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The Great Unwind: Busiest US Container Ports Went From Swamped To Eerily Quiet

The Great Unwind: Busiest US Container Ports Went From Swamped To Eerily Quiet

Container volumes at the twin ports of Los Angeles and Long…

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The Great Unwind: Busiest US Container Ports Went From Swamped To Eerily Quiet

Container volumes at the twin ports of Los Angeles and Long Beach, California, are seeing steep declines versus one year ago, signaling a downturn in imported goods might suggest continued sinking economic activity. 

The twin ports are the busiest container port complex in the country, responsible for 40% of all containerized flow, and are a major artery feeding overseas goods into the Heartland through rail and trucking networks. 

Gene Seroka, the executive director of the Port of Los Angeles, told Bloomberg the days of more than 100 container ships waiting in queue and massive container backlogs are all but over. 

Imports are sliding as major US retailers such as Walmart, Target, and Costco pull back on orders because of high inventories. Management of these retailers noted on recent earnings calls that consumer demand for big-ticket items such as electronics and furniture has waned because of elevated inflation and interest rates, leaving them with an abundance of supply in warehouses.  

US retail sales tumbled in November, the Commerce Department said last month, as consumers buy staple items to survive the inflation storm rather than buying televisions and computers.

Last month, Seroka said, "We are seeing a nationwide slowing of imports." 

The latest charts show West Coast transport networks are slowing.   

The first chart shows easing congestion at the largest containerized ports and slumping congestion on rail networks. 

Source: Bloomberg

Seroka noted in the Bloomberg interview that easing backlogs meant processing containers through the twin ports has increased in speed. 

Next are container rates for major shipping lines that have plunged -- some are nearing pre-pandemic levels. 

Transit times for vessels from Asia to the US are normalizing. 

Source: Bloomberg

Inventory levels at warehouses are coming off a peak. 

Source: Bloomberg

Separately, in a note on Wednesday, Goldman Sachs' Patrick Creuset told clients, "demand destruction allowed for an unwinding of supply chain bottlenecks" across the air and sea networks. He expects this "will come to an end during 1Q23, with volumes returning to modest growth through the rest of the year." 

Creuset pointed out, "a record order book of containerships about to be delivered from 1Q23 through 2H24, and belly capacity set to gradually return in air cargo." The good news is that seaborne transport capacity is about to be expanded. 

And according to Morgan Stanley's Ravi Shank, he expects retailers' 12-15 month de-stocking cycle could reach a bottom and begin to normalize by the midpoint of the year, and it could even lead to an upcycle in the second half. 

So the good news is the shipping downturn has cleared out supply chain snarls at some of the largest US containerized ports. It seems like retailers are at an inflection point, and once de-stocking is complete, they will increase overseas orders, which might not occur until the second half. 

We ask why retailers would want to increase goods on hand if the IMF and World Bank are slashing global growth estimates and warning about recession. 

Tyler Durden Thu, 01/12/2023 - 10:59

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Part 1: Current State of the Housing Market; Overview for mid-March 2024

Today, in the Calculated Risk Real Estate Newsletter: Part 1: Current State of the Housing Market; Overview for mid-March 2024
A brief excerpt: This 2-part overview for mid-March provides a snapshot of the current housing market.

I always like to star…

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Today, in the Calculated Risk Real Estate Newsletter: Part 1: Current State of the Housing Market; Overview for mid-March 2024

A brief excerpt:
This 2-part overview for mid-March provides a snapshot of the current housing market.

I always like to start with inventory, since inventory usually tells the tale!
...
Here is a graph of new listing from Realtor.com’s February 2024 Monthly Housing Market Trends Report showing new listings were up 11.3% year-over-year in February. This is still well below pre-pandemic levels. From Realtor.com:

However, providing a boost to overall inventory, sellers turned out in higher numbers this February as newly listed homes were 11.3% above last year’s levels. This marked the fourth month of increasing listing activity after a 17-month streak of decline.
Note the seasonality for new listings. December and January are seasonally the weakest months of the year for new listings, followed by February and November. New listings will be up year-over-year in 2024, but we will have to wait for the March and April data to see how close new listings are to normal levels.

