By Faraz Munaim, Goldman trader and Managing Director
We live in uncertain times but the one certainty (outside of taxes) seems to be that New York City can still make you gasp on prices even when you thought you had become immune to it. One of my colleagues was looking to book one of her favorite restaurants for a dinner in their private room – the group size was only 7 people but the restaurant came back with an astonishing $12,000 minimum spend (before taxes and tip) and doing the easy math gets you to at least $2,000 per person which actually doesn’t make a lot of sense (beyond the obvious) given that an average steak there is around $150 (admittedly high but nowhere near enough to get you to that minimum number). I suppose if I am ever invited to go there I will have to take my cardiologist with me – needless to say my colleague found another spot. Feel free to email if you want to know the name of the place.
Stories of these types of sticker-shock prices abound but the question is, is this now finally marking the high? Given that inflation remains persistent, consumer sentiment is weakening and the noise around tariffs and growth (unless you are in Germany but more on that later) continues to signal an uncertain future, we could be at the beginning of the end for these astronomical prices. However, the US economy has beaten back the doubters before and it may happen again but we are on shakier ground especially if government spending goes lower as anticipated (it is still counted as part of GDP, musings to change the methodology aside).
Speaking of tariffs, I will be the first to admit I am utterly confused as to what is actually happening / going to happen despite being in the weeds as much as anyone can. As of now most things (against Canada and Mexico) appear to have been exempted for a month – started with cars and moved to onto trades covered by the USMCA.
Nonetheless trying to figure out tariff policy is all the rage so its pretty incredible that that wasn’t the top market moving headline this past week. That title belonged to Germany who appear to have woken out of their fiscal conservativeness (after the recent US comments on defense and the Ukraine summit at the White House) and announced their intention to borrow 900 billion Euros to spend on two funds covering defense and infrastructure spending.
