The Higher Standard

The FTX drama continues. The crypto business' founder, Sam Bankman-Fried, has been arrested by Bahamian authorities after the United States Attorney for the Southern District of New York shared a sealed indictment with the Bahamian government, setting the stage for extradition and U.S. trial for the one time crypto billionaire at the heart of the cryptocurrency exchange’s collapse. His arrest is being called the first concrete move by regulators to hold individuals accountable for the multibillion-dollar implosion of FTX last month.

In today's episode of The Higher Standard, Chris and Saied dig into this news, and speculate as to whether or not this move could signal the beginning of regulation for the crypto space.

They discuss the possible upcoming pivots for the Fed in it's ongoing battle against inflation. Will they raise rates again? Will they hold? For how long?

Chris and Saied look at Meta's $3 billion plan to decrease its office footprint, which includes unloading up to 544,000 square feet of offices in the Bay Area.⁠

They also discuss a New York Federal Reserve survey indicating that consumers grew more optimistic about inflation in November amid expectations that both food and energy price increases would be less severe in the coming year.

Join Chris and Saied for this eye-opening conversation.

Enjoy!

What You’ll Learn in this Show:

• The arrest of former FTX CEO Sam Bankman-Fried and what that means for the future cryptocurrency.
• Cross-collateralized cross-default loans - what they are, and why you should care.
• Why Redfin predicts that 2023 will bring the slowest housing market in a dozen years.
• Why affordability in the real estate space is going to continue to be an issue in the years to come.
• And so much more...

Resources:

"FTX founder Sam Bankman-Fried arrested in the Bahamas after U.S. files criminal charges" (article from CNBC)

"November PPI a bit hotter than expected" (article from Reuters)

"Housing market to sink to a 12-year low in 2023, Redfin says" (TheRealDeal via Instagram)

"Lennar offers to sell 5000 homes to big landlords" (TheRealDeal via Instagram)

"Economists like Nouriel Roubini are starting to fret about a US debt crisis as interest rates rise – here's why it's the latest issue rattling markets" (article from Markets Insider)

"Total Household Debt Reaches $16.51 trillion in Q3 2022; Mortgage and Auto Loan Originations Decline" (press release from the Federal Reserve Bank of New York)

"Top economist Mohamed El-Erian says the Fed will face these two ‘unpleasant choices’ next year" (article from Fortune)

"Meta to ditch up to 544K sf of office space in Bay Area" (TheRealDeal via Instagram)

"Consumers see inflation easing considerably in the next year, New York Fed survey shows" (article from CNBC)

American consumers are slowing their spending as the Federal Reserve’s interest rate increases reverberate throughout the economy, according to the CEOs of two of the largest American banks. After two years of pandemic-fueled, double-digit growth in Bank of America card volume, “the rate of growth is slowing,” CEO Brian Moynihan said at a financial conference. While retail payments surged 11% so far this year to nearly $4 trillion, that increase obscures a slowdown that began in recent weeks: November spending rose just 5%, he said.

In today's episode of The Higher Standard, Chris and Saied have done something a little different and invited their brothers, Ariya and Haroon, to join them in the discussion as they attempt to dissect this and many other pieces of economic news.

They discuss what's likely to happen in the crypto space, and why the lack of regulation will remain a turn off for many investors.

Chris and Saied look at the sudden reversal in home prices that began this spring, which has now affected every one of America’s major metros with declines from their recent all-time peaks.

They also discuss a recent report stating that Morgan Stanley has cut about 2% of its workforce, affecting about 1,600 positions and following workforce reductions at Goldman Sachs and Citigroup.

Join Chris and Saied (as well as Ariya and Haroon) for this fascinating conversation.

Enjoy!

What You’ll Learn in this Show:

• Why JPMorgan CEO Jamie Dimon has compared crypto tokens to 'pet rocks.'
• Why every major financial institution has crypto within its organization.
• What home appraisals are and how they work.
• Why the only true hedge against inflation is to keep doing what you're doing when inflation isn't there to keep buying.
• And so much more...

