The Higher Standard

Following a spike at the end of 2022, mortgage rates dropped sharply last week, driving demand from current homeowners hoping to save on their monthly payments, though it failed to excite potential homebuyers. The Mortgage Bankers Association’s seasonally adjusted index is reporting that the total mortgage application volume rose 1.2% last week compared with the previous week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.42% from 6.58%, with points remaining at 0.73 (including the origination fee) for loans with a 20% down payment. That rate was 3.52% just a year ago.

In this episode of The Higher Standard, Chris and Saied examine this news and try to make sense of what it means for the housing market and the economy as a whole.

They discuss the effects recessions have had on the energy sector historically, such as lower oil demand, as well as a comment by Jerome Powell stating that price stability is the bedrock of a healthy economy.

Chris and Saied look at comments from Ron Insana from Contrast Capital, stating that the current data don’t support concerns by the Fed and many other economists who worry about an emergent wage/price spiral.

They also offer some thoughts on the precedents that were set by the acquisition of Union Bank by US Bancorp, and how that has affected other banks, such as embattled Wells Fargo.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

• The latest CPI report and what it means for inflation and the economy.
• Why the World Bank's statement about cutting its 2023 forecasts is not nearly as ominous as it sounds.
• The unconstitutional nature of Biden's student loan forgiveness plan.
• Why the job numbers appear to still be relatively strong, despite mass layoffs happening across several sectors.
• And so much more...

Resources:

"Inflation is easing, even if it may not feel that way" (article from NPR)

"Insana says the case is clear that inflation is over" (article from CNBC)

"Mortgage refinance demand surges, as homeowners take advantage of lower interest rates" (article from CNBC)

"The World Bank is cutting its 2023 forecasts and warning of a global recession" (Bloomberg Businessweek via Instagram)

"Forget Core CPI, Market Pros Are Searching for Supercore Inflation" (article from The Wall Street Journal)

In today's episode of The Higher Standard, Chris and Saied sit down with Andy Tran, photographer, YouTuber and owner of Andy's Cuts Barbershop, a classic barbershop specializing in modern and old-school haircuts, based out of Fountain Valley, California.

Andy explains his path to creating Andy's Cuts, from running down a YoutTube 'rabbit hole' looking for hairstyle inspiration to finally deciding to enter barber college and learn to do it for himself.

They discuss the now-famous 10,000 hour rule, and how Andy realized that to be successful, he had to work harder and put in more time than anyone else.

Andy shares the lessons he learned opening his barbershop, and the many steps necessary when opening a brick-and-mortar location - steps that many new business owners fail to think about prior to opening.

They also discuss Andy's OTHER career as a photographer, one born out of YouTube, where he discusses camera equipment and photography with his 5K+ subscriber base.

Join Chris, Saied and Andy for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

• Andy's path from YouTube viewer to photographer/hairstylist/YouTube personality
• The importance of the 10,000 hour rule.
• The lessons Andy learned working (and negotiating) with large companies interested in his YouTube videos.
• Why Andy wants to set up the barbershop so that it can run without him and he can focus on content creation.
• And so much more...

Resources:

Andy's Cuts

Andy's Cuts Instagram

Andy Tran YouTube

Technology-driven companies across industries have been laying off workers at the fastest pace since the Covid-19 pandemic shocked the global economy in 2020. Employers in the tech sector cut more than 150,000 jobs in 2022, based on estimates from Layoffs.fyi.

That figure compares with about 80,000 layoffs in March-December 2020 and 15,000 in all of 2021.

In this episode of The Higher Standard, Chris and Saied examine this latest news and offer some insights as to the effects it will have on the economy as a whole.

They discuss the concept of the 'everything bubble,' and the reasons why many economists believe that years of loose monetary policies from the Fed and other central banks following the Great Financial Crisis (GFC) helped create it.

Chris and Saied look at a report stating that used car prices paid by wholesalers fell the most on a yearly basis since at least the late 1990s - a decline that could help the fight against inflation.

They also offer some thoughts on a leaked email from Disney CEO Bob Iger, telling hybrid employees they must return to corporate offices four days a week starting March 1.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

• The 'everything bubble:' What it is, where it came from, and why it's now popping.
• Why social media is no longer 'social' - it’s an online business.
• The bright spots that exist in the economy during the recession.
• The difference between low-cost index funds and mutual funds.
• And so much more...

