The Nation's Financial Condition

[Farfromgeneva]

Investors are j@cked to the t!ts with the announcement. lol.

It's interesting how cocaine usage and overdoses spikes around 2006 a little bit prior to the crash.

There was another spike in use in 2017 and a decline in 2018 and 2019, but COVID threw a wrench into any causality. We're just flat out boned now. Reports from fellow colleagues the past few days of their Chinese factories rationing power to hit 2030 emissions goals, delaying production time and driving up prices. Local intel says it's actually Chinese nationalism pounding factories too reliant on US exports to get back to in-country manufacturing.

Capitalism for the sake of capitalism with 80's Reaganistic gusto has cut our b@lls off. Bourbon is gonna hit a cliff soon domestically, then Japan and following countries will drain the remaining main veins. You seem diversified, Rum will follow another boom and bust after, then we'll see what happens. Gonna be a rough 2-3 decades man... for all of us. General alcohol sales are normally recession proof.

Buy cash businesses like laundromats, payday lending and check cashing and mobile (“manufactured housing”) home parks. Resistant if not countercyclical.

[Farfromgeneva]

Cleanest dirty shirt in the laundry argument has always felt like a weak one to me but I’ve also ignored the time value of compounded gains which is a tragic mistake for somebody who should know better. (Ie front loaded returns are better than a bunch of singles and doubles because it pulls forward the balance and increase option value-not that Cathy wood and most proxy kicks momentum followers think like this themselves but it works to their advantage)

There Is Still No Alternative for Investors
Whether a post-pandemic world brings a consumer boom or a bout of “stagflation,” it might not mark the end of easy money

Wall Street on Tuesday suffered its biggest rout in months.
PHOTO: RICHARD DREW/ASSOCIATED PRESS
By Jon Sindreu
Sept. 29, 2021 9:15 am ET

Investors seem ready to move on from the “there is no alternative” mind-set that has guided their decisions since the 2008 crisis. But TINA may be harder to quit than they think.

On Wednesday, stock markets around the world staged a small rebound from Tuesday’s rout. The Stoxx Europe 600 rose around 1%, and futures point to gains in the U.S. too. September has been a very bad month for equities: The S&P 500 has so far lost more than 3%, putting it on course for the worst monthly performance since September last year.

Money has flowed out of technology stocks and other “growth” sectors and into “cyclical” ones that gain from higher interest rates, like banks, or benefit from the supply shortages ailing the global economy, such as car makers and energy producers.


The realization that the “temporary” inflation created by these bottlenecks could last a while seems to be persuading some officials at the Federal Reserve to start reducing its $120 billion in monthly bond purchases as soon as November, which has sparked fears of a “taper tantrum” similar to that in 2013.

On top of this, there are concerns about the U.S. debt ceiling not being lifted and potential spillovers from the restructuring of Chinese property behemoth Evergrande. The U.S. dollar has gained more than 1% this month against the euro, while yields on 10-year government bonds have risen to 1.5% from 1.3% in just a week.

It looks like a challenge to the TINA world of modest economic growth and very low interest rates, in which investing in growth stocks and long-maturity bonds pays off because central banks always rescue markets from the dips.

Today’s beef is instead between optimists and pessimists. The first lot believes that activist fiscal policies will lead to a sustained consumer boom in 2022, boosting cyclical stocks and allowing markets to cope with the slow normalization of monetary policy. The second group sees the current woes as the start of a disastrous 1970s-style “stagflation” in which economic growth is choked off by Fed tapering but high inflation persists.

Investors tend to overestimate the mechanical impact of central-bank purchases and sales, which have historically left no clear trace on bond markets a few months in. More important is whether the taper signals an era of higher interest rates; some rate-setters are pointing in this direction. However, every precedent suggests that the Fed’s micromanagement of markets is here to stay, and that officials will course-correct whenever bond yields go high enough to seriously threaten equity markets.

The main risk to the economy comes from an incompletelabor-market recovery

Yes, shortages can keep inflation elevated for a while, but this alone won’t bind officials’ hands: As long as pay increases don’t start feeding powerfully into inflation, they will find sound arguments to keep rates low. Concerns about Evergrande and a property-led slowdown in the Chinese economy could be among them, like in 2015.

Meanwhile, the big underrated risk comes from the labor market, which still hasn’t fully recovered. The U.S. employment-to-population ratio for 25-to-54 year-olds remains more than 2 percentage points below its pre-Covid peak, at a time when governments are set to ease off on fiscal activism. The continuing economic recovery is unlikely to be as slow as in the post-2008 period, but it may still fall short of expectations.

Perhaps investors shouldn’t throw away the old playbook just yet.

[Farfromgeneva]

Thought this was an interesting piece I pulled to respond partly to a question from my father in law RE Evergrande

Nassim Taleb —and
Universa —Versus the World
Why does everyone hate tail-risk hedgers?

By Julie Segal
September 22, 2020

On April 17, Nassim Nicholas Taleb, the famous Black Swan author and provocateur, took to Twitter to call out the then-chief investment officer of the California Public Employees’ Retirement System for “B.S.” In a four-minute video recorded in a sunny room in his Atlanta home, Taleb claimed that CalPERS’ Ben Meng had “offered extremely unrigorous rebuttals about tail-risk hedging.” In its most basic form, tail-risk hedging is designed to protect investors against extremely rare events — or black swans. Taleb is an outside adviser (technically a “distinguished scientific adviser”) to Universa, but doesn’t manage any investments for the firm.

Two days before in a webcast, Meng had defended his now-infamous October 2019 decision to end a tail-risk hedging program, which Universa Investments anchored, shortly before it would have generated about $1 billion in gains in the March market crash. The badly timed move was immortalized in scores of headlines in the financial and local press. Taleb and Universa founder Mark Spitznagel started the first tail-risk hedge fund in 1999.

Meng started unraveling the initiative of his predecessor, Ted Eliopoulos, almost immediately after joining CalPERS in January 2019. He never talked to or emailed anybody at Universa about the inner workings of the strategies or his decision to abandon the hedge. He told people at the pension plan that he decided to fire Universa and another tail-risk manager because they were too costly. Meng, like many finance professionals, also never understood tail hedging, multiple sources claim. He stepped down in August and could not be reached for comment. In an emailed statement, a CalPERS spokesperson said, “The risk-mitigation strategies CalPERS put in place offset $11 billion in losses during the most volatile time period in February and March.”

Meng publicly attributed his decision to kill the tail hedges to their high cost, their lack of scalability, and the availability of better alternatives. He said the pension plan had other hedges in place and relied on traditional diversification.

Taleb countered that with an argument that is essentially the central argument of tail hedging and risk mitigation. Meng didn’t tell viewers of the webcast what the hedging strategy cost the plan in previous years. “I don’t know if you realize that these strategies need to be weighed against what they made or lost before that,” Taleb said. “Effectively, we think, back-of-the-envelope calculation, the so-called mitigating strategy would have lost something like $30 billion the previous year. So you make $11 billion, you lose $30 billion before, not a great trade. It’s definitely not a great trade over long periods of time, when you lose in rallies and make back a little bit in the selloff,” he said.

Taleb believes that the same flawed logic is why investors lose billions of their savings every year. They’re relying on strategies like diversification that the financial industry has long peddled to protect investors’ downside. But adding assets such as bonds, or even gold, costs investors in bull markets, without fully cushioning portfolios in a crisis.