Resources:

"Crypto is a complete sideshow, tokens are like 'pet rocks,' says JPMorgan CEO Jamie Dimon" (via YouTube)

"Goldman CEO says small bonuses, job cuts shouldn't be a surprise." (Bloomberg via Instagram)

"Home prices are down in every one of the top 58 metros according to the latest AEI data. But cities in this region have taken the biggest hit so far" (article from Fortune)

"Wisconsin Man Indicted for $35 Million Bank Fraud Scheme" (press release from the Department of Justice)

"‘There is a slowdown happening’ – Wells Fargo, BofA CEOs point to cooling consumer amid Fed hikes" (article from CNBC)

"A key indicator of a coming economic downturn is pricing in nearly 100% chance of a 'Powell recession' in 2023" (article from Yahoo! Finance)

"Morgan Stanley cuts about 2% of its workforce - source" (article from Reuters)

According to Jim Cramer, host of CNBC's "Mad Money," there are four reasons why the Federal Reserve can’t stop tightening the economy just yet. He cites not enough people reentering the workforce, a mismatch between job openings and job seekers, too many people working in customer relations management, data analysis and advertising, and the creation of too many new companies in the past two years. “This market’s hostage to the Federal Reserve, and the Fed’s not going to stop tightening until they see more evidence of real economic pain. Unfortunately, we’re not there yet,” he said.

In today's episode of The Higher Standard, Chris and Saied explore why Cramer is, in fact, wrong in this assertion (and a good deal more).

They discuss a report from real estate brokerage Redfin saying that a record number of homes are being delisted as sellers face a sharp drop in demand. On average, 2% of homes for sale were delisted without being sold each week during the three months ended Nov. 20 compared to 1.6% a year earlier.

Chris and Saied offer some insights into the belief by traders that the Federal Reserve will drive its policy rate above 5% by May, following a report showing little sign of a cooling job market. This is in spite of the central bank's aggressive interest-rate increases so far.

They also discuss recent comments from Bank of America, which is expecting nonfarm payroll gains to be cut in half in Q4 of 2022 and turn negative in 2023. During the first quarter of 2023, the bank projects that the U.S. will be losing roughly 175,000 jobs a month.

Join Chris and Saied for this fascinating conversation.

Enjoy!

What You’ll Learn in this Show:

• Why Jim Cramer is wrong 100% of the time.
• A Labor Department report stating that nonfarm payrolls increased 263,000 for the month while the unemployment rate was 3.7%.
• Why BofA believes that the US economy will start to lose 175,000 jobs per month during Q1 of 2023.
• The storm surrounding the so-called "Liver King" and his recent (and very carefully crafted) apology video.
• And so much more...

Resources:

"Strong Job Numbers Throw Cold Water on Hopes for an End to Interest-Rate Rises" (article from Barron's)

"Traders now see Fed policy rate hitting 5% next year" (article from Reuters)

"The Fed can’t stop raising interest rates due to these 4 factors, Jim Cramer says" (article from CNBC)

"Home Sellers Are Pulling Properties off the Market at Record Pace" (article from Bloomberg)

"Payrolls and wages blow past expectations, flying in the face of Fed rate hikes" (article from CNBC)

"BofA warns that the US economy will start to lose 175,000 jobs per month during Q1 of 2023, expects a ‘harder landing’ rather than a softer one — here’s why" (article from Yahoo! Finance)

"The Liver King Lie" (via YouTube)

"Liver King Confession... I lied." (via YouTube)

Consumers spent a record $9.12 billion online shopping during Black Friday this year, according to Adobe, which tracks sales on retailers' websites. Overall online sales for the day after Thanksgiving were up 2.3% year over year, and electronics were a major contributor, as online sales surged 221% over an average day in October. Toys were another popular category for shoppers, up 285%, as was exercise equipment, up 218%. Buy Now Pay Later payments increased by 78% compared with the past week, beginning Nov. 19, as consumers continue to grapple with high prices and inflation.

