October 28, 2023
GDP Growth Will Slow – Likely To Turn Negative
Forbes Money Markets GDP Growth Will Slow – Likely To Turn Negative Robert Barone Contributor Great Speculations Contributor Group Opinions expressed by Forbes Contributors are their own. Following Oct 28, 2023, 01:39pm EDT | Press play to listen to this article! Got it! Share to Facebook Share to Twitter Share to Linkedin U.S. real GDP growth BEA, RSM US The economic story of the week was the “hot” 4.9% GDP print. The chart shows this in relationship to the recent past, with the dotted line showing the long-run 1.8% growth rate of the economy. The 4.9% is an annualized number, so the actual growth from Q2 was just under 1.5%, and the year/tear growth was 2.9%. In his daily missive to subscribers on Friday (October 27), Economist David Rosenberg observed that immediately after the “hot” GDP release on Thursday morning, bonds rallied (prices rose) while stock prices fell. Normally, if the economy is expected to continue to be strong, the opposite should occur, as strong growth should continue a “hawkish” Fed stance, and, perhaps, even cause them to raise rates. Apparently, market players aren’t buying into either the “strong economy” or the “soft-landing” scenarios. Equities have been falling of late, down -10% from their end of July peaks. Back to GDP, the table shows the contribution by category. Category Consumption Universal Value Advisors Consumption Growth In our last blog, we discussed the role of “excess savings” in those blowout consumption numbers and noted that with the savings rate more or less back to normal after a big decline this past quarter, and credit card balances at all-time highs, another such quarter of consumption growth is highly unlikely (note on the left-hand chart the rather large down move in the savings rate in the last quarter). Personal Savings Rate & Record High Credit Card Debt on a per Capita Basis Haver Analytics, BEA, Rosenberg Research MORE FOR YOU ‘South Park: Joining The Panderverse’ Review — Disney Satire At Its Finest WWE SmackDown Results: Winners And Grades On October 27, 2023 Shock Leak Reveals Elon Musk s Mind Blowing X Plan To Replace Banks And PayPal Sparking Wild Critical Mass Bitcoin And Crypto Price Speculation Inventories, which accounted for 1.3 pct. points of the 4.9, are quite fickle. Any sign of a slowdown in consumption leads to inventory liquidation, i.e., items “on sale.” This bodes ill for the retailer as holiday shopping season commences. For this discussion, it is more likely that in next quarter’s equivalent table to the one above, inventories will be a subtraction from GDP. Note also that government spending added +0.8 pct. points. It is unlikely that this Congress will allow an even greater budget deficit than the one that existed last quarter. So, it is unlikely that we will see GDP expansion from this source; in fact, the opposite is likely. New Card and Request for Limit Increase Rejection Rates Haver Analytics, New York Fed, Rosenberg Research In addition, because the consumer has tapped out their savings, and, because many consumers are now up against or approaching their credit card limits, these sources of GDP won’t be available in Q4 (and likely not in Q1 and Q2 of 2024). Finally, rejection rates for new credit cards and rejection rates for increased limits are at or near all-time highs (see above charts). So, it isn’t likely that credit card spending will be a source of rising consumption in the near term. Housing The high interest rate scenario has clearly affected housing. Mortgage applications have been falling and are now near a three-decade low, off -18% from year earlier levels. Pending sales of existing homes did rise +1.1% in September, but that barely dented the -7.1% print from August. So, no, not anywhere near the readings from this past spring and summer. New home sales, at 12.3% growth in September over August, looks encouraging. But, to us, this looks more like home builders doing inventory liquidation, as interest costs to carry such inventory have skyrocketed. To clear inventory, builders are giving price concessions. The median sales price has been falling (-3.3% in September vs. August) and is down -12.3% from year ago levels. US Existing Homes Sales in Millions; US Pending Home Sales Index Universal Value Advisors The Fed The next set of Fed meetings are scheduled for the October 31-November 1. Markets have placed odds of a rate hike at 10%. Normally, such odds need to be at 50% or more for there to be any real chance of a hike. Nevertheless, this Fed is unpredictable (thus the 10% chance). Our view is that they will continue to “pause” but also continue the “hawkish” rhetoric (“higher for longer” etc.). Afterall, they do not want the bond markets to move rates down (in their estimation: “prematurely”). It is a game with the markets that the Fed created when they