Taleb says, “What Universa is doing is allowing people to stay in the game long enough to gather alpha. It’s not a luxury. It is a necessity,” he says in an interview. “How many people in the United States own a house without insurance on the house? The way they [critics of tail hedging] look at it, you won’t buy a house if the insurance is expensive. No, you would buy a smaller house. Insurance is not an option.”

“I’m not that emotional of a person, contrary to what it appears,” says Taleb, who is famous for social media outbursts. “But when I see some B.S., I get aggressive.”


Spitznagel wasn’t surprised when Meng ended CalPERS’ tail-risk hedging program. He had seen such decisions many times before. As the founder and president of Universa, he knows his products require investors to go up against modern portfolio theory and the other orthodoxy they learn in business school and starter finance jobs.

Pension funds’ first line of defense against crashes is diversification away from stocks into bonds and other assets. Second, they can opt for products or strategies like trend-following commodity trading advisers or gold. Ron Lagnado, who led the implementation of the tail hedge at CalPERS and is now the director of research at Universa, says, “I’ve written on the failure of diversification. With each big drawdown in the stock market, we see less and less protection coming from bonds. One of the reasons that pensions are so poorly funded is they have maintained such large allocations to bonds and other forms of risk mitigation, which are a drag on performance.”

Former CalPERS chief Eliopoulos, who is now at Morgan Stanley, brought in the tail hedge after hearing Taleb speak, according to sources. He did not want a repeat of CalPERS’ experience in 2008-09, when the pension was forced to sell stocks at the bottom. The pension’s funding ratio never recovered.

Eliopoulos and his team at CalPERS started talking to Universa in 2016, around the U.S. election. Everyone, not just CalPERS, was concerned about the risk to stocks, given the long-running bull market. The pension had already sold about $15 billion worth of shares ahead of the November election and was considering one or two more sales to reduce risk.

But the investment strategy group also started researching tail hedging to protect against a stock crash. By August 2017, CalPERS had implemented a pilot program, with Universa, LongTail Alpha, and some internal tail-hedge investments. The pension was the largest ever to deploy a tail hedge. The hedge was initially designed to protect about $5 billion in equities, with several planned increases that would have ultimately shielded about 10 percent of the stock portfolio.

When markets are up, a pension fund would pay a small fee to Universa and the other managers, just like insurance. But most CIOs — including Eliopoulos — aren’t in the job long enough to see a tail hedge through, and few want to defend any excess costs to their boards.

Lagnado gets upset thinking about Meng’s defense of conventional diversification as less costly than Universa’s options-based risk mitigation.

In an internal Universa document that ended up getting leaked to the press in April, Lagnado argued that CalPERS was essentially using a conventional 60-40 portfolio for risk mitigation, with 60 percent of the assets invested in the S&P 500 and 40 percent invested in the Barclays U.S. Aggregate Bond Index. Universa calculated that over the 12-year period, the compound annual growth rate trailed an all-stock portfolio by 1 percent per year and 11.3 percent cumulatively. That’s not risk mitigation, he explained.

From his home in northern Michigan, Spitznagel says the misunderstanding about tail hedging — a name he says he has come to hate because it’s been co-opted by marketers — comes down to simple concepts.

Tail-risk hedging, or risk mitigation, as Spitznagel prefers to call it, should raise an investor’s wealth. “That seems obvious. You would think the name of the game is to raise wealth,” he says. I first met Spitznagel and Brandon Yarckin, Universa’s chief operating officer, at the Plaza Hotel in Manhattan in January, before Covid-19 shut down the city. On the phone, Spitznagel starts talking faster and louder as he rattles off his points about conventional wisdom in the industry.

Modern finance offers up strategies like diversification, which lowers people’s wealth, he says. “And it does that very, very well. That’s a definitive statement. Even the most successful proponents of diversification, like Ray Dalio, openly say that it lowers your returns. But the argument is that it smooths your ride, even if it makes you poorer at the end of the day.” A portfolio made up of many different types of investments will weather different markets. One investment — say, real estate — will do well, even as another asset declines in value.

But it’s the big losses that matter when it comes to compounding. “That’s not my opinion; it’s not even an empirical observation. This is a mathematical fact,” Spitznagel says. “That is tail hedging. People don’t understand any of that. It flies in the face of everything we’ve been taught.”

A former hedge fund manager who declined to be named agrees with Universa’s founder. “Yep, the entire hedge fund industry is predicated on lowering the volatility of investors’ portfolios. No one will say this out loud, but what’s the point of that? It lowers the psychological pain during a crash, but it doesn’t maximize wealth. It’s a crude solution.” The hedge fund manager says all risk-mitigation strategies rely on some kind of diversification, negative risk correlations, or market timing.

Spitznagel gets wound up and almost shouts into the phone when talking about hedge funds. “Risk mitigation should raise your returns. But no one will come up with that.”

Spitznagel won’t talk about performance because of compliance reasons, but he says Universa has proved itself through two crises and multiple mini-downturns since 2007. Although Universa generated a 4,144 percent return in the first quarter of 2020, it’s the overall portfolio effect that matters more, according to a client letter obtained by II. The portfolio effect is the impact it has on the compound annual growth rate (CAGR) of an investor’s entire portfolio.

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In March 2020, a hypothetical portfolio with 3.33 percent in the Universa tail-risk strategy and 96.67 percent in the Standard & Poor’s 500 stock index had a CAGR of 0.4 percent. The S&P 500 is a proxy the firm uses for the systematic risk the investor is mitigating.

The S&P 500 had declined 12.4 percent as of the end of March. Since the end of 2019, Universa’s hypothetical portfolio has returned 16.2 percent, compared with the S&P’s 4.5 percent. Most telling, the portfolio has gained 11.5 percent per year since inception in March 2008. The S&P has returned 7.9 percent per year over the same period. According to an audited performance statement from a source close to the firm, Universa’s life-to-date average annual return on invested capital across all Black Swan Protection Protocol funds from January 1, 2008, to December 31, 2019, was 105.2 percent.

But tail-hedging products remain devilishly difficult to sell.

Karyn Williams, founder of consultant Hightree Advisors and former CIO of Farmers Insurance, says, “What do people see with a tail hedge? They see a line item, and that line item looks like a drag on performance for most of its productive life. You don’t always see a return, but you do see this cost associated with it. If you’re the CIO, you want more returns, not less.”

Williams adds that some tail-hedge managers have even changed their underlying processes to reduce this cost or even show returns in up markets. “It’s because of the pressure of being a line item that sticks out every quarter like sore thumb.”



Spitznagel believes he was brainwashed.

That’s how he describes his experience with his mentor, Everett Klipp, as a teenager in the Chicago trading pits. Spitznagel’s father brought him down to the floor in the 1980s to meet Klipp, a family friend. “I was mesmerized. I was 16 and I wanted to be a pit trader. I wanted to be specifically in the corn pit.”

As a clerk, Spitznagel would bring U.S. Department of Agriculture crop reports to Klipp. He’d tell Spitznagel that nothing he could read would tell him what the price of corn would be. You can’t forecast. “All that matters is you have to be able to take a lot of small losses,” Klipp told Spitznagel. “He was brainwashing me that you have to be positively skewed,” he laughs.

