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Wolf Richter

Wolf Richter

Founder, Wolf Street Corp. In his cynical, tongue-in-cheek manner, he muses on WOLF STREET about economic, business, and financial issues, Wall Street shenanigans, complex entanglements, and other things, debacles, and opportunities that catch his eye in the US, Europe, Japan, and occasionally China.

Articles by Wolf Richter

No, Homes Did Not Sell Like Hotcakes: “Pending Home Sales” Plunged 34% in April, a Preview of “Closed Sales” in May

May 29, 2020

The housing market faces ferocious headwinds.
By Wolf Richter for WOLF STREET.
Pending sales of existing homes of all types in April – contracts on houses, condos, etc., that were signed in April but that haven’t closed yet – collapsed by 33.8% from April last year, after having plunged 16.3% year-over-year in March, with the index plunging to 69, according to the National Association of Realtors today. An index value of 100 represents the pending sales level of January 2001.

Pending sales are an indication of what closed sales will look like a month or two down the road. So this is an indication of the direction that May’s closed sales are heading into.
We already know how pending sales in March translated into closed sales in April. Pending home sales for March had plunged 16.3%

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Week 10 of the U.S. Labor Market Collapse: Still Getting Worse at Gut-Wrenching Pace, But Signs of Bottom Appear

May 28, 2020

Gig workers weigh. PUA and “Initial Claims” surge. But millions of other workers got their jobs back. Here are the “Insured Unemployment Rates” for each state, topping out at 30%.
By Wolf Richter for WOLF STREET.
Has the collapse of the US labor market finally bottomed out? It would have to stop getting worse first. After it stops getting worse, it might begin to recover. And there are signs that the labor market might be approaching that bottom, but the overall numbers are still getting a lot worse.
The number of people who filed for unemployment insurance in or before the week ended May 9 under all state and federal unemployment insurance programs combined, including Pandemic Unemployment Assistance (PUA) for gig workers and programs for laid-off federal employees, and who still

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4th-Largest US Rental Car Company, Advantage, Files for Bankruptcy: 3rd Time in Decade, Hertz & Private Equity Written All Over It

May 28, 2020

The “bare bones” petition is a sign that “something was about to happen.” Pressure piles on the used-vehicle wholesale market.
By Wolf Richter for WOLF STREET.
The second major rental car company popped in less than a week – but this one is owned by a private equity firm, Catalyst Capital Group in Canada. Advantage Holdco Inc., the holding company of Advantage Rent-a-Car, the fourth largest rental car company in the US, filed for Chapter 11 bankruptcy on Tuesday late evening.
The filing included subsidiaries Advantage Vehicles, E-Z Rent A Car, Advantage Opco, Central Florida Paint & Body, Advantage Vehicle Financing, and RAC Vehicle Financing.
Advantage is far behind the three giants: #1 Enterprise, #2 Hertz, which last Friday already filed for what will likely be a messy

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College Enrollment in the Spring Fell for 9th Year in a Row, and Now Comes Covid

May 27, 2020

Already troubled asset classes, such as student housing and student housing CMBS, face turmoil.
By Wolf Richter for WOLF STREET.
The pandemic threw higher education into chaos in the middle of the spring semester. How this will pan out for students, colleges, the whole army of people that works in higher education, the asset class of student housing, student housing mortgages packaged into commercial mortgage backed securities (CMBS), text-book publishers, and the rest of the industries surrounding the sector is highly uncertain. But even before the crisis hit, before the shutdowns, student enrollment in the spring 2020 fell for the ninth year in a row.
The number of post-secondary students – undergraduate and graduate students – fell 0.5% from the Spring semester last year, or by

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Despite Record-Low Mortgage Rates, New House Prices Drop to Lowest April since 2015, Sales to Lowest April since 2017

May 26, 2020

More than plenty of supply: 6.3 Months’ unsold inventory of speculative houses.
By Wolf Richter for WOLF STREET.
Sales of new single-family houses in April dropped 6.2% from a year ago, after having dropped 11.6% in March, to a seasonally adjusted annual rate of 623,000 houses, down nearly 20% from the peak in January:

