🌍 Google and Disney in trouble

Good morning investors! October is turning out to be a decent month.

Today we cover:

• Mortgage rate jumps

• Google to break down?

• Disney in trouble

📊 Economy and News 

US 30-year mortgage rate jumps to 6.36%

The interest rate for the most popular U.S. home loan climbed to 6.36% last week, marking its largest weekly jump in over a year. This surge followed stronger-than-expected economic data, prompting financial markets to reduce expectations for additional Federal Reserve rate cuts.

The last time rates saw such a large rise was in July 2023, when the Federal Reserve was still raising rates to fight inflation.

As a result, applications to refinance home loans, which had been growing for several months, dropped by 9% for the week, though they remained more than double the levels seen in the same week last year. Meanwhile, mortgage applications for home purchases were largely unchanged for the week.

Global hits:

• China’s growth is set to slow next year despite temporary boost from stimulus, World Bank warns.

• U.S. Treasury yields shifted slightly lower Wednesday, days after the rate on the 10-year note hit its highest level in more than two months.

• Mining giant Rio Tinto to acquire Arcadium Lithium in $6.7 billion deal.

Rate Cuts: New Zealand central bank slashes rates by 50 basis points in second straight rate cut . Elsewhere, India central bank holds rates, shifts stance to ‘neutral’ signaling rate cuts ahead. Indian giant Ola Electric gets a warning on customer service after 10,000 complaints. Following a stellar market debut in August, shares in India’s biggest e-scooter maker have fallen around 40% in recent weeks.

📈 Stocks

S&P 500 5,792.04 (+0.71%)
DJIA 42,512 (+1.03%)
NASDAQ 18,291.62 (+0.60%)
BRENT CRUDE 76.75 (-0.53%)
* Prices as of Oct 10th, 12:20 AM UTC

Google in Trouble?

The Department of Justice (DOJ) on Tuesday proposed changes to Google's search engine business practices, suggesting it might consider breaking up the tech giant as a potential antitrust solution.

The DOJ also stated it was evaluating both "behavioral and structural remedies" to prevent Google from leveraging products like Chrome, Play, and Android to give its search engine and related features an unfair advantage over competitors, including emerging technologies like artificial intelligence.

Moreover, the DOJ proposed restricting or banning default agreements and "revenue-sharing arrangements" linked to search and search-related products. This includes Google's lucrative deals with Apple’s iPhone and Samsung devices, which cost the company billions of dollars annually. One recommendation was implementing a "choice screen" that would allow users to select their preferred search engine.

These measures aim to break “Google’s control of distribution today” and ensure it cannot dominate future distribution channels.

More about the case: These recommendations follow a ruling by a U.S. judge in August that Google maintains a monopoly in the search market. That decision came after the government’s 2020 landmark case, which argued Google had maintained its dominance by creating significant barriers to entry and reinforcing its market power. The court concluded that Google had violated Section 2 of the Sherman Act, which prohibits monopolies.

Another case: Google isn’t the only company facing legal issues. Shares of German life sciences company Bayer fell more than -7% on Wednesday, after a U.S. court said it would review a case alleging that exposure products made by the company’s Monsanto unit harmed individuals.

The Washington Supreme Court this week accepted a review of a litigation against the German company over alleged polychlorinated biphenyls (PCBs) exposure at the Sky Valley Education Center.

Disney Gets Costly: Disneyland has announced price hikes for its most popular tickets, effective immediately. While the base entry price remains unchanged at $104, other ticket options will see increases ranging from $7 to $12. Additionally, the Magic Key annual passes will rise by 6% to 20%, with price jumps of $100 to $125, depending on the pass type.

In the meantime, potential disruptions from Hurricane Milton are projected to impact Walt Disney's earnings. Analysts at Goldman Sachs estimate the storm could reduce earnings before interest and taxes for Disney’s Parks and Experiences segment by $150 million to $200 million in the first quarter of fiscal 2025.

Despite these challenges, Goldman Sachs reaffirmed its "Buy" rating on Disney shares, maintaining a price target of $120.00.

💵 Personal Finance

Prepare your investment for the election season

The period right after Election Day tends to be positive for stocks. The benchmark index has averaged a 6.2% gain during the fourth year of presidential elections, going back to President Herbert Hoover's last year in office in 1932.

The S&P 500 index has added 5% in the eight weeks following Election Day through the end of the year in the median election year since 1984, compared to a 2.6% gain during the same period during non-election years, according to Goldman Sachs.

The S&P 500 has gained 6.2% on average during the fourth year of presidential terms since 1932, according to Yardeni Research. That’s below the 13.5% gain the index has averaged during the third year of presidential terms since 1931.

During the first and second years of presidential terms, the S&P 500 has risen 6.7% and 3.3% on average, respectively, according to the same dataset.

But, don’t count solely on historical data, especially because the situation is very different this time.

There are challenges

The global economy is in a crisis. There's war in Ukraine, Israel and Gaza are in conflict, and US relations with China are not good. Plus, there is still a possibility of recession.

Should I invest now or after the elections?

Here are a few tips to remember:

• Use dollar-cost-averaging to benefit from the situation.

• Have a diversified portfolio so you can stay safe even if one industry doesn't offer your desired results.

• Focus on long-term investments and don't let short-term fluctuations worry you.

• Benefit from the current high interest rate environment and choose high-yield savings accounts to be on the safe side.

• Get in touch with a financial advisor and get a customized solution according to your financial goals.

The video below might be able to help, so give it a look:

💰 Be a Better Investor

Resources:

• Calculators

• Retirement Resources

• Dividends

• Make Money in Retirement

• Side Hustle Ideas

• Stock Deep Dives

• Investing 101 videos

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

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