Posts

Unemployment Claim

Weekly Jobless Claims In US Hit 18-Month Low

The Labor Department revealed this week that weekly jobless claims have decreased to almost pre-pandemic levels. People on state unemployment have also hit March 2020 levels when the pandemic was initially starting and shutting down multiple businesses.

Europe’s Proposed Artificial Intelligence Law Could Cost Its Economy $36 Billion 

A new law proposed for the European Union designed to regulate artificial intelligence could cost the nation up to 32 billion euros; about $36 billion. The payments would be spread out over five years according to a report from the Center for Data Innovation, a Washington-based think tank. 

The Artificial Intelligence Act is a proposed law put forward by the European Commission, the executive arm of the EU. The act is said to be the :world’s most restrictive regulation of AI” according to the center. 

Embed from Getty Images

“It will not only limit AI development and use in Europe but impose significant costs on EU businesses and consumers.”

The Center for Data Innovation argued that a small or midsize enterprise with a turnover of 10 million euros will face compliance costs of up to 400,000 euros if it was to deploy an AI system deemed “high risk.” These systems are ones that the commission defines as “affecting people’s fundamental rights or safety.” 

“That designation sweeps in a broad swath of potential applications — from critical infrastructure to educational and vocational training — subjecting them to a battery of requirements before companies can bring them to market,” the center said.

Embed from Getty Images

The center argues that “compliance borders” will cost European businesses 10.9 billion euros per year by 2025, or 31 billion euros over the next five years. Ben Mueller, a senior policy analyst at the Center for Data Innovation and author of the report suggested that this would be more harmful than helpful to many sectors of the economy. 

“The Commission has repeatedly asserted that the draft AI legislation will support growth and innovation in Europe’s digital economy, but a realistic economic analysis suggests that argument is disingenuous at best.”

“The rosy outlook is largely based on opinions and shibboleths rather than logic and market data,” he added, explaining that AI is already being used by major companies like Google, Apple, and Facebook, but lawmakers in Europe aren’t even aware of the impact this new law could have. 

Mueller explained that the technology has the potential to improve healthcare and climate modeling for the nation, however, it can also be used to give every citizen a “social score.” The law is still in the works and the debates over its actual benefits are ongoing.

Designer Fashion Labels Are Increasing Their Prices Post-Pandemic 

Top designer brands are currently increasing their prices as a means of making up for any economic loss that occurred within the past year due to the pandemic. Currently, there’s a high demand for luxury items among upper class individuals in the US. 

After nearly 18 months, designer fashion labels were finally able to revive the art of live fashion shows as well, which has brought back a certain cultural energy that the world was lacking throughout the past year of lockdown. 

Embed from Getty Images

Chanel, for example, as a brand has increased their handbag prices by at least 15% when compared to last year’s pricing. Chanel’s revenues have also declined by nearly 20% throughout 2020. 

A recent Bernstein industry report identified “Rolex, Dior, Prada, Gucci and Louis Vuitton as brands that had raised prices. The pricing of luxury bags had increased at twice the level of the broader consumer prices index over four decades. The most desirable brands had translated growth into increasing prices quickly in an unrealised pricing upside.”

Bernstein analyst Luca Solca said: “Most luxury brands increased prices during the pandemic in the attempt to cushion the impact of lower sales. Chanel has been particularly aggressive in this move. Very desirable brands have the ability to increase prices, if they so wish. This has the advantage of reducing the risk of overwhelming the market and putting perceived exclusivity in jeopardy.”

Embed from Getty Images

Orsola de Castro, founder of Fashion Revolution, a fashion activism movement, said: “The luxury industry needs to go back to some kind of semblance of luxury, because it’s hardly been immune to the low-quality, high-quantity bug. There is so much wrong with luxury these days, but the main issue is lack of transparency.”

“To imagine a luxury industry that really is luxurious, they need to reinvent their parameters, go back to the essence of what luxury is – craft, respect for human toil and skills, and beautiful materials. None of this can hurt people and nature, if we are to consider it a luxury product.”

There’s a major rise in the movement for sustainability in fashion, especially considering a lot of the more affordable brands that average working-class Americans can afford are produced in factories overseas, likely filled with harsh conditions and underpaid workers, however, the issue is clearly systemic. 