Getting serious, Spitznagel contrasts that with people coming out of Harvard Business School, who graduate and join Goldman Sachs’s proprietary trading desk. “They’re taught the reverse. That a good trade is one that prints a small amount of money all the time. That’s a good strategy until you lose it all and then some. I was taught the opposite. You have to look like an ass and feel like an ass to be a good trader.”

After Spitznagel graduated, Klipp backed him and he became the youngest trader in the U.S. Treasury bond pit at 21. He then went on to become a prop trader at Nippon Credit Bank.

In 1999, he took a sabbatical and went to New York University’s Courant Institute of Mathematical Sciences, where he met Taleb. They decided to start Empirica Capital, the first formal tail-hedging fund. Spitznagel was the trader and Taleb raised the assets. Four years later, Taleb faced health issues, and the two shut the firm down. Spitznagel briefly joined Morgan Stanley’s proprietary process-driven trading group, PDT Partners, before starting Universa in 2007.

COO Yarckin was a derivatives broker at D.E. Shaw subsidiary KBC Financial Products, which covered Empirica, and helped Spitznagel start Universa. Selling hedges, he says, has always been an uphill battle. Investors may say they want protection, but they don’t want to stray too far from what they can easily explain to their boards. “If you’re providing masks during a pandemic, it’s probably very easy. However, think of us as having to explain why you’d need a mask in the first place,” Yarckin says.

The structure of the financial industry, including incentives and the “agent” problem, also weighs on tail hedging. CIOs are rewarded based on beating benchmarks, not averting disaster. Plus, it’s not their money; they’re only the agent. That’s why the majority of Universa’s investors are family offices and high-net-worth individuals, he believes. These people feel the pain personally when crisis strikes.

The pain at a pension fund is indirect, hitting beneficiaries, and perhaps taxpayers, who need to make up any shortfalls.

Taleb likewise believes he’s spent his life being misunderstood. “But it doesn’t matter much. It forces you to be robust in your arguments. When you’re robust, you don’t really care,” he says.

“What I’m saying is not controversial for the people who practice decision-making; it’s only controversial for analysts or people who get paid but don’t have skin in the game,” says Taleb.


“Betting on doom” is popular shorthand for tail hedging — yet another piece of industry lingo Spitznagel dislikes. It’s misleading; he doesn’t need a stock market crash to prove the strategy’s effectiveness.

Clients tend to devote only a fraction of their portfolio to the hedging product. This means they can allocate more to stocks — getting more systematic exposure — because their risk is hedged. “Maybe that’s part of the problem,” Spitznagel says. “You’ve got to believe that something really bad is happening. We’ll get an asteroid strike or something. It’s a bet on doom. But nothing is further from the truth.”

Universa’s strategy should be the next risk parity, he believes. “But we never will be. We should be the dominant new paradigm in risk mitigation.” The risk-parity comment is barely out of Spitznagel’s mouth before he says, “Universa’s success comes because people don’t believe it works. If they did, we wouldn’t have a business.”

CalPERS — Universa’s most infamous doubter — will forever be part of the company’s story, Lagnado believes.

The pension fund’s decision came down to behavioral mistakes, says Spitznagel. There’s an explicit annual “insurance cost” to tail hedging, just as any other risk-mitigation measure has a price. For example, CalPERS lost out on four years of gains after the fund sold about $15 billion in equities in 2016.

But that number wasn’t written down in a balance sheet.

[Farfromgeneva]

By Ruth Simon | Photographs by Nic Antaya for The Wall Street Journal
Oct. 1, 2021 5:30 am ET
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10 RESPONSES

A 10-screen movie theater in Woodhaven, Mich., needed help, fast. After closing for 15 months during the pandemic, it reopened this past July, and its owner needed a way to stand out. So Jon Goldstein decided to radically change the pricing plan. Convincing customers to embrace it would be harder than he expected.

For $20 during the week—$25 on weekend evenings and other peak times—adults received a movie ticket plus a wristband entitling them to unlimited popcorn, pizza, chicken tenders, soda, candy and other special menu items. Tickets for the show alone sold for $12.

“I have wanted to redo the business model since I got into the business,” said Mr. Goldstein, who built his first movie theater, in Meadville, Pa., 15 years ago. “Without the pandemic, I might have been too busy to try this.”

Other businesses have experimented with pricing changes during the pandemic, looking for ways to stand out as consumers’ habits change. MCR Hotels, a large U.S. hotel owner with 125 properties in 34 states, recently began experimenting with a la carte pricing, adding charges for guests who want to check in early or swim during peak hours. Whole Foods this summer piloted a $9.95 service fee for all deliveries in six metropolitan areas and announced last month it would roll that out to its other markets on Oct. 25. Other retailers started offering free shipping during the pandemic.

“Many [companies] had no choice but to try,” said Jagmohan Raju, a marketing professor at the University of Pennsylvania’s Wharton School who studies pricing.


‘Maybe the way to win customers back is not to try something different,’ said Jon Goldstein, who owns and operates the Woodhaven theater along with 14 others.

Testing the public’s appetite for a pricing change poses opportunities and risks for smaller businesses. They can be more nimble than bigger counterparts, an asset during such experiments, but they also have fewer resources to spend on data analysis and marketing and may need to win support from much larger partners. The cost of a mistake can be high.

Mr. Goldstein, who owns and operates 15 theaters in Michigan, Illinois, Minnesota and Pennsylvania, saw this firsthand. His company, Bloomfield Hills, Mich.-based Northwoods Entertainment, employs roughly 400 people, down from roughly 600 pre-pandemic.

The goal of his all-inclusive package was to drive traffic to the Woodhaven theater, which had been struggling to attract people even before it closed for 15 months during the pandemic. But getting customers in the door proved challenging. On Labor Day weekend, the 1,500 tickets sold were half of Mr. Goldstein’s target, and he said the theater has lost roughly $15,000 a week since reopening in July.

Starting Friday, instead of bundling the ticket and concessions, he is revising his plan so that he will sell movie tickets and concessions separately. The theater will offer an all-inclusive concession package of $12 for adults and $9 for children while selling popcorn and soda a la carte. Movie tickets will be $5-10 for adults.

“I am making it a lot harder than I need to make it,” Mr. Goldstein said in September as he pondered the next steps in his continuing experiment. “Maybe the way to win customers back is not to try something different,” he added. “Maybe this wasn’t the right movie theater to try it.”


The initial pricing change at the Woodhaven theater charged adults $20 during the week—or $25 on weekend evenings and other peak times—for a movie ticket plus a wristband entitling them to unlimited popcorn, pizza, chicken tenders, soda, candy and other special menu items.
‘A horrible model’
Pricing changes at movie theaters face numerous hurdles due to the way the business operates. Thick master licensing agreements between the studios and theater owners dictate which films a theater will show, over how many screens and for how long. Movie studios don’t dictate pricing, but they typically receive 55% to 60% of ticket-sale revenue. Theater operators get to keep the rest, plus all revenues from concessions.

“It’s a horrible model,” said Mr. Goldstein, adding that the industry’s best customers subsidize its worst ones. “If someone buys a ticket, sits down and sneaks in their own food, we don’t make any money.”

That arrangement helps explain why a small popcorn can cost at least $6 and why so much focus goes to reserve seating, plush chairs that recline and additional dining options as alternative ways of attracting customers.

