The Consequences of Monopolies: How It's Affecting Consumer Rights and the Economy.

What we will be covering today:

1. Why We Need to Break-Up Equifax's Monopoly.

2. Uncovering the Real Cause of Rising Rent-to-Income Ratios.

3. Market Volatility Continues, Stock Market Trends Down.

4. Rising Delinquencies in Subprime Auto Loans.

5. The Ineffectiveness of the Federal Reserve's Monetary Policy.

Let's Dive In!

Newsletter: BIG

Title: How Equifax Became a Private IRS.
Link:

How Equifax Became a Private IRS

Here are the top takeaways:

• Equifax is a credit bureau that has transformed itself into a sort of tax information agency, selling information about people's salaries and incomes to third parties.

• Equifax has been able to establish a monopoly in the employment verification market. The company has a monopoly on this data, and CEO Mark Begor has openly boasted about the firm's market power.

• This monopoly is bad for consumers, as it allows Equifax to charge high prices for its services and also puts people's personal data at risk.

• They have done this by buying up rivals, forcing customers into long-term contracts, and paying employers for employee data. This has resulted in higher prices for consumers and less competition in the market.

• Breaking up Equifax's monopoly would not be difficult and would benefit consumers by giving them more control over their data.

• A more decentralized system, where people could choose to share their data with any interested party, would be better for both consumers and the economy.

Newsletter: Fresh Economic Thinking

Title: Why did the rent-to-income ratio rise in the 1980s but stay flat ever since?
Link: https://fresheconomicthinking.substack.com/p/why-did-the-rent-to-income-ratio

Here are the top takeaways:

• The mystery of rising rents relative to income ratio is not a mystery of how the market changed, but of who was actually paying the market rent.

• The increase in the rent-to-income ratio in the 1980s was the result of the unwinding of rent controls in the private sector, reducing the scale of heavily subsidized public housing, and scaling back cash support for renters.

• The rise in house prices is not purely down to supply. Factors such as the collapse in interest rates, the surge in global asset prices and the rise of investors buying to rent out.

• Many governments want more homebuilding than the market seems to supply, yet never propose a public homebuilder to help flood the market to bring down rents and prices.

YouTube Channel: Wall St For Main St

Title: This Week In Charts Episode 92: Bad Q4 2022 Earnings Coming In Weeks Ahead To Stop Rally In Stocks?
Link: https://www.youtube.com/watch?v=p-b9-KCOhuE

Here are the top takeaways:

• The stock market had a volatile week last week, with sharp swings in both directions. The overall trend seems to be down, however, and the market may continue to fall in the coming weeks. This is due in part to earnings season and the upcoming Federal Reserve meeting.

• The bond market is holding up reasonably well, but keep in mind that yield curves are still very inverted. This means that there is potential for further downside in the future.

• The homebuilders sector has seen a sell-off followed by a rebound, but it is unclear where it will go from here.

• The financial sector is also showing signs of weakness, with Goldman Sachs stock failing to bounce back after earnings.

• Crude oil prices are mostly sideways at the moment, but there is potential for further downside.

• Uranium prices have been on the rise recently, but they have not yet broken out of their recent range. It appears that somebody is trying to push the price of net gas lower for their own benefit. This price action is not driven by fundamentals, but rather looks very algorithmic. There is major support at the $3 level, and if the price can bounce back above this level, there could be a 50% or greater rally.

Website: Wolf Street

Title: Subprime Auto-Loan Delinquencies Rise to 2019 Levels: a Dive into Subprime Lending and Securitizations
Link: https://wolfstreet.com/2023/01/23/subprime-auto-loan-delinquencies-rise-to-2019-levels-a-dive-into-subprime-lending-and-securitizations/

Here are the top takeaways:

• Delinquencies of subprime auto loans have increased since the beginning of the pandemic when many borrowers caught up on their payments. Now that stimulus money has run out and unemployment benefits have ended, delinquency rates are surging.

• In December, the rate rose to 7% of total auto loan balances. This is still below the record set in August 2019, but it is a cause for concern.

• Most subprime lending is done by specialized lenders who package the loans into asset-backed securities (ABS). These securities are then sold to investors, such as bond funds and pension funds, in order to earn a higher yield.

• The ABS are structured so that the equity tranche and the lowest-rated tranches take the first losses. As losses increase, higher-rated tranches are also at risk. The high risks associated with subprime lending are driven by the potential for high profits.

• Loans are often made with high interest rates, which can make them difficult to repay. If a vehicle is repossessed, the lender can sell it at auction and recoup some of their losses.

• The current surge in delinquencies is not caused by an employment crisis, but by increased risk taking in recent years.

YouTube Channel: Eurodollar University

Title: They always get it wrong. This time is no different and here's the proof.
Link:

Here are the top takeaways:

• The Federal Reserve is all show and no substance. They have no control over interest rates or the economy, despite what they claim.

• Alan Greenspan admitted as much in 2005 when he testified before Congress. The Fed is only able to influence short-term rates over a short period of time, and even then they often intrude on their own balance sheet.

• QE has been proven to be ineffective in Japan, where it has been going on for years with no results. The only thing the Fed is good for is creating inflation.

• The market is leading the Fed, not the other way around, and this has been the case for years.

• The Fed's quantitative easing (QE) program has failed to produce the desired results, and now the Fed is raising rates again. This time, however, long-term bond yields are actually falling, instead of rising.

• This is a sign that the market is not responding well to the Fed's actions. The bottom line is that the Fed needs to start following the market, instead of trying to lead it.

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