YieldStar Software Inflates Rental Prices to Benefit Landlords.

Lessons from Past Recessions.

Here is what we will be getting into today:

1. YieldStar's Influence on Rental Prices: Revealing the Manipulation of the Rental Market.

2. Navigating Yield Curve Control: The Fed's Dilemma Between Financial Stability and Inflation.

3. Labor Market Data Lessons from Past Recessions.
   

Let's Dive In!

Newsletter: BIG

Title: Pete Buttigieg's Moment of Truth.
Link: https://mattstoller.substack.com/p/pete-buttigiegs-moment-of-truth

Here are the key highlights:

• Secretary of Transportation Pete Buttigieg background and training in politics may not have fully prepared him for the level of accountability and action demanded by the public, particularly in his handling of the airline industry. However, the Biden administration's focus on anti-monopoly policies and appointments of aggressive regulators offer a potential opportunity for Buttigieg to take decisive action in promoting fair competition and blocking industry consolidation.

• The recent move by FCC commissioner Jessica Rosenworcel to block the merger between Tegna and Standard General using administrative means is a clear signal of the Biden administration's commitment to promoting fair competition. This move can have significant implications for future media mergers because the FCC can challenge them based on a public interest standard.

• This puts pressure on other regulators, such as Pete Buttigieg, who has similar authority to block mergers in the transportation industry. The JetBlue-Spirit Airline merger is happening in an already concentrated and highly regulated industry, and if the merger goes through, it could lead to higher prices for consumers and job losses. Elizabeth Warren has called on Buttigieg to block the merger using his public interest standard to protect consumers from price hikes and job losses.

• The Biden administration's approach to antitrust enforcement is a significant departure from the previous administration's approach, and it is already resulting in numerous challenges to proposed mergers. The bias towards action is a welcome change that promotes fair competition and consumer protection.

• The recent uncovering of RealPage's YieldStar software and its impact on rental prices raises serious concerns about the manipulation of the rental market. Landlords and property management companies use this software to determine daily rent prices for available units, resulting in different prices for identical units every day. This practice, known as yield management, allows landlords to maximize their profits at the expense of tenants. However, tenants can fight back by negotiating leases based on advertised prices and seeking out longer-term lease options that may be offered at lower rates. RealPage's YieldStar software feeds data to online rental platforms like Apartments.com and Zillow, creating the illusion of advertised prices that are based on market analysis. In reality, these prices are inflated to benefit landlords, and the heavily discounted 15-month leases are often the only truly affordable option.

• It is time for the FTC to investigate these practices and hold landlords accountable for their actions. Non-public pricing data collection outfits that facilitate illegal collusion must be shut down, and tenants must be empowered to make informed decisions about their living situations. The rental market should be fair and transparent, with advertised prices reflecting the true market value of each unit.

Newsletter: The Last Bear Standing

Title: Forward Guidance.
Link: https://thelastbearstanding.substack.com/p/forward-guidance

Here are the key highlights:

• Yield curve guidance through the Dot Plot has been successful in calming sovereign bond markets, but looser financial conditions have led to a resurgence in asset prices, capital markets activity, bank lending, and housing sales, ultimately fueling inflation. (The Fed’s dot plot is a chart that records each Fed official’s projection for the central bank’s key short-term interest rate)

• The current situation, with a Long Run Estimate of 5% and an inverted yield curve, is not working in the Fed's favor. The Fed wants to maintain credibility and tame inflation via the short-end of the curve. Raising the Long Run Estimate by at least 25bps would signal the possibility of a new regime and lead to better financial stability and asset valuations. The UK intervention provides an example of how such a move can lead to restoring financial stability. The BOE's intervention in the gilt market saved both the market and the GBP.

• Taming inflation may require higher long-term rates. The Long Run Estimate acts as an anchor to the Zero Interest Rate Policy regime, and so far, the Fed has refused to let go. So long as it maintains this guidance, the Fed is declaring that both inflation and rate hikes are transitory. Contrarily, if the Fed raise its Long Run Estimate, it would signal the possibility of a new higher-for-longer rate regime for the first time.

YouTube Channel: Eurodollar University

Title: Because of the same shocking mistake every time.
Link: https://www.youtube.com/watch?v=3R5yuZ3xG7Y

Here are the key highlights:

• The January 2023 payroll report exceeded the Bureau of Labor Statistics' prediction of 517,000, leading to an increase in the need for a rate hike and a hotter than expected Consumer Price Index. The Federal Reserve is likely to continue hiking rates for a while, with interest rates expected to remain relatively unchanged afterward. Comparing forward spreads can give an indication of what the market thinks about future interest rates.

• The labor market data collected by the government is an essential part of the economic case. Recessions and layoffs are not always linked, and it is crucial to investigate labor market data as one of history's most dependable economic stories.

• The US economy was in a bad state before June 2008, but it had improved slightly, with retail sales and the ISM Indexes hovering around 50 over the past four months. The 1974 and 1980 recessions were both short but sharp, with the 1981 recession being the worst economic contraction since the Great Depression. Labor market data was looking positive at the start of the recession (1981), with total employment and retail sales being generally buoyant. Despite this, policy makers expressed doubts and concerns about the future of the economy in 1981. The Federal Reserve expected a soft landing after an oil shock, but inflation held up, and there was no soft landing scenario.

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