In today's episode of The Higher Standard, Chris and Saied dig into these numbers and attempt to make sense of them.

They discuss a recent story indicating that Airbnb is recruiting multifamily landlords for short-term rentals at properties, as well as the problems that surround mutifamily properties.

Chris and Saied offer some insights into how blockchain companies like BlockFi work in light of the company's recent Chapter 11 bankruptcy listing.

They also discuss the reasons why the fanfare and sensationalism surrounding cryptocurrency has now vanished, and why crypto will never be the same.

Join Chris and Saied for this fascinating conversation.

Enjoy!

What You’ll Learn in this Show:

• How and why the S&P jumped over 700 points in just a week.
• Why S&P Global Ratings economist Beth Ann Bovino is telling people to brace for  a recession in 2023.
• Why private hiring has slowed sharply in November.
• 'Dr Doom' Nouriel Roubini's seven Cs of crypto: Concealed, corrupt, crooks, criminals, con men, carnival barkers and CZ.
• And so much more...

Resources:

"Black Friday online sales top $9 billion in new record" (article from CNBC)

"Americans are spending $433 more a MONTH for the same products due to crippling inflation as consumer prices rocket 8% to nearly highest level in 40 years" (article from The Daily Mail)

"Collapse" in home prices is coming, experts say" (article from Axios)

"Home sales could plunge in 2023. These cities could see the biggest dips." (article from CBS News)

"Airbnb recruits multifamily landlords for sublets" (The Real Deal via Instagram)

"A Recession Akin to 1969-1970 Awaits U.S. Next Year, Economist Warns" (article from Barron's)

"30 under 30" (Forbes via Instagram)

"Fed officials see smaller rate hikes coming ‘soon,’ minutes show" (article from CNBC)

"Retiring baby boomers are getting wiped out by inflation and a volatile stock market: ‘It’s extremely scary’" (article from Yahoo! Finance)

"BlockFi lawyer tells bankruptcy court that the priority is to ‘maximize client recoveries’" (article from CNBC)

"Private hiring increased by just 127,000 jobs in November, well below estimate, ADP reports" (article from CNBC)

According to the National Association of Realtors (NAR), sales of previously owned homes declined 5.9% in October from the prior month to a seasonally adjusted annual rate of 4.43 million, the weakest rate since May 2020. October sales fell 28.4% from a year earlier, the biggest annual decline since February 2008. Home sales have been dropping each month since February. From their recent peak in January, existing-home sales have dropped about 32%. The slowdown is due to a rapid increase in borrowing rates. The average rate on a 30-year fixed-rate mortgage began to climb rapidly in the first quarter and rose above 7% earlier this month. Mortgage rates eased this week but are still more than double where they stood a year ago.

In today's episode of The Higher Standard, Chris and Saied dive into these numbers to help you understand what they mean for the economy and the fight against inflation.

They play a game of 'What if?', trying to determine the effect on the market, both short and long term, if the Fed funds rate were to reach 10%.

Chris and Saied discuss the concept of a yield curve inversion and why it matters to the economy.

They also discuss a recent report indicating that the city of San Francisco could lose up to $200 million in property tax revenue by 2028 as record office vacancies, fueled by remote work and uncertainty in the tech industry.

Join Chris and Saied for this fascinating conversation.

Enjoy!

What You’ll Learn in this Show:

• Why banks are pulling back on lending to both households and businesses.
• Why the yield curve inversion is an indicator of a future recession.
• How long it actually takes to get a real estate license.
• The reasons why US home sales have fallen for the ninth straight month.
• And so much more...

