Intelligence Brief for March 27

Economic Intelligence for March 27, 2024:

Markets:

• What it is: Baltimore Port's coal exports are likely to be blocked for weeks after the collapse of the Francis Scott Key Bridge on Tuesday while Norfolk, Virginia, the largest coal port, remains open.

• Why it matters: Baltimore's impact could be severe, but it also means that rival Norfolk should see a boost to the local economy.

• How it impacts you: Globally, the disrupted exports are unlikely to impact coal prices considerably, but there is an opportunity for logistics companies with solid Virginia relationships.

• Opportunities: CSX owns the coal pier in Baltimore, which has underperforming stock.

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Web3/Crypto:

• What it is: A judge ruled that the Securities and Exchange Commission's lawsuit against Coinbase can continue.

• Why it matters: The SEC's arguments "fall short of demonstrating that Coinbase acts as a 'broker' by making Wallet available to customers," said Judge Failla.

• How it impacts you: The SEC's reach appears to be constrained to exchanges and mixers rather than individual crypto wallets.

• Opportunities: Startup companies focused on crypto wallets may circumvent much of the legislation others in the space face.

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Geopolitics:

• What it is: Financial firms are extremely worried about geopolitical risks. According to Bloomberg, 85% of firms surveyed place geopolitics in their top 5 concerns.

• Why it matters: Half the world's population is going to the polls to vote in 2024.

• How it impacts you: Supply chain instability has been a significant issue for 2023 and continues into 2024. This factor could further raise the prices of many consumer goods.

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Energy:

• What it is: Russia led OPEC+ to cut oil production.

• Why it matters: Brent crude is at $86.75 a barrel. WTI is at $81.95 a barrel.

• How it impacts you: Oil prices are on the rise, which will raise gasoline prices and the cost of almost all consumer goods.

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Real Estate:

• What it is: WSJ reports that the U.S. office market suffers from soaring vacancy rates and rising defaults. However, rent prices are still growing.

• Why it matters: Many commercial real estate loans will become due in 2024. Second-class offices are expected to take the biggest hit.

• How it impacts you: Banks don't want to declare loans as nonperforming because that hurts their balance sheets. However, it is expected that a number of these loans will not be able to refinance.

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Business:

• What it is: WSJ reports that the U.S. office market suffers from soaring vacancy rates and rising defaults. However, rent prices are still growing.

• Why it matters: Many commercial real estate loans will become due in 2024. Second-class offices are expected to take the biggest hit.

• How it impacts you: Banks don't want to declare loans nonperforming because doing so hurts their balance sheets. However, a number of these loans will likely not be able to refinance.

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