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Occupancy rates at Las Vegas hotels are now back to pre-pandemic levels, driven by strong employment growth, solid wage growth, and high household savings, see chart below.
Source: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The Bank of Japan owns almost 50% of all Japanese government bonds outstanding, see chart below.
Source: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The slowdown in immigration growth in recent years has implications for the potential growth rate of the US economy and it is contributing to the ongoing tightness in the labor market, see chart below.
Source: Census Bureau, Apollo Chief Economist. NoteNet international migration for the United States includes the international migration of both native and foreign-born populations. Specifically, it includes: (a) the net international migration of the foreign born, (b) the net migration between the United States and Puerto Rico (c) the net migration of natives to and from the United States, and (d) the net movement of the Armed Forces population between the United States and overseas See important disclaimers at the bottom of the page.
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Delinquency rates on auto loans and credit cards are starting to move higher, in particular in lower income zip-codes (as defined by the Fed), see charts below.
Source: New York Fed Consumer Credit Panel / Equifax; IRS SOI, Apollo Chief Economist 
Source: New York Fed Consumer Credit Panel / Equifax; IRS SOI, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The consensus sees a 90% probability of a recession in the UK and 80% in Europe, and 65% in the US, which continues to point to lower rates in the long end of the curve in 2023.
Source: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Fed hikes are cooling down the economy and the interest rate-sensitive components of GDP are slowing down (housing, autos, and capex spending), see chart below.
Source: NAR, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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If inflation continues to decline and it becomes clear that we will only get a mild recession, then there is a lot of cash on the sidelines available to be invested in credit markets and equity markets in 2023, see chart below.
Source: Bloomberg, Apollo Chief Economist
See important disclaimers at the bottom of the page.
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This new Fed working paper finds that the monetary policy transmission mechanism has changed in recent years, and the peak impact on the economy now comes after 12 months versus previously 18 months. The argument is that monetary policy no longer only works through the Fed funds rate but also through forward guidance and balance sheet policy.
Have Lags in Monetary Policy Transmission Shortened?
https://www.kansascityfed.org/Economic%20Bulletin/documents/9299/EconomicBulletin22DohFoerster1221.pdfSee important disclaimers at the bottom of the page.
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Last week, the Fed published a new working paper calculating a new measure of rent inflation using only newly signed leases, and it shows that housing inflation has rolled over, see chart below. As Fed Chair Powell has pointed out, we should also expect to see the same profile in the housing components of the CPI.
Source: Cleveland Fed, BLS, Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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US retail gas prices continue to decline and are now lower than before Russia invaded Ukraine, driven by slowing global growth and the release from the Strategic Petroleum Reserve. The main upside risk to global growth and inflation going into 2023 is China’s reopening, which could lift oil prices and complicate the Fed’s efforts at getting inflation back to 2%.
Source: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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