Resources:

"Did Bullard Undershoot? Stifel Economists Say Fed Funds Rate May Need to Go to 8% or Even 9%." (article from Barron's)

"U.S. Home Sales Fell for Ninth Straight Month in October" (article from The Wall Street Journal)

"37% of real estate agents in the US couldn't afford to pay their rent in October — another bad sign for the housing market. Here are 3 key takeaways for sellers right now" (article from Yahoo! Finance)

"SF could lose up to $200M in property tax revenue" (The Real Deal via Instagram)

"Bob Iger returns as Disney CEO, replacing Bob Chapek after a brief, tumultuous tenure" (article from CNBC)

The Federal Reserve may have to raise its benchmark interest rate much higher than it has previously projected to get inflation under control, according to James Bullard, president of the Federal Reserve Bank of St. Louis. Bullard suggested that the Fed’s rate hikes will make borrowing by consumers and businesses even costlier and further heighten the risk of recession.

In today's episode of The Higher Standard, Chris and Saied take a deep dive into these comments and where they come from, as well as what they mean for the economy and the continuing fight against inflation.

Thanks to a submitted listener question, they discuss the true impact of rising interest rate on the current housing market.

Chris and Saied discuss a report stating that the number of available short-term rental listings in the U.S. skyrocketed to 1.38 million in September - a 23.2% year-over-year increase, according to rental analytics firm AirDNA.

They also discuss comments from KPMG's chief economist Diane Swonk who predicts that a 15% drop in home prices for next year is “very conservative,” as the housing bubble begins to pop.

Join Chris and Saied for this fascinating conversation.

Enjoy!

What You’ll Learn in this Show:

• Why Chris believes that an interest rate increase to the 5%-7% range in order to fight inflation seems to be a stretch.
• A report from the Federal Reserve Bank of Dallas predicting a home price correction could remove five to point seven percentage points from consumer spending.
• The real world impact of rental analytics on the future of AirBnB.
• How interest rates impact the monthly payments on a house.
• And so much more...

Resources:

"Fed’s Daly sees rates rising at least another percentage point as ‘pausing is off the table’" (article from CNBC)

"Sharp drop in mortgage rates does little to boost demand" (article from CNBC)

"Rising mortgage rates could take 20% bite out of home prices" (Article from The Real Deal)

"Too Many Rich People Invested In Airbnbs, More Than A Million Remain Unoccupied" (article from Travel Noire)

"Fed's Bullard says benchmark interest rate in 5%-7% range may be needed to bring inflation down" (article from MarketWatch)

The collapse of FTX continues as a stunning list of allegations against the company’s former leadership has surfaced.  John J. Ray III, the group’s new chief executive officer, said in a sworn declaration submitted in bankruptcy court, 'Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information.' He slammed non-existent oversight and the misuse of client funds as advisors struggle to locate billions of dollars in missing assets.

In today's episode of The Higher Standard, Chris and Saied dig into the FTX implosion, described as a free-wheeling crypto enterprise devoid of virtually every policy and practice that would be the norm for almost all other corporations.

They look at the continuing drama of Elon Musk's purchase of Twitter as even more staff exit the company following his reorganization and ultimatum.

Chris and Saied discuss why Elon Musk's 'Twitter 2.0' will likely be bad for the brand, the platform and the users in the long run.

They also discuss a recent article describing the debut of a new cannabis infused edible called 'Holy Ears,' created by legendary boxers Mike Tyson and Evander Holyfield. The edibles are named after a notorious moment in 1997 when Tyson bit off part of Holyfield's ear during a bout.

Join Chris and Saied for this fascinating conversation.

Enjoy!

What You’ll Learn in this Show:

• What happened to cause the implosion of FTX, and why the financial mismanagement involved is reminiscent of the Enron debacle.
• Why advisors have located only a fraction of digital assets that they hope to recover during FTX's Chapter 11 bankruptcy.
• Why Jeff Bezos doesn't seem to care about company morale in the traditional sense.
• Chris' thoughts of the future of public journalism in the wake of Elon Musk's purchase of Twitter.
• And so much more...

