Above the Fold             

British Pound Approaches Dollar Parity 

On Monday, the venerable British pound sold off sharply to all-time lows against the U.S. dollar levels not seen since 1985. The rout was triggered by a sweeping tax-cutting package released late last week, along with the planned issuance of large amounts of bonds to help cover costs associated with the cuts. The pound is now trading around $1.07, which may be welcome news for U.S. travelers, but certainly signals trouble for a nation still grieving from the loss of Queen Elizabeth II. The news set off additional selling of UK government bonds, pushing yields higher across all maturities. The 10-year gilt jumped to a multiyear high of 4.142%, up from 3.813% Friday and less than 3% at the start of September.  

The tax plan is centered mainly around the high costs of energy plaguing the country. UK Chancellor of the Exchequer Kwasi Kwarteng revealed the package, which includes a freeze on corporate taxes, payroll tax cuts, removal of banker bonus caps and a slew of additional spending to subsidize Britons’ lofty energy bills. Though the plan was expected to spark activity and add a boost to the faltering economy, the move is being seen as dramatic and desperate by many investors, and the added volatility and rising borrowing costs could have just the opposite effect. All this comes on the heels of a two-year corporate and individual energy bailout program announced by Prime Minister Liz Truss, who took office earlier this month. The tax-cutting program is the largest since 1972, which then triggered skyrocketing inflation and the ousting of the Conservative Party, of which Ms. Truss belongs.  

Three Things             

Renters Catch a Break in August 

For the first time in two years, the average rent rate fell 0.1% in August from its July reading, according to property data company CoStar Group. Though the headline decline seems insignificant, other data showed much larger declines in certain markets and weakening consumer sentiment regarding rental housing. A continued rise in the amount of apartment construction and inventory added to supply, further pressuring prices. We expect the rental decline trend to continue over the coming months.  

Apple’s Buy Now, Pay Later Service Delayed 

According to Bloomberg’s Mark Gurman, the tech giant’s planned foray into the fast-growing buy now, pay later (BNPL) segment, is facing some “significant” setbacks. Apple’s “Pay Later” program was widely expected to be released alongside iOS 16, but that obviously wasn’t the case. Though the exact issues are not known, several reports have indicated several “technical and engineering” related struggles. Experts now expect the service to be released in early 2023, perhaps not until late spring. The delay coincides with increased government scrutiny of these BNPL programs as they could potentially add risks to consumer health, as well as increased fees that consumers were clearly not made aware of. Apple’s service could leapfrog over the competition as the feature is expected to be built into the iPhone directly.  

China is Swiftly Exiting the U.S. Commercial Real Estate Market 

Since the Great Recession, Chinese firms had gobbled up tens of billions of dollars’ worth of commercial real estate, but that trend is now reversing. After years of aggressive property purchases, which according to MSCI research, totaled roughly $52 billion between 2013 and 2018, investors from the communist nation have flipped the switch. China-based investors have already dumped $23.6 billion in commercial holdings since the start of 2019. Many of these investments have been heavily concentrated in New York City, with high-end “trophy” properties like the famed Waldorf-Astoria Hotel, and a high-rise office tower at 245 Park Avenue, which was the most expensive sale of a U.S. office building ever recorded. And while Chinese bidders are increasingly rare, investors from Singapore, Korea, and even Germany, are stepping in.  

In the Know             

Ukrainian Firm to Take Over Darth Vader’s Voice 

Since his debut in 1977’s Star Wars, Darth Vader’s menacing voice has been played by American actor James Earl Jones (David Charles Prowse wore the original costume). But as Mr. Jones approaches 92 years of age, he’s ready to let AI (artificial intelligence) take over his roles.  

The actor had agreed to sign over rights to his archival work on the films to a Ukrainian startup called Respeecher, which used technology to recreate Jones’ unique vocal delivery for Disney Plus’ Obi-Wan Kenobi. Respeecher has worked with Disney before, recreating Mark Hamill’s voice for several productions. But this AI voice trend could become big business for celebrities to “rent” their voices for productions without ever having to step foot in a studio.