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The last industrywide pricing experiment—a subscription service from MoviePass that let customers watch up to a movie a day in theaters for less than $10 a month—didn’t work out. MoviePass closed in 2019, burning through cash to support its costly business model. Two national chains— AMC Entertainment Holdings Inc. and Cinemark Holdings Inc. —still have their own subscription services in place, however. The AMC Stubs A-List program, which launched in 2018, offers customers three movies a week in any format for $19.95 to $23.95 depending on location. Cinemark’s Movie Club, rolled out a year earlier, provides one movie ticket a month, a 20% discount on concessions and other benefits for $9.99 monthly.


The economic downturn and lockdowns that followed the pandemic applied even more pressure to the economics of movie theaters as thousands shut down in 2020. That year, U.S. and Canadian box office revenues fell 80% to $2.2 billion, according to the Motion Picture Association. Many theaters eventually reopened but had trouble regaining an audience as customers gravitated to at-home streaming services for their entertainment. Hollywood studios also delayed a number of films or released films simultaneously on streaming services, hurting grosses for theaters.

Weekend ticket sales are now running about 55% of their average between 2015 and 2019, estimates Eric Handler, a media and entertainment analyst with MKM Partners.


Zachary Fortuna, 13, and his mother, Rebecca Fortuna, sit down at the Woodhaven theater last month.
Making the math work
For Mr. Goldstein, however, the pandemic offered a chance to try something new after a decade and a half in the business. The idea of running theaters came to him in his previous career working for an investment banking firm, where he helped small businesses strengthen their balance sheets. He encountered a small movie theater operator whose approach he thought he could replicate.

“The model was to find smaller markets where you could be the only game in town, big enough to support a theater but small enough where you didn’t have to really worry about the competition.” After starting one in Meadville, Pa., he opened theaters in nearby Cranberry Township, Pa., and Woodhaven. He later purchased a portfolio of eight Minneapolis movie theaters in 2016 and now operates all but his two original properties under the Emagine Entertainment brand.

Before Mr. Goldstein could begin his pricing experiment this year, he needed to convince the big studios the test was worthwhile. For the math to work, the studios needed to accept a smaller share of the higher ticket price, leaving Northwoods with enough money to cover food and beverage costs and turn a profit.

Mr. Goldstein said it took him months to win the needed approvals. One big studio, Paramount Pictures, wasn’t willing to accept the smaller share of the ticket and didn’t agree to be part of the test, Mr. Goldstein said. “This is the hardest business to do any kind of innovation because you don’t own the product,” he said. Paramount, a unit of ViacomCBS Inc., declined to comment.


He decided to set his pricing trial at a Michigan theater built in 2008 in a suburb of Detroit; he had leased it to theater giant AMC in 2017 before taking it back during the pandemic. Attendance was down, he said, and he faced nearby competition from two other big theater chains. He spent $300,000 on a new pizza oven and other improvements before reopening the theater in July.


From left, John Courage of Belleville and his daughters Andi Courage and Gray Courage wait for popcorn being prepared by Woodhaven theater employee Shane Campbell.
An AMC spokesman declined to comment on the decision to hand over the property.

“I am competing with formidable opponents,” said Mr. Goldstein. “As a small business, I have to go out and shake the trees,” he added. “I have to set it apart from the other two theaters in the market.”

The good news for Mr. Goldstein was that per-ticket revenues went up, compared with the period when he last operated the theater. Mr. Goldstein declined to say how revenues are split with the movie studios under the one-price arrangement, but figures average ticket revenue is now $9.50, or $2.25 more than under the old model. “It really lifted all boats,” he said this summer. “It’s made more money for my studio partners and done better for us.” In part, that is because Mr. Goldstein bumped the price of the basic ticket to $12 compared with $9 when he last operated the theater.

Vanessa McLean, a Dearborn, Mich., resident, hadn’t been to the movies in 18 months when she took advantage of the new one-price option in July. “The food is what brought me here,” said Ms. McLean.

“It’s a heck of a good deal,” she added. “Normally, you’d spend $20 on the ticket, a pop and popcorn. Now, you can get whatever you want—pizza, candy, a hot dog, pretzel, bites, a sandwich—and take it home for just a little more. I’m surprised.”


Starting Friday, instead of bundling the ticket and concessions, the Woodhaven theater is revising its pricing plan so that movie tickets and concessions will be sold separately. The theater will offer an all-inclusive concession package of $12 for adults and $9 for children while selling popcorn and soda a la carte. Movie tickets will be $5-10 for adults.

Lessons learned
One challenge for Mr. Goldstein was getting customers such as Ms. McLean to come back; she has returned to the Woodhaven theater just once. “It’s not because of the deal,” she said. “It’s more the content of the movies. There are not that many I’ve been interested in seeing.”

Some customers didn’t like the new pricing concept, either. “If you opt for ticket only, NO CONCESSIONS allowed. Nothing to drink, or eat,” one customer wrote on Yelp. “Not sure what brainiac thought that one up, but we all almost walked out.”

Mr. Goldstein said he initially planned to sell soda and popcorn at the bar. He said he dropped the idea because the other members of his four-person executive team believed that adding a third option would confuse customers. “I take full credit for being the brainiac that thought it up,” Mr. Goldstein said.

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The all-inclusive price also appears to have scared off potential customers shopping for tickets on Fandango or other online aggregators. Emagine Woodhaven’s all-inclusive tickets show up as far more costly than those sold by competitors, and it takes some time to understand why. “We think we are pushing a lot of our customers away with sticker shock,” Mr. Goldstein said.

Mr. Goldstein initially hoped that the new offering would generate a buzz that would draw new customers to the theater, but instead he found it hard to stand out. He planned to roll out a marketing campaign, but the Delta variant made him wary of spending the money. A bigger company might have had the financial resources to let the test run longer, he added.

A reminder of how difficult this experiment would be came Labor Day weekend, when the Woodhaven theater sold about 1,500 tickets. That was on par with ticket sales during the final months of AMC’s ownership, Mr. Goldstein said, but just half of Emagine’s target—and far below the 4,000 tickets sold at a comparable theater he owns in Minneapolis. “For us, it’s not good enough,” he said. “If you are not driving people through the door, you are not able to get to the critical mass to become profitable.”


On Labor Day weekend, the Woodhaven theater sold 1,500 tickets—half of its owner's target. ‘For us, it’s not good enough,’ Mr. Goldstein said.
Since reopening in July, the Woodhaven theater has grabbed just 5% of the local market compared with roughly 25% of the market before AMC took over, he said.

Another concern for Mr. Goldstein was his relationship with the studios. He said he was grateful they allowed him to experiment, but he feared efforts to publicize his approach could make studios more skittish about what had been a low-profile experiment.

In the end, Mr. Goldstein said he learned that for many people, moviegoing is a habit that is hard to change. His own habits include always sitting on the right side of the theater, a small popcorn and a large Diet Coke in hand. “There are a lot of customers, they just want to buy one thing,” Mr. Goldstein said. “This is maybe where I stumbled.”

In September, Mr. Goldstein and his executive team decided it was time to revise their plan. Starting Friday, Emagine Woodhaven is offering a standard movie ticket plus a separate all-inclusive concession package, with soda and popcorn available a la carte. Mr. Goldstein hopes the new approach will eliminate potential conflicts with the studios and be easier for consumers to understand. To drive traffic, he plans to give away free popcorn and all-inclusive concession packages.