Resources:

Irma Lomidze Instagram

"FTX’s New Boss Reveals Chaos Left Behind by Bankman-Fried" (article from Bloomberg Law)

"New wave of resignations hits Twitter after Musk ultimatum" (article from CNBC)

"Mike Tyson and Evander Holyfield Team Up for “Holy Ears” Edibles" (article from Now This News)

“This is a very, very bad thing. The country did not need a currency that was good for kidnappers. There are people who think they’ve got to be on every deal that’s hot. I think that’s totally crazy. They don’t care whether it’s child prostitution or bitcoin.” So says Charlie Munger, Berkshire Hathaway Vice Chairman and a longtime cryptocurrency skeptic. He went on to declare that the space is rife with fraud and delusion, and regulators have dropped the ball by not outlawing bitcoin and other digital assets.

In today's episode of The Higher Standard, Chris and Saied take a look at Munger's vehement criticisms and try to determine if his thoughts are valid, and whether or not regulators have indeed failed to provide proper oversight.

They discuss the Federal Reserve's meeting in February and offer some thoughts on whether or not there will be another rate increase at that time.

Chris and Saied examine why government spending has a tremendous impact on GDP, but surprisingly on core inflation numbers.

They also discuss a recent article in which Amazon founder Jeff Bezos advises consumers and businesses to delay purchases and stockpile cash to prepare for a devastating downturn.

Join Chris and Saied for this fascinating conversation.

Enjoy!

What You’ll Learn in this Show:

• Why Charlie Munger's longtime criticism of cryptocurrency has reached new levels of virulence in light of the recent implosion of FTX.
• The incredible wave of layoffs rolling across the country, particularly in the tech industry.
• Why the US has just 25 days of diesel supply remaining — the lowest level since 2008.
• Why Federal Reserve Governor Christopher Waller believes that financial markets have overreacted to the softer-than-expected October consumer price inflation data released last week.
• And so much more...

Resources:

"Charlie Munger, Warren Buffet’s right-hand man, rips into cryptocurrency after FTX collapse, saying it’s good for ‘kidnappers’" (article from Fortune)

"A Six-Figure Income Is Needed Just to Afford the Typical US Home" (article from Bloomberg)

"Mortgage Lenders Vie to Be ‘Last Man Standing’ as Rates Soar" (article from Bloomberg)

"Amazon founder Jeff Bezos warns a recession is looming - and Americans should 'prepare for the worst'" (article from Markets Insider)

"Congress seeks to arm Taiwan quickly as China threat grows" (article from the Washington Post)

"United States Government Spending To GDP" (chart from Trading Economics)

"Fed’s Waller says market has overreacted to consumer inflation data: ‘We’ve got a long, long way to go’" (article from Yahoo! Finance)

"Musk Says Everyone Thought FTX's Bankman-Fried Was 'Walking on Water'" (article from The Street)

"Inflation Isn’t Going Anywhere. History Says It Could Take a Decade to Get Back to Normal" (article from Barron's)

"Amazon reportedly plans to lay off about 10,000 employees starting this week" (article from CNBC)

"The US has just 25 days of diesel supply — the lowest since 2008. Here's why that's more alarming than a dwindling 'oil piggy bank'" (article from Yahoo! Finance)

"System Open Market Account Holdings of Domestic Securities" (information via The Federal Reserve Bank of New York)

Unless you've just arrived from another planet, you've likely heard something about FTX, a high-profile, Bahamas-based cryptocurrency that has filed for bankruptcy amid allegations of fraud against Sam Bankman-Fried (known as SBF), its philanthropist founder. Cryptocurrency is a subject that many seem to be talking about, but that few understand fully.

In today's episode of The Higher Standard, Chris and Saied take a deep dive into the subject, providing explanations of some of the basic terminology, along with insights into the history of cryptocurrency. The goal is to give you a clearer picture of what's happening the crypto space in light of the FTX collapse.

They discuss and demystify concepts such as the blockchain, exchanges and the overall promise of cryptocurrency as an alternative to existing fiat currency.

