What we’re reading (12/17)
“Wall Street's Most Vicious Vultures Are About To Get Torn To Shreds” (Insider). “Over at Carlyle Group, distributable earnings — profits that can be returned to shareholders — fell to $367.4 million in the third quarter, down 43% from the same time last year. At KKR, distributable earnings in the third quarter were down 6.6% compared to the same time the year before, much better than the 23% year-on-year drop the firm reported in the second quarter. This summer, the ratings agency Moody's downgraded Blackstone, Apollo, and KKR because of their large commercial real-estate holdings (only 66% of US workers have returned to the office full time, most reports indicate).”
“Home Buyers Are Ready To Buy. But Sellers Aren’t Selling.” (Wall Street Journal). “Home sales this year are on track to be the lowest since at least 2011. But as mortgage rates retreated from nearly 8% in October to below 7% last week, buyers are responding. Mortgage applications have increased for six straight weeks on a seasonally adjusted basis, though they are still down from year-ago levels, according to the Mortgage Bankers Association. Real-estate agents say they expect more buying activity in the new year, after home shoppers return from a break over the holidays. ‘There’s just a lot of pent-up demand,’ said Lisa Sturtevant, chief economist at Bright MLS, a real-estate listings database that covers parts of six eastern states and Washington, D.C. “
“We Predict 6 Interest-Rate Cuts In 2024” (Morningstar). “In addition to the first cut in March 2024, we’re expecting a total of six cuts for the whole year. That will bring the federal-funds rate down from currently at a 5.25% to 5.50% range. It will take that down to a 3.75%-4.00% target range. So, that’s a 150-basis-point reduction from current levels by the end of 2024. And then, we’re expecting further cuts, another 150 basis points of cuts in 2025, taking the federal-funds rate down to 2.25% by the end of that year. And then, even in 2026, we expect it to get down as low as 1.75%. So that’s taking the federal-funds rate really all the way back down to about prepandemic levels. Long-term rates should fall accordingly, and that will help ensure that the economy grows at its full potential, and we don’t see a recession in that we ultimately see the soft landing that is very much possible.”
“We’re Still At Risk For Another ‘Everything Shortage’” (Freight Waves). “Ultimately, the reason we’re no longer in a supply chain crisis isn’t that companies did anything particularly amazing to overhaul their manufacturing and distribution systems. Rather, we just started to slow down our buying from the peak of 2020 to 2021 — and corporations were able to catch up at last.”
“Vase Bought At Goodwill For $3.99 Sells For More Than $100,000” (New York Times). “On Wednesday, the vase was auctioned for $107,100 to an unidentified private art collector in Europe. About $83,500 went to Ms. Vincent and about $23,600 went to Wright Auction House. Specialists who evaluated the piece determined it was part of the ‘Pennellate’ series that Mr. Scarpa designed in the 1940s. It’s unclear how many vases of this kind were made, Mr. Wright said.”
