Rents/All-You-Can-Eat wings tonight/Yen

With the direction of rental growth being a key component of where CPI goes from here, ahead of the August read next week and we know the BLS has some catching up to do with what's doing on the ground, Equity Residential last night repeated its own expectations for rents. After a blended rate (new leases and renewals) of rent growth of 4.3% y/o/y in Q2, they repeated what they said in their Q2 earnings released that they expect this to moderate a touch to 3.5% y/o/y growth in Q3. They said "The Company is finishing a good leasing season with healthy demand and pricing for its apartment units. Consistent with normal seasonal demand patterns, in early August 2023 rents peaked for the year and the Company expects rents to moderate for the balance of the year." They have a major presence in big cities as opposed to the burbs and in Boston, NY, DC, San Francisco, Seattle, and LA. They've also expanded over the past few years in Denver, Atlanta, Austin and Dallas. 

We know there is a large amount of supply currently being constructed, some 1mm units I've heard and there is an immediate assumption that rent growth slows sharply in response. While I don't disagree, a 7.5% mortgage rate for home buyers will keep demand for rentals pretty solid I also believe which will help to absorb this supply. And once this construction is complete, there will be very little new supply because almost no new projects are getting started because of the new economic realities. 

There really wasn't much macro gleanings in some of the earnings releases last night, though Dave & Buster's badly missed estimates but didn't blame the macro. The most interesting earnings call comment yesterday from them ahead of the football season they said "We are also bringing back the successful All-You-Can-Eat Wings on Monday and Thursday's which our guests will particularly enjoy while cheering on their favorite teams." RH (Restoration Hardware) reports tonight and Gary Friedman always leaves us with his colorful and honest thoughts.