THE MARKETS

📈 The S&P500 ends 2023 up 24.2%; Nasdaq up 43.4%.

💼Economic News

Jobless Claims Creep Up. New state unemployment benefit claims increased by 12,000 last week, reaching 218,000, as reported by the Labor Department. This is yet another indication that the labor market is gradually cooling off during the 4th quarter.

November Home Sales Remain Flat. The National Association of Realtors reported that pending home sales in November remained unchanged from October and were down 5.2% on an annual basis. This news came as a surprise to analysts, who had anticipated an increase in home sales following the decline in mortgage rates from their previous highs.

 👀 What to Be on the Lookout for This Week

Here are the main economic announcements to look out for:

• Tuesday: US Manufacturing PMI

• Wednesday: ISM Manufacturing PMI, 30-Year Mortgage Rate, JOLTs Job Openings, FOMC Minutes

• Thursday: Jobless Claims, S&P Global Composite PMI

• Friday: Non-farm Payrolls, Average Hourly Earnings, Factory Orders

Additionally, here are the biggest earnings reports to keep an eye on:

• Wednesday: Cal-Maine Foods

• Thursday: Walgreens Boots Alliance, Conagra Brands

• Friday: Constellation Brands

📰 In Other News

New York Times Sues AI Leaders. The New York Times has filed a lawsuit against OpenAI and Microsoft, claiming that the companies trained their AI models on millions of New York Times articles. The Times is the first major media organization to sue AI companies over copyright issues related to its written works, and others will likely follow suit. 

The New York Times has not specified a specific dollar amount. However, it stated that the defendants should pay “billions of dollars in statutory and actual damages” related to the “unlawful copying and use of The Times’s uniquely valuable works.” Additionally, the newspaper is demanding that OpenAI and Microsoft destroy any AI chatbots trained on copyrighted material.  

Affirm’s Major Move with Walmart. Affirm, one of the leading Buy Now, Pay Later (BNPL) companies, has just entered a major partnership with Walmart. Shoppers purchasing a minimum of $144 worth of non-grocery products at Walmart may have the option to spread their payments over three to 24 months, with financing capped at $4,000. This partnership could trigger a renewed interest in the BNPL industry, which has slowed down after a surge in popularity in 2021. 

Bird Files For Bankruptcy. The popular electric scooter company, Bird, has officially filed for Chapter 11 bankruptcy. Valued at $2.5 billion at its peak, Bird was one of the fastest companies to reach a $1 billion “unicorn” valuation. The company surged in popularity by providing a fun alternative to walking or driving. However, ridership crashed during the COVID-19 pandemic and Bird was unable to fully recover.

Medicare Negotiations Ramp Up. In 2024, Americans and drug manufacturers will gain insights into Medicare’s ability to negotiate lower drug prices. The upcoming year is expected to be marked by lawsuits, negotiations, and ideally, a reduction in drug prices for many.

YOUR ECONOMY

💸 Gen Z Wants To Spend Now & Save for Retirement Later

Creating “Life Experiences”

Most people recognize the importance of saving for retirement. According to a recent report from Experian, 63% of Generation Z and 59% of Millennials prioritize spending money on experiences over saving for retirement. 

In other words, given the choice between a weekend getaway with friends or contributing extra money to their retirement accounts, most Gen Z and Millennials will opt for the trip.

Prioritizing Mental Wellbeing

Generation Z has gained a reputation for placing greater emphasis on mental health and well-being than previous generations. This mindset has extended into their spending habits. In fact, according to Intuit’s Prosperity Index, Generation Z is leading a movement known as “Soft Saving.”  

Soft saving is a money mentality that encourages people to stop stressing about their financial future. The focus instead, is on living comfortably in the present rather than constantly worrying about what lies ahead. This approach contrasts with the F.I.R.E. movement, which advocates extreme frugality to retire early. 

As the generation that entered the workforce during the COVID-19 pandemic, it's understandable why they may be hesitant to save for the future. After all, they've witnessed how quickly the world can change.