The Woodhaven location may not have been the best place for the experiment, said Mr. Goldstein, who wonders if local customers are too price sensitive or if the test would have been more successful in a theater with a large customer base, or one with less competition. “Would I try it today with a different theater?,” he asked. “My answer today is no, but I have a very short memory.”

Write to Ruth Simon at [email protected]

[Typical Lax Dad]

By Ruth Simon | Photographs by Nic Antaya for The Wall Street Journal
Oct. 1, 2021 5:30 am ET
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A 10-screen movie theater in Woodhaven, Mich., needed help, fast. After closing for 15 months during the pandemic, it reopened this past July, and its owner needed a way to stand out. So Jon Goldstein decided to radically change the pricing plan. Convincing customers to embrace it would be harder than he expected.

For $20 during the week—$25 on weekend evenings and other peak times—adults received a movie ticket plus a wristband entitling them to unlimited popcorn, pizza, chicken tenders, soda, candy and other special menu items. Tickets for the show alone sold for $12.

“I have wanted to redo the business model since I got into the business,” said Mr. Goldstein, who built his first movie theater, in Meadville, Pa., 15 years ago. “Without the pandemic, I might have been too busy to try this.”

Other businesses have experimented with pricing changes during the pandemic, looking for ways to stand out as consumers’ habits change. MCR Hotels, a large U.S. hotel owner with 125 properties in 34 states, recently began experimenting with a la carte pricing, adding charges for guests who want to check in early or swim during peak hours. Whole Foods this summer piloted a $9.95 service fee for all deliveries in six metropolitan areas and announced last month it would roll that out to its other markets on Oct. 25. Other retailers started offering free shipping during the pandemic.

“Many [companies] had no choice but to try,” said Jagmohan Raju, a marketing professor at the University of Pennsylvania’s Wharton School who studies pricing.


‘Maybe the way to win customers back is not to try something different,’ said Jon Goldstein, who owns and operates the Woodhaven theater along with 14 others.

Testing the public’s appetite for a pricing change poses opportunities and risks for smaller businesses. They can be more nimble than bigger counterparts, an asset during such experiments, but they also have fewer resources to spend on data analysis and marketing and may need to win support from much larger partners. The cost of a mistake can be high.

Mr. Goldstein, who owns and operates 15 theaters in Michigan, Illinois, Minnesota and Pennsylvania, saw this firsthand. His company, Bloomfield Hills, Mich.-based Northwoods Entertainment, employs roughly 400 people, down from roughly 600 pre-pandemic.

The goal of his all-inclusive package was to drive traffic to the Woodhaven theater, which had been struggling to attract people even before it closed for 15 months during the pandemic. But getting customers in the door proved challenging. On Labor Day weekend, the 1,500 tickets sold were half of Mr. Goldstein’s target, and he said the theater has lost roughly $15,000 a week since reopening in July.

Starting Friday, instead of bundling the ticket and concessions, he is revising his plan so that he will sell movie tickets and concessions separately. The theater will offer an all-inclusive concession package of $12 for adults and $9 for children while selling popcorn and soda a la carte. Movie tickets will be $5-10 for adults.

“I am making it a lot harder than I need to make it,” Mr. Goldstein said in September as he pondered the next steps in his continuing experiment. “Maybe the way to win customers back is not to try something different,” he added. “Maybe this wasn’t the right movie theater to try it.”


The initial pricing change at the Woodhaven theater charged adults $20 during the week—or $25 on weekend evenings and other peak times—for a movie ticket plus a wristband entitling them to unlimited popcorn, pizza, chicken tenders, soda, candy and other special menu items.
‘A horrible model’
Pricing changes at movie theaters face numerous hurdles due to the way the business operates. Thick master licensing agreements between the studios and theater owners dictate which films a theater will show, over how many screens and for how long. Movie studios don’t dictate pricing, but they typically receive 55% to 60% of ticket-sale revenue. Theater operators get to keep the rest, plus all revenues from concessions.

“It’s a horrible model,” said Mr. Goldstein, adding that the industry’s best customers subsidize its worst ones. “If someone buys a ticket, sits down and sneaks in their own food, we don’t make any money.”

That arrangement helps explain why a small popcorn can cost at least $6 and why so much focus goes to reserve seating, plush chairs that recline and additional dining options as alternative ways of attracting customers.

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The last industrywide pricing experiment—a subscription service from MoviePass that let customers watch up to a movie a day in theaters for less than $10 a month—didn’t work out. MoviePass closed in 2019, burning through cash to support its costly business model. Two national chains— AMC Entertainment Holdings Inc. and Cinemark Holdings Inc. —still have their own subscription services in place, however. The AMC Stubs A-List program, which launched in 2018, offers customers three movies a week in any format for $19.95 to $23.95 depending on location. Cinemark’s Movie Club, rolled out a year earlier, provides one movie ticket a month, a 20% discount on concessions and other benefits for $9.99 monthly.


The economic downturn and lockdowns that followed the pandemic applied even more pressure to the economics of movie theaters as thousands shut down in 2020. That year, U.S. and Canadian box office revenues fell 80% to $2.2 billion, according to the Motion Picture Association. Many theaters eventually reopened but had trouble regaining an audience as customers gravitated to at-home streaming services for their entertainment. Hollywood studios also delayed a number of films or released films simultaneously on streaming services, hurting grosses for theaters.

Weekend ticket sales are now running about 55% of their average between 2015 and 2019, estimates Eric Handler, a media and entertainment analyst with MKM Partners.


Zachary Fortuna, 13, and his mother, Rebecca Fortuna, sit down at the Woodhaven theater last month.
Making the math work
For Mr. Goldstein, however, the pandemic offered a chance to try something new after a decade and a half in the business. The idea of running theaters came to him in his previous career working for an investment banking firm, where he helped small businesses strengthen their balance sheets. He encountered a small movie theater operator whose approach he thought he could replicate.

“The model was to find smaller markets where you could be the only game in town, big enough to support a theater but small enough where you didn’t have to really worry about the competition.” After starting one in Meadville, Pa., he opened theaters in nearby Cranberry Township, Pa., and Woodhaven. He later purchased a portfolio of eight Minneapolis movie theaters in 2016 and now operates all but his two original properties under the Emagine Entertainment brand.

Before Mr. Goldstein could begin his pricing experiment this year, he needed to convince the big studios the test was worthwhile. For the math to work, the studios needed to accept a smaller share of the higher ticket price, leaving Northwoods with enough money to cover food and beverage costs and turn a profit.

Mr. Goldstein said it took him months to win the needed approvals. One big studio, Paramount Pictures, wasn’t willing to accept the smaller share of the ticket and didn’t agree to be part of the test, Mr. Goldstein said. “This is the hardest business to do any kind of innovation because you don’t own the product,” he said. Paramount, a unit of ViacomCBS Inc., declined to comment.


He decided to set his pricing trial at a Michigan theater built in 2008 in a suburb of Detroit; he had leased it to theater giant AMC in 2017 before taking it back during the pandemic. Attendance was down, he said, and he faced nearby competition from two other big theater chains. He spent $300,000 on a new pizza oven and other improvements before reopening the theater in July.


