1. US Jobless Claims Fall to New Low;
2. US Mortgage Rates Hit Lowest Since May;
3. Pfizer Employee Sentenced for Insider Trading;
4. Apple Vision Pro Faces Skepticism;
5. Discover’s Net Income Plunges 62%;
6. Italian Government Sells Stock to Repay Debt;
7. US New Home Construction Declines.
1. US Jobless Claims Fall to New Low
The U.S. Department of Labor reported today that for the week ending January 13, initial jobless claims fell by 16,000 to 187,000, below all economists’ expectations and marking the lowest level since September 2022. The data once again highlights the resilience of the U.S. labor market.
New York led the decline with a drop of 17,000 claims after a sharp rise the previous week. Continuing claims also fell for the third straight week to 1.81 million, the lowest since October.
Weekly jobless claims can fluctuate, especially during holiday periods. However, the more reliable four-week moving average also declined to its lowest level in 11 months.
Economists believe U.S. companies are still laying off workers at very low levels and see no sign of an upward trend.
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2. US Mortgage Rates Hit Lowest Since May
Freddie Mac announced today that the average 30-year fixed mortgage rate fell to 6.6% last week, the lowest since May.
The U.S. housing market is entering its annual peak season, and lower rates are expected to boost buyers’ purchasing power.
The downside is that housing inventory remains tight nationwide, which may result in higher asking prices or even bidding wars.
Economist Sam Khater noted that most homeowners currently have mortgage rates below 4%, and only when rates drop below that level will they be more inclined to sell or upgrade, thus increasing inventory.
Falling rates may increase demand, but when paired with limited supply, they could push home prices even higher.
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3. Pfizer Employee Sentenced for Insider Trading
Former Pfizer employee Amit Dagar was convicted of using confidential clinical trial data for the company’s Covid pill Paxlovid to make illegal options trades, profiting $214,000.
On November 5, 2021, Pfizer announced that Paxlovid reduced mortality for high-risk patients by 89%, and the stock surged 11% before market open.
The day before the public announcement, Dagar tipped off his friend Atul Bhiwapurkar, who also profited $60,000.
Dagar faces a maximum sentence of 20 years in prison.
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4. Apple Vision Pro Faces Skepticism
This Friday, Apple will begin accepting pre-orders for its VR headset Vision Pro, the company’s first new product line in years.
However, tech investment expert Denny Fish believes the Vision Pro’s innovative features don’t justify its hefty $3,500 price tag. Over the next two years, its target audience may remain very small.
UBS forecasts Apple will sell 300,000 to 400,000 Vision Pro units this year, generating $1.4 billion in revenue. That’s a drop in the bucket compared to Apple’s $383 billion in fiscal 2023 revenue.
So far this year, Apple shares have struggled, down 3% cumulatively.
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5. Discover’s Net Income Plunges 62%
Credit card company Discover Financial Services reported that Q4 net income plunged 62% to $388 million. This morning, Discover stock dropped 6.9%, the biggest three-month fall.
The company said compliance and risk management expenses, along with employee benefits, have increased. Q4 operating costs rose 18% year-over-year to $1.78 billion, exceeding expectations.
Last month, CFO John Greene revealed that fixing compliance issues may cost the company $500 million.
Discover canceled two stock buyback programs over the past year.
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6. Italian Government Sells Stock to Repay Debt
The Italian government is considering selling shares of oil company Eni SpA to repay a portion of its massive debt.
Sources say the government may sell a 4% stake and raise about $2.2 billion. The plan is still under discussion and subject to change. Currently, the Italian Treasury holds 4.7% of Eni, while state-owned bank Cassa Depositi e Prestiti owns 27.7%.
The government aims to sell a total of $21.8 billion in state-owned assets before 2026.
Italy has been grappling with high interest rates and low growth, and government debt has reached 140% of GDP.
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7. US New Home Construction Declines
According to data released by the U.S. government today, housing starts in December fell 4.3% to an annualized 1.46 million units — the first decline in four months.
Single-family home construction dropped the most, while multi-family projects rose to a five-month high.
With tight inventories in the existing home market, more buyers are turning to new homes, which has boosted builder confidence.
Of the four U.S. regions, three saw declines in housing starts, while the West posted a five-month high.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.