This decline in sales has occurred despite record low mortgage rates in April, with the average 30-year fixed rate dropping to 3.23% in the week ended April 30, the lowest ever, according to Feddie Mac data.
And the median price fell.
The median price of new houses in April fell 8.6% from April a year ago to $309,900, according to the Commerce Department, based on data produced jointly by the Census Bureau and the Department of Housing and Urban Development. The peak

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US Air Passenger Traffic over Memorial Day Weekend Down 87%, Amid Signs of Slow Recovery

May 26, 2020

Airlines don’t expect a quick recovery back to “normal” either. Based on their decisions about aircraft in their fleets, they expect this to drag out for years.
By Wolf Richter for WOLF STREET.
This was the first big travel weekend of the Pandemic Era – meaning a holiday weekend when normally Americans like to go somewhere. So let’s see how it went for airlines.
The worst for the economy may be over, meaning that the economy, which is in terrible shape, may not get worse from here on forward, and that activity is ticking up, though the economic data that lag by weeks and months, such as unemployment rates, consumer spending, or GDP, are certainly going to get a lot worse because they’re still trying to catch up with just how bad it already is.
In the immediate near-real-time data,

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Hertz Bankruptcy Threatens to Make Mess of Used-Vehicle Prices with Burst of Pent-Up Supply

May 25, 2020

Here come the “bankruptcy-remote special-purpose subsidiaries” and $14.5 billion in rental-vehicle-backed securities. The stock market – other than Carl Icahn – smelled a rat for years.
By Wolf Richter for WOLF STREET.
The Chapter 11 bankruptcy filing of Hertz Corporation and its US and Canadian subsidiaries Hertz, Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen – but not its subsidiaries in Europe, Australia, and New Zealand – on Friday May 22 threatens to make a royal mess of used-vehicle wholesale prices, as creditors may take possession of their collateral and dump hundreds of thousands of vehicles on the wholesale market starting in late July, pushing down wholesale prices further and creating further valuation pressures and bigger losses for Hertz creditors, the entire

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Catastrophic Plunge in Jobs & Labor Force in Los Angeles, San Francisco/Silicon Valley Smacks into Housing Bubbles

May 23, 2020

Holy cow, Los Angeles. The economy is gradually opening up. But the exodus has started hard and heavy. And the influx has stopped.
By Wolf Richter for WOLF STREET.
A little anecdotal thingy before we get into the horrifying data: I was on a call with a guy from Google – they want my WOLF STREET media mogul empire to spend money advertising on Google. He was working from home, and since he no longer has to go to Google’s office in Redwood City, he moved home to his parents in St. Louis, Missouri. One more soul gone from the Bay Area housing market, and he still has a job.
Coastal California is an expensive place, and if you lose your job, and you’re not rich, and maybe your stock options didn’t pan out, why stick it out? And if you can work from home, why spend a fortune on housing

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The Unemployment Rate for Each State, from 7.9% in Connecticut to 28.2% in Nevada

May 22, 2020

How rates soared by state from February to March to April.
By Wolf Richter for WOLF STREET.
The unemployment rates by state for April were released this morning by the Bureau of Labor Statistics. They range from 7.9% in Connecticut to a catastrophic 28.2% in Nevada, up from 3.6% in February. Every state has its own challenges. In Nevada, the casinos and shows and hotels and everything that comes along with them have been put on ice, and people in the US and from around the world aren’t traveling to Nevada anymore to gamble.
Hawaii, another economy where tourism is hugely important, has seen its unemployment rate jump nearly nine-fold from 2.6% March to 22.3% in April.
The unemployment rates of the big four states – they account for one-third of the total US population – are in the

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Median Home Price Does Classic Head-Fake as Home Sales Plunge and Condo Sales Collapse

May 22, 2020

Turmoil in the housing market and its impact on the “median price.”
By Wolf Richter for WOLF STREET.
Across the US, despite record low mortgage rates, sales of “existing homes” – closed transactions of previously owned single-family houses, townhouses, condos, and co-ops – plunged 17.8% in April from March, after having already plunged 8.5% in March from February, to a seasonally adjusted annual rate of 4.33 million homes, last seen in September 2011 (also 4.33 million). The last time sales were lower was in July 2010. This knocked April’s sales volume down by 25% from pre-Covid February (data via YCharts):

