—— The Fed may enter a loss-making state in 2023; Tesla raises the price of several electric cars; Ferrari announces the launch of SUVs and all-electric cars; mortgage interest rates in some areas exceed 6%; Microsoft CRM software competes with Salesforce; homes under construction home hits 50-year record; Manhattan office building gets $270 million Blackstone refinance.
1. The Fed may enter a loss in 2023
Former Federal Reserve Bank of New York Governor William Dudley said the Fed is likely to start losing money next year as the central bank continues to raise short-term interest rates.
The reason is that the interest the Fed needs to pay banks on deposits will soon exceed the yield on the Fed’s MBS and Treasury holdings.
Although the loss should not seriously affect the Fed’s fiscal formulation, the Fed’s shrinking of the balance sheet and selling MBS will only further expand the loss.
The Fed’s entry into the red would be hotly debated — and an opportunity for QE opponents to push back against long-term securities purchases.
After the interest rate rises, the price of MBS will also start to fall, and the shrinking of the balance sheet will make the Fed lose money further
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2. Tesla raises prices for several electric cars
Tesla has raised prices on some models as the auto industry faces severe production cost inflation.
According to Tesla’s official website, the price of the Model 3 long-distance version has increased from $55,900 to $57,990, but the price of the rear-wheel-drive and performance versions of the Model 3 has not changed.
The long-haul and performance versions of the Model Y, which are very popular with consumers, are up $3,000 and $2,000, respectively.
Prices for the Model S and Model X dual-motor all-wheel-drive versions have risen by $5,000 and $6,000, respectively.
In April, Musk said that the price increase was to reflect the current market supply and demand status and the continued cost increase in the future.
Company CFO Zachary Kirkhorn (Zachary Kirkhorn) revealed that 10% to 15% of Tesla’s costs are currently vulnerable to component price fluctuations.
Tesla delivered just 1,512 electric cars in Shanghai in April, 94% lower than the same period a year earlier
Source: WSJ – Tesla Raises Prices Amid Surging Costs
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3. Ferrari announces SUV and all-electric car
Famous supercar company Ferrari said recently that it plans to launch its first SUV in September and its first all-electric sports car in 2025.
Many Ferrari enthusiasts and industry analysts have questioned whether Ferrari, which has been successful over the past 75 years with its powerful roaring engine, can successfully complete the electrification transition.
Ferrari CEO Benedetto Vigna said the all-electric model would still retain the Ferrari pedigree.
Of the 11,000 Ferraris sold last year, 80 percent used internal combustion engines, while the remaining 20 percent were gasoline-electric hybrids. The company expects that by 2026, sales of traditional engine, hybrid, and electric vehicles will account for 40%, 55%, and 5%. By 2030, 40% of all cars sold will be fully electric.
Currently, the cheapest Ferrari model is priced at $260,000, and the price of the limited version is even closer to $1 million.
Ferraris are so sought after that some models even require delivery to qualify for purchase
Source: WSJ – Ferrari to Debut SUV-Like Model in September
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4. Mortgage mortgage rates in some areas exceed 6%
Today, Freddie Mac said in a statement that the average interest rate on a 30-year mortgage has climbed to 5.78%, the highest since November 2008. Compared with last week’s 5.23%, the increase also set a record since 1987. Some loan companies even offer more than 6% interest rates.
However, despite higher interest rates and a shortage of supply, house prices remain firm.
Mortgage interest rates and 10-year U.S. Treasury yields have a certain correlation, and the latter is also related to market expectations for benchmark interest rates.
Yields on the 10-year U.S. Treasury note have surged in the past few months as panicked investors swarmed for safe-havens.
Mortgage mortgage rates are rising, but house prices are still holding up amid a lack of supply
Source: WSJ – Mortgage Rates Hit 5.78%, Highest Level Since 2008
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5. Microsoft pushes CRM software
Recently, software giant Microsoft (Microsoft) launched Viva Sales, a product that rivals Salesforce’s customer relationship management (CRM) software, and hopes to seize more performance from Salesforce customers.
Viva Sales integrates Microsoft Outlook’s address book, calendar, and Teams’ video conference chat function. The software can use artificial intelligence to analyze customer phone interactions and sentiments and craft the best promotional materials.
Users who currently subscribe to Microsoft’s Dynamics user relationship software will be able to use Viva Sales for free. When the software is officially on the market, Microsoft will also give Salesforce customers a special price for “switching camps”.
Over the past year, Microsoft’s sales team has been training AI systems and improving analytics capabilities
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6. Number of homes under construction hits 50-year record in May
The number of housing units under construction hit 1.67 million units in May, the highest level since 1969, according to the latest data released by the U.S. government, offering a rare hope for the housing market. In addition, the number of completed dwellings was 9% higher than in April, also setting a record since 2007.
Builders have been busy on the supply side over the past two years, driven by extremely low-interest rates and strong buyer demand. Recently, with the rising cost of suppliers, the backlog of construction projects has also been alleviated to some extent.
Although builders still face the problem of project backlog, the pressure on the supply chain has been alleviated to some extent
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7. Manhattan office building gets $270 million in refinancing from Blackstone
The Commercial Observer reports that Columbia Property Trust’s new landmark office building at 799 Broadway has secured a $270 million refinancing from the Blackstone Mortgage Trust.
Michael Eglit, director of Blackstone’s Debt Strategies Division (BREDS), said the company is pleased to be able to refinance the beautiful buildings in Columbia, where demand for high-end office buildings in New York City remains strong.
The target office building is 12 storeys high and designed by Perkins + Will. The building is LEED Gold certified and meets the WELL Building health standards. The ceiling height on each floor is 15 feet, and floor-to-ceiling windows also ensure maximum light and ventilation. The building also features 17,000 square feet of outdoor space with ample amenities.
After the epidemic, the office market is increasingly pursuing quality and luxury, and only the most health-conscious high-end buildings can better attract tenants.
To attack employees back to the office, businesses are looking for the highest quality luxury office buildings
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The content of this article comes from various financial news media such as The Wall Street Journal, Financial Times, Bloomberg