Matrix Blog

Economy

[Brookings] How We’re Doing Index – May 2012

May 21, 2012 | 2:30 pm |

Sort of like the sparklines feature in Excel – It provides a quick snapshot of where we are economically right now.

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Buying Manhattan Apartments with Gold

February 7, 2012 | 11:14 am | | Charts |

[Click top expand]

Last year I got an email from a Matrix reader, Ben Tanen, a former VC now running his own investment partnership that invests in public companies, with an interesting take on the buying power of gold as it relates to Manhattan apartments.

Like many things in my life, I let this “nugget” (sorry) slip through the cracks last year. He recently updated it with our new numbers in the recent release and it’s quite compelling.

The value of gold has risen sharply in recent years during the wobbling of the global financial markets – investors see precious metals like gold as a way of preserving purchasing power over the long run. In fact, in 2011, gold had more purchasing power relative to Manhattan real estate than at anytime during the past 22 years (the limit of our publicly released data).

It would take 908 ounces of gold to purchase the average Manhattan apartment versus the 1996 low point of 1,030 ounces, a point where many think our asset bubble problems began (stocks, then housing).


[Interview PART II] Barry Ritholtz, CEO, Director of Equity Research, Fusion IQ, Author, Bailout Nation, The Big Picture Blog

October 6, 2011 | 8:21 am | Podcasts |

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[Interview PART I] Barry Ritholtz, CEO, Director of Equity Research, Fusion IQ, Author, Bailout Nation, The Big Picture Blog

October 5, 2011 | 12:15 pm | Podcasts |

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[Interview] Barry Ritholtz, CEO, Director of Equity Research, Fusion IQ, Author, Bailout Nation, The Big Picture Blog

January 21, 2011 | 11:23 am | | Podcasts |

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[Interview] Mark Zandi, Chief Economist, Moody’s Analytics, Author, Financial Shock & Paying the Price

December 21, 2010 | 1:03 pm | Podcasts |

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[Interview] Stan Humphries, Chief Economist, Zillow.com

December 15, 2010 | 2:00 pm | | Podcasts |

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[Interview] Gary Shilling, Economic Consultant, Founder, A. Gary Shilling & Co., Author, The Age of Deleveraging

December 3, 2010 | 1:08 pm | | Podcasts |

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[Wall Street + Housing] Lower Risk = Lower Compensation = Tempered Housing Demand

June 23, 2010 | 12:01 am |

Robert Moses, the Master Builder of New York, famously uttered these words at the groundbreaking of Lincoln Center in NYC.

You cannot make an omelet without breaking eggs.

I highly recommend The Power Broker by Robert Caro (and his LBJ trilogy) that chronicles Moses’ life but make sure you dedicate a lot of time – it’s a long read.

Amid the scrambled (sorry) state of financial reform going on in Washington right now is the underlying newly realized immovable object and the likely outcome for Wall Street:

Lower Risk = Lower Compensation

Ok, eggs not a great analogy but I needed to squeeze one of my favorite quotes of all time in somehow. Lower leverage is in the future of Wall Street. Take lower risks and there are lower returns to firms eventually translating into lower compensation, translating into tempered housing demand.

This Monday federal regulators finalized guidance on a hot topic as of late: executive compensation:

The final guidance is similar to what the central bank proposed in October, but would now apply to the entire banking industry. Previously, its efforts targeted only holding companies and state-member banks…

The final guidance did not change the three initial goals of the Fed’s proposal: providing incentives that appropriately balance risk and financial results and discourage risk taking; matching “effective controls and risk management”; and supporting corporate governance.

Risk, risk, risk

Senior Economist David Belkin of NYC’s Independent Budget Office received a flurry of media coverage for his post titled “Wall Street Wages: A Rough Ride on Easy Street:”

Much has been made in recent months of last year’s record profits on Wall Street, the myriad ways (near-zero interest rates, bailouts, accounting rules changes) that government policy boosted those profits, and the seven or eight figure bonus packages that some Wall Street executives awarded themselves from those profits. There has been less said, however, about what happened to aggregate wages and salaries across the securities industry in New York City in 2009. Not only did wages fall, but the fall was the steepest in modern history—including the Great Depression.

Adjusted for inflation, average wages in the securities industry plummeted 21.5 percent in 2009 and 24.6 percent over two years.

A key economic engine in the New York City metro area that provides 25% of personal income and 5% of the employment and creates 2.5 private sector jobs for each securities job, this should also be a concern for sustainability of the current level of housing demand.

Ironically Wall Street has been telling us this for years: past performance does not guaranty future returns.


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[Interview] Nicholas Retsinas, Director, Harvard University’s Joint Center for Housing Studies

June 21, 2010 | 11:57 am | Podcasts |

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[GS Economic Outlook] Modest Residential Investment Growth on the Horizon

June 15, 2010 | 12:00 pm |


source: GS Investment Strategy Group

Current improvement seems to be on the low end of the range…but it’s not clear to me how this occurs at meaningful levels until excess supply is cleared.

From their Investment Strategy Group

The key changes to our 2010 outlook are as follows:

  • We believe the Fed is unlikely to raise rates this year due to uncertainty around Europe and lower inflation data.
  • We are lowering our 10-year yield forecast from 4.25-4.75% to 3.5-4.0%.
  • As inflation has surprised to the downside, we are lowering our core CPI range to 0.75-1.25% from 1.0-1.5% and our headline CPI range to 1.5-2.0% from 1.75-2.25%.
  • We maintain our central case target of 1150-1225 on the S&P 500

In 2011:

  • We expect GDP to grow 2.75-3.25%. Investment will likely recover from its low levels; consumption should continue to grow at a moderate pace.
  • The Fed is unlikely to raise rates until some time in the second half of 2011 unless employment growth and/or inflation surprise to the upside.
  • Our central case target for the S&P 500 is 1225-1300

download report [GS Investment Strategy Group]


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[Interview] Mark Willis, Research Fellow, NYU Furman Center

June 15, 2010 | 12:01 am | | Podcasts |

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