Compared to April 2019, homes sales dropped 17.2%, according to the National Association of Realtors today. It was the sharpest year-over-year drop since August 2010, during the

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Week 9 of the Collapse of the U.S. Labor Market: Still Getting Worse at a Gut-Wrenching Pace

May 21, 2020

Federal Pandemic Unemployment Assistance (PUA) for gig workers doubles initial claims under state programs. Here are the “Insured Unemployment Rates” for each of the 50 states & DC.
By Wolf Richter for WOLF STREET.
The moment the unemployment crisis stops getting worse and bottoms out would signal the beginning of a recovery of the job market. But instead, it’s still getting worse at a gut-wrenching pace.
In the week ended May 16, state unemployment offices processed 2.438 million “initial claims” for unemployment insurance under state programs, bringing the total number of initial claims over the past nine reporting weeks since mid-March to a mind-bending 38.6 million (seasonally adjusted). The claims reported by the US Department of Labor this morning were over three times the

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Used-Vehicle Market Begins to Unfreeze, Pent-up Supply Looms

May 20, 2020

Now at least, price discovery can take place amid a more ample flow of vehicles. But the entire industry dreads a Hertz bankruptcy could cause lenders to liquidate its fleet.
By Wolf Richter for WOLF STREET.
The images are cropping up all over the Internet: Parking lots of temporarily shut-down stadiums and shopping malls densely packed with cars, SUVs, vans, and pickups. These are rental vehicles that rental car companies don’t know what to do with because they cannot rent them out because their travel market has collapsed. And some of them are off-lease vehicles that had been leased and whose lease expired. This is just part of the pent-up supply. The longer these vehicles sit, the more value they lose.
They need to be sold at wholesale auctions, but auction volume had collapsed

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What Unicorn Money-Sinkholes Actually Disrupt

May 20, 2020

They have accomplished an amazing feat: losing tons of money year after year during the Good Times in what were profitable industries.
By Wolf Richter. This is the transcript from my podcast last Sunday, THE WOLF STREET REPORT:
What do the companies Wayfair, Zillow, Uber, Lyft, WeWork, Carvana, Tesla, Airbnb, Casper Sleep, Zume, and many others have in common in addition to their current or former status as unicorns with huge valuations?
There is one fundamental thing they all have in common: Supported by what seemed to be an endless flow of investor money, they barged into profitable industries, such as retailing furniture, house flipping, real estate brokerage, taxi operations, serviced temporary offices, selling used cars, manufacturing new cars, retailing mattresses, pizza

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During the Last Financial Crisis, Even Ecommerce Sales Plunged. Not This Time

May 19, 2020

Ecommerce Spiked to Record. Mall Stores Got Hung Out to Dry. Walmart’s Online Sales, Still Woefully Behind, Shot Up 74%
By Wolf Richter for WOLF STREET.
Walmart US ecommerce sales set the tone. Being the largest grocery seller in the US, it didn’t have to close its stores. Nevertheless, its ecommerce sales soared 74% in the first quarter, compared to Q1 a year ago, Walmart reported today. This would be an increase of $3.2 billion from a year ago to $7.5 billion. But Walmart US had fallen woefully behind during the early years of ecommerce; while it is now rapidly catching up, its ecommerce sales in Q1 were still only 8.5% of its Walmart US sales.
By contrast, in 2019, Nordstrom’s online sales already accounted for over one-third of its total sales, and Macy’s online sales accounted

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Shares of Mall REITs Jumped 12% Today, But Have Collapsed So Far It’s a Barely Visible Blip

