Morning Download 

Personal finance + economics + markets

Together with WebStreet

Good morning investors! Money flew from Bitcoin to stocks yesterday with stocks climbing new heights.

Fun fact: The "Lipstick Indicator" is a term coined by Leonard Lauder, chairman of Estée Lauder. The theory suggests that during tough economic times, lipstick sales increase as it's considered an affordable luxury. Some investors humorously use this as an economic indicator.

Today we cover:

• Inflation numbers come out lower than expected. 🏬 

• Bitcoin predicted to hit $50,000 in four months. 🚀 

• Homes and down payments – how much do you need? 🏠

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📊 Economy and News 

Inflation comes lower than expected

US consumer price inflation cooled down in October after rising for the last two months.

The Consumer Price Index rose 3.2% for the 12 months that ended in October, down from 3.7% in September.

On a monthly basis, prices were unchanged for the first time since July 2022. A month before, they shot up 0.4% as gas and rent costs added upward pressure.

Economists anticipated a 0.1% monthly increase and a 3.3% year-over-year gain.

Core CPI, which excludes the more volatile food and energy categories, climbed 0.2% monthly, bringing the annual increase to 4%, which is the lowest yearly increase since September 2021.

The index cooled from the prior month — when core CPI rose 0.2% monthly and 4.1% annually — and the October print also beat expectations for a 0.3% monthly increase and a 4.1% annual gain.

This news sent stocks soaring with some hitting new highs.

Global hits:

• Developing countries owe China at least $1.1 trillion – and the debts are due.

• Most Americans expect the economy to be in fairly good shape this time next year.

• TikTok gets banned in Nepal due to ‘disruption’ to social harmony.

📈 Stocks

S&P 500 4,495.70 (+1.91%)
DJIA 34,827.70 (+1.43%)
NASDAQ 15,812.47 (+2.135)
BRENT CRUDE 82.35 (-0.21%)
* Prices as of Nov 15th, 12:20 AM UTC

Dow soars nearly 500

Stocks rallied yesterday due to positive news surrounding the economy.

The Dow rose 490 points, or 1.4%. The S&P 500 gained 1.9% and the Nasdaq Composite added 2.4%, both notching their best day since April.

Almost all niches grew with tech recording big numbers. Meta hit a new 52-week high of $338.10 and Nvidia continued its incredible run. The company has added $220 billion in market value just in November. The company is on its longest winning streak in seven years.

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🔐 Crypto

Bitcoin $35,585 (-2.44%)
Ethereum $1,986 (-3.25%)
Total market cap $1.37T (-2.22%)
* Prices as of Nov 15th, 12:20 AM UTC

Bitcoin will hit $50,000, predicts analyst

Bitcoin price wiped out its weekend gains, falling below $35,000 on Tuesday.

BTC holders are awaiting the US Securities and Exchange Commission’s (SEC) decision on 12 spot Bitcoin ETF applications. The SEC’s window to approve all BTC ETF applications opened on November 9 and will close on November 17.

Crypto analyst Faibik, evaluated the Bitcoin price trend and set a $50,000 target for the risk asset. According to the analyst, if Bitcoin price remains within the $34,000 to $38,000 range for two months, it could begin the halving rally by mid-February and hit $50,000 by late March 2024.

💵 Personal Finance

How much downpayment do I need to buy a house?

Buying your first home can feel daunting. It’s one of the most important and biggest purchases that you’ll ever make. But, unfortunately, most people in the US do not have enough to buy a house.

Prices have been on the rise. In fact, the median sales price has jumped to $359,000 in January 2023 from $266,300 in January of 2020. This means someone trying to save up a 5% down payment would have needed $13,315 for the average home in January of 2020 but $17,950 just three years later. 

The first step to buying your house is to know how much you need to buy one. Between sky-high prices and surging mortgage rates, thinking about your budget can feel downright maddening.

There seem to be many myths about the down payment. It is an initial up-front partial payment for the purchase of your house. Before we talk about down payments, let's be clear that the minimum depends on a variety of factors, including the type of loan you are dealing with.

Some other factors that impact the down payment include the type of property you are interested in and your financial capabilities.

Contrary to popular belief, you do not need to put down 20 percent of the purchase price. In fact, first-quarter 2023 data from Realtor.com found that the average down payment on a primary residence was just 13 percent. And, this is not the minimum but the average.

Several low- and no-down payment mortgages allow for even less money upfront, as highlighted above.

The rule of 36: The rule of 36 is guidance on how much your monthly mortgage payment should be. The rule states that no more than 36% of your gross income should be attributable to debt, and this includes your monthly mortgage.

What about the salary: Lenders often allow borrowers to incur debt roughly 4 to 4.5 times their annual pay. For example, if your annual salary is $200,000, it's most often advised you pursue a mortgage no more than $800,000 to $900,000.

Figure out your down payment based on your budget and financial goals. Don’t make the mistake of spending every penny you have to cover your down payment just to reduce the monthly amount.

Lenders prefer applicants with a good amount of cash reserve. Furthermore, you should save some for rainy days.

Here are a few things you can do to manage your down payment fund:

• Look for support programs. You might find several if this is your first home with the intention to live in. Some of the most popular first-time homebuyer programs include HomeReady mortgage, Home Possible mortgage, and HomeOne mortgage.

• Know perks you enjoy: Home buyers enjoy several perks such as the ability to take up to $10,000 from a traditional IRA or Roth IRA without the 10% early withdrawal penalty.

• Cut expenses and save more. Create a goal and get rid of things you do not need, such as subscription services.

• Make every penny count. Benefit from the current high interest rate environment by investing in high yield accounts.

Check this video for more on how to save for a house:

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

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