This is very close to the rate of inflation. It would seem to indicate that we collectively bought the same amount of stuff as last year but paid the inflated prices for it.

NEW YORK — Holiday sales rose this year as American spending remained resilient during the critical shopping season despite surging prices on everything from food to rent, according to one measure.

 

Holiday sales rose 7.6, a slower pace than the 8.5% increase from a year earlier when shoppers began spending the money they had saved during the early part of the pandemic, according to Mastercard SpendingPulse, which tracks all kinds of payments including cash and debit cards.

 

Mastercard SpendingPulse had expected a 7.1% increase. The data released Monday excludes the automotive industry and is not adjusted for inflation, which has eased somewhat but remains painfully high.

Not too terribly surprising given that the market peaked in most areas earlier this year. If you bought at the top of the market with a very low down payment, you’re likely underwater.

Surging mortgage rates aren’t just raising the cost of purchasing a new home. An alarming number of recent homebuyers have discovered they already owe more on their property than it’s worth, according to a new analysis.

 

Some 250,000 people who took out a mortgage this year to buy a home are now underwater, meaning they owe more on their loan than the home is worth, Black Knight, a mortgage software provider, found. Another million have less than 10% equity.

Given that housing prices have gone up about 40% in just two years, there could be a lot more correction.

This latest Case-Shiller report—which found a 2.2% price decline in U.S. homes since June—means we’ve moved into the second biggest home price correction of the post-World War II era. On paper, it’s tied with the 2.2% drop between May 1990 and April 1991, however, given that the index is a three-month average, we know the October numbers will surpass that mark. That said, it’s still far below the 26% peak-to-trough decline that occurred between 2007 and 2012.

 

How can this 2.2% drop already qualify as the second biggest correction of the post-World War II era? It boils down to the fact that, historically speaking, home prices on a national basis have been fairly sticky. Sellers resist going below market comps unless economics forces their hand.

 

“I think that the religion people had from 1946 to 2008, that housing prices always go up, is dead. My parents believed that it was literally inconceivable for [home] prices to go down,” Glen Kelman recently told Fortune. The ensuing 2008 housing crash broke that “religion” and taught buyers and sellers alike, he said, that home prices can indeed fall. “So folks respond [now] to that [correction] with almost PTSD, and they pull back much more quickly.”

Leadership, or the lack thereof, makes a difference.

It has been a slow, quiet death for an iconic chain, whose groundbreaking catalog and anchor position at many malls nationwide once made Sears both the Amazon (AMZN) and the Walmart of its day.

When Sears and Kmart merged in 2005, they counted 3,500 US stores between them and more than 300,000 employees. But both brands were already in a downward spiral. After the merger the company concentrated on selling off its more attractive real estate and buying back stock in an effort to prop up its declining share price, rather than investing in modernizing stores to make them competitive.

By 2018 the company had filed for bankruptcy. Eddie Lampert, the hedge fund operator who had engineered the disastrous Kmart merger and served as the holding company’s CEO, bought the remains of the business out of bankruptcy in early 2019. He had promised to turn things around after it had shed much of its debt, unprofitable stores and less attractive leases.

The company that emerged from bankruptcy in early 2019 — with the overly optimistic name Transformco — owned 223 Sears and 202 Kmart stores nationwide. But less than four years later, it is barely on life support, as the miniscule brick-and-mortar footprint and lack of shoppers demonstrates.

It’s rather a small pullback for Amazon, but on top of a lot of other companies in this sector.

Amazon is planning to lay off approximately 10,000 employees in corporate and technology roles beginning this week, according to a report from The New York Times. Separately, The Wall Street Journal also cited a source saying the company plans to lay off thousands of employees.

 

Shares of Amazon closed down about 2% on Monday.

The cuts would be the largest in the company’s history and would primarily impact Amazon’s devices organization, retail division and human resources, according to the report. The reported layoffs would represent less than 1% of Amazon’s global workforce and 3% of its corporate employees.

One guy’s opinion. I’m investing in brass and cordite.

In a letter to clients, Elliott said that while investors look for further easing of financial conditions with a Fed pivot, only a severe recession can cut inflation.

 

Elliott, founded by Paul Singer, says the “world is on the path to hyperinflation, which is the direct route to global societal collapse and civil or international strife. It is not baked, but that is the path that we are treading.”

 

“Investors should not assume that they have ‘seen everything’ on account of experiencing the 1973 to 1974 bear market and oil embargo, the 1987 crash, the dot-com crash, or the 2007 to 2008 GFC,” the fund said.

Ouch.

U.S. homebuilders were a major beneficiary of the Covid economy. Record low interest rates, combined with surging demand from consumers looking for more living space, caused a run on housing unlike most had ever seen before. Home prices surged over 40% in just two years, and homebuilders couldn’t meet the orders fast enough. They even slowed sales just to keep pace. All of that is over.

 

Housing starts for single-family homes dropped nearly 19% year over year in September, according to the U.S. Census. Building permits, which are an indicator of future construction, fell 17%. PulteGroup, one of the nation’s largest homebuilders, reported its cancelation rate jumped from 15% in the second quarter of this year to 24% in the third.

 

The public homebuilders that have reported earnings so far showed surprisingly strong results, but that is because much of it is based on a backlog of homes that went under contract last spring. That was before mortgage rates crossed 6% and then 7%.

 

Now builders are preparing for what’s coming next. Myers said that his company’s balance sheet is incredibly strong right now, thanks to a backlog of homes sold at high prices, but he predicted that the market will be “ugly” by the start of next year.

“It is definitely a hard landing for housing,” he said. “Any hope of a soft landing really evaporated last spring, when it became so clear that our customers who are accustomed to such low mortgage rates just were going to go on strike.”