Happy Wednesday all,
The Federal Reserve, the US Central Bank, just raised Interest Rates another 0.25% today. That means if you have money in a high-yield savings account, the rate you get should increase in lockstep! I know that Wealthfront, the HYSA I use, is now going to be offering 4.05% APY on savings. So if you had $1 Million theoretically, in a year you’d get $40,500 for saving - or about $3,375 a month - not bad at all. Now… let’s get to $1 Million in cash, lol.
Some other HYSA’s you can consider are Marcus by Goldman Sachs, Ally Bank, American Express, and SoFi - to name a few. If you have any excess cash, I would start by parking it in one of those.
One of my favorite charts is listed at the bottom of today’s newsletter, and it has to do with egg prices - be sure to check it out.
Enjoy this week’s Hump Days!
- Humphrey, Rickie & Tim
Tweet of the Week
The Weekly Brief
U.S. to End Covid-19 Emergency Declarations on May 11 (Reuters)
The Biden administration says it will end the Covid-19 emergency declaration on May 11 following nearly three years since the government imposed pandemic measures to curb the spread. Under the public health emergency (PHE) measures, the government paid for Covid-19 vaccines, some tests, and particular treatments. When the PHE expires, these costs will be transferred to private insurance and government health plans.
Why Should I Care?
This is a key step towards winding down Covid measures across the country. Although, while cases are declining in the U.S., more than 500 people continue to die each day from the disease, according to government data.
Eurozone’s Economy Outpaced China and U.S. in 2022 (WSJ)
The eurozone economy grew faster than China and the U.S. last year with the eurozone’s GDP growing by 3.5% in 2022. The U.S. in comparison grew by 2.1%, down significantly from the 5.9% growth recorded in 2021. China had a similar case, growing by 3% in 2022, down from 8% the previous year.
Why Should I Care?
This is out of the ordinary. The last time the eurozone grew at a faster pace than that of either China or the U.S. was in 1974. For decades, China grew the fastest, followed by the U.S., and then the eurozone. This trend is unlikely to last, however, as China abondons its zero-Covid policy.
Home Prices Fell in November for Fifth Straight Month (WSJ)
Home prices declined in November month-over-month as higher mortgage interest rates made homes less affordable for buyers. The -0.6% figure in November was the fifth straight monthly decline. Many economists expect prices to continue to slide from their spring peaks until the end of the year. Home prices fell 3.6% between June and November.
Why Should I Care?
Consistently falling home prices can be a signal of the imminent start of a recession. Whether you think we’ve already been in a recession for months now, falling home prices means homeowners will see their wealth shrink (on paper) and recent buyers could end up with negative equity if the loans they took out were larger than the current value of the home.
You’ll Find This Interesting
Mastercard and Binance said they are launching a prepaid card in Brazil, Latin America’s largest economy. This latest move is an attempt to “broaden the connection between traditional finance and crypto”. The so-called Binance Card is currently in beta testing and should be widely available in the next few weeks.
Hump Days Scoop
The Biden administration is seriously considering cutting off Chinese telecommunications giant Huawei from U.S. suppliers. We fill you in on what you need to know.
Who are Huawei’s major U.S. suppliers currently?
Huawei largely relies on U.S. companies Intel Corp. and Qualcomm Inc. for processors used in the company’s laptops and smartphones, although since 2019, they have only been allowed to sell their less advanced technology to Huawei. Huawei has been unable to offer a 5G-enabled smartphone because U.S. restrictions cut off access to the advanced chips needed to power these devices. U.S. officials have signaled to Qualcomm and Intel that it would be a good time to begin winding down their sales to the Chinese company. Intel and Qualcomm have not made a public comment as of publishing.
Why would the U.S. government want to block Huawei from American suppliers?
The move to block Huawei from American suppliers is over national security concerns. Lawmakers and intelligence officials, in the past, have claimed the Chinese telecom giant could be exploited by the Chinese government for espionage. There are also concerns surrounding China’s history of stealing trade secrets and intellectual property, as well as the reliability of a proper audit.
What is the history surrounding the U.S. government and the Chinese tech sector?
The U.S. and China have been in a trade war centered around technology ever since Trump took office. In 2019, the Trump administration added Huawei to the Department of Commerce’s “Entity List” of deemed national security threats. imposed tariffs of more than $360B worth of Chinese goods, prompting China to retaliate on $110B worth of American goods. The Biden administration followed suit by restricting the sale of semiconductors to 36 Chinese companies and was able to get Japan and the Netherlands to bar shipments of advanced semiconductor manufacturing machinery to China.
What happens next for American suppliers and Chinese tech companies?
Huawei was once one the world’s largest buyers of electronic components but the Trump-era bans crippled the Chinese company while wiping out huge amounts of revenue for U.S. suppliers such as Broadcom Inc. Although, Huawei remains a $100B telecom giant that is a dominant player in the expansion of the world’s largest 5G network at home while constructing critical broadband from Africa to the Middle East.
As for the big American suppliers, cutting off sales to Huawei isn’t going to be as devastating as it once was. Huawei represents less than one percent of revenue for Qualcomm, Intel, and AMD, according to Bloomberg supply chain analysis.
What We’ve Been Reading
Markets
Economy
Government
U.S. Weapons Industry Unprepared for a China Conflict, Report Says (WSJ)
Biden and McCarthy Are Set to Discuss Debt Limit as Both Sides Trade Barbs (NYTimes)
World
The Global Economy Needs a New Powerhouse. India Is Stepping Up (Bloomberg)
Nuclear Power Plants Are Pushed to the Limit as Demand Surges (Bloomberg)
People, please. US ban on Huawei (especially Huawei) has nothing to do with national security. The same exactly that a ban oh TikTok has nothing to do with spying or national security. It has everything to do with dominance.
Huawei, did in in a very short time what took Apple a decade or so. Their mobile phones were so good that they started to be serious competition to Apple. Die hard Apple fanboys (and girls) would probably never use anything else but many Apple users started to switch when they realized how good Huawei phones were. I know, I had two and regret selling the last one.
Huawei 5G is considered to be the most advance in the world. That would make them a dominance power with almost no one else to compete. The US could not be in that position and they did whatever they can to convince European that China is spying on them. Quite ironic since it was proven that the US is the biggest spy agency on the planet :-)
Same with TikTok. in a span of five years it became the 6th largest social platform in the world. It is not unthinkable to see TikTok taking the reign from Facebook top three places in a couple of years (with FB, WhatsApp and Instagram). Not something the US want to allow.
This is about competition, not about national security. The exact same as invading Iraq had nothing to do with "weapons of mass destruction" but about elimination an oil producer competitor.
What these bans created is even fiercer advancement of Chinese tech. They have the people, the knowledge and most importantly, the will. We will see a world in which two different tech systems will exist, not an ideal world in my opinion.
Cheers.