From left, John Courage of Belleville and his daughters Andi Courage and Gray Courage wait for popcorn being prepared by Woodhaven theater employee Shane Campbell.
An AMC spokesman declined to comment on the decision to hand over the property.

“I am competing with formidable opponents,” said Mr. Goldstein. “As a small business, I have to go out and shake the trees,” he added. “I have to set it apart from the other two theaters in the market.”

The good news for Mr. Goldstein was that per-ticket revenues went up, compared with the period when he last operated the theater. Mr. Goldstein declined to say how revenues are split with the movie studios under the one-price arrangement, but figures average ticket revenue is now $9.50, or $2.25 more than under the old model. “It really lifted all boats,” he said this summer. “It’s made more money for my studio partners and done better for us.” In part, that is because Mr. Goldstein bumped the price of the basic ticket to $12 compared with $9 when he last operated the theater.

Vanessa McLean, a Dearborn, Mich., resident, hadn’t been to the movies in 18 months when she took advantage of the new one-price option in July. “The food is what brought me here,” said Ms. McLean.

“It’s a heck of a good deal,” she added. “Normally, you’d spend $20 on the ticket, a pop and popcorn. Now, you can get whatever you want—pizza, candy, a hot dog, pretzel, bites, a sandwich—and take it home for just a little more. I’m surprised.”


Starting Friday, instead of bundling the ticket and concessions, the Woodhaven theater is revising its pricing plan so that movie tickets and concessions will be sold separately. The theater will offer an all-inclusive concession package of $12 for adults and $9 for children while selling popcorn and soda a la carte. Movie tickets will be $5-10 for adults.

Lessons learned
One challenge for Mr. Goldstein was getting customers such as Ms. McLean to come back; she has returned to the Woodhaven theater just once. “It’s not because of the deal,” she said. “It’s more the content of the movies. There are not that many I’ve been interested in seeing.”

Some customers didn’t like the new pricing concept, either. “If you opt for ticket only, NO CONCESSIONS allowed. Nothing to drink, or eat,” one customer wrote on Yelp. “Not sure what brainiac thought that one up, but we all almost walked out.”

Mr. Goldstein said he initially planned to sell soda and popcorn at the bar. He said he dropped the idea because the other members of his four-person executive team believed that adding a third option would confuse customers. “I take full credit for being the brainiac that thought it up,” Mr. Goldstein said.

SHARE YOUR THOUGHTS
How have small businesses in your community shaken up their business model? Join the conversation below.

The all-inclusive price also appears to have scared off potential customers shopping for tickets on Fandango or other online aggregators. Emagine Woodhaven’s all-inclusive tickets show up as far more costly than those sold by competitors, and it takes some time to understand why. “We think we are pushing a lot of our customers away with sticker shock,” Mr. Goldstein said.

Mr. Goldstein initially hoped that the new offering would generate a buzz that would draw new customers to the theater, but instead he found it hard to stand out. He planned to roll out a marketing campaign, but the Delta variant made him wary of spending the money. A bigger company might have had the financial resources to let the test run longer, he added.

A reminder of how difficult this experiment would be came Labor Day weekend, when the Woodhaven theater sold about 1,500 tickets. That was on par with ticket sales during the final months of AMC’s ownership, Mr. Goldstein said, but just half of Emagine’s target—and far below the 4,000 tickets sold at a comparable theater he owns in Minneapolis. “For us, it’s not good enough,” he said. “If you are not driving people through the door, you are not able to get to the critical mass to become profitable.”


On Labor Day weekend, the Woodhaven theater sold 1,500 tickets—half of its owner's target. ‘For us, it’s not good enough,’ Mr. Goldstein said.
Since reopening in July, the Woodhaven theater has grabbed just 5% of the local market compared with roughly 25% of the market before AMC took over, he said.

Another concern for Mr. Goldstein was his relationship with the studios. He said he was grateful they allowed him to experiment, but he feared efforts to publicize his approach could make studios more skittish about what had been a low-profile experiment.

In the end, Mr. Goldstein said he learned that for many people, moviegoing is a habit that is hard to change. His own habits include always sitting on the right side of the theater, a small popcorn and a large Diet Coke in hand. “There are a lot of customers, they just want to buy one thing,” Mr. Goldstein said. “This is maybe where I stumbled.”

In September, Mr. Goldstein and his executive team decided it was time to revise their plan. Starting Friday, Emagine Woodhaven is offering a standard movie ticket plus a separate all-inclusive concession package, with soda and popcorn available a la carte. Mr. Goldstein hopes the new approach will eliminate potential conflicts with the studios and be easier for consumers to understand. To drive traffic, he plans to give away free popcorn and all-inclusive concession packages.

The Woodhaven location may not have been the best place for the experiment, said Mr. Goldstein, who wonders if local customers are too price sensitive or if the test would have been more successful in a theater with a large customer base, or one with less competition. “Would I try it today with a different theater?,” he asked. “My answer today is no, but I have a very short memory.”

Write to Ruth Simon at [email protected]

Good article

[Farfromgeneva]

Someone just need to let me know if it’s generally not cared about-I don’t want to be the new Taats thread that’s a one man band but drop stuff in that I think is important to all of us.

[NattyBohChamps04]

I've seen a bunch of those "government handout" employment signs plastered on facebook from restaurants who don't want to deal with free market economics and pay more for labor. Nice to finally see a sign more grounded in reality...

[youthathletics]

Seems like a nice lady, who is more in tune with Russia than anyone in the last administration. Appears to have it out for banks according to the WSJ piece in the slides of this post. I know nothing about her....anyone here ha e insight?

https://www.instagram.com/p/CUiOBd_rwxc ... =copy_link

[a fan]

Seems like a nice lady, who is more in tune with Russia than anyone in the last administration. Appears to have it out for banks according to the WSJ piece in the slides of this post. I know nothing about her....anyone here ha e insight?

https://www.instagram.com/p/CUiOBd_rwxc ... =copy_link

Who cares? And come on...."have it out for banks". Like they're having such a rough time in America.

What I want to know is: when the F are guys like Dan Crenshaw going to tell us what the F his plans are for middle America?

Dems are bad. I get that. But we just had four years of R's------how much worse shape are TrumpVoters off?

MUCH worse, YA. MUCH. Your party doesn't have a freaking plan for them, and hasn't had one for a loooooong time.

Doesn't that freak you out? The Dems have a plan. You might not like it, but they have a plan.

Example? DIrect checks for parents--the "child tax credit". That one single, simple move will help the average Trump voter more than anything Trump did in 4 years. The Dems are trying to make it permanent. And if your party gave two *hits about the average Trump voter? They'd sign on for it, too. And the one of the great features of this credit----it gets spent immediately, prompting more economic activity.

By Contrast (snicker) , what was your team's big accomplishment over the last four years? That's right; MORE tax breaks for the 1%. Remember those? The cuts that would "pay for themselves", and lead to massive economic growth? How'd that work out?

This cultural cr*p that Crenshaw is selling is swell if you want to get elected....but does NOTHING to help the bottom 80% of American earners. At some point, people like me are going to say "F it, Crenshaw wants to line my pockets, and stick it to Trump voters? Let him. He gets my vote".

[MDlaxfan76]

Seems like a nice lady, who is more in tune with Russia than anyone in the last administration. Appears to have it out for banks according to the WSJ piece in the slides of this post. I know nothing about her....anyone here ha e insight?

https://www.instagram.com/p/CUiOBd_rwxc ... =copy_link

consider the source, but yeah, she's likely to get some pushback...bet she doesn't get confirmed.