We can’t expect every American to shop sustainably when that’s just not possible for so many individuals, but we can reshape the brands that are deemed “luxury” to return back to a sense of craftsmanship and transparency, like de Castro explained, and hope that a larger revolution in the fashion industry can occur. 

House Keys 2

How Much Has The US Housing Market Been Impacted By The Pandemic? 

Housing experts throughout the US are currently experiencing a “white hot” market thanks to a multitude of economic reasons. However, problems that existed in the industry before the pandemic are being just as exasperated due to the impact of the past year overall. 

“One of the most prominent housing issues in pre-pandemic America was supply shortages. That has carried over and exacerbated, but we already had evidence of supply shortages heading into the pandemic,” said Matthew Murphy, executive director of the Furman Center For Real Estate and Urban Policy at New York University. 

Murphy also explained that “today’s housing situation has its roots in the last boom-bust cycle. The context here to this current housing moment is that we were still recovering from the 2009 foreclosure crisis, when property values plummeted.” 

Embed from Getty Images

According to the National Association of Realtors (NAR), over the past two decades an underbuilding gap of between 5.5 million and 6.8 million housing units has existed since 2001. 

The National Association of Home Builders found that of “all the new single-family homes built last year across the U.S., none were priced below $100,000. A mere 1 percent fell in the range of $100,000 to $150,000. Home buyers in the bottom one-fourth of the market have been squeezed entirely out of the market for new construction,” the group said in an online post.

“In a pandemic, with people working from home and kids schooling from home, you need more space. We saw a real pickup in demand. People wanted a home with some green space and a community with lower population density.”

“The increase in demand has really been sparked by the record low level of mortgage rates. That’s a real opportunity for anyone who’s shopping for a mortgage or shopping to buy a home, and that’s really sparked the demand, especially among millennials or Gen Xers,” explained Frank Nothaft, chief economist at CoreLogic. 

Prospective buyers are also noticing a major decrease in available homes due to the fact that those who weren’t as economically stunted by the pandemic have been able to get out and acquire more real estate within the past few months of recovery. 

Embed from Getty Images

“You’ve got this 20-plus percent year-over-year price growth, which you think would entice homeowners to sell. The bigger factor is just availability of supply to move into. … There’s nothing to go buy or downsize into,” said Todd Teta, chief product officer at Attom Data Solutions.

Zillow found a nearly 4% increase in housing availability on the market in May, which has been the first time that percentage has increased since July 2020. The NAR found that the average price of existing homes throughout the US have hit a record number of $350,000; up nearly 25% when compared to last year. 

“This is supply and demand on steroids.”

The other major issue is that builders, architects, and construction workers can’t keep up with the demand that the pandemic has created. Costs for certain raw materials like copper or lumber are projected to continuously increase within the next couple of months. That in addition to labor costs and the cost of land overall is causing a lot of buyers to be hesitant with their purchases. 

“There’s an affordability that comes with density, and in a lot of America, you can’t build that kind of housing. This just makes it harder for the market to supply this housing en masse,” Murphy explained. 

“If we see a substantial increase in the proportion of the workforce working remotely, then I think we’re going to continue to see some of this shift to single-family and this shift not just to suburban but to the outer edges of metro areas. When you sever that link between where you live and where you work, then that gives you a lot of flexibility on where you locate,”  Nothaft said.

4.1 Million Individual Investors Own 80% Stock Of AMC Entertainment 

AMC Entertainment announced this week that 4.1 million individual shareholders own 80% of the company’s stock. 

“The number of investors who want to own a part of AMC continues to increase. More than 80% of AMC shares are held by a broad base of retail investors — highly unusual for big public companies — with an average holding of around 120 shares.”

Embed from Getty Images

“Some hold more and some hold less, however, each and every shareholder is important to AMC. Each shareholder has a critical role to play in AMC’s future by having their voice heard by voting at our upcoming Shareholder Meeting. By voting in favor of the proposals, together we can help position AMC, in its 101st year of business, for continued success over the next century,”  CEO Adam Aron said in a statement.

AMC shares in general have soared after experiencing a 52-week low of under $2, to a new high of about $73. This Wednesday the shared closed off at $49, and Wall Street Analysts have been closely monitoring the way in which that price has been fluctuating. 

SEC chairman Gary Gensler said that he has “asked the agency’s staff to examine a variety of stock trading issues and rules, which are being closely scrutinized amid wild swings in so-called meme stocks like AMC, GameStop and a handful of others. Brokers profit when investors trade.”

