Weekly Market Commentary April 26, 2023

Fast Facts

Homes with pizza ovens and other professional-grade appliances sell for ~5.3% more than they otherwise might—a premium of around $17,400 on a typical US residence, according to new research from Zillow. Meanwhile, mentioning a “she shed” in your listing can boost the price by 2.5%, and a doorbell camera can help your house sell five days faster. One thing buyers aren’t looking for: walk-in closets. Houses with a closet big enough to sit in while you wolf down one of your homemade pizzas go for 0.7% less than similar homes without.

As tech workers transition from a world where Big Tech couldn’t hire fast enough to one where mass layoffs are the norm, ex-employees are coming out of the woodwork to talk about one very special kind of job: the kind with no work. While scaling back, tech CEOs have admitted they over hired during the pandemic talent wars, and the experience of former staffers now speaking up bears that out. Many say they wanted to work, but there wasn’t enough to go around.

In a YouGov America survey, 31% of respondents said that they’ve hit the button to close the elevator’s doors because they saw that someone was trying to get on and didn’t want to ride the elevator with them (the other 69% are lying). Meanwhile, 25% of respondents said they believed that most buttons to close the doors on elevators do nothing…and they are right.

There are as many millionaires in New York City as there are people living in Anaheim, California. According to a report from investment migration firm Henley & Partners, the Big Apple is home to 340,000 millionaires and has retained its title of the wealthiest city in the world, boasting ~50,000 more millionaires than second-place Tokyo. The Bay Area has more billionaires than NYC, though, with 63 to NYC’s 58.

Weekly Focus – Think About It

“There are not more than five musical notes, yet the combinations of these five give rise to more melodies than can ever be heard. There are not more than five primary colors, yet in combination they produce more hues than can ever been seen. There are not more than five cardinal tastes, yet combinations of them yield more flavors than can ever be tasted.”
—Sun Tzu, philosopher

The Markets

Better than expected.

It’s earnings season – the time when publicly traded companies report on how profitable they were during the first quarter of 2023. So far, reports suggest that companies listed on United States stock exchanges did better than many had anticipated. Almost 20% of companies in the Standard & Poor’s 500 Index have reported and three-out-of-four have exceeded earnings expectations, reported John Butters of FactSet.

“At any given moment, earnings expectations reflect everything that’s happening in the world, from the economy and the Federal Reserve to interest rates and geopolitics. Right now, most of the fear stems from expectations about the economy. The Fed has lifted interest rates to tamp down inflation by reducing economic demand, and so far, that seems to be working. The rate of inflation has been cut almost in half from its post-COVID peak, but growth is slowing with it…And since higher rates operate with a lag, the full effects of the rate hikes probably haven’t been felt yet, raising the possibility of a recession,” reported Jacob Sonenshine of Barron’s.

Banks were among the first companies to report on earnings, and the news reassured investors who were concerned about financial stability after the collapse of three regional banks. Despite contributing $30 billion to bailout a regional bank, big U.S. banks generally reported healthy results and higher interest income in the first quarter, reported Max Reyes of Bloomberg.

The banks still face significant challenges. Loan delinquencies have been rising from historic lows as the pandemic policies have come to an end. The four largest lenders in the United States saw a 73% increase in consumer loan defaults and have significantly increased the assets set aside to cover loan losses.

Last week, many major U.S. stock indices finished the week close to where they started it, according to Barron’s. Yields on U.S. Treasuries generally moved higher before retreating a bit.

Power Outage? There’s a Hybrid for That. In recent years, storms have led to lengthy power outages in many parts of the United States. When ice storms knocked out the Texas power grid in the winter of 2021, some people relied on generators to supply their energy needs. Others turned to hybrid trucks, reported Paul Eisenstein of NBC News.

One hybrid truck owner in Texas purchased the optional generator feature, thinking he would use it when camping or to fire up power tools in remote areas. Instead, after the storm hit, he hooked the vehicle up to his house. For three days, it “provided enough energy to handle a refrigerator, a freezer, lights, the cable and internet box and a television.”

When the supply of generators ran low, one U.S. truck manufacturer asked its Texas dealerships to lend any hybrid trucks they had in stock to people who needed power.

Hybrid trucks that double as generators is just one example of innovation in the auto industry.

“The $4 trillion automotive industry is going through three big transformational changes at once. Two of those – the rise of electric vehicles and the gradual emergence of autonomous driving – have attracted most of the attention. But the third one could be more powerful still: Cars are becoming computers on wheels,” explained Eric Savitz of Barron’s.

There are more lines of code in automobiles than there are in jumbo jets, according to a C-suite executive at a semiconductor firm who was cited by Barron’s. In fact, automakers have been scooping up workers laid off by technology companies to help develop branded software.

Not too far in the future, it’s possible that drivers will be loyal to vehicle brands in the way they are to mobile phone brands. When drivers change brands, they’ll have to learn a new system – and that could give industry leaders a competitive advantage.

Best regards,
John Klevens, CFP®

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Sources:
Carson Consulting
The Brew