely remain high for several months, meaning overall core PCE inflation will continue to be persistently high.” - Federal Reserve Governor Christopher Waller
“So shelter CPI accounts for a very large part of the CPI basket. And until that number starts to roll, it's going to be really difficult to bring core services inflation lower. So the best -- I think the best thing to look at with regard to that is probably home prices. It's pretty cut and dry, pretty clean. And it tends to act with -- certainly with a lag typically 12 to 18 months, at least on the way up -- despite the fact that home prices have just started to roll, we shouldn't take that as any sort of win on the shelter CPI side anytime soon." - Manning & Napier (MN 0.00%↑) Senior Analyst of the Global Strategies Group Jason Symoniak
The housing market is significantly slowing down
“So far, the contraction in housing demand has been more pronounced than the changes in supply, and so inventories of homes for sale have increased. While inventories of existing homes are still low in historical terms, they have grown a lot for new homes. Based on the current pace of sales, estimates of the number of months of supply of new homes has shot up and is now nearing the peaks seen in 2008 during the previous housing cycle. The easing in housing demand can also be seen in a slowdown in house price increases. Nationwide, prices of existing homes rose by about 20% over the 12 months ending in May, while they rose at an annual rate of less than 10% in recent months --.While this market correction could be fairly mild, I cannot dismiss the possibility of a much larger drop in demand and house prices before the market normalizes” - Federal Reserve Governor Christopher Waller
Nuggets of Wisdom
Experience is a competitive advantage
"I would say that the more white you get in your beard and your hair, the more comfortable you get with opinion-based decisions. For those folks who are football fans out there: why is Tom Brady still playing quarterback at 45, even though, physically, he is playing with guys half his age? Because it is hard to fool him, and he's seen it all. I probably move faster now (in decision-making) than I did when I was younger” - Arm CEO Rene Haas
Ask the right questions
"The future may seem uncertain today. But I can't help but be optimistic. Because everywhere I look, I see potential. Yes, our world is complex and it is increasing day by day. It was an Italian mathematician who said: 'When things get too complicated, sometimes it makes sense to stop and ask yourself, did I ask the right question? I hope the aspiring innovators in all of us will take that wisdom to heart. Have you asked the right question? Are your values guiding you to the right answer? Because it's not enough to ask how people can improve technology, if we don't also ask how technology can improve people's lives." - Apple (AAPL 0.00%↑) CEO Tim Cook
Be skeptical
“And I learned early to question everything and everybody. When I first went to Wall Street I assumed all these people knew what they were doing, they were older, they were educated, they were experienced, it didn’t take me long to see that they didn’t know any more than I did. They would say things that just made no sense. So I learned the hard way that you have to do your own research, you have to question everything, and you have to be skeptical about everything, and fortunately, it paid off. I’m trying to teach my daughters, my children to question everything, to be skeptical, and not to accept what -- especially when everybody says something, that if everybody says to you the sky is blue, I urge them to go look out the window to see if the sky is blue” - American Investor Jim Rogers