Embed from Getty Images

Aron claimed that “AMC has worked the stock rise to raise cash by issuing shares and selling them at inflated prices. We’ll use the latest cash injection for acquisitions including of ArcLight Cinemas and Pacific Theaters where the chain is in discussions with landlords.”

Within the past year of the pandemic, entertainment hubs like movie theaters and museums have seen a massive decline in revenue and foot traffic; for obvious reasons. So the fact that their stock prices were so low for so long makes sense, especially for AMC which was on the brink of bankruptcy in the beginning of the pandemic. 

Aron is continuing to try to get more investments, just last week he invited all shareholders to become AMC Stubs loyalty members for free, which allows them to get a free popcorn at every showing. As of this past weekend he tweeted that over 100,000 retail investors were not AMC Stubs members, quite a genius move for a company that was on the brink of extinction just a few months ago.

Americans Are Flocking To Florida To Embrace Post-Pandemic Life

Florida has become one of the hottest travel destinations in the past few months as more Americans are receiving their Covid-19 vaccinations and ready to get back to a greater sense of normalcy. 

Beyond just vacationing, many Americans are looking to invest in real estate in Florida, specifically in Miami where social outings have been occurring constantly since the beginning of the year. 

Antonio Khoury is the Managing Director at Compass & principal of the Antonio Khoury Group. He recently was interviewed by Forbes Magazine to discuss this recent influx in Miami investments and travel to Florida in general. 

Embed from Getty Images

The Antonio Khoury Group has been working for over a decade and has seen over $500 million in sales. Khoury said many individuals from Boston and New York have been adding Florida homes as a part of their dream real estate portfolios in this post-pandemic era that we’re all entering. 

 “We made an immediate expansion to the Miami market knowing that we could leverage our strategic alliances within Compass to best serve the needs of Northeast clients looking to purchase a home in the region. My real estate group has facilitated over $20M+ in successful closings in Florida in the past few months,” said Khoury. 

“The mass exodus during COVID-19 to South Florida, was certainly evident. I would argue that COVID-19 expedited plans of owning real estate in a warmer climate.”

Most of the new clientele in Florida, however, is made up of individuals who found themselves on the luckier end of the spectrum in terms of economic and social impact of the pandemic. 

Embed from Getty Images

“The second largest contingency of buyers in the South Florida market are those who have benefited from their companies remaining virtual or have adapted to long term flexible work structures, i.e. young professionals from Boston and New York. These buyers have found the Miami market a much more attractive home base due to its perks. Things like more accessible luxury rental prices, more accessible luxury condo prices, private outdoor space, the warm climate, all the while in the same time zone as both Boston and New York are attracting these young professionals,” Khoury explained. 

Khoury is adamant that any prospective buyers for Florida real estate need to do their research before making any final decisions, especially if they’re looking into Miami. 

“Miami has many distinct neighborhoods, which are set for different lifestyles and personalities. Brickell, for example, is the area with the most high-rise full service residential buildings, offices, restaurants, and nightlife. Given the overall full-service aspect of the neighborhood, it has become the go to area for those seeking pied-a-terres.” 

Khoury recommends that any buyer who’s looking to invest in Miami for a second property should simply vacation there first to make sure that its really worth putting their money into. America is still very much in the middle of combatting this pandemic, so it’s important to remember that the market and social settings in all of these locations will change drastically in the coming months.

Etsy Buys Clothing App Depop In $1 Billion Deal 

Popular online retail giant Etsy announced this week that they would be purchasing Depop, a British secondhand fashion resale app that works like eBay, but specifically for clothing; the app is mainly used by younger generations as a means of purchasing vintage clothing and custom made pieces. 

Josh Silverman, the chief executive of Etsy, which is based in Brooklyn, New York, said that he was already expecting the resale craze to peak as we enter this post-pandemic world. 

Embed from Getty Images

“I expect this whole resale market to continue long after the pandemic, and I believe that Depop’s passionate community of fashion-conscious young people will be leading the way. The generation Z demographic is enormous, and is known as the trendsetter demographic.”

More than 90% of Depop’s 30 million users are under the age of 26, which makes them a part of generation Z, the smartphone conscious generation that utilizes technology to communicate, but also improve the world. 