Resources:

"U.S. labor market powers ahead, but wage growth loses steam" (article from Reuters)

"Tech layoffs are happening faster than at any time during the pandemic" (The Wall Street Journal via Instagram)

"Tech Layoffs Are Happening Faster Than at Any Time During the Pandemic" (article from The Wall Street Journal)

"The ‘everything bubble’ has popped and the experts on Wall Street and in Silicon Valley were spectacularly wrong about a ton of things" (article from Fortune)

"Used car prices post biggest drop on record - and have 'much further to fall’” (Forbes via Instagram)

"Meta updates property listing policy, riling agents" (The Real Deal via Instagram)

"Bob Iger tells Disney employees they must return to the office four days a week" (article from CNBC)

"Party City prepares to file for bankruptcy" (The Real Deal via Instagram)

"Job openings hold strong despite rate hikes; manufacturing in contraction" (article from CNBC)

"2022 was the worst-ever year for U.S. bonds. How to position your portfolio for 2023" (article from CNBC)

The idea that rates could come down in 2023 appears to be wishful thinking, according to minutes released from the Federal Reserve's December meeting. At a meeting where policymakers raised their key interest rate another half a percentage point, they expressed the importance of keeping restrictive policy in place while inflation holds unacceptably high. The increase ended a streak of four consecutive three-quarter point rate hikes, while taking the target range for the benchmark fed funds rate to 4.25%-4.5%, its highest level in 15 years.

In this episode of The Higher Standard, Chris and Saied examine this latest episode in the continuing fight against inflation, and offer their own insights as to its meaning and impact.

They discuss a report stating that real estate broker Compass is about to engage in more layoffs, the third round since June of 2022 and the final wave of staff cuts needed to become cash-flow positive by mid-2023.⁠

Chris and Saied look at a report from Douglas Elliman and Miller Samuel showing that Manhattan apartment sales fell by 29% in the fourth quarter, sparking fears of a frozen market in which buyers and sellers stay on the sidelines due to economic and rate fears.

They also offer some thoughts on business growth in a recessionary economy - most businesses won't try to grow, merely focusing on maintaining their capital, but some will be able to do so, in spite of the recession.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

• Why companies such as Compass, Amazon and Salesforce are cutting more jobs than originally thought.
• Why Moody's Analytics' chief economist is calling for a 'slowcession.'
• The impact of private payrolls rising by 235,000 for December, above the 153,000 Dow Jones estimate.
• Why the FTC is considering banning noncompete clauses for workers.
• And so much more...

Resources:

"The U.S. might avoid a full-out recession, but get ready for a ‘slowcession’ says one of the first economists to predict the 2008 financial crash" (article from Fortune)

"The US is in a recession 'by any definition,' 'The Big Short' investor Michael Burry says." (Bloomberg Business via Instagram)

"Shopify tells employees to cancel all recurring meetings with more than two people" (Business Week via Instagram)

"Compass executes third layoffs in one year" (The Real Deal via Instagram)

"Silvergate Raced to Cover $8.1 Billion in Withdrawals During Crypto Meltdown" (article from the Wall Street Journal)

"Private payroll growth surged by 235,000 in December, well above estimate, ADP reports" (article from CNBC)

"Fed officials see higher rates for ‘some time’ ahead" (article from CNBC)

"Fed minutes: No rate cuts in 2023, inflation risk remains in focus" (article from Yahoo! Finance)

"Manhattan apartment sales plunge in fourth quarter as brokers fear a frozen market" (article from CNBC)

(Chris Naghibi via Instagram)

"Amazon says it will cut over 18,000 jobs, more than initially planned" (article from CNBC)

"Salesforce is cutting 10% of its personnel, more than 7,000 employees" (article from CNBC)

"FTC Proposes Banning Noncompete Clauses for Workers" (article from the Wall Street Journal)

Ten years. That's how long we can expect to see sluggish growth in the global economy, at least according to Daniel Lacalle, author and chief economist at Tressis Gestion. Events such as Russia’s invasion of Ukraine and China’s persistent zero-Covid measures have sent shockwaves through economies around the world, sending inflation soaring and weakening activity. The IMF now projects that global GDP growth will slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. The Fund called it “the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the Covid-19 pandemic.”

In this episode of The Higher Standard, Chris and Saied examine Lacalle's comments and the projections of the IMF to try and determine the effect they will have on the economy.

They discuss comments from Scion Asset Management founder and The Big Short investor Michael Burry, who has stated that while inflation has peaked, it is likely to pick up again in response to government stimulus. ⁣

Chris and Saied look at the prevalence of fake followers on social media, particularly Instagram, and the effect that can have on a business.