May 19, 2020

The disaster came in two phases: first, the brick-and-mortar meltdown, then Covid-19.
By Wolf Richter for WOLF STREET.
Retail property REITs had a huge day in the stock market today. The WOLF STREET market-cap-weighted index of nine REITs in this space surged 12.4% today! These nine REITs in my index are Tanger Factory Outlet Centers, Cedar Realty Trust, Macerich, Seritage Growth Properties, Kimco Realty, RPT Realty, Washington Prime Group, Brixmore Property Group, and the largest of them all, Simon Property Group.
But despite that one-day surge, the index remains down 76% from the peak in July 2016. This collapse of the sector came in two phases: Phase one, from July 2016 to February 22, 2020, the relentless brick-and-mortar meltdown that has been going on for years, powered by the

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The WOLF STREET REPORT: What Unicorn Money-Sinkholes Actually Disrupted

May 18, 2020

Wayfair, Zillow, Uber, Lyft, WeWork, Carvana, Tesla, Airbnb, Casper Sleep, Zume, and many others – they all have accomplished an amazing feat: losing tons money year after year during the Good Times in mundane profitable industries.
By Wolf Richter for WOLF STREET.
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Zombie J.C. Penney Finally Files for Bankruptcy, in Deal with Distressed Debt Funds. Stock and Some Bonds Wiped Out

May 16, 2020

Investors bet on this outcome for years. Covid-19 just sped it up by a few months. Department Stores Are Toast.
By Wolf Richter for WOLF STREET.
I’m in awe of how long these publicly traded companies with access to hyperventilating capital markets can hang in there and burn cash and ruin their brand and drive away their customers, and make expense-cutting their business model, and present this expense-cutting to investors to get more cash to keep the charade going, over and over again, before finally investors refuse to throw good money after bad. And then it still takes nearly forever before these companies can’t breathe any longer, by which time their brand has been turned into a liability suitable only for hanging on a scarecrow.
Yup, it finally happened. J.C. Penney announced

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Here’s What Collapsed, Spiked, or Hung On in 12 Charts of Retail Sales (Yes, Department Stores Were Already Toast)

May 15, 2020

Ecommerce booms. Years of brick-and-mortar meltdown gets compressed into a few months.
By Wolf Richter for WOLF STREET.
Just how hard it is to even track the sudden collapse of brick-and-mortar retail sales when many stores are temporarily shut down and when the Census Bureau was operating at reduced capacity, was made clear in a special note when the Census Bureau released its report on retail sales today. The store locations across the US are normally contacted in various ways, including by email, regular mail, and phone calls. But this time, most of it was shifted to email and online. Stores that reported $0 sales were “tabulated with $0 sales as long as the company was viewed to be representative of other companies in the same industry.”
The hot and the near-dead all averaged

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After Two Months of Jawboning and Media Hype that Triggered a Huge Rally, the Fed Finally Buys a Whopping $305 Million in Corporate Bonds

May 15, 2020

What gave the Fed the “Authority” to do this? Enter the “13(3) facilities.”
By Wolf Richter for WOLF STREET.
There has been huge hoopla about the Fed stepping into the markets and buying investment-grade corporate bonds and “fallen-angel” junk bonds, syndicated leveraged loans, CLOs (collateralized loan obligations), bond ETFs, and even junk-bond ETFs. The first intentions were announced in March and then expanded to include more asset classes and lower credit ratings. The Fed also announced that it would buy bonds and slices of syndicated loans directly from issuing companies, thereby providing emergency funding directly to companies that are solvent but cannot fund themselves because credit markets have frozen up. So what has the Fed actually done — and under what “authority?”

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Week 8 of the Collapse of the U.S. Labor Market: Nearing a Previously Unthinkably Deep Bottom?

May 14, 2020

“Insured unemployment rate” in California spiked to 27.7%, “continued claims” hit 4.8 million. In terms of “initial claims,” Georgia & Florida move into 1st and 2nd, ahead of California.
By Wolf Richter for WOLF STREET.
State unemployment offices have processed 2.98 million “initial claims” for unemployment  insurance in the week ended May 9, according to the US Department of Labor this morning. This brings the total number of initial claims processed over the past 8 reporting weeks since mid-March to a gut-wrenching 36.84 million (seasonally adjusted). Today’s claims were over four times the magnitude of the prior spikes in the unemployment crises in 1982 and 2009.
While the weekly explosion of initial claims has slowed from prior weeks, the number of people still filing for

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First the Freight Recession, Now Covid-19: Trucking & Rail Freight Collapses. Is This the Bottom?

