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  • Wednesday's Scoop: Snooze🌤️

Wednesday's Scoop: Snooze🌤️

Rivian's big deal & General Mills' poor pricing decisions

 
Hey friend - we’re closing in on the last few days of June. Brace yourselves.
Here’s what you need to know today to inform your work, spending, and investments:

 

🌎 Big picture

  1. Mortgage rates are still pretty high.

  2. Low home affordability has slowed new home purchases.

  3. Extreme weather threatens crop yields this year and risks more food inflation.

How are you feeling about the economy?

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 👜 Cost of living trends

Inflation Rate: +3.3% (YoY), +0% (MoM)
Policymakers aim for 2% YoY inflation. (May CPI)

Extreme weather is threatening global crop yields, potentially risking high food prices. Drought in the Black Sea region and heavy rains in the US are among the most significant concerns. According to Maxar meteorologist Chris Hyde, below-normal rains in July and August could impact corn and sunflower crops in the Black Sea area, one of the world’s biggest exporters. Global wheat prices already hit a 10-month high in May due to adverse weather reducing yields in Russia. Meanwhile, excessive rain in the US Midwest raises fears of flooding, affecting corn and soybean fields. Record temperatures have delayed planting and hurt crops across major growing regions. Grocery prices have finally stabilized in recent months after years of inflation. Anything affecting food prices could stress families further.

 

🏠 Housing trends

30yr Mortgage Rate: 6.9%
That’s up from 6.8% a year ago. (MBA)
Median Home Price: $419,300
That’s up from $397K a year ago. (Existing homes - NAR)

Mortgage costs remain high. The Mortgage Bankers Association reported that the average 30-year fixed-rate mortgage stayed flat last week at 6.9%, nearly double what a mortgage cost at the beginning of 2022. Mortgage applications also stalled. The number of applications to buy a new home increased slightly but remained 13% below the same week a year ago. In recent months, reports on the housing market have indicated a stagnant market with a shortage of affordable homes. Existing homeowners have avoided selling their homes due to old age trends or a desire to hang on to their cheaper existing mortgage rate. New home construction has slowed, perpetuating the shortage and keeping prices high.

Low home affordability has slowed new home purchases. The Census Bureau reported that sales of newly constructed homes dropped 11.3% in May, the slowest pace of sales since November. Near-record prices and high mortgage costs continue to drag down affordability, though the median sale price of a brand-new home decreased slightly in May to $417,400.

 

 📈 Investment trends

The Market: ⬆️ +0.2%
S&P 500: 5,477.90
1Mo: +3% | 1Yr: +27% | 5Yr: +86%

The market didn't move much on Wednesday, with little news shaking the existing narrative of slow but steady business activity and cooling inflation. A report from food giant General Mills confirmed these trends of slowing sales and discounted prices.

 

 🤓 Inside Scoop: How do I understand the news about analyst ratings?

A large portion of the news you'll see about companies comes from "analysts." Wall Street analysts are professional company researchers. They typically have a set industry or group of companies they follow, study, and report their opinions on. These analysts will typically produce a "price target" of what they think the company should be worth, as well as a "rating" recommendation to "buy," "sell," or "hold" the stock. Depending on the analyst, those ratings might also be expressed as "overweight/underweight" or "outperform/underperform.”

These ratings and price targets are usually short-term projections of 12-18 months. Predicting market movements over the short term is very difficult, so while these expert opinions can be very informative, you shouldn’t assume them to be accurate.

🏭 Companies worth watching

👍👎 APPROVAL RATINGS

Vote and practice your board member voice. It accelerates your comprehension and comfort with these topics. (+2 pts)

UnitedHealth

Unfunded Contraceptives

UnitedHealth will pay a $1 million penalty and refund patients with interest for any copays on improperly denied birth control coverage, complying with New York’s mandated coverage of contraceptives without restrictions.

The issue highlights the growing challenge for insurers of adhering to varying state reproductive health laws.

Tell UnitedHealth's CEO how you feel

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 💭 Broader perspectives… (+ 2pts)

Should companies be required to cover contraceptive costs for employees?

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General Mills

Losing Customers

General Mills' sales and profits tumbled this past quarter as the snack and cereal maker's small discounts failed to entice customers driven away by years of steep price hikes.

The food giant faces growing competition from companies like Walmart that have invested heavily in their lower-priced store brand alternatives.

Tell General Mills' CEO how you feel

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Rivian

Big Deal

Rivian secured a $5B investment from Volkswagen to share its electric vehicle architecture and software in a joint venture leveraging the German automaker's production power to cut costs.

The funding will enhance the financial stability of the EV startup, which is still ramping up its manufacturing capabilities.

Tell Rivian's CEO how you feel

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FedEx

More Efficient

FedEx reported a jump in sales last quarter thanks to a rebound in e-commerce spending and better-than-expected profits due to a massive cost-cutting initiative, including consolidating air and ground services.

The global delivery giant is on track to reduce expenses by $4B by the end of fiscal 2025.

Tell FedEx's CEO how you feel

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Toyota

Well Paid

The world's biggest automaker boosted its Chairman's pay by 62% to $10.2 million this past year despite record-low shareholder support, making him Japan's highest-paid executive.

Toyota achieved a record operating profit despite a government probe into vehicle safety certifications.

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