They also offer some thoughts on the CATO Institute's 2022 Housing Affordability National Survey, which indicates that around 55% of Americans say they cannot afford to buy their home in today's market, resulting in the second biggest home price correction of the post-WWII era.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

• Why home prices have gone up 46% in the period of two years in some markets.
• The differences between business loans and single-family residence loans.
• Why rental rates are on the downward trend in most states.
• Why luxury home sales have been experiencing the biggest decline on record.
• And so much more...

Resources:

"The Washington State AG has sued a plastic surgery provider for manipulating customer reviews and buying fake Instagram followers." (Robert Freund via Twitter)

"The US is in a recession 'by any definition,' 'The Big Short' investor Michael Burry says." (Bloomberg Business via Instagram)

"US suffering from the second biggest home price correction of the post-WWII era" (article from Fox Business)

"Nevada rent prices see greatest decline nationwide, report shows" (article from the Washington Examiner)

"Global economy is heading into a decade of low growth, economist says" (article from CNBC)

"Deep freeze: Luxury home sales suffer biggest hit on record" (The Real Deal via Instagram)

"Luxury-Home Sales Sink 38%, the Biggest Decline on Record" (article from Redfin)

"Here's how much housing affordability tanked this year" (article from Yahoo! Finance)

During the early days of the pandemic, Americans were receiving stimulus checks from the government, and as a result were able to save quite a bit of money. However, according to data from the Federal Reserve Bank of St. Louis, the personal savings of Americans is only $520 billion as of November 2022, marking a substantial drop from the $4.85 trillion in 2020. Savings are now below even pre-pandemic levels and with the national stockpile shrinking by $100 billion since October. Thanks to persistent inflation, sluggish economic growth and major layoffs, living paycheck to paycheck has become the norm.

In this episode of The Higher Standard, Chris and Saied examine this worrying trend and what it means for the economy as we move into 2023.

They discuss comments from Goldman Sachs CEO David Solomon, in his traditional end-of-year message to staff, that layoffs will happen in the first half of January.

Chris and Saied look at a Washington Examiner article stating that recently unearthed emails show that disgraced FTX CEO Sam Bankman-Fried attempted to 'wine and dine' someone who, at the time, was a commissioner for the U.S. Commodity Futures Trading Commission, one of several agencies that regulate cryptocurrency.

They also offer some thoughts on what might happen if the Federal Reserve hadn't pursued a policy of quantitative tightening.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

• Why consumer credit card debt is up by nearly $40 billion.
• Why MarketWatch claims there's a better recession indicator than the yield curve... and why that's nonsense.
• Why Grant Cardone is a syndicator, not a 'crowdfunding maestro' (and why he's now in hot water.)
• How Sam Bankman-Fried was able to get access to a commissioner for the U.S. Commodity Futures Trading Commission.
• And so much more...

Resources:

"Americans' personal savings have plunged to a staggering $520 billion — from $4.85 trillion in 2020. Here are 3 easy ways to buck that dangerous downtrend" (article from Moneywise)

"Goldman Sachs will lay off staff in a matter of weeks, says CEO David Solomon" (Bloomberg via Instagram)

"Consumer Spending Is About to Get Slammed. Here’s How to Prepare." (article from Barron's)

"Home Prices Fell in October for Fourth Straight Month" (article from Wall Street Journal)

"There’s a better recession indicator than the yield curve and it is not flashing danger (yet)" (article from MarketWatch)

"This crypto engineer bought an NFT for $2.9 million, expected to sell for $48 million, and was only offered a few dollars" (Entrepreneur via Instagram)

"Man who paid $2.9m for NFT of Jack Dorsey’s first tweet set to lose almost $2.9m" (article from the Guardian)

"Sam Bankman-Fried told crypto regulator FTX was 'natural choice' to be 'umpires' of industry, emails show" (article from the Washington Examiner)

"Grant Cardone is back on the hook in a class action suit" (TheRealDeal via Instagram)

"401(k) ‘hardship’ withdrawals hit record high, Vanguard says — another sign households feel the pinch of inflation" (article from CNBC)

"Jobless benefits rolls grow but U.S. labor market remains resilient" (article from Reuters)

"Defense Spending Reaches Record High as Pentagon Fails Its Audit – For Fifth Time" (article from The Equation)

The listeners have questions, and Chris and Saied are here with answers! This time out, the boys are answering burning questions submitted by the audience. At the end of the show, Chris and Saied choose their favourite question out of the ones submitted and award the lucky listener a $100 prize!

In this episode, Chris and Saied examine the continuing aftermath of the FTX collapse, speculating as to why disgraced CEO Sam Bankman-Fried was allowed to return to his parent's home.

