Good morning.
After coming close to hitting yet another intra-day record this morning, the S&P index settled down a bit and that major index is now little changed from where it closed the week. And where does today’s focus seem to be? Bonds … as rates are inching up with the 10-year yield (which typically has high correlation to mortgage rates) now above 4 ½%.
There is one major problem with rate increases, as more pressure is placed on borrowers and a report out this morning shows credit card demand is beginning to soften. Does this mean retail sales are dropping too? It is too early to tell, but certainly something to keep an eye on.
But there is a second problem … delinquencies. And Daily Shot claims payments over 90-days late are at their highest level in over 10 years. Yikes!
Does CEO personality matter? A friend of mine called me from New Hampshire this weekend and told me he is not happy with Elon Musk, so he sold his Tesla – and bought a competitor’s Electric Vehicle … strictly out of protest. I don’t know how that affects anything … but I guess it does indirectly … though not much.
But you are seeing a lot more competition for electric vehicles and what brings this to mind was a competitor’s commercial I saw last night that really grabbed my attention … especially the touting of the “hands-free driving.” Sure, the Cadillac is out of my price range but there is fast arrival of others coming onto the scene … and I remain convinced that a majority of us will have an electric vehicle in the next 5-7 years (with hate mail expected).
One thing to keep in mind is that … according to Auto Trader … the cost differential (not even considering the gas savings) showed EVs to be 73% higher than a “gas equivalent vehicle” in 2020 … and this has narrowed to 20% higher today. It appears it will soon be below … and that is when the floodgates might really open.
Just a few more items today.
The plane crash/accident in Toronto was interesting … as a Delta flight ended “upside down” and, aside from harrowing video, only a few passengers were injured. Flying is still considered one of the safest modes of transportation … but so many accidents in the news lately are raising anxiety levels.
On a final note … pertaining to flying and my last note below … did you ever see the price for something on one computer … only to have it show up cheaper on another? This is especially true with flying … and differences in currency also come into play. How do you “trick” your computer software? Use a VPN. This might not work all the time, but what do you have to lose by trying it?
That about wraps it up for today.
I was thinking about taking a healthy walk at lunch … or getting on my rowing machine as I somehow put on some unexpected and uninvited pounds over the last few weeks.
Some health-conscious friends asked if they would be seeing me at the gym any time soon.
I don’t think so.
I am in the Fitness Protection Program.
Have a great day,
Joseph G. Witthohn, CFA
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