Monday's Scoop: Steady☀️

Hey friends - hope you had a phenomenal weekend. We made big progress on our mobile app. Get psyched.

Insiders, catch up with the Weekly Scoop.

Here’s what you need to know today to inform your work, spending, and investments:

1. New home construction has boosted home supply.

2. High borrowing costs are eating up more of our taxes.

3. Corporate profits aren’t growing as fast as they used to.

Inflation Rate: +2.4% (YoY), +0.2% (MoM)
^{Policymakers aim for 2% YoY inflation (September CPI)}

Rising interest rates have pushed the US into more debt. The Treasury Department reported that the US government paid $1.16 trillion in interest on its debt in fiscal 2024, as the average interest rate rose to 3.32% from 2.97% last year. This surge in borrowing costs contributed to a budget deficit of over $1.8 trillion—the third biggest overspending year on record—even though the government collected a record $4.9 trillion in taxes. The deficit now exceeds 6% of the country’s annual economic production, much higher than the 50-year average of 4%. For all of us, this trend might lead to higher taxes or cuts in government services as more of our annual tax payments go toward paying the interest on our debt.

30yr Mortgage Rate: 6.5%
^{That’s down from 7.7% a year ago. (MBA)}
Median Existing Home Price: $416,700
^{That’s up from $404K a year ago. (NAR)}

New home construction picked up last month, but it’s not solving the home affordability problems. The Commerce Department's Census Bureau reported that single-family housing starts rose 2.7% to an annual rate of 1.027 million units, reaching a five-month high. Building permits for future construction barely moved, inching up just 0.3%. At the same time, the National Association of Home Builders noted a moderate boost in builder confidence in October. However, many are still offering incentives like price cuts to attract buyers. Expensive mortgage rates and an oversupply of new homes are making both builders and buyers hesitant. So, while you might notice more homes going up in your neighborhood, getting a good deal could still be challenging with today's borrowing costs.

The Market: ⬇️ -0.2%
S&P 500: 5,853.98
1Mo: +2% | 1Yr: +39% | 5Yr: +94%

The market drifted lower on Monday after reaching a new all-time high on Friday. China is trying to stimulate its economy, which is optimistic for global growth. Third-quarter financial updates from the world's biggest companies have been encouraging.

Corporate profits are still growing, but not as quickly as before. According to FactSet's latest report, with just 14% of S&P 500 companies reporting third-quarter results, 79% have reported higher profits than investors expected. That’s slightly above the 10-year average. However, investors usually expect companies to beat their projections. So, magnitude also matters, and quarterly profits aren’t exceeding expectations by as much as usual. Earnings so far are averaging 6.1% above estimates compared to a 5-year average of 8.5%. This marks the fifth consecutive quarter of year-over-year profit growth, but the blended growth rate is just 3.4%, the slowest growth in over a year. This slowdown in profit growth might temper stock market gains because corporate profits drive stock prices.