October 17th, 2022
Last week’s market summary (October 10th-14th, 2022):
- S&P 500: -1.77%
- Dow: +0.74%
- Nasdaq: -3.18%
- Bitcoin: -1.30%
Happy Monday! Last week was more news-heavy than usual, so we have a lot to cover today. These are the economic events that we'll be discussing:
- Mortgage Rates Swell to 20-year high
- GM Is Getting Into the Energy Business
- Inflation Rose Again, Defying Expectations
- Hackers Stole $570 Million from the Binance Smart Chain
- Meta Unveiled Its New $1,500 VR Headset
Keep reading for the full scoop on each of these stories and to get a sneak peek at what everyone's likely to be talking about next week.
What Everyone’s Been Buzzing About
1. Mortgage Rates Swell to 20-year high
In its latest weekly report which released on October 13th, Freddie Mac announced that the average 30-year mortgage rate had risen to 6.92%. That was a sizable jump up from the previous week's rate of 6.66% and marked the highest level that we've seen since April 2002.
Even more startling is the fact that mortgages have more than doubled from where they were a year ago (3.05%). These skyrocketing rates have sent shockwaves through the housing market. Demand has plummeted to a 22-year low and nearly 20% of home sellers reduced their asking prices in September.
Give me some good news >>> 3 Benefits of Buying a Home When Interest Rates Are High
2. GM Is Getting Into the Energy Business
Back in January 2021, General Motors put Tesla on notice by announcing that it planned to be an all-electric car manufacturer by 2035. But it turns out the EV industry isn't the only Tesla turf that GM is looking to move into.
Next up: energy storage and management
Last week, the company launched GM Energy which it's describing as “An Electric Ecosystem, Reimagined.” In addition to its current EV charging product, Ultium Charge 360, two new products are on the way: Ultium Home and Ultium Commercial.
GM Energy has already forged a few key partnerships. For example, solar company SunPower is working with them to develop a custom home energy system. Among other things, GM says that these homes will be able to receive power from compatible electric vehicles.
3. Inflation Rose Again, Defying Expectations
The Consumer Price Index (CPI) rose 0.4% in September. That brought the annual rate of inflation down a smidgen to 8.2%, but the price growth was still higher than the consensus estimate.
Leading the charge to higher costs are rents. The lower homebuying demand that we discussed earlier has increased the rental market demand and that's led to big rent hikes across the U.S. And while they're slowly improving, continued global supply chain issues are also keeping prices stubbornly high in many industries.
Following the inflation report, the stock market has experienced historic volatility. On Thursday, the S&P 500 started the day down by 2%, before a seismic a reversal allowed it to close the day up 2.6%…only for it to swing violently down again on Friday by 2.37%. These are wild days on Wall Street.
Inflation survival guide >>> 8 Best Inflation-Proof Investments for 2022
4. Hackers Stole $570 Million from the Binance Smart Chain
Binance Smart Chain, the crypto exchange's cross-chain bridge, was hacked last week and the thieves were able to snatch about $570 million worth of BNB. Importantly, no user funds were affected and, as of writing, all but $100 million of the stolen assets had been recovered.
Still, the incident once again highlights the vulnerabilities of cross-chain bridges. They've increasingly become the primary targets of hackers. Chainanalysis recently reported that $2 billion has already been stolen in 13 cross-chain attacks, accounting for 69% of all stolen crypto funds in 2022.
The negative news for Binance came in a week when its rival Coinbase announced a major partnership with Google. Starting next year, the search giant will begin allowing its Google Cloud customers to pay for their services in cryptocurrencies via Coinbase Commerce.
Safety first >>> How to Spot a Crypto Scam
5. Meta Unveiled Its New $1,500 VR Headset
Mark Zuckerberg showed off his latest metaverse toy last Wednesday, the Meta Quest Pro. The high-end VR device packs some impressive new eye and facial tracking technology.
The bad news? The $1,500 price tag is over $1,000 higher than the Quest 2 which sells for $400.
Even if Meta is able to get the price of their premium Quest products down over time, more concerning questions lurk in the background, such as:
- Do enough people even want a device like this?
- What real-world problems does it solve?
- Is it realistic to expect that someday we'll all carry VR masks with us everywhere like we do our phones today? (after all, they're not exactly pocketable).
Despite Zuckerberg's unwavering insistence, many shareholders remain skeptical that the metaverse will be the “next big thing” in consumer tech. Meta's share price has been on a steady decline ever since…well, ever since it changed its name to Meta. And shares fell sharply again on Wednesday after the Meta Quest Pro product reveal.
More metaverse content to check out (no headset required) >>>
What To Keep Your Eye on This Week
Here are a few noteworthy economic events that are coming up this week:
- Tuesday, October 18th: NAHB Home Builders' Index | October
- Wednesday, October 19th: Housing Starts | September
- Thursday, October 20th: Philadelphia Fed Manufacturing Business Index | October
- Thursday, October 20th: Existing Home Sales | September
At IJ, we're well aware that many other news teams and websites are creating great personal finance content. So each week we like to call out a few recent stories from our colleagues that we felt were interesting, eye-opening, challenging, inspiring…or just funny.
Here are our picks for this week:
- A 2007 Flashback: Home Flippers Are in Trouble Again (Fortune)
- The First Global Deflation Has Begun, And It’s Unclear Just How Painful it Will Be (Adam Tooze)
- The Software Used in Bitcoin Mining is Getting a Major Update (TradeAlgo)
- Inside Zuckerberg's Metaverse Struggles (New York Times)
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