Balance Your Finances

Saving for retirement is a personal endeavor that depends on income, lifestyle, and long-term financial goals. But just like most things in life, a balanced approach is usually the best way forward. Trying to put away too much of your income will undoubtedly lead to stress. Yet, not saving enough for retirement can lead to regrets later in life too. 

Fortunately, financial experts say it is possible to have enjoyable experiences without compromising future financial security. Here’s how:

• Spend on what brings you joy. People have preferences when it comes to deciding what they spend their money on. But the decision is always dependent on one thing: they believe it will make them happy. Instead of spending on multiple different items or activities, experts recommend focusing on what truly brings joy, budgeting for those experiences, and cutting out the rest.

• Avoid using credit cards for discretionary spending. According to LendingTree, the average credit card debt per borrower stood at $6,993 in Q3, 2023. Advisors say that spending on fun should come from your income after covering bills. Accumulating additional expenses on a credit card with accruing interest can result in long-term financial stagnation. 

• Supplement your income: More money, more fun. Financial experts point to the fact that finding a side hustle is easier than ever. This way, the main income can cover fixed bills and the side hustle can go toward the “fun” tab.

Ultimately, the key lies in finding the right balance between spending on memorable experiences and preparing for a secure future - which includes investing to take advantage of the power of compounding to unlock financial freedom later in life.

🏡 Many Americans Are Rethinking Homeownership

Renting on the Rise

Purchasing your own home used to be a staple of the American dream. However, even high-income Americans are now increasingly reconsidering homeownership in favor of renting. 

For lower-income households, renting is often a necessity rather than a choice. Nevertheless, the number of high-income households opting to rent instead of own is also on the rise. According to the Census Bureau, the number of renters earning over $200,000 a year has quadrupled since 2010. 

Traditionally, young couples would flock to affordable suburbs when they were ready to buy a home. Today, many potential homebuyers are choosing to live in luxury apartments that offer amenities like stylish rooftops, concierge services, and prime locations. This group of renters prefers renting their dream home to owning one that is less desirable.

Rent or Buy?

From a purely financial perspective, purchasing a home is usually the better choice when compared to renting. When you buy a home, you acquire an asset that appreciates in value while you reside there. 

Additionally, with homeownership, there’s always the possibility of tapping into home equity and receiving tax breaks. In contrast, renting offers limited financial advantages. However, that doesn’t mean that there are no benefits to renting. 

Firstly, renting enables many Americans to live in their dream home, even if they can’t afford to buy it. They can experience their dream lifestyle for a fixed monthly monthly fee. Moreover, renters are spared the responsibility of maintenance, repairs, paying property taxes, and the constant upkeep associated with homeownership. 

Furthermore, renters enjoy the flexibility to move wherever they want. Most leases only last 1-2 years, while mortgages are usually locked in for at least 15 years if not 30. This flexibility is particularly appealing as more people work remotely these days and desire the ability to be able to move around whenever they’d like.

Renting Your Dream Home

The decision to rent or own a home hinges on various factors. Ultimately, it depends on the individual who must strike a balance between their financial goals and lifestyle aspirations. Individuals content with living a more modest lifestyle may find it worth saving for a downpayment, purchasing an affordable home, and reaping the many benefits of homeownership. 

However, others who aspire to live a dream lifestyle may realistically find themselves leaning toward renting. With housing prices and mortgage rates nearing 7%, these consistently high interest rates have made homeownership less appealing than in the past. 

Renting has traditionally been viewed as a stepping stone to homeownership. According to recent trends, however, many Americans are committed to renting out their dream home — even if that means sacrificing homeownership.

POCKET CHANGE

Experts expect electric vehicles to get cheaper in 2024 due to an oversupply. Tesla, the top U.S.EV producer, has already reduced vehicle prices by up to 20% over the past year. 

Home prices rose 4.8% annually in October, the highest gain of 2023. The cities with the highest home price surges were Detroit, San Diego, and New York. 

2024 could be the year that major streamers start to bundle services with cable providers. Disney and Charter Communications have paved the way, after reaching an agreement in late 2023. 

Apple is now banned from selling its Series 9 and Ultra 2 Apple Watches. The ban was enforced after ITC determined that Apple violated the patent for blood oxygen saturation technology owned by Masimo.