🚘 Tesla, Coke, Boeing earnings

and a look at the housing market

Good morning investors! Big companies announced earnings yesterday as the market overall remained sluggish.

Today we cover:

  • Housing market

  • A warning from the world’s largest wealth fund

  • Tesla, Boeing, Coca Cola, and more announce earnings

📊 Economy and News 

A Look at the Housing Market as Sales Hit a 14 Year Low

Sales of previously owned homes dropped 1% in September from August, reaching an annualized rate of 3.84 million units—the slowest since October 2010. This is a 3.5% decrease from September 2023, with sales falling in most U.S. regions except the West.

Closings, based on contracts from July and August, reflect mortgage rates that started near 7% in July and fell to just below 6.5% in August. Inventory rose 1.5% to 1.39 million homes, a 4.3-month supply, and is up 23% from a year ago. Despite low inventory, prices increased, with the median home price reaching $404,500, up 3% year-over-year, marking 15 consecutive months of price gains.

Cash purchases accounted for 30% of sales, up from pre-Covid levels of 20%, while investor sales dropped to 16%. Homes are staying on the market longer, averaging 28 days compared to 21 last year, and first-time buyers made up only 26% of sales, matching the all-time low from August.

Global hits:

Warning: Norges Bank Investment Management (NBIM), which manages Norway’s $1.8 trillion sovereign wealth fund, has warned that stock market risks are leaning to the downside due to heightened economic uncertainty.

Despite these concerns, the fund remains committed to its long-term asset allocation strategy of holding 70% in equities and 30% in bonds, avoiding significant short-term shifts.

Just in: Striking Boeing workers reject 35% pay rise offer.

📈 Stocks

S&P 500 5,797.42 (-0.92%)
DJIA 42,514.95 (-0.96%)
NASDAQ 18,276.65 (-1.60%)
BRENT CRUDE 75.45 (+0.67%)
* Prices as of Mar 3rd, 12:20 AM UTC

Tesla, Coca Cola, Boeing, and More Report Earnings

Tesla posted earnings that surpassed expectations, with adjusted earnings per share of 72 cents (vs. 58 cents expected) and revenue of $25.18 billion, just shy of the $25.37 billion forecast. Revenue grew 8% from the previous year, and net income rose to $2.17 billion from $1.85 billion. Profit margins were boosted by $739 million in automotive regulatory credit revenue, sending Tesla's stock up +12%.

Coca-Cola also exceeded expectations, reporting earnings per share of 77 cents (vs. 74 cents expected) and revenue of $11.95 billion, above the $11.60 billion estimate. Net income, however, fell to $2.85 billion from $3.09 billion the previous year. Despite this, Coke’s organic revenue climbed 9%, driven by price hikes, but shares dipped 2%. Also, Coca-Cola CEO said McDonald’s E. coli outbreak won’t hurt beverage company’s sales

Boeing reported a larger-than-expected adjusted loss of $10.44 per share for the third quarter of 2024, missing the Zacks Consensus Estimate of a $10.34 loss. This marks a sharp decline from the $3.26 per share loss reported in the same quarter last year. Including one-time items, Boeing posted a GAAP loss of $9.97 per share, compared to a $2.70 loss a year earlier. The worsening results were largely due to the effects of a work stoppage by the International Association of Machinists and Aerospace Workers (IAM) and previously disclosed charges on Boeing's commercial and defense programs. Boeing expects to burn cash next year as CEO says there's no quick fix for ailing planemaker

IBM’s earnings per share came in at $2.30 (vs. $2.23 expected), but revenue slightly missed, coming in at $14.97 billion (vs. $15.07 billion expected). The company swung to a net loss of $330 million due to a one-time pension settlement charge, compared to net income of $1.70 billion the previous year. IBM’s stock fell -3% following the report, although it reaffirmed its free cash flow target of over $12 billion for 2024.

Apple troubles: Apple shares dropped -2% on Wednesday after analyst Ming-Chi Kuo reported that the company reduced iPhone 16 production orders by about 10 million units, mainly affecting the regular models rather than the more popular iPhone 16 Pro. Production for the second half of 2024 is now expected at 84 million units, down from the previous estimate of 88 million.

Additionally, Apple and Goldman Sachs were fined over $89 million by the Consumer Financial Protection Bureau for mishandling Apple Card consumer disputes. The bureau also barred Goldman Sachs from issuing new credit cards without a compliance plan, following allegations of misleading customers about interest-free payment plans for Apple devices.

Exciting: Shares of Peloton surge +11% after David Einhorn says stock is significantly undervalued.

What surprised you more?

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💵 Personal Finance

Where to put your money

Worried about where to park your funds? Here’s your answer:

For short-term: We recommend high-yield savings accounts for people interested in short-term gains. Some US banks are offering up to 5% returns, which is better than the inflation rate of 3.14%. Check with your local bank. If they don’t have any, here are some of the best options:

For mid-term: Index funds and ETFs can be great for mid-term gains. Here’s the average stock market return for 5, 10, 20, and 30 years.

For long-term: Stocks, index funds and real estate are among the best options for long-term growth.

Here’s what U.S. real estate is projected to do this decade:

The housing market offers great returns with the ability to make even more money if you invest in the right property and perform suitable upgrades. Plus, it offers passive income in the form of interest. Not to mention the tax benefits.

The situation, however, is changing and cities that used to be the hub are not that attractive anymore. Here are some of the best US cities to invest in:

  • Detroit, Michigan, with a home appreciation rate of 15.92%.

  • St. Louis, Missouri, with a home appreciation rate of 14.94%.

  • Fort Wayne, Indiana, with a home appreciation rate of 14.62%.

  • Toledo, Ohio, with a home appreciation rate of 13.53%.

  • Wichita, Kansas, with a home appreciation rate of 12.97%.

Not only are prices increasing in these cities, the home price index is also good with a decent rent-to-income ratio and low property taxes.

Check this amazing video:

💰 Be a Better Investor

“Although it’s easy to forget sometimes, a share is not a lottery ticket… it’s part-ownership of a business.”

Peter Lynch

Resources:

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.