📰 This Week…

• New economic data has investors on edge.

• Rent increases are slowing around the country.

• Perplexity made an important step in the relationship between AI products and traditional media companies.

• Blackstone officially completes their acquisition of the Hipgnosis Songs Fund acquisition

And so much more!

📊 Markets

• Interest Rates, Federal Funds: 5.33%

  • Next FOMC meeting starts September 17

• 30 Year Mortgage Rates: 6.73%

  • (-0.74% WoW, -3.2% MoM, -2.5% YoY)

• Single Family Home Price Index: 424.6

  • (-0% MoM, +5.7% YoY)

  • July report, data is through May

• Commercial Real Estate Index: 123.6

  • (+0.0% MoM, -5.2% YoY)

💸 Economy

Bottom Line: The US economy has been showing quiet warning signs throughout the year. They’re not so quiet anymore. While The Fed did not cut interest rates in July, it is now widely expected in September.

With unemployment jumping to 4.3%, the health of the economy is in focus now. There’s also slowing increases in hourly earnings, declining job openings, worsening sentiment about the job market, a slowdown of consumer spending, and increasing levels of corporate bankruptcies. But, layoffs decreased, consumer confidence rose, and Mastercard expects the consumer to hold up in the short term.

The question markets are trying to assess is whether The Fed will be able to keep the emerging problems from growing and pulling the US into recession.

• The unemployment rate increased to 4.3% in June. In July, average hourly earnings increased 3.6% yearly. That is the lowest increase in over 3 years. It is still above the late 2019/early 2020 trend (pre-pandemic), however. (Reuters)

• The labor market is continuing to evolve, but slowing. Job openings decreased again in June, continuing an ongoing trend. New hires and layoffs also decreased. June saw the fewest layoffs since late 2022. People voluntarily quitting their jobs decreased as well. The end-result is a weakening labor market that’s still holding up. However, people are increasingly reporting the market is bad. A total of 16% of people reported that jobs were hard to get, a 3.5 year high. (Reuters)

• A slowdown in consumer spending is showing up across the board. Even McDonald’s is feeling the impact. They had a sales decline for the first time in over 3 years. As consumers spend less, companies are beginning to focus more on value, savings, and discounts. That could help to suppress inflation. (MarketWatch)

• Some have a more optimistic outlook on the consumer. Mastercard saw a 7% yearly increase in purchases. They also expect consumer spending to remain solid for the short term. (Quartz)

• Consumer confidence increased slightly in July. However, that is compared to a confidence index reading for June that was revised lower. (Reuters)

• The disappointing economic metrics have many expecting interest rate cuts this year. Fitch Ratings is now forecasting two of them. (Reuters)

• June saw the highest level of bankruptcy filings by corporations since 2020. There was a 1.3% decrease in retail sales in Q2 2024, compared to 2023. (Business Insider)

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🏠 Real Estate

Bottom Line: The housing market is slowing down. This is partially due to increased inventory. Some areas are seeing the impact more severely than others. There’s also rising insurance costs in some big markets like Texas that are hurting prices. Rents are still increasing, but slowing down. Foreclosures of commercial properties increased significantly in Q2 reflecting the ongoing problems in the space.

• The Case-Shiller home price index reported 5.9% growth for May. That makes May’s number an all-time high for the index. The FHFA’s House Price Index disagrees slightly. They have May at just a tiny bit below April and a 5.7% yearly change. (Bankrate)

• Capital Economics reports that this summer’s increase in home inventory is starting to affect sellers. They believe the market is transitioning more towards a buyer’s market. However, they also think it could take until 2026 for the market to balance out. (Business Insider)

• Based on data from Realtor.com, most markets have fewer houses for sale in 2024 than in 2019. Texas and Florida are stand-out exceptions to this. Austin has 40% more homes for sales now. There are also increases in Tennessee, Idaho, Washington, and Arizona. This somewhat aligns to areas with yearly price declines in 2024. Florida, Texas, Louisiana are the most pronounced. However, there’s a scattering of declines in different metros across the US. (Fast Company)

• Rents are still increasing around the country, but at a slower pace than the last several years. Overall rents have increased an estimated 1% yearly. (The Washington Post)

• A small survey of real estate investors found many reported losing money during their course of investing. Their biggest regrets range from tenant issues, legal issues, too much time investment, a bad choice of property, and paying too much to buy the house. (Business Insider)

• Expensive natural disasters are pushing insurance premiums higher in The Sun Belt. Texas, Florida, and Louisiana are seeing the highest growth in insurance costs in the past 20 years. These increases are hurting the value of real estate, especially for multifamily housing. (Business Insider)

• Commercial properties continue to suffer. Q2 saw the highest amount of foreclosures since 2015. Quarter-over-quarter, foreclosures increased by 13%. (The Wall Street Journal)

💡 Startups

Bottom Line: Large companies continue to use their existing funds to acquire AI startups. While they have their own AI projects, they’re spending heavily on acquisitions. This may speak to the difficulty and cost of building some of these solutions from scratch.

Regulators are probing one of Nvidia’s AI acquisitions. Protect AI raised $60M to help make AI systems more secure. Perplexity may have found a way to make peace with media companies. They may have also developed a new content monetization model for a world of AI search engines and summaries.

• Search engine startup Perplexity has settled disputes with several major media companies. Perplexity is planning to launch ads on their service in the near future. The two sides have agreed to a revenue-sharing model when major brands’ content is used alongside the ads. (Semafor)

• Canva is a graphic design company and one of the largest private startups. They just completed an acquisition of Leonardo.ai, a popular generative AI company. The terms weren’t disclosed, but one estimate has the cost at $380M. (TechCrunch)

• The US DOJ is scrutinizing Nvidia’s acquisition of Run:ai. The estimated $700M purchase has raised potential antitrust concerns. This is because of Nvidia’s existing dominant position in providing computer chips for AI workloads. (Ars Technica)

• Reddit has purchased Memorable AI. The AI ad technology company is believed to have cost Reddit about $40M. Reddit hopes the acquisition will make their platform a more valuable place to advertise. (Business Insider)

• Protect AI has raised $60M at a $400M valuation. The company provides products and services to help protect AI and machine learning systems. (GeekWire)

🎵 Music Royalties

Bottom Line: Hipgnosis Songs Fund is officially acquired. A new bill takes aim at “deepfake” music that could hurt artists.

• The Hipgnosis Songs Fund is officially a part of Blackstone now. Shares have been removed from the London Stock Exchange. (Billboard)

• Congress has introduced a new bill (the NO FAKES act) aimed at protecting artists from generative AI. While the movie and music industry are on board, it’s unclear if the bill will make it into law. (Billboard)

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