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- Wednesday's Scoop: Calm 🌤️
Wednesday's Scoop: Calm 🌤️
GM snitches on drivers & Boeing keeps messing up
Scoops Team
August 14, 2024
Hey friend - welcome back to scoop world. I’m getting peak OOO replies. Duck out for those happy hours while you can.
Here’s what you need to know today to inform your work, spending, and investments:
🌎 Big picture
The cost of living crept higher last month, but inflation seems to be mostly under control.
A surge in apartment construction is bringing some hope to renters.
Mortgage refinancing surged last week amid low interest rates.
How are you feeling about the economy? |
👜Cost of living trends
Inflation Rate: +2.9% (YoY), +0.2% (MoM)
Policymakers aim for 2% YoY inflation. (July CPI)
The cost of living crept higher last month, but inflation seems to be mostly under control. The Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose by 0.2% in July after declining by -0.1% in June. Stuff is only 2.9% more expensive than last year, the smallest year-over-year increase since the rapid inflation started in early 2021. Rising shelter costs, which include home prices and rent, accounted for nearly 90% of the cost of living inflation last month. The good news is that those figures might be overstated. Government measures of rent and home prices are usually slow to update. While rent and home prices are still far higher than they were a few years ago, real-time measures indicate that they’ve stopped increasing as quickly and have started getting cheaper in some regions. Food prices ticked up slightly last month as the second major inflation driver, adding more pressure to people’s grocery budgets. Overall, inflation has slowed significantly this year, potentially easing consumer financial pressures as wages start to catch up.
🤓 Inside Scoop: What is the CPI, and why do people care so much?
The Consumer Price Index (CPI) is one of the main ways economists track inflation. Inflation is the rate at which things get more expensive. The CPI looks at a set basket of stuff your average consumer spends money on and tracks how much it costs each month. The rate of change is inflation.
Prices rarely go down. It's normal for things to get more expensive. You'll never be able to buy a Coke for a quarter again, but that's okay. Low inflation (~1-2% per year, 0.0-0.2% per month) is standard and almost unnoticeable. High inflation, like following the pandemic, with prices of essential goods going up nearly 7-10% per year, is a problem. It's unmanageable, especially if our incomes aren't rising in tandem. Low inflation, where incomes keep up or outpace rising living costs, is the goal for economic policy, not zero or negative inflation.
🏠Housing trends
30yr Mortgage Rate: 6.5%
That’s down from 7.2% a year ago. (MBA)
Median Home Price: $426,900
That’s up from $410K a year ago. (Existing Homes, NAR)
Mortgage refinancing surged last week as homeowners took advantage of the lowest interest rates in over a year. The Mortgage Bankers Association reported a 35% jump in refinance applications, marking the strongest week since May 2022. This comes as the average rate for a 30-year fixed-rate mortgage dipped slightly to 6.54%. While refinance activity surged, applications for new home purchases only rose by 3%, reflecting ongoing challenges with high home prices and low inventory. With mortgage costs still relatively high compared to a few years ago, some potential buyers are holding off, hoping for even better affordability ahead.
A surge in apartment construction is bringing some hope to renters. According to a new report from Zillow, renters across the US are starting to see perks like free parking and discounted rent as a surge in apartment construction eases the supply shortage. In June, a record 60,000 multifamily units were completed, the most in 50 years, leading more property owners to offer concessions to attract tenants. Zillow noted that the share of listings with such perks jumped to 33% last month, up from 25% a year ago. This increase in housing supply could help bring down rent prices, potentially helping Americans’ strained budgets.
📈Investment trends
The Market: ⬆️+0.4%
S&P 500: 5,455.21
1Mo: -3% | 1Yr: +22% | 5Yr: +89%
The market floated higher on Wednesday as investors celebrated another month of relatively low inflation. While the cost of living didn't get cheaper, as it did in June, prices rose at a more normal, low rate. Investors hope this will give policymakers the confidence to ease up their restrictive stance and start lowering borrowing costs.
🏭 Companies worth watching
👍👎 APPROVAL RATINGS
Vote and practice your board member voice. It accelerates your comprehension and comfort with these topics. (+2 pts)
 Boeing | Unending Turbulence Boeing's production problems continue with the planemaker discovering new electrical issues in its 737s, further delaying deliveries and undermining efforts to restore its reputation and stabilize operations. The planemaker recently pleaded guilty to misleading regulators about past 737 Max production issues that led to deadly crashes.
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 Johnson & Johnson | Talc Tension Johnson & Johnson has finally secured majority support from its 61,000 cancer victim claimants to proceed with a $6.5B lawsuit settlement over allegations that its talc products caused cancer. The healthcare giant aims to resolve litigation through bankruptcy protection but faces continued legal challenges and opposition from some plaintiffs.
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 Flutter | Betting Binge The company behind FanDuel sports betting reported surging growth in revenue and monthly active users last quarter. Flutter's choice not to implement surcharges in high-tax states has helped it gain ground on competitors.
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 Intel | Cash Crunch Intel sold its stake in a British chip firm, Arm Holdings, for nearly $150M to streamline operations and direct its funds toward AI chip development. The chipmaker has been aggressively cutting costs, including layoffs and a dividend suspension, to regain its competitive position in the semiconductor industry.
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 General Motors | Privacy Breach General Motors is being sued by Texas for allegedly installing technology in over 14 million vehicles to collect drivers' data, rate their driving, and sell it to insurance companies without consent, raising serious privacy concerns. The state seeks the destruction of the data, driver compensation, and financial penalties.
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💭Broader perspectives… (+ 2pts)
Should companies be allowed to use your data about your behavior on their platforms however they want? |
🛠️ Recommended resources (+2 pts)
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