November 21, 2023
Rates and consumer pressure
U.S. CPI was flat in October, with year-over-year inflation at 3.2%. Core prices rose 0.2% month over month and 4% year over year, the smallest annual increase since September 2021. India also showed easing, with annual retail inflation falling to 4.87% from 5.02%.
Moody's changed its U.S. sovereign credit outlook from stable to negative while keeping the AAA rating. The agency pointed to the fiscal deficit and political polarization. Average interest rates on U.S. government debt rose from 1.61% in 2021 to 2.97% in 2023, and net interest costs reached $659 billion in fiscal 2023, up 39% from 2022.
Retail sales fell 0.1% in October after rising 0.9% in September. Target and Home Depot were seeing sales fall 3% to 4%, while low-wage worker pay growth slowed from 7.2% in January to 5.9% in October. Credit card debt increased by $154 billion in the third quarter versus the same period last year, the largest increase since 1999. For recruiting, this is a useful consumer split: weaker low-income spending can coexist with major long-term capital commitments elsewhere.
Housing fee pressure
A Missouri judge found the National Association of Realtors and several brokerages guilty of anticompetitive conduct tied to home-sale commissions. About 500,000 Missouri home sellers were expected to share a $1.8 billion payout, with potential damages rising to nearly $5 billion.
The case challenged the standard 5% to 6% commission structure. Americans pay about $100 billion in real estate commissions each year, and that pool could fall by up to 30% if sellers gain more bargaining power. Zillow shares fell after the verdict because buyer-agent advertising is part of its revenue base. This is one of the cleaner examples of a legal ruling turning into a fee-pool and valuation story.
Aircraft and venture capital
Dubai-based carriers placed orders exceeding $50 billion for Boeing jets. Emirates and flyDubai jointly ordered 125 Boeing wide-body aircraft, including 90 777x planes. Boeing shares rose 4.4% after the order news and after reports of a possible pause in Chinese 737 orders following a Biden-Xi meeting.
The order helps Boeing's delayed 777x program, but delivery timing still matters. Industry insiders estimated airlines were negotiating for 700 to 800 new jets, much of it tied to replacement demand delayed during the pandemic. Many aircraft are not expected to be delivered until 2030 because supply chains remain tight.
Khosla Ventures was close to raising a $3 billion fund, including $500 million for startups and $1.6 billion for early-stage companies. The focus included nuclear fusion, humanoid robots, and AI. My read is that higher rates did not kill growth investing. They made capital more selective and more concentrated around investors willing to underwrite long-duration, high-variance outcomes.