Etsy revealed that Depop is the 10th most visited shopping site among generation Z consumers in the United States. Etsy itself was founded back in 2005 and has been attempting to expand its influence among younger generations. The average Etsy user is 39, as the app mainly focuses on crafts and handmade items as well as secondhand clothing. Etsy is known for helping small business owners create a larger customer base for themselves, as the site is so universally used around the world.  

Embed from Getty Images

Simon Beckerman is the founder of Depop, and claims he originally made the app for fun back in 2011 while working at a fashion magazine. The app now has registered users in 150 countries and currently has 2 million active sellers; which sold about $650 million worth of secondhand clothing last year alone; Depop took a $70 million cut. 

“The idea for the app came from an early realization that there was going to be a new generation of people who were most acquainted with using mobile phones and there was no app designed for selling clothes.”

Beckerman, who was born in Milan, told Artefact magazine in 2015 that “the concept for the app was initially a shop for the magazine I worked for in Italy and we would sell everything featured in the magazine. When we started Depop, apps were [in their] very early stages and apart from the three or four main ones that everybody was starting to use heavily – such as Instagram, Facebook or Twitter – it wasn’t very clear how we were going to use them fully. We didn’t realise how integrated with our lives they would be.”

Etsy claimed that they would be allowing Depop to continue to operate as is; a standalone business run in London. In general, the secondhand clothing market is valued at about $40 billion, so this acquisition was likely one of the biggest business decisions Etsy could’ve done coming out of this pandemic.

New Home Sales In The US Fell 6% Last Month As Construction Costs Continue To Rise 

The US experienced a 6% fall in home sales throughout the month of April, partially due to the fact that construction and other additional costs that come with buying a home have been on the rise as the pandemic continues. 

The US Census Bureau reported on Tuesday that new residential sales occurred at a seasonally-adjusted annual rate of 863,000 in April. They also reported that the previously published figures for March sales should be decreased to 917,000. This time last year during the pandemic, new home sales were surprisingly up by 48% due to an increase in individuals leaving the city to have more space in the suburbs. 

Embed from Getty Images

The Bureau also noted that new home sales reports are prone to change within the first month of release as well, and they predict that the new home sales between March and April could be 11.2% larger or smaller than what it is currently. 

Sales rates in every part of the country have decreased except for the West, where sales grew by 3.9%; the largest decline occurred in the Northeast with a nearly 14% drop. The inventory of new homes available for sale at the end of April was also significantly lower from March. 

Pantheon Macroeconomics chief economist Ian Shepherdson had “projected a larger decline than what occurred, because of trends in mortgage application data. Over time, though — and usually not much time — new home sales gravitate to the pace implied by the trend in mortgage applications. So, absent any other reliable near-time indicators of the pace of sales, we have to expect a steep drop in April.”

Embed from Getty Images

Experts believe that the decline in mortgage demand is linked to an increase in property costs, as well as construction and renovation costs. Affordability is obviously a top priority for every working class American right now as we navigate this grey area of the pandemic where half of people are receiving vaccines while the other is refusing. 

“The market for new homes is seeing price pressures not just due to the high demand for housing but also because of rising material costs that are driving construction expenses higher.”

“Builders are reluctant to sign sales contracts for houses they haven’t broken ground on because of the possibility that costs will continue to rise, nibbling into profits. So some builders are waiting at least until houses are framed before accepting buyers’ offers. This limits the number of home sales, even as demand remains strong,” ,” said Holden Lewis, housing and mortgage expert at personal-finance website NerdWallet. “

“The market for new homes has benefitted from a near-record low supply of available resale properties, which is sending prices skyward,” said Sal Guatieri, senior economist at BMO Capital Markets.

Luxury Home

Home Construction Projects At An All Time Low Since Pandemic Began

The US is currently facing a historic shortage of homes for sale, which is why it’s surprising that homebuilders aren’t working as frequently as they once were towards the beginning of the pandemic. With the pandemic itself coming to a close, many Americans are continuing to look for work, and real estate prices and service fees have only increased for the same reason. 

According to reports from NBC, single-family housing is priced 13% lower when compared to this time last year. This marks the sharpest decline since last April, when the pandemic initially shut down the economy.  

Embed from Getty Images

“I have to blame the difficulty in procuring lumber and other products, along with labor issues for the miss, in addition to likely cancellations due to skyrocketing costs for single family starts,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

According to a recent survey performed by the National Association of Home Builders, “prices of new and existing homes are at record levels, and the increases are accelerating at the fastest clip in over 15 years. Nearly half of all builders say they are adding escalation clauses to their sale prices because of rising material costs.”