became “transparent” in 2012; now, besides making monetary policy, they must also play the role of a “maestro,” making sure the players (markets) are in sync. It remains our view that a Recession is imminent, and that the Fed should “pivot” now (begin to lower rates). There is a 0% chance of this at the upcoming meeting and for the one scheduled for December. As we have commented in our blogs over the last 6 months or more, the leading indicators are signaling Recession. This chart shows the tight correlation between them and GDP. Leading Indicators and GDP Conference Board, BEA, Charlie Bibello, Mauldin Economics This particular Fed, however, appears to be looking at lagging and coincident economic indicators. For example, the latest “hot” GDP reading may come into play in their decision making (despite good reasons like those above as to why such economic growth won’t continue). Lagging, Coincident and Leading Economic Indicators Haver Analytics, Conference Board, Rosenberg Research Other telling signs that a Recession is near include rising delinquency rates. The charts show that both credit card and auto loan delinquencies are approaching or are above their pandemic highs. Credit Card Delinquencies and Auto Loan Delinquencies Universal Value Advisors Manufacturing – in Recession Every survey of manufacturers of late tells us that sector is already in Recession. The latest three such surveys (Philly Fed, Richmond Fed, and Kansas City Fed) continued the saga. The Philly Fed index was -20.3 in October, in contraction now for seven of the last eight months. New orders, sales and inventories were negative, and while prices paid were up, prices received were flat. This implies an oncoming margin squeeze. The Richmond Fed Business Activity Composite fell to -15 in October from -5 in September. The only good news here is that prices received fell for the 10 th month in a row; again, implying a profit margin squeeze, but also signaling that inflation is becoming dormant. The Kansas City Fed Manufacturing Survey also showed weakness at a reading of -8, negative now for 13 months in a row. Like the other Fed surveys, this one showed negative readings for new orders, shipments, production, employment, delivery times, and backlogs. And, while prices received were flat, prices paid actually fell, the first time this has happened since May 2020. Inflation As noted above, the news on the inflation front continues to be positive. While there was no major inflation news this week, we continue with our view that inflation has been beaten. As we have detailed in past blogs, the CPI is biased by the use of lagging rental data (35 % weight) of up to a year. Rosenberg Research has calculated that if one were to use a current index, like that of Apartment List, today’s CPI headline rate of inflation would be at or below 1%. As a result, we are confident that, going forward, the monthly CPI headline numbers will continue to show progress on inflation. In addition, for those readers who subscribe to Milton Friedman’s theory that inflation is a monetary phenomenon, M2, for the first time in its history, has turned negative on a year over year basis. Driving this is the rapid fall in commercial bank lending and the Fed’s Quantitative Tightening (selling bonds from its portfolio) policy. From Econ 101, growing bank lending expands the money supply; and when bank credit turns negative, so does the growth of the money supply. In the end, it appears that the tide on inflation has turned. M2 YoY% Change & Commercial Bank Credit Universal Value Advisors Final Thoughts The financial markets look to have caught wind of something sinister. The 10-year T-Note yield, after displaying high volatility a week ago, calmed down somewhat this past week. The 10-Yr T-Note closed under 4.85% after flirting with 5% for much of the past two weeks. The S&P 500 is now off -10.1% from its end of July peak and Nasdaq and the Dow Jones are also off -11.9% and -9.0% respectively. And it isn’t any wonder: 1) The markets suspect a Recession is a strong possibility, the leading indicators and the manufacturing polls tell them that; and 2) the Q3 quarterly reports from major companies (tech being the exception), are downbeat. ( Joshua Barone and Eugene Hoover contributed to this blog ) Follow me on Twitter . Check out my website . Robert Barone Editorial Standards Print Reprints & Permissions
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Star Wars Director Says It's About Time A Woman Makes A Star Wars Movie
Jan 02, 2024