May 14, 2020

YRC, one of the largest less-than-truckload carriers, wheezes under the strain.
By Wolf Richter for WOLF STREET.
The hope is that April was the bottom, that volumes can’t fall further, that factories and retailers will gradually open and that consumers and businesses will buy these goods, and that trucks and railroads will roll again. That’s the hope. It might take a long time to get back on track, but at least the hope is that the plunge in the demand for transportation services bottomed out in April.
Shipment volume in the US by truck, rail, and air collapsed by 22.7% in April compared to April last year, and is down 25% from April 2018, according to the Cass Freight Index for Shipments today. It was the 17th month in a row of year-over-year declines, where the Covid-19 crisis

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What Powell said About Negative Interest Rates, Their Effect on Banks, Jawboning, and Why the Fed Might Not Buy a Lot of Junk Bonds

May 13, 2020

The reasons behind the Fed’s No-NIRP stance: It doesn’t work and kills bank stocks. One of the most revealing statements.
By Wolf Richter for WOLF STREET.
Over the years, the Fed has waffled on all kinds of things, from what represents “price stability” to what it will do with regards to asset purchases. But there’s one theme that it has been relentlessly consistent about: a negative interest rate policy (NIRP).
There has been a lot of clamoring for negative interest rates, ranging from bond-fund managers and hedge funds – when rates fall, bond prices rise – to the White House. Last week, futures markets had started to price in negative rates for the federal funds rate, which is the rate that the Fed targets with its policies. The absurdity is just too tempting and juicy: Who

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A Word About the Current Chaos in Prices and Inflation

May 13, 2020

Some prices collapsed, others skyrocketed, and the Consumer Price Index went haywire. Here’s what I’m seeing beyond the near term — and it’s not “deflation.”
By Wolf Richter for WOLF STREET.
Amid soaring prices of meat, beverages, fruit, veggies, and other food at home, and surging costs of personal goods, medical care services, and household furnishings, and amid a collapse in prices of gasoline, car rentals, public transportation, car insurance, lodging away from home, and other things – amid these diametrically opposed price movements, the Consumer Price Index went, as expected, haywire today. And we’re going to look at some of those gyrations beyond it.
First, here’s what got buffeted around:
The overall Consumer Price Index fell 0.8% in April from March, the steepest one-month

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“Pent-up Supply” is Building up in the Housing Market: Example of San Francisco Bay Area’s North Bay

May 12, 2020

“The next big shoe to drop will be when appraisers call a declining market in early August.”
By Wolf Richter for WOLF STREET.
The Virus has thrown the housing market into turmoil. Housing moves slowly. It took the last housing bust four years to play out. But the underlying dynamics can change quickly. So here are some of the underlying dynamics from the four counties that form the North Bay of the San Francisco Bay Area: Marin (just north of the Golden Gate Bridge), Sonoma and Napa (Wine Country), and Solano (easternmost part of the North Bay).
New listings plunged 62% in April from a year ago to just 675 houses and condos, after having already dropped in March. This is supposed to be the spring selling season, and new listings are supposed to surge, but sellers aren’t interested

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US Commercial Real Estate Prices Plunged in April, Mall Prices Collapsed

May 11, 2020

Tenants’ collapsing one after the other without replacement has a pernicious impact on property prices.
By Wolf Richter for WOLF STREET.
Before the coronavirus, some segments of commercial real estate (CRE) were red hot, others were hanging in there or declining, and one sector, malls, has been in deep trouble since 2016, with prices plunging. Then came the lockdowns. Property prices in every CRE segment fell in April, even those that were red hot. And prices of mall properties got crushed.
The overall Commercial Property Price Index (CPPI) by Green Street Advisors had peaked in the period of November 2019 through January 2020. In February and March, it ticked down. In April it plunged 9.4% from March, the second largest percent-drop in the data going back to the 1990s. The largest

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It Gets Rough for US Airlines: Why Buffett Dumped His Airline Stocks Though There Was Blood on the Tarmac, Which Should Have Been a Buy Signal

