Fir Point Wolf

Markets/Econ/Politics. (for compliance: Not financial advice, views are my own)

[Fir Point Wolf @firpointwolf]

What: the lack of CRE transactions since Covid have allowed REITs and landlords to mark-to-value their properties above their true value

Why it matters: lenders could see massive losses should borrowers default or sell the property at a steep discount https://t.co/z6yD2CAdy6

[Fir Point Wolf @firpointwolf]

Sprinkle in dried up savings and resuming student loan payments, and the average consumer is in a bind. Only the retired can save consumption.

[Fir Point Wolf @firpointwolf]

Gas prices seem to move the needle in September on the producer side. Expecting similar trend for Consumers.

[BLS-Labor Statistics @BLS_gov]

PPI for final demand advances 0.5% in September; goods rise 0.9%, services increase 0.3% https://t.co/dyytPa3BcK #PPI #BLSdata

[BLS-Labor Statistics @BLS_gov]

PPI for final demand advances 0.5% in September; goods rise 0.9%, services increase 0.3% https://t.co/dyytPa3BcK #PPI #BLSdata

[Fir Point Wolf @firpointwolf]

Savings rate down to 3.5% and excess savings nearly depleted.

Labor market getting more competitive: openings are dropping and participation is rising.

Inflation is seemingly stickier, especially in housing. Wage power will soon dip below inflation. https://t.co/dUHFURVZUe

[Fir Point Wolf @firpointwolf]

After over a year of Chinese real estate being in a state of default, Chinese shadow bank misses payments/pauses redemptions. They manage ~$139B. https://t.co/LZDoo6b9e5

[Fir Point Wolf @firpointwolf]

The US default risk will continue to grow as the Treasury issues more debt at higher rates. Unfortunately the era of easy money is likely over. In a higher-for-longer environment, deficits will matter more. https://t.co/oWMm0rx11n

[Fir Point Wolf @firpointwolf]

Following increased tax on high-income earners (with no deductions) and slower than pitched progress on local issues, Portland sees tax revenue down $1B. Interested to see how many people buy condos at the brand new Ritz Residence downtown. https://t.co/Flucj6MFPe

[Fir Point Wolf @firpointwolf]

Germany GDP flat vs Q1 citing slump in demand for consumer goods and specialty products amid rising rate environment. France up 0.5% Q/Q.

Flat Q/Q GDP growth ends a 2 quarter stretch of declines. The ECB raised key rates 25bp yesterday. https://t.co/tQ4a55UpqZ

[Fir Point Wolf @firpointwolf]

Bond markets pricing for sustained uncertainty and possible 25 bps hike in June or July meeting… equities entering new “bull market” with SPY +20% off the bottom

Dollar holds strength following Canada’s 25bps hike and expected ECB hike next week https://t.co/kf3KzXzAxh

[Fir Point Wolf @firpointwolf]

China TTM share of US imports falls to lowest level since Oct 2006, APAC ex China, Mexico, and Europe share grows… the pivot to primarily Mexico is the next leg https://t.co/ZClKE5pos9

[Fir Point Wolf @firpointwolf]

Good recap from BRK annual meeting - Occidental, US default, and Taiwan https://t.co/nif2sSDRhq

[Fir Point Wolf @firpointwolf]

Fed expected to raise 25 bps on Wednesday bringing Fed Rate to 5-5.25%.

Market/media signaling this is the end of the hikes, but further tightening pre-recession could win the inflation battle and give the Fed more room to cut rates down the road https://t.co/UERjbqZ45f

[Fir Point Wolf @firpointwolf]

RIP Decentraland https://t.co/XtN2xhGTdo

[Fir Point Wolf @firpointwolf]

What: High end vacancies are rising

Why it matters: Higher vacancy rates put pressure on landlords ability to service debt

The impact: more defaults in the Commercial RE space unless landlords refi at higher rates or sell https://t.co/l4HTGAUsF6

[Fir Point Wolf @firpointwolf]

The only rate cut scenario is systematic failure and widespread contagion (which I believe would come from Commercial RE and shadow debt)… that being said there would be more capitulation before cuts https://t.co/60eQMQ2oIE

[Fir Point Wolf @firpointwolf]

Interesting housing price disparities between East and West - whether due to job market mixes, zoning laws, or general state level politics, the west coast is seeing prices fall https://t.co/ZTwTVbMwGT

[Fir Point Wolf @firpointwolf]

What: Inflation is back on the rise in the UK

Why it matters: the ECB raised 50 bps last week, and today the Fed decides hike-or-hold (cons 25 bps raise)

Kicker: The Fed is stuck between its mandates of financial stability and stable prices https://t.co/INyAgPngd1

[Fir Point Wolf @firpointwolf]

What: defaulted Chinese RE developers owe international bondholders

Why it matters: last year developers missed payments on $30B worth of bonds held by global investors

The sector remains soft with unit sales up YoY for the first time since mid-2021 https://t.co/SejckUkPPC