“Escalation clauses specify that if building materials increase, by a certain percentage for example, the customer would be responsible for paying the higher cost. Including such a clause allows all parties to be on notice that the contract costs could change if materials prices change due to supply constraints outside the builder’s control,” according to the NAHB.

In a monthly sentiment survey, they also noted that “builders said they were slowing production in order to deal with higher costs for lumber, steel, gypsum and copper, some of which have hit record highs this year. A broad mix of residential construction materials is up in aggregate 12.4% over the previous 12 months.”

Embed from Getty Images

The NAHB claimed in their statement that lumber alone increased in price tremendously throughout the past year; specifically the group claimed the increase has added an additional $36,000 charge to every single-family home building cost. 

The housing sector, like most of the industry, is also dealing with a major shortage in labor. Last April saw a major decrease in construction employment due to the fact that construction projects were some of the first to be halted when the pandemic began, leaving thousands of laborers unemployed or indefinitely furloughed. 

“Contractors are experiencing unprecedented intensity and range of cost increases, supply-chain disruptions, and worker shortages that have kept firms from increasing their workforces. These challenges will make it difficult for contractors to rebound as the pandemic appears to wane,” said Ken Simonson, chief economist with Associated General Contractors of America, an industry trade group. 

“Builders are also reporting difficulty obtaining other inputs like appliances. These supply-chain constraints are holding back a housing market that should otherwise be picking up speed, given the strong demand for buying fueled by an improving job market and low mortgage rates,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association.

UK Homes

UK Homeowners Struggling To Complete Interior Renovations Due To Labor Shortages

An industry-wide labor shortage in the United Kingdom is causing a multitude of homeowners to be left waiting for months longer than usual for bathroom and kitchen renovations/installations. The labor shortage is growing due to a combination of Brexit-related issues as well as the Covid-19 pandemic. 

While the pandemic overall has caused a major increase in the amount people have invested in their homes, the demand for labor hasn’t been able to keep up. Specifically, bathroom, kitchen, and room renovations would, on average, take about four to eight weeks to complete before the pandemic, and now homeowners can expect to be waiting at least 12-18 weeks. 

Embed from Getty Images

Damian Walters is the chief executive of the British Institute of Kitchen, Bedroom, and Bathroom Installations, and recently spoke to the press about the “unprecedented demand for kitchens, bedrooms, bathrooms, and home improvement in general” throughout the pandemic. 

“Lengthening lead times were part of the fallout from the incredible labor shortage. Our organization has been inundated with inquiries from retailers desperate to recruit more fitters. There were a number of problems, including an ageing workforce and a decrease of youngsters wanting to take up apprenticeships. Brexit had also deterred tradesmen from moving to the UK for work,” Walters explained.

“There are not going to be any tradesmen parachuting in from Europe, or anywhere else for that matter. EU migration was a little bit like a Band-Aid that’s been ripped off and the real problems have been exposed,” he said.

B&Q is known as the UK’s largest DIY project chain, and according to their data sales of supplies for interior DIY projects have increased by 13% within the last year of the pandemic, with some of the most popular projects being organizing outdoor spaces, and new kitchen and bathroom designs.

Embed from Getty Images

Global supply chains are still dealing with trading disruptions brought on by the pandemic while demand has continued to increase for these supplies. This is not only bad for the DIY renovator, but for contractors who are still in business but don’t have access to the supplies they need to complete the projects being asked of them. 

The EU has reported shortages in everything from plumbing materials, to screws, handheld and power tools, as well as appliances like washing machines and fridges. 

The British Institute of Kitchen, Bedroom, and Bathroom Installations has announced a campaign that will begin this fall and hopefully recruit 700 apprentices from the UK’s school systems every year to become apprentices in the construction industry. Without new recruits, according to Walters, the “problem will only worsen, as a third of sole traders are due to retire over the next decade.” 

“We simply haven’t focused on vocational learning, and that has caused huge problems in terms of a gap between the demand and the available labour to do this type of work. Put bluntly, we’ve relied for too long on an ageing workforce who are now looking forward to their retirement. We need to pull out all the stops to prepare a new generation of skilled installers ready to take their place,”  said Walters.