Here's a liberal POV: https://prospect.org/economy/wall-stree ... e-omarova/

Here's a conservative POV: https://www.politico.com/news/2021/09/2 ... nks-514189

And here's the wiki: https://en.wikipedia.org/wiki/Saule_Omarova

Looks like she'd be a tough regulator from a position that's not known for such.

I think the implications of her being a closet commie are entirely specious, but she definitely has an academic's sharp perspective on banking having been far too deregulated. And gotta remember that consumers don't have lobbyists when we think about who actually writes the rules in America.

[youthathletics]

Seems like a nice lady, who is more in tune with Russia than anyone in the last administration. Appears to have it out for banks according to the WSJ piece in the slides of this post. I know nothing about her....anyone here ha e insight?

https://www.instagram.com/p/CUiOBd_rwxc ... =copy_link

Who cares? And come on...."have it out for banks". Like they're having such a rough time in America.

What I want to know is: when the F are guys like Dan Crenshaw going to tell us what the F his plans are for middle America?

Dems are bad. I get that. But we just had four years of R's------how much worse shape are TrumpVoters off?

MUCH worse, YA. MUCH. Your party doesn't have a freaking plan for them, and hasn't had one for a loooooong time.

Doesn't that freak you out? The Dems have a plan. You might not like it, but they have a plan.

Example? DIrect checks for parents--the "child tax credit". That one single, simple move will help the average Trump voter more than anything Trump did in 4 years. The Dems are trying to make it permanent. And if your party gave two *hits about the average Trump voter? They'd sign on for it, too. And the one of the great features of this credit----it gets spent immediately, prompting more economic activity.

By Contrast (snicker) , what was your team's big accomplishment over the last four years? That's right; MORE tax breaks for the 1%. Remember those? The cuts that would "pay for themselves", and lead to massive economic growth? How'd that work out?

This cultural cr*p that Crenshaw is selling is swell if you want to get elected....but does NOTHING to help the bottom 80% of American earners. At some point, people like me are going to say "F it, Crenshaw wants to line my pockets, and stick it to Trump voters? Let him. He gets my vote".

Didn't' know Dan was a trigger for you and MD.....good Lord!

The point wasn't Dan's take, it was what the WSJ wrote in the photos on his Instagram. Notice, nothing I posed in my post had a single thing to do with partisanship. But if dan makes you fly off the handle, go full boat partisan livid, I'll try to refrain from bringing questions to the forum that may provoke scoreboarding.

[a fan]

Didn't' know Dan was a trigger for you and MD.....good Lord!

The man was full on rational when he entered Congress. Now he's cuckoo for cocoa puffs. Disappointed, I guess, to watch his decline into TrumpLand xenophobic nonsense about nothingburgers.

The point wasn't Dan's take, it was what the WSJ wrote in the photos on his Instagram. Notice, nothing I posed in my post had a single thing to do with partisanship. But if dan makes you fly off the handle, go full boat partisan livid, I'll try to refrain from bringing questions to the forum that may provoke scoreboarding.

Pull the woman's name from consideration. I won't lose a wink of sleep.

I know your post wasn't partisan, my man.

Mine was in the sense of: what the F is Dan complaining about here.....and when is he going to regain his sanity, and start looking out for the people of Texas' 2nd district?

[Farfromgeneva]

It’s the illiquid assets that get hurt first but I’ve been tracking the Zillow model for my house (algo is way off in general but directionally should be correct) and also this Pre 1980 “deal or no deal” baseball card group on Facebook (which by the way is idiotic folks bid against themselves but the seller never provides an open auction offer or provides a reserve price? That’s just collecting market data points in a disparate market for free and having the option of hitting an outlier bid when the cover bid could be miles off, just stupid to participate as a buyer under such construct on a “public” (invite in but no filter) forum. Maybe it’s Covid but my house model value has pulled back about 3% from peak in late July/early Aug and the card group velocity of bidding and deals getting done has clearly dropped a ton. Could be pickup of delta but I can’t imagine a bunch of middle class folks buying baseball cards as investments are suddenly all dropping form delta variant or recognizing risk to their pocketbook this quick as a feedback loop for such a esoteric “asset class” (I have a couple hundred thousand worth of cards but they’re worth zero and infinity in that I’ll never sell them but collected them with my father).

This being said this weekend piece is interesting

Mortgage Payments Are Getting More and More Unaffordable

Record growth in home prices is erasing savings typically delivered by low interest rates

By Oct. 3, 2021 5:30 am ET

During the early months of the pandemic, homes became more affordable. But then fierce competition sent home prices soaring.
Photo: patrick t. fallon/Agence France-Presse/Getty Images
House prices are rising at a record pace but incomes aren’t keeping up, which is making home ownership less and less affordable.

The median American household would need 32.1% of its income to cover mortgage payments on a median-priced home, according to the Federal Reserve Bank of Atlanta. That is the most since November 2008, when the same outlays would eat up 34.2% of income.

Supercharged home prices in markets across the country are canceling out the impact of modestly higher incomes and historically low interest rates, two factors that typically make owning a home more affordable. Prices rose at a record pace for the fourth consecutive month in July, driven by a shortage of houses for sale. Higher prices require buyers to take out larger loans, essentially signing them up to make larger mortgage payments each month for years.

Share of income needed to cover housing costs
Source: Federal Reserve Bank of Atlanta
Note: Share is based on median household incomes and median home prices.

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The Atlanta Fed calculates affordability using a three-month average of median home prices from CoreLogic Inc. and median household incomes based on census data. In July, the latest month in the Atlanta Fed’s calculations, median home prices were $342,350, up 23% from the year before. Median incomes were $67,031, up 3%.

Declining affordability will have the biggest impact on buyers shopping for their first homes, who will have to sign up for larger monthly payments, buy less desirable homes or step back from the market altogether, economists said.

“It’s a lot more difficult for people to get their foot in the door of the housing market,” said Ralph McLaughlin, chief economist at Haus, a home-finance startup. “The question is whether it is an insurmountable hurdle or is it just that these households have to spend more of their monthly income on the mortgage.”

The dynamics were different in 2008, even if the effect—disarray in the housing market—was the same. Home prices were falling, and many Americans owed more on their homes than the homes were worth. What’s more, widespread job losses weighed on household income for years.

Christopher Ferreris and his wife, Danielle Ferreris, have been hoping to purchase a home in the Tampa, Fla., area for close to two years. They can afford about $1,600 in monthly payments, but every house they have seen requires monthly payments about 25% bigger than that.

Year-over-year change in home prices, monthly
Source: S&P CoreLogic Case-Shiller National Home Price Index

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“It’s almost like we’ve gotten into a holding pattern because of how difficult it is,” Mr. Ferreris said.

The typical value of a home in Tampa was $331,000 in August, up from $265,000 at the same time last year, according to Zillow.

The Ferrerises are doing everything they can think of to save money, and Mr. Ferreris started a side business last year buying and selling sports cards. He now counts on it for about $500 each month.

During the early months of the pandemic, homes became more affordable, according to the Atlanta Fed. Interest rates fell. And home prices, while still rising, weren’t accelerating at such a fast pace.