There are always people that need to sell due to the so-called 3 D’s: Death, Divorce, and Disease. Also, in certain times, some homeowners will need to sell due to unemployment or excessive debt (neither is much of an issue right now).

And there are homeowners who want to sell for a number of reasons: upsizing (more babies), downsizing, moving for a new job, or moving to a nicer home or location (move-up buyers). It is some of the “want to sell” group that has been locked in with the golden handcuffs over the last couple of years, since it is financially difficult to move when your current mortgage rate is around 3%, and your new mortgage rate will be in the 6 1/2% to 7% range.

But time is a factor for this “want to sell” group, and eventually some of them will take the plunge. That is probably why we are seeing more new listings now.
There is much more in the article.

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Pharma industry reputation remains steady at a ‘new normal’ after Covid, Harris Poll finds

The pharma industry is hanging on to reputation gains notched during the Covid-19 pandemic. Positive perception of the pharma industry is steady at 45%…

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The pharma industry is hanging on to reputation gains notched during the Covid-19 pandemic. Positive perception of the pharma industry is steady at 45% of US respondents in 2023, according to the latest Harris Poll data. That’s exactly the same as the previous year.

Pharma’s highest point was in February 2021 — as Covid vaccines began to roll out — with a 62% positive US perception, and helping the industry land at an average 55% positive sentiment at the end of the year in Harris’ 2021 annual assessment of industries. The pharma industry’s reputation hit its most recent low at 32% in 2019, but it had hovered around 30% for more than a decade prior.

Rob Jekielek

“Pharma has sustained a lot of the gains, now basically one and half times higher than pre-Covid,” said Harris Poll managing director Rob Jekielek. “There is a question mark around how sustained it will be, but right now it feels like a new normal.”

The Harris survey spans 11 global markets and covers 13 industries. Pharma perception is even better abroad, with an average 58% of respondents notching favorable sentiments in 2023, just a slight slip from 60% in each of the two previous years.

Pharma’s solid global reputation puts it in the middle of the pack among international industries, ranking higher than government at 37% positive, insurance at 48%, financial services at 51% and health insurance at 52%. Pharma ranks just behind automotive (62%), manufacturing (63%) and consumer products (63%), although it lags behind leading industries like tech at 75% positive in the first spot, followed by grocery at 67%.

The bright spotlight on the pharma industry during Covid vaccine and drug development boosted its reputation, but Jekielek said there’s maybe an argument to be made that pharma is continuing to develop innovative drugs outside that spotlight.

“When you look at pharma reputation during Covid, you have clear sense of a very dynamic industry working very quickly and getting therapies and products to market. If you’re looking at things happening now, you could argue that pharma still probably doesn’t get enough credit for its advances, for example, in oncology treatments,” he said.

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Q4 Update: Delinquencies, Foreclosures and REO

Today, in the Calculated Risk Real Estate Newsletter: Q4 Update: Delinquencies, Foreclosures and REO
A brief excerpt: I’ve argued repeatedly that we would NOT see a surge in foreclosures that would significantly impact house prices (as happened followi…

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Today, in the Calculated Risk Real Estate Newsletter: Q4 Update: Delinquencies, Foreclosures and REO

A brief excerpt:
I’ve argued repeatedly that we would NOT see a surge in foreclosures that would significantly impact house prices (as happened following the housing bubble). The two key reasons are mortgage lending has been solid, and most homeowners have substantial equity in their homes..
...
And on mortgage rates, here is some data from the FHFA’s National Mortgage Database showing the distribution of interest rates on closed-end, fixed-rate 1-4 family mortgages outstanding at the end of each quarter since Q1 2013 through Q3 2023 (Q4 2023 data will be released in a two weeks).

This shows the surge in the percent of loans under 3%, and also under 4%, starting in early 2020 as mortgage rates declined sharply during the pandemic. Currently 22.6% of loans are under 3%, 59.4% are under 4%, and 78.7% are under 5%.

With substantial equity, and low mortgage rates (mostly at a fixed rates), few homeowners will have financial difficulties.
There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

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