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Here’s what you need to know today…
Big Picture
Falling rates have injected some optimism into the housing market.
Millions of Americans are late on student loan payments.
Tech jobs have finally spread out beyond Silicon Valley.
The Market: ⬆️ +0.5%
S&P 500: 4,740.56
1Mo: +4% | 1Yr: +24% | 5Yr: +96%
The market maintained a positive momentum this week as the holiday news cycle slowed. Investors are still celebrating peaking interest rates, low unemployment, and falling inflation.
Falling mortgage rates have injected some optimism into the bleak real estate market. Policymakers expect to begin cutting interest rates next year, pushing mortgage costs lower from their peak in October. The National Association of Homebuilders reported increased optimism this month from homebuilders after four months of declining confidence. Builders have been offering discounts to lure buyers amid high mortgage costs. More construction could help relieve the housing shortage keeping prices high.
Millions of Americans have already fallen behind on their student loans just one month after payments restarted. The Department of Education reported only 60% of borrowers had made payments by mid-November, even though the pandemic-era relief program ended on October 1. Officials attribute some delays to people not realizing payments have restarted after a two-year break.
Silicon Valley no longer has a monopoly on tech jobs. A new report from the Brookings Institute revealed that a combination of remote work, government initiatives, and policy changes have spurred a rapid expansion in tech jobs across major cities like Atlanta, Dallas, Denver, Miami, Orlando, San Diego, Kansas City, St. Louis, and Salt Lake City. A majority of the nation’s large metro areas have seen their tech job growth accelerate since the pandemic.
How are you feeling about the economy? |
Company Scoops 🗣️🌎💰
💡Act like a boardmember and judge how companies behave. Engaging helps build your financial confidence and hold corporations accountable.
 Humana | Artificial Denials Humana allegedly uses artificial intelligence to systematically deny payments for seniors in rehabilitation care, according to victims' class action lawsuit. The health insurer covers millions and increasingly uses AI to decide claims. |
 Adobe | Failed Collab Adobe called off its $20B acquisition of digital design platform Figma after finding it too difficult to convince regulators that buying its fastest-growing competitor was good for the market. Adobe already expects sales to slow this quarter. |
 Apple | Time Out Apple has been forced to stop selling Watches during the peak shopping season after regulators ruled it used another company's patented blood oxygen measurement tech. Apple does $17B annually in Watch sales, and overall revenue keeps sliding. |
 Anheuser-Busch InBev | Looming Strike Over 5,000 workers across 12 Anheuser-Busch InBev production facilities have voted to stage walkouts to escalate negotiations before their contract ends in February. Beer workers demand better pay, healthcare, and job security. |
 VF Corp | Cyber Delays The owner of Vans and North Face suffered a significant cyber attack that is likely to disrupt its holiday sales and deliveries, though the extent of the breach is still unknown. VF Corp expects a material impact on its sales. |
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Inside Scoop 🤓
What are Treasuries, and why are they important?
The US government borrows money from public investors, just like companies do. They do this by issuing Treasury Bills (short-term debt), Notes (2-10 year debt), and Bonds (10+ year terms), which are all collectively known as Treasuries. These are sold and traded by public investors, similar to stocks.
The yield on the 10-year Treasury note is like the bellwether index for the market. It's a key indicator that affects pretty much everything. Treasury securities are considered riskless investments because they are backed by the US government. So, they act as the benchmark for other types of borrowing like mortgages, student loans, credit cards, and more. The riskier the borrower, the higher the interest rate they'll have to pay. So, as Treasury rates rise, it means that all other borrowing costs will go up, too.
But, just like the stock market, figuring out the exact cause of changes in interest rates isn't always straightforward. The main driver is the supply and demand in the market. When investors seek safety, yields tend to fall. The Federal Reserve's monetary policy also plays a significant role, as they often buy or sell Treasuries to manipulate borrowing costs. And, of course, shifts in concerns about fiscal deficits or anything that could shake the US government's reputation as a riskless borrower can also have an impact.
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