May 10, 2020

Just can’t catch a break: Friday after hours, United disclosed it abandoned its junk-bond offering after investors balked. Shares fell.
By Wolf Richter for WOLF STREET.
Here’s what US airlines are going through: The TSA has been reporting the number of daily checkpoint screenings. This is the number of people in the US who got on a plane for at least the first leg of a trip. A connecting flight would not trigger another screening. This is a rough indication of passenger air traffic.
Between March 1 and May 9, 2019, the TSA checkpoint screenings ranged between 2 million and 2.6 million per day. This year between March 1 and May 9, they have collapsed to as low as 90,000 screenings, and though they have ticked up, they remain abysmally low:

Airlines reported that some flights have

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The State of the American Debt Slaves, Q1 2020

May 9, 2020

How are consumers positioned going into the crisis?
By Wolf Richter for WOLF STREET.
Most of the first quarter was still the Good Times, but in later February and early March it hit the fan, as markets were crashing. In mid-March lockdowns started to roll across the country, and the layoffs by the tens of millions commenced. So how were consumers positioned going into this crisis? Many of them, up to their eyeballs in debt.
Consumer debt – student loans, auto loans, and revolving credit such as credit cards and personal loans but excluding housing-related debts such as mortgages and HELOCs – jumped by $153 billion at the end of the first quarter, compared to Q1 a year earlier, or by 3.8%, to $4.15 trillion (not seasonally adjusted), according to Federal Reserve data:

In March, the

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Collapse of the Labor Market in 5 Charts: Employment Plunged to 1999 Level. Everything’s a Gut-Wrenching Record

May 8, 2020

Tens of millions of people, many at the lower end of the income scale, lost their jobs. But stocks surge thanks to the Fed’s helicopter money for Wall Street & asset holders.
By Wolf Richter for WOLF STREET.
The total number of employed people collapsed by 22.3 million in April from March, the largest monthly drop in the history of the data series going back to 1948. This left only 133.4 million people still employed, the lowest level since June 1999. This is based on surveys of households by the Bureau of Labor Statistics and includes full-time, part-time, and gig workers:

Of these 22.3 million people who lost their jobs, there were 15.0 million who said they usually work full time and 7.4 million who work part time – in other words, one-third of the people who lost their jobs

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Fed Cuts QE Helicopter Money for Wall Street Further. Still Hasn’t Bought Junk Bonds or ETFs. Was Just Jawboning

May 8, 2020

Loans to “SPVs” declined to lowest since March 25.
By Wolf Richter for WOLF STREET.
Total assets on the Fed’s balance sheet rose by $65 billion during the week ended May 6 — the smallest weekly increase since the week of February 26, when assets fell by $13 billion. And it was down 89% from peak-bailout in the week ended March 25. The chart depicts the weekly changes of total assets on Fed’s balance sheet:

The chart below of the Fed’s total assets, now at $6.72 trillion, shows the effect of the reduced weekly QE binges: a flattening curve since peak-bailout of $586 billion in the week ended March 25:

The Fed slashed its purchases of Treasury securities. Mortgage-backed securities (MBS) and commercial mortgage-backed securities (CMBS), after falling last week, remained flat.

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Uber Lost $3 Billion on $3.5 Billion in Revenues. Fake “Profitability” Delayed. Another Quarterly Horror-Show. Markets Eat it Up

May 8, 2020

This hoped-for fake “profitability” isn’t profitability, but “Adjusted EBITDA,” Uber’s own homemade creature.
By Wolf Richter for WOLF STREET.
Uber – which announced another round of mass-layoffs this week of 3,400 folks or 14% of its staff – reported another classically horrendous quarterly loss this evening.
Revenues rose 14% in the first quarter, ended March 31, to $3.5 billion. But operating expenses, despite cost cuts and the series of layoffs, jumped by 16% to $4.8 billion. And there were “other expenses” of $1.8 billion and interest expenses of $118 million, a tax benefit, and a couple of other things. And the net loss tripled to $2.94 billion.
It’s astounding that investors don’t throw in the towel on a company that is over 10 years old and has many thousands of employees

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