Oscar-winning documentary filmmaker Sharmeed Obaid-Chinoy is directing an upcoming Star Wars movie that brings back Daisy Ridley in the role of Rey. Obaid-Chinoy will become the first woman to direct a Star Wars film, dating back to the franchise's origins in the 1970s. Speaking about this, Obaid-Chinoy told CNN that she is "very thrilled" to make the movie and create something that is "very special.""We're in 2024 now, and I think it's about time we had a woman come forward to shape the story in a galaxy far, far away," she said.Obaid-Chinoy won Best Documentary, Short Subjects Academy Awards for Saving Face (2012) and A Girl in the River: The Price of Forgiveness (2015).In 2020, Lucasfilm boss Kathleen Kennedy told the BBC that a woman would eventually direct a Star Wars movie, saying that would "absolutely" happen, "without question." Victoria Mahoney was a second unit director on The Rise of Skywalker, but a woman has never claimed a top directing credit on a Star Wars movie.On the TV side of things, The Mandalorian has featured a number of female directors, including Deborah Chow and Bryce Dallas Howard. Chow went on to direct the Obi-Wan TV series, too.Another high-profile franchise that has never had a female director is James Bond. Producer Barbara Broccoli and Skyfall director Sam Mendes have both said they want to see a woman direct a future 007 film.As for Obaid-Chinoy's Star Wars movie, little is known about it apart from the fact that Ridley will come back to play Rey. It is expected that this film will be the first of the three new Star Wars films to come to theaters, possibly releasing in December 2025.According to a report, Peaky Blinders creator Steven Knight is writing the Rey movie, taking over for Damon Lindelof and Justin Britt-Gibson.
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NBA Names Clare Akamanzi CEO Of NBA Africa
Jan 02, 2024 15:29
The NBA named Clare Akamanzi – an accomplished business executive and international trade and investment lawyer – as CEO of NBA Africa. Akamanzi will start her position on Jan. 23, 2024, and report to NBA Deputy Commissioner and Chief Operating Officer Mark Tatum. In this role, Akamanzi will oversee the NBA’s business and basketball development efforts in Africa and will be responsible for continuing to grow the popularity of basketball, the NBA and the Basketball Africa League (BAL) across the continent, including through grassroots basketball development, media distribution, corporate partnerships, and social responsibility initiatives that improve the livelihoods of African youth and families. For the last six and a half years, Akamanzi was CEO of Rwanda Development Board (RDB), where she spearheaded Rwanda’s economic development by enabling private sector growth. Under Akamanzi’s leadership, RDB implemented several business policy reforms and initiatives that led to significant investment and development for the country, including through partnerships with the BAL, Arsenal FC, Paris Saint-Germain FC, FC Bayern Munich and TIME Magazine, among others. “Clare’s business acumen, international experience and familiarity with basketball and the NBA make her the ideal executive to lead our business in Africa,” says Tatum. “NBA Africa and the Basketball Africa League are well-positioned for continued growth, and under Clare’s leadership we believe these initiatives will transform economies, communities and lives across the continent.” “I’ve seen firsthand how sports can positively impact businesses, families and communities in Africa, and the NBA and the BAL are a perfect example of that,” says Akamanzi. “The NBA has done an incredible job growing basketball and the economy around it across the continent, and I’m excited about the enormous opportunities ahead to build on that momentum.” Previously, Akamanzi was Chief Operating Officer of RDB and Head of Strategy and Policy Unit, Office of the President of the Republic of Rwanda. She has extensive international trade, business and diplomatic experience, having previously worked for the Rwandan Government at the World Trade Organization in Geneva, Switzerland and at the Rwandan Embassy in London, England. Akamanzi has worked or studied in seven different countries and holds an honorary LLD from Concordia University in Montreal, Canada, in recognition of her work in Rwanda. She earned a master’s degree in public administration from Harvard University’s Kennedy School of Government in Cambridge, Massachusetts, where she was the recipient of three prestigious awards for academic excellence and distinguished contribution to the community: the Lucius N. Littauer Fellows Award, the Raymond & Josephine Vernon Award and the Robert Kennedy Public Service Award. In addition, Akamanzi holds a Master of Laws degree in international trade and investments from the University of Pretoria in South Africa, and a Bachelor of Laws degree from Makerere University in Kampala, Uganda. Akamanzi has served on several company boards, including the World Health Organization (WHO) Foundation, ECOBANK and Aviation, Travel and Logistics (ATL) company. She was recognized by Forbes as one of Africa’s Top 50 Powerful Women in 2020.
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