🔥 Inflation report comes satisfactory

and a look at the market

Good morning investors! BTC crossed $93,000 yesterday for the first time.

Today we cover:

  • New inflation report

  • A look at the housing situation

  • Moe about stocks

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The last time we asked this question, nearly 780% of our readers said ‘no’.

📊 Economy and News 

Inflation comes as expected

The consumer price index (CPI) rose 0.2% in October, raising the annual inflation rate to 2.6%, up from 2.4% in September. Excluding the more volatile food and energy sectors, core CPI showed a stronger increase, up 0.3% for October and 3.3% year-over-year, also matching predictions.

What went up:

  • The shelter index, which makes up about one-third of the CPI, rose by 0.4% in October—double the rate of September—and increased 4.9% year-over-year, heavily influencing the overall CPI rise.

  • Airline fares surged 3.2% for the month.

  • Used vehicle prices increased by 2.7% in October.

  • The food index rose 0.2% for the month, contributing to a 2.1% annual increase.

What went down:

  • Energy costs remained flat in October and were down 4.9% year-over-year, following previous months of decline.

  • Some food items showed price decreases, with eggs falling 6.4% for the month, though still 30.4% higher compared to the previous year.

  • Motor vehicle insurance declined slightly by 0.1% in October but remained 14% higher than the previous year.

Traders raised the likelihood of a Federal Reserve interest rate cut by a quarter point in December, heightening optimism for a future rate reduction.

Also, inflation-adjusted average hourly earnings for workers increased by 0.1% in October and 1.4% from a year ago, reflecting a slight improvement in real wages despite inflationary pressures.

Global hits:

Mortgage and homes: The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less increased to 6.86% from 6.81%. Applications to refinance a home loan, which are most sensitive to weekly moves in interest rates, fell to the lowest level since May. Applications for a mortgage to purchase a home rose 2% for the week and were 1% higher than the same week one year ago.

On the other hand, a household needed to earn $107,700 to afford a new single-family home and pay property taxes and insurance costs in the third quarter of this year. That’s nearly double the household income of $56,800 needed to afford a new home in 2019.

Lastly, M&A activity in the single-family homebuilder space is having a record year in terms of dollar volume, and close to a record in the number of deals.

Worth checking: Nelson Peltz says postelection market rally won’t last: ‘There will be something that will upset it’. Also, Larry Summers thinks that The Trump inflation shock could be worse than the last inflation crisis.

Americans in debt: U.S. household debt reached a record $17.94 trillion as of September 30, according to the New York Fed’s latest report. Debt rose across all major categories, with credit cards and auto loans leading the gains.

Despite this increase, most households have managed to handle the higher debt, as after-tax income grew to $21.8 trillion in the third quarter. This brought the debt-to-income ratio to 82%, down from 86% in 2019 and a peak of 120% during the 2008 financial crisis.

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📈 Stocks

S&P 500 5,985.38 (+0.023%)
DJIA 43,958.19 (+0.11%)
NASDAQ 19,230.72 (-0.26%)
BRENT CRUDE 72.28 (-0.02%)
* Prices as of Nov 14th, 12:20 AM UTC

Here’s what happened in the stock market

  • Spirit Airlines’ shares plunged more than 50% following a report that it is preparing to file bankruptcy — and the company’s announcement that it won’t report quarterly financial results because it’s scrambling to reach a deal with creditors.

  • Tencent reported quarterly profit well above analysts’ expectations, amid strength in its gaming business. Revenue grew by 8%, but nevertheless came just under an analyst forecast. The company also noted it was starting to see benefits from artificial intelligence.

  • Klarna, which is known for its popular buy now, pay later business, said Wednesday it has confidentially filed IPO documents with the SEC. Analysts recently valued the company in the $15 billion range. Klarna investors include SoftBank, Sequoia Capital and London-based firm Atomico.

Shocking: AMD to lay off 4% of workforce, or about 1,000 employees. Elsewhere, Amazon is targeting retail rivals Shein, Temu and TikTok Shop with a new deeply discounted storefront that sells a wide array of products for $20 or less. Lastly, DirecTV said it plans to abandon its Dish merger. Whereas,

Tesla recalls: Tesla is voluntarily recalling 2,431 Cybertrucks to replace defective drive inverters. It’s the sixth recall in a year for Tesla’s Cybertruck, the company’s angular steel pickup.

💵 Personal Finance

Key Investment Opportunities in China’s Rebounding Sectors

For those evaluating the Chinese market, investment bank Bernstein highlights promising opportunities within sectors expected to benefit from policy-driven rebounds.

Stocks to Watch: Tencent and Meituan

Among Bernstein’s top picks are Tencent and Meituan, two technology giants positioned for significant growth. Tencent, described as a “set and forget” investment, is favored for its long-term earnings and capital returns. Meanwhile, Meituan stands out for its rapid expansion in the e-commerce sector, projected to lead growth in China’s Internet industry over the coming years.

Bernstein’s target prices indicate potential upsides of around 30% for Tencent and 18% for Meituan, underlining the appeal of these stocks for investors with a long-term perspective.

Both stocks are listed on the Hong Kong Exchange and available in the U.S. as ADRs under the tickers TCEHY and MPNGY.

Warning: Chinese market is still very risky. Here’s an interesting video on the topic:

💰 Be a Better Investor

“Creditors have better memories than debtors.”

Benjamin Franklin

Resources:

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

Advertiser’s Disclosures

1 Mode Mobile recently received their ticker reservation with Nasdaq ($MODE), indicating an intent to IPO in the next 24 months. An intent to IPO is no guarantee that an actual IPO will occur.

2 The rankings are based on submitted applications and public company database research, with winners selected based on their fiscal-year revenue growth percentage over a three-year period.

3 A minimum investment of $1,950 is required to receive bonus shares. 100% bonus shares are offered on investments of $9,950+.

4 Please read the offering circular and related risks at invest.modemobile.com. This is a paid advertisement for Mode Mobile’s Regulation A+ Offering.

Past performance is no guarantee of future results. Start-up investments are speculative and involve a high degree of risk. Those investors who cannot afford to lose their entire investment should not invest in start-ups. Companies seeking startup investment tend to be in earlier stages of development and their business model, products and services may not yet be fully developed, operational or tested in the public marketplace. There is no guarantee that the stated valuation and other terms are accurate or in agreement with the market or industry valuations. Further, investors may receive illiquid and/or restricted stock that may be subject to holding period requirements and/or liquidity concerns.