But then many families, after sitting on the sidelines for a few months, raced to buy homes, eager for more space or to move out of crowded cities. The fierce competition sent home prices soaring. Affordability began to decline.

SHARE YOUR THOUGHTS

Are you trying to buy a house, sell a house or refinance? Tell us about your experience with the current housing market. Join the conversation below.

At the start of 2021, Americans needed about 29% of their income to cover a mortgage, the Atlanta Fed estimated. That rose to about 32% by July. The Atlanta Fed includes principal, interest, taxes, insurance and related costs in mortgage payments.

“Any affordability that mortgage rates lended has pretty much been erased at this point,” said Daryl Fairweather, chief economist at real-estate brokerage Redfin.

Home buyers have noticed. About 63% of consumers surveyed in August believed it was a bad time to buy a house, according to Fannie Mae. That was up from 35% at the same time last year.

Write to Orla McCaffrey at [email protected]

[Farfromgeneva]

The limits of decentralization
The cryptocurrency industry has been up in arms over a tax-reporting provision in the infrastructure bill. The proposed bill defines a “broker” in a way that would apply to everyone involved in a crypto transaction, including software developers of decentralized finance platforms and Bitcoin miners. It is damaging and impractical to require these players to report tax data on users that they do not know, crypto advocates have argued.

A costly bug recently undermined industry claims. Last week, a flaw in the code of the automated money market protocol Compound, which has $15 billion in assets, led to tens of millions of dollars worth of its crypto token erroneously going to some users. Compound’s chief, Robert Leshner, tweeted that anyone who didn’t voluntarily return the money would be reported to the I.R.S., seemingly undermining claims that identifying users of decentralized crypto platforms like Compound is impossible.

“This episode shows that the current lack of tax reporting by major cryptocurrency platforms aren’t technological limitations,” Alexis Goldstein of the nonprofit Open Markets Institute told DealBook. “They’re design decisions.”

Leshner told DealBook that his tweet was “misconstrued.” He said that anyone could identify the public Ethereum addresses that interact with the Compound protocol, and whether they engaged with popular exchanges like Coinbase that collect information about users. Leshner said he “intended to suggest” that given the likelihood of interaction with a centralized exchange, “anyone could point to which addresses received an unexpected windfall.”

The episode exposed the vulnerabilities of automated crypto financial systems, just as regulators, alarmed by the alternative ecosystems being built on the blockchain, plan to issue a series of reports this fall outlining new rules for the future of finance.

[Farfromgeneva]

What do folks think about this concept?

https://www.crisesnotes.com/yet-another ... ntthecoin/

Yelled flat out rejected it this am on CNBC. I don’t usually agree with her on macro, she’s a smart lady just with different biases than me, but was unequivocal. They don’t have a transcript up but it was around but it was around 7:40-7:45 EST this am as part of a discussion in the debt ceiling about 2/3 into it if anyone wants to look for the transcript later today when it surely will be up.

[MDlaxfan76]

What do folks think about this concept?

https://www.crisesnotes.com/yet-another ... ntthecoin/

Yelled flat out rejected it this am on CNBC. I don’t usually agree with her on macro, she’s a smart lady just with different biases than me, but was unequivocal. They don’t have a transcript up but it was around but it was around 7:40-7:45 EST this am as part of a discussion in the debt ceiling about 2/3 into it if anyone wants to look for the transcript later today when it surely will be up.

Yellen.

Not surprised that she rejected it.
It's applying an absurd solution to an absurd situation.

Far preferable is rationality.
But will that happen without calamity first?

[Farfromgeneva]

What do folks think about this concept?

https://www.crisesnotes.com/yet-another ... ntthecoin/

Yelled flat out rejected it this am on CNBC. I don’t usually agree with her on macro, she’s a smart lady just with different biases than me, but was unequivocal. They don’t have a transcript up but it was around but it was around 7:40-7:45 EST this am as part of a discussion in the debt ceiling about 2/3 into it if anyone wants to look for the transcript later today when it surely will be up.

Yellen.

Not surprised that she rejected it.
It's applying an absurd solution to an absurd situation.

Far preferable is rationality.
But will that happen without calamity first?

I was doing some excel stuff so in background and partly hearing but basically her reply. It’s a manufactured problem so this would be a ridiculous “solution” that is all risk and minimal reward.

[youthathletics]

Seems like the goal is to pry open Pandora's box....just for the sake of opening it, and then never look back.

[MDlaxfan76]

What do folks think about this concept?

https://www.crisesnotes.com/yet-another ... ntthecoin/

Yelled flat out rejected it this am on CNBC. I don’t usually agree with her on macro, she’s a smart lady just with different biases than me, but was unequivocal. They don’t have a transcript up but it was around but it was around 7:40-7:45 EST this am as part of a discussion in the debt ceiling about 2/3 into it if anyone wants to look for the transcript later today when it surely will be up.

Yellen.

Not surprised that she rejected it.
It's applying an absurd solution to an absurd situation.

Far preferable is rationality.
But will that happen without calamity first?

I was doing some excel stuff so in background and partly hearing but basically her reply. It’s a manufactured problem so this would be a ridiculous “solution” that is all risk and minimal reward.

Yup, but is it actually worse than the calamity that will surely occur if rationality and responsibility don't prevail first?

She has to root for the rational, responsible answer, but she's not Mitch.
He has different strategic goals than the nation's economy.

[Farfromgeneva]

Seems like a nice lady, who is more in tune with Russia than anyone in the last administration. Appears to have it out for banks according to the WSJ piece in the slides of this post. I know nothing about her....anyone here ha e insight?

https://www.instagram.com/p/CUiOBd_rwxc ... =copy_link

Who cares? And come on...."have it out for banks". Like they're having such a rough time in America.

What I want to know is: when the F are guys like Dan Crenshaw going to tell us what the F his plans are for middle America?

Dems are bad. I get that. But we just had four years of R's------how much worse shape are TrumpVoters off?

MUCH worse, YA. MUCH. Your party doesn't have a freaking plan for them, and hasn't had one for a loooooong time.

Doesn't that freak you out? The Dems have a plan. You might not like it, but they have a plan.

Example? DIrect checks for parents--the "child tax credit". That one single, simple move will help the average Trump voter more than anything Trump did in 4 years. The Dems are trying to make it permanent. And if your party gave two *hits about the average Trump voter? They'd sign on for it, too. And the one of the great features of this credit----it gets spent immediately, prompting more economic activity.

By Contrast (snicker) , what was your team's big accomplishment over the last four years? That's right; MORE tax breaks for the 1%. Remember those? The cuts that would "pay for themselves", and lead to massive economic growth? How'd that work out?

This cultural cr*p that Crenshaw is selling is swell if you want to get elected....but does NOTHING to help the bottom 80% of American earners. At some point, people like me are going to say "F it, Crenshaw wants to line my pockets, and stick it to Trump voters? Let him. He gets my vote".

Didn't' know Dan was a trigger for you and MD.....good Lord!

The point wasn't Dan's take, it was what the WSJ wrote in the photos on his Instagram. Notice, nothing I posed in my post had a single thing to do with partisanship. But if dan makes you fly off the handle, go full boat partisan livid, I'll try to refrain from bringing questions to the forum that may provoke scoreboarding.

Crenshaw is proving the axiom that “in the land of the blind the man with one eye….”