Chris and Saied examine the FTX collapse, including the allegations against founder Sam Bankman-Fried, who was involved and what it means for other cryptocurrencies.

They also discuss the confusion surrounding the blue verification check mark on Twitter, in light of the massive changes brought about by new owner Elon Musk.

Join Chris and Saied for this fascinating conversation.

Enjoy!

What You’ll Learn in this Show:

• The promises of cryptocurrencies: Censorship-free money, a hedge against inflation, and verifiability.
• Definitions of commonly used but often misunderstood cryptocurrency terms, like the blockchain, crypto exchanges and decentralization.
• How SBF was able to move huge amounts of money without alerting other people, including external auditors.
• The value that a decentralized blockchain is supposed to provide.
• And so much more...

Fed Chairman Jerome Powell still says it's possible to cool the economy and keep employment stable – without a severe recession, in what would be a 'soft landing.' However, according to Nouriel Rubini, professor emeritus at New York University’s Stern School of Business and CEO of Rubini Macro Associates, better known as 'Dr. Doom', a recession and an economic 'hard landing' are all but guaranteed.

In today's episode Chris and Saied discuss Dr. Doom's prognosis and why historical evidence would seem to prove him right: No one is getting a soft landing.

They discuss the recent news that a federal judge in Texas has ruled that President Joe Biden's plan to cancel hundreds of billions of dollars in student loan debt was unlawful and must be vacated, delivering a victory to conservative opponents of the program.

Chris and Saied look at Sam Bankman-Fried, the cryptocurrency entrepreneur, founder and CEO of FTX and (former) billionaire, whose cryptocurrency empire went from $16 billion at the start of the week, to nearly non existent by the end.

They also discuss comments by former Treasury Chief Larry Summers, who said that stubborn inflation could force the Federal Reserve to hike interest rates above 6%, the highest level in more than two decades.

Join Chris and Saied for this fascinating conversation.

Enjoy!

What You’ll Learn in this Show:

• Why the idea that the economy will somehow avoid a recession and achieve a kind of 'soft landing' is a fallacy.
• What happens now that President Biden's Student Loan Forgiveness program has been (temporarily at least) struck down.
• How one of the darlings of the cryptocurrency industry lost 94% of his wealth in less than a week.
• Why Larry Summers thinks that the economy might be more resilient to rate increases than expected, which could put pressure on the Fed to hike rates even further.
• And so much more...

Resources:

"Here’s the inflation breakdown for October 2022 — in one chart" (article from CNBC)

"Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse" (article from CNBC)

"Opendoor slashes 18% of staff" (The Real Deal via Instagram)

"Opendoor posts near $1 billion loss" (The Real Deal via Instagram)

"Nouriel Roubini says it’s ‘mission impossible’ to avoid a hard landing, and we’ll get the worst of the 1970s and 2000s combined" (article from Fortune)

"Sam Bankman-Fried’s $16 Billion Fortune Is Eviscerated in Days" (article from Fortune)

Jeremy Siegel says the housing crash will force Fed chief Powell to 'flip sometime' on inflation and pivot" (article from Markets Insider)

"The Fed may need to hike interest rates above 6% to crush stubborn inflation, ex-Treasury chief Larry Summers says" (article from Markets Insider)

"‘Only time will tell if September was the nadir’: Zillow reports sharp home-value declines in these cities, amid grim outlook for U.S. housing market" (article from Market Watch)

"The U.S. housing market to see second biggest correction of the post-WWII era—when to expect the home price bottom" (article from Fortune)

"Meta will slash 11,000 jobs in first major round of cuts" (Bloomberg Business via Instagram)

"'They will come to a bad ending': A year since its $69K peak, Bitcoin has plummeted more than 70% — here's why Warren Buffett has hated cryptocurrency all along" (article from Yahoo! Finance)

"When Small Businesses Can't Pay Their Rent, Can A Recession Be Far Behind?" (article from Yahoo!)