They discuss the pros and cons of replacing the antiquated title system used in real estate with modern web3 technology, such as the blockchain, making the information more accessible.

Chris and Saied look at the reasons why a recession has only been hinted at or predicted, but not "officially" announced, despite evidence seemingly supporting the existence of one.

They also offer opinions on the tech sector and whether or not they think it will underperform compared to energy and finance in the next decade.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

• Why the antiquated title system should be replaced with blockchain technology.
• The possibility of the FTX scandal leading to larger scandals within the US government.
• Chris and Saied's short and long term goals.
• Why a recessionary declaration is normally made 10, usually 12 months, at least, after the period is done.
• And so much more...

The FTX drama continues. Co-founder Gary Wang and former Alameda Research co-CEO Caroline Ellison have both pleaded guilty to federal charges. Wang pleaded guilty to conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud and conspiracy to commit securities fraud. Ellison pleaded guilty to two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering. Ellison and Wang become the second and third individuals to be charged in connection with FTX's multibillion-dollar collapse. Sam Bankman-Fried has already been indicted.

In this episode Chris and Saied examine these latest developments as well as Sam Bankman-Fried's recent release on $250 million dollar bail.

They discuss an article from Bloomberg Business claiming that inflation reports are so important, staff were once instructed to have no facial expressions when walking them into the West Wing of the White House.

Chris and Saied look at a seemingly skewed chart from Keeping Current Matters revealing home price forecasts for 2023, with Realtor.com predicting a 5.4% increase and Zelman going the other way with a -5.1% decrease.

They also discuss a report stating that Mortgage applications to refinance a home jumped 6% last week as interest rates hit their lowest level since September, according to the Mortgage Bankers Association’s seasonally adjusted index.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

• Caroline Ellison and Gary Wangs's plea bargain deal and what that means for Sam Bankman-Fried.
• Why economists are now predicting a 7-in-10 likelihood that the US economy will sink into a recession next year.
• A report from the NAR stating that sales of existing homes fell 7.7% in November compared with October.
• Why a new Bloomberg Economics model projection predicts that a recession by late-2023 is a '100%' likelihood.
• And so much more...

Resources:

"Caroline Ellison, Associate of FTX Founder Sam Bankman-Fried, Pleads Guilty to Criminal Charges" (article from The Wall Street Journal)

"It takes a lot to keep inflation data secret, including NDAs" (Bloomberg Business via Instagram)

"There is a 70% risk of recession in 2023, economists say" (Bloomberg business via Instagram)

"Brace for Recession Next Year. But the Outlook Isn’t All Doom and Gloom" (article from Barron's)

"Home price forecasts for 2023" (Keeping Current Matters via Instagram)

"Home sales tumbled more than 7% in November, the 10th straight month of declines" (article from CNBC)

"Homebuilder sentiment drops for the 12th straight month, but a bottom may be near" (article from CNBC)

"Mortgage refinance demand surged 6%, as rates dropped to the lowest level since September" (article from CNBC)

"With new mortgages down 47%, US lenders are starting to go bankrupt — could this one factor trigger the worst surge of failures since 2008?" (article from Yahoo! Finance)

"FTX’s Gary Wang, Alameda’s Caroline Ellison plead guilty to federal charges, cooperating with prosecutors" (article from CNBC)

"FTX founder Sam Bankman-Fried to be released on $250 million bail, will live with his parents" (article from CNBC)

"Forecast for US Recession Within Year Hits 100% in Blow to Biden" (article from Bloomberg)

Cisco is the latest tech company to implement mass layoffs, specifically 4100 employees, nearly 5% of its workforce. These layoffs were anticipated, but which employees would be affected was unknown. Even though these tech layoffs are massive for the industry, they’re not representative of the job market at large. Instead, they’re symptomatic of the strange circumstances present in our current economy. At the same time, Cisco has been actively hiring for new roles. The company says this is part of a restructuring, and workers it cannot place internally will receive severance packages.

Today marks the 100th episode of The Higher Standard, and Chris and Saied are celebrating by doing what they do best - diving into this news and what it means for the tech sector as a whole in the coming year.

They discuss the ongoing drama at Twitter, as the social media platform tries to redefine its policies in light of the recent purchase by Elon Musk. The most recent policy shift involves an abrupt ban of all links to Instagram, Mastodon, and other competitors.

Chris and Saied look at the deterioration of affordability in housing across the US, which is happening at the fastest pace in history. The problem is that home prices are still rising while interest rates on mortgages are surging higher, which is highly unusual.

