Weekly Market Update by Retirement Lifestyle Advocates

The Parade of Restaurant Bankruptcies Continues

         This past week, TGI Friday’s became the latest restaurant chain to file for bankruptcy protection.  (Source:  https://www.reuters.com/business/tgi-fridays-operator-files-bankruptcy-amid-financial-woes-2024-11-02/).  After abruptly closing 50 locations, the company has 164 restaurants that remain open.

         Already this year, BurgerFi, World Beer Bar and Kitchen, Buca di Beppo, Gotham Restaurants, Tocaya, Melt Bar and Grilled, Rubio’s, red Lobster, Tijuana Flats, Boxer, Sticky Finger Joint, and Popeye’s Chicken have all filed for bankruptcy protection.

         Meanwhile, Wendy’s announced its closing of 140 restaurants, and Outback Steakhouse closed 41 stores.  (Source:  https://www.msn.com/en-us/money/companies/wendys-closing-140-more-restaurants-as-part-of-push-to-update-its-locations/ar-AA1tlgyR)

         Seems inflation is taking a toll on the dining out budgets of many Americans.

Employment Picture Weakening

         It’s interesting to note that in March 2022, the very month that the Federal Reserve began to increase interest rates to what we might all consider to be more ‘normal’ levels, there were 11,773,000 job openings compared to 5,993,000 Americans who were unemployed.  (Source:  https://mishtalk.com/economics/job-openings-drop-by-418000-as-quits-show-major-weakness/)

         In other words, there were nearly two job openings for every unemployed person.          

         Job ‘quits,’ where an employee voluntarily leaves his or her employment, are way down, indicating that it’s becoming more difficult to find a job if you leave your present job.

         And the number of job openings has fallen from March of 2022 to 7,443,000, while the number of unemployed has risen to 6,834,000.  Soon, the number of unemployed will exceed job openings.

         “Mises” reported that in the month of October, private sector jobs went negative.  (Source:  https://mises.org/mises-wire/private-sector-jobs-went-negative-october-will-fed-panic-again)

         The most recent report from the Bureau of Labor Statistics reported that only 12,000 payroll jobs were added during the month of October.  Not surprisingly, in keeping with recent government hiring trends, the government added 40,000 jobs.  That means the private sector lost a net of 28,000 jobs.

         According to the Bureau of Labor Statistics, October was the first month in 46 months that private-sector employment fell.

Auto Sales Continue to Slump

         Stellantis, the company that manufactures Jeep and Dodge, reported that third-quarter sales fell a whopping 23%.  (Source:  https://www.investopedia.com/stellantis-q3-sales-slump-8737324)

         The company, in response to lower sales, paused production of its Jeep Grand Cherokee and Dodge Durango in response to slow sales (Source: https://www.zerohedge.com/markets/stellantis-pausing-production-durango-and-grand-cherokee-due-slow-sales).

         Ford Motor Company recently cut its 2024 earnings forecast as well.  (Source:  https://abcnews.go.com/Business/wireStory/ford-quarterly-profit-drops-26-due-1b-write-115235990)  The company cited high warranty costs and slower-than-expected cost-cutting measures as the cause.

         Ford cut electric vehicle costs by $1 billion this year.

Is Buffet Calling a Stock Market Top?

         Warren Buffet, seemingly everyone’s favorite billionaire investor, looks like he’s calling a market top here.

         Mr. Buffet didn’t come out and say the market is topping here, but he doesn’t have to; his actions speak for him.

         At the end of the second quarter of this year, Berkshire Hathaway had increased cash holdings by $88 billion, bringing total cash to $277 billion.  (Source:  https://www.zerohedge.com/markets/buffett-calls-top-berkshire-quietly-dumps-half-its-apple-shares-amid-record-liquidation)

         The cash increase came from stock sales, much of which was Apple stock.  At the end of the second quarter of this year, Berkshire Hathaway owned about 400 million shares of Apple, down from more than 900 million shares at the end of calendar year 2023.

         Despite record levels of cash, Buffet is not engaging in Berkshire share buybacks, instead opting to hang onto cash.  Perhaps the billionaire is taking his own advice:  be greedy when others are fearful and be fearful when others are greedy.

Was Working Remotely a Fad That Is Now Passing?

         Last week, Starbucks became the latest corporation of many to allow employees to work from home.  The company now requires all employees to be in the office for at least three days each week.  (Source:  https://fortune.com/2024/10/28/starbucks-return-to-office-mandate-remote-work-from-home-fired-brian-niccol/)

         An internal message to Starbucks employees was obtained by “Bloomberg” and “The Wall Street Journal”.  The memo stated that the new policy will be effective the first of the year, and employees who don’t comply may be terminated.

         Starbucks is not alone in requiring workers to show up at the office rather than working from home.  UPS, JP Morgan Chase, Dell Technologies, and Boeing have all, at least partially, reversed prior remote work policies.

Mortgage Rates Top 7% Again

         The interest rate on a 30-year mortgage recently topped 7%.  According to Redfin, that’s the highest level since the beginning of the summer and comes just weeks after the Federal Reserve cut the fed funds rate by 50 basis points.

         Over the last six weeks since the Fed’s rate cut, mortgage interest rates have increased one entire percentage point.  (Source:  https://www.msn.com/en-us/money/realestate/mortgage-rates-are-still-going-up-heres-why/ar-AA1tbMaH). While there are those in the real estate industry that have been talking about lower interest rates for much of the year, those forecast lower rates have yet to materialize.  Nor do I expect significantly lower mortgage rates in the future as banks continue to tighten credit and as private sector debt remains at nosebleed levels.

         This week’s RLA radio program features a ‘best of’ interview that I did with the host of the New Orleans Investment Conference, Mr. Brien Lundin.  The radio program is available now by clicking on the "Podcast" tab at the top of this page. 

“There are men running governments who shouldn’t be allowed to play with matches.”                        -Will Rogers