Discover the seismic shifts in tech and finance that are redefining our world, as we examine Apple's struggle in the dragon's lair—China. With Samsung's tech wizardry casting spells in the form of advanced AI, we ponder the potential magic Apple must conjure at their developer conference to combat this formidable foe. Our journey through the economic realm uncovers the mysteries of consumer spending and the Fed's cryptic signals, leaving you equipped to navigate the tumultuous waters of interest rates and investments. Whether you're a Silicon Valley devotee or a Wall Street warrior, this episode is your map to the treasure trove of knowledge about today's market dynamics.
Feel the pulse of your wallet tighten as we dissect the repercussions of soaring treasury notes, the likes of which we haven't seen since 2006. This isn't just a story about numbers; it's a narrative of how these digits dance through our daily lives, from job prospects to the roofs over our heads. As we traverse the economic landscape, our insights into inflation and the housing sector will illuminate the path for your financial planning. Tune in and emerge more informed, more prepared, for the economic odyssey that lies ahead.
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Apple sales are plunging. Americans are spending more and it might be the reason why the Feds won't lower interest rates. And the Feds may raise rates and not cut them this year. These are the top three headlines in this week's Weekly Business Brief. First up Apple is getting beat by Samsung again. First up Apple is getting beat by Samsung again. Sales of iPhones are going down, especially in China, which is a super important market, and is happening for a few reasons. First, people in China kind of upset at America right now, think this is due to the propaganda that the Chinese government puts out to the Chinese people, so they're buying phones from Chinese companies like Xiaomi instead. Second, the economy in China isn't doing great, so people are being more careful with their money. And lastly, samsung is making phones with all the latest AI features, which is what a lot of people want to see these days. Apple might announce some new features for iPhones at their developer conference in June. They need to do something if they want to keep up with Samsung. This is interesting. Apple is being beat by Samsung at the moment. They need to level up. Just think about your iPhone. What has really changed in recent years with our iPhones? You got upgraded cameras. Right, I mean, it's a simple use of equipment, but how have they really innovated? I'm not a tech guy so I can't say much on that respect. Just my perspective as a regular, good old consumer.
Speaker 1:
Next up, a recent data shows that people are spending more than expected. This data makes investors think the feds won't lower interest rates this year. Lowering interest rates usually happens when the economy is weak. The interest rate on the 10-year treasury note went up to its highest level since November. As of right now, april 16th 2024, as I record this, the 10-year treasury hasn't been this high since November of 2006. That is since November. You heard me right, november of 2006. That is since November. You heard me right, november of 2006. Today, the 10-year treasury hit 4.62%. The last time it was that high was in November of 2006. Let that sink in for a minute, guys. Some analysts also believe inflation will also increase soon. In short, forget about getting a lower interest rate on your loans anytime soon, as the economy might be doing better than expected and this could lead to higher prices for things you need to buy Now.
Speaker 1:
Higher interest rates has a big impact on everyone, guys. It impacts your employer, which employs you and pays you your check. That means the cost of borrowing money. It's more expensive for the employer. That means the employer has to cut somewhere to make up the difference. It just trickles all the way down. So what do they do? They lay people off and so on. Now you are laid off, you spend less and it contracts the economy. This impacts everyone. The challenge here is that investors will stop investing and because the cost of money is so high and, like I said, it contracts all the economy and in this week on the Fed watch. So you're budgeting for rent and groceries, but prices keep going up. That's kind of what's happening in the US economy right now.
Speaker 1:
Inflation is high. The Federal Reserve may raise interest rates because of recent signs of unexpected strength in the US economy. If inflation persists, the Fed could raise to 6.5% by next year, likely causing a decline in stock and bond prices. Imagine the Feds are like the parents who control the credit card and they might have to raise interest rates, like the amount you pay to borrow money, to slow things down. This could mean tightening our belts for a bit, with the possible stock market dip and less money flowing around, but hey, at least prices will stop going crazy.
Speaker 1:
Interest rates going up, like I said a moment ago, impacts everyone, whether you like to believe it or not. Impacts everyone directly and indirectly. Also, as it pertains to the housing sector. When interest rates are this high and the cost to borrow to build new builds, new construction goes up. Right now, to build for developers the cost of money is around 9-10%. That's expensive. Someone has to pay for it, so it goes down to the end buyer, to the consumer, the renter or the buyer. So when money is that expensive, developers stop developing affordable housing, which is desperately needed in our country, and it creates a problem down the future. Imagine this we got 2 million new people that moved into our country through immigration right New immigrants, 2 million that we know moved into our country through immigration right New immigrants. 2 million that we know of Developers slowed down on developing this year, last year and this year because of the cost of money.
Speaker 1:
In three years, five years, we have a demand for housing. We already, depending on who you talk to, we already had a shortage of three and a half to 4 million units short for housing. Now you add an additional two million people to our economy, to our country. These people need housing Developers. Stop developing. Guys like me, stop borrowing money and creating new housing and creating new affordable housing. What happens? We put more stress in the future and a higher demand for housing in the future, which in the future means what Prices will continue to go up. So if you think rents are high today, you think houses are high today, wait five years. Wait till you see what happens in five years or seven years. And this has been your weekly business brief. I'll see you guys next week.