MARKET MOVERS
- Inflation rose 7% over the past year. The highest since 1982. The consumer price index, an inflation gauge that measures costs across dozens of items, rose 7% in December from a year ago. That was in line, however, with economist estimates, and stock market futures rose after the release. Excluding food and energy, the so-called core CPI was up 5.5% on the year, the biggest growth since February 1991. Read more here.
- Meta Platforms Inc. appointed DoorDash CEO to its board of directors. Chief Executive Tony Xu's appointment is the first change to the board since the company rebranded itself as Meta in October. Mark Zuckerberg said in a statement that it’s important to have great tech leaders on their board, and Tony has direct experience both running a tech company and solving complex challenges in commerce. Read more here.
- Winter homebuying is heating up and it may be fueled by fear of even higher mortgage rates. The housing market started in 2022 on a strong note. Both conventional and government purchase applications showed increases, with FHA purchase applications increasing almost 9%, and VA applications increasing more than 5%. As mortgage rates rise, fewer and fewer borrowers can benefit from a refinance.
- Shelter is the single biggest component of CPI (33% of Index) and is being wildly understated (+4.1%) with rents up 17.8% over the last year (largest annual increase ever), and home prices up 19% (also largest annual increase ever). The true inflation rate is much higher than 7%.
- Rising interest rates will result in 3 housing market changes, says Motley Fool's Aly Yale. As mortgage rates rise, buyers will likely pull back, easing the competition for today's limited supply of housing. Rising rates will also spur a drop in refinancing activity, as the incentive to refinance (and take on the costs that come with it) wanes. Prices may also slow, but consumers should not expect a decline. A deep dearth of for-sale homes will keep prices rising, albeit at a slower pace, for some time. Read more here.
- UK Bitcoiners might be leading the next wave of adoption. UK investors have a higher percentage of their net worth invested in Bitcoin compared to the US market, according to UK fintech Mode. Around 70% of Brits have 3% or more of their net worth invested in Bitcoin while just 46% of US investors declared the same level of portfolio contribution. An overwhelming majority of Gen-Z and Millennials seem to be leading the way with Bitcoin ownership in the UK.
WHAT TO WATCH
- A bloodbath in the used car market is coming, says Cathie Wood. She is expecting this with valuations tumbling in the coming year into 2023 as prices that have surged because of supply-chain bottlenecks and a pop in demand recede. She noted that the U.S. gas-powered car sales are likely to struggle, especially now that used car inventories, as measured by Manheim, are roughly 40% above normal at wholesale and retail.
- General Motors is launching an app for used car purchases. The company has introduced CarBravo, an online platform that connects used car buyers with the company as well as GM dealers. Used car buyers can shop for non-GM makes and models on the platform too. The biggest impact might be on the existing online dealers and car data providers such as Carvana (CVNA), Vroom (VRM), and Cars.com (CARS). Read more here.
- Lucid Group will build an EV factory in Saudi Arabia by 2025 or 2026 and is negotiating details with ministries in the kingdom. The maker of the $169,000 Air sedan has been in talks with Saudi Arabia’s sovereign wealth fund to build an EV plant potentially near the Red Sea city of Jeddah. The $360 billion Public Investment Fund will provide much of the money for the site at the King Abdullah Economic City.
- HSBC's fixed-income team led by Steven Major sees value right now in short-term rates, saying rate hikes are priced in with 2-year yields at 0.9%. They're mildly bearish on long-term bonds in the short term, saying that 10-year yields are likely to rise more from here.
- Meta loses bid to dismiss FTC antitrust case a second time. A US federal judge allowed an antitrust case against Facebook to proceed. US regulators have been attempting to sue the social media site. The FTC has provided more evidence to make its argument that Meta has a stranglehold on the social network market because it owns WhatsApp and Instagram. It wants to force Meta to unwind the acquisitions of those two apps. Meta has until January 25th to respond. Source(0:46)
