Location Strategy Chartbook 072024

The largest IT outage in the world occurred Friday due to a Crowdstrike software update issue. Were you impacted?

Financial services, TV broadcasters went offline as businesses worldwide grappled with an ongoing major IT outage. Air travel has been particularly hit, with planes grounded and services delayed.

“Real GDP would contract by 0.4% in 2025” if Washington were to impose a 60% tariff on Chinese imports and a universal 10% levy on goods from other trading partners, Wells Fargo economists Jay Bryson and Azhar Iqbal wrote in a note Thursday.

The jobless rate would climb to 4.8% by 2026, while core CPI inflation would top out at 4.3% in 2025, the Wells Fargo model suggests. “Higher prices erode growth in real income, which causes real GDP growth to slow, if not contract. The unemployment rate would rise. In short, the tariff increases would impart a modest stagflationary shock to the economy.”

High foreign demand for US Treasuries

In its baseline scenario, Goldman Sachs Research expects oil demand to peak at 110 million barrels a day by 2034. In a scenario with slower EV adoption, oil demand could keep increasing towards 113 million barrels a day by 2040.

Stripping out food and energy, core inflation as measured by the consumer-price index has either slowed or stayed the same for 16 straight months.

We've already seen more inflation in just 54 months of the 2020s decade than in the entire decade of the 2010s

• +33.1% - ‘90s decade

• +28.8% - ‘00s decade

• +19.0% - ‘10s decade

• +21.0% - ‘20s decade

• There are 120 months in a decade

US consumer spending is showing signs of slowing. Real personal consumption expenditure rose 2.6% in April from the same month a year ago, compared with a pace above 3% last year.

But that's more of a return to normal than an indication that a downturn is looming, says Joseph Briggs, who jointly leads the Global Economics team in Goldman Sachs Research.

Women's labor-force participation has grown across many developed economies. It has had an enormous economic impact. Italy's workforce, for example, would have shrunk if not for greater participation from women. Non-paid work, such as caregiving for family, takes up a larger share of a woman's day in every country, making it harder for them to reach the top echelons in firms, academia, or politics. Women are also more likely to work part-time.

Yield-hungry insurance firms are skipping mortgage-backed bonds and buying the underlying whole loans outright.

It’s a trend that’s picked up pace over the last few years. Last yea, insurers increased their holdings of residential mortgage loans by 45%, or about $20 billion, according to an analysis by Ellington Management Group.

The loans typically don’t qualify for being bundled into bonds supported by Fannie Mae or Freddie Mac. The borrowers are usually riskier, and investors owning mortgages directly, rather than slices of MBS. Not every firm has the size or sophistication to do that, which is why large alternative asset managers like Apollo Global Management Inc. and KKR & Co. are leading the shift.

Residential mortgage applications are at their lowest levels in decades

Refinances are also way down