They also discuss an investigation by the DEA, which alleges that a methamphetamine and cocaine gang operating across the U.S., Mexico, Europe and Australia used the world’s biggest cryptocurrency exchange Binance to launder tens of millions in drug proceeds.

Join Chris and Saied for this fascinating and informative conversation and help them celebrate episode 100!

Enjoy!

What You’ll Learn in this Show:

• The two primary methods for measuring housing prices: Month over month and year over year.
• Why US agencies are now moving to track illegal use of cryptocurrency.
• Why the ideology of free speech has become very murky in recent years.
• Why Chris believes there will be a significant amount of layoffs in Q1 across many sectors.
• And so much more...

Resources:

"Morgan Stanley warns that housing affordability is deteriorating faster than at any point in its data history — here are 2 easy ways to buck the worrisome trend" (article from Moneywise)

"Are housing prices going up or down?" (TheDataDeli via Instagram)

"Tech Layoffs: Cisco Announces Mass Layoffs - 4,100 Employees Cut" (article from Forbes)

"Twitter abruptly bans all links to Instagram, Mastodon, and other competitors" (article from The Verge)

"International drug conspiracy used Binance to launder millions, DEA investigation finds" (Forbes via Instagram)

"Goldman Sachs is planning to cut up to 8% of its employees in January" (article from CNBC)

"Homebuilder sentiment drops for the 12th straight month, but a bottom may be near" (article from CNBC)

"Roughly 1 in 3 workers is worried about a layoff — here’s where anxiety is highest" (article from CNBC)

"Twitter Reverses Ban to Accounts That Boost Competitors" (article from TheStreet)

"Washington Post chief announces job cuts – and refuses to answer questions" (article from the Guardian)

The Federal Reserve has raised its target federal funds rate by 0.5 percentage points in a continued effort to cool inflation. While this is a more typical hike compared to the 0.75 percentage point moves at each of the last four meetings, the central bank is far from finished, at least according to Greg McBride, chief financial analyst at Bankrate.com. Whether directly or indirectly, higher Fed rates influence borrowing costs for consumers and, to a lesser extent, the rates they earn on savings accounts.

In today's episode of The Higher Standard, Chris and Saied explore this latest rate hike and try to determine what it will mean for the economy, and for you.

They discuss a mystery rally in stock futures that spontaneously appeared in the seconds before the better-than-expected inflation number hit the Labor Department’s website, resulting in a 1% spike in stock futures as well as a surge in Treasury futures, pushing benchmark yields lower by about 4 basis points.

Chris and Saied look at a new report from Black Knight stating that approximately 270,000 homebuyers who bought during the red-hot housing market this year already owe more than their house is worth. Among the 450,000 embattled borrowers in the third quarter, nearly 60% had mortgages originated in the first nine months of 2022.

They also discuss a Commerce Department report indicating that consumers pulled back on spending in November, failing to keep up with even a muted level of inflation for the month.

Join Chris and Saied for this eye-opening conversation.

Enjoy!

What You’ll Learn in this Show:

• Why the NAR believes that existing-home sales will slide to 11-year low in 2023.
• What’s going to happen to homebuyers with Federal Housing Administration (FHA) loans.
• The real differences between Paul Volcker and Jerome Powell.
• Why the new FTX CEO will get paid before its allegedly defrauded customers will.
• And so much more...

Resources:

"Here’s what the Federal Reserve’s half-point rate hike means for you" (article from CNBC)

"In 60 seconds before CPI hit, heavy trading drove a mystery rally" (Bloomberg Businessweek via Instagram)

"The last time the Fed curbed inflation without crashing the economy, explained" (article from Vox)

"New FTX CEO is getting paid $1,300 an hour, and customers will foot the bill" (article from CNBC)

"U.S. existing-home sales to slide to 11-year low in 2023, NAR says" (article from Reuters)

"270,000 homebuyers who bought in 2022 are underwater on their mortgage" (article from Yahoo! Money)

"Fed raises interest rates half a point to highest level in 15 years" (article from CNBC)

Principle of the Day (Ray Dalio via Instagram)

Principle of the Day (Ray Dalio via Instagram)

"Consumer prices rose less than expected in November, up 7.1% from a year ago" (article from CNBC)

“This is a sleeping giant. Many people are surprised at how much they are going to pay the city.” (TheRealDeal via Instagram)

"Retail sales fell 0.6% in November as consumers feel the pressure from inflation" (article from CNBC)

"For most American businesses, new Fed rate means loans now start at 10%-plus interest" (article from CNBC)

"Home flipping profits drop at the fastest pace in over a decade" (article from CNBC)