Market Beats | US Obesity Rate Finally Declines; New York’s Relative Cost of Living Hits 15-Year Low; Fed May Cut Interest Rates Three Times Next Year; Trump’s Tax Cuts May Not Benefit Economy; Broadcom Shares Surge 20% on Strong AI Component Sales

1. Fed may cut interest rates three times next year

2. Trump’s tax cuts may not benefit the economy

3. Broadcom shares surge 20% on strong AI component sales

4. Trafigura net profit plunges 62%

5. Sixth Street acquires Affirm loans

6. US obesity rate finally declines

7. New York’s relative cost of living hits 15-year low

1.  Fed may cut interest rates three times next year

The Federal Reserve is expected to cut interest rates by 25 basis points at its December 17-18 meeting, bringing the benchmark rate down to 4.25%-4.5%, a cumulative 100 basis points reduction from September.

Most economists predict the Fed will implement three rate cuts next year, as inflation is easing slightly slower than expected toward its 2% target.

Economists at Scope Ratings noted that after this month, the likelihood of further Fed rate cuts will decrease significantly due to persistent inflation, an overheated economy and financial markets, rising unemployment, and potential inflationary effects of Trump’s policies.

Economists expect the Fed to take no action in January and to implement another rate cut in March.

______

2. Trump’s tax cuts may not benefit the economy

The latest analysis from the nonpartisan fiscal watchdog CRFB suggests that extending Trump’s tax cuts, which are set to expire next year, may not provide a substantial boost to the economy.

CRFB found that if Trump does not extend these tax cuts, the US government could reduce its fiscal deficit by $3.7 trillion over the next decade, significantly improving public finances. Higher tax revenues would mean less government debt issuance, which could, in turn, stimulate private investment.

Most of the tax cuts benefit individuals and households, including lower tax rates and expanded child tax credits.

In 2024, the US fiscal deficit hit its highest level since the pandemic due to high borrowing costs and increased spending on social security and defense.

______

3. Broadcom shares surge 20% on strong AI component sales

Broadcom, a key chip supplier to Apple and other tech giants, saw its market value surpass $1 trillion for the first time, fueled by strong demand for AI chips.

In the first fiscal quarter, revenue from AI-related products surged 65%, far outpacing the company’s overall semiconductor revenue growth of 10%.

Broadcom also projected that by fiscal year 2027, the AI components market for data center operators could reach $90 billion.

Last fiscal year, Broadcom’s AI revenue skyrocketed by 220%, though demand for its non-AI chips declined.

At market open this morning, Broadcom shares surged 21% to $218.29, marking the stock’s biggest gain since March 2020.

______

4. Trafigura net profit plunges 62%

Commodity trading giant Trafigura reported a net profit of $2.8 billion for the 2024 fiscal year, marking a steep 62% year-over-year decline and the lowest in four years.

Trafigura faced a $357.5 million loss due to employee misconduct at its Mongolian oil project, with further financial impacts expected in the coming years.

Additionally, its zinc smelting unit, Nyrstar, along with other retail crude oil projects, contributed to a $297 million loss.

One positive note for the company was its effective tax rate, which dropped to 2.8% this year from 8% last year.

______

5.  Sixth Street acquires Affirm loans

Investment giant Sixth Street has agreed to acquire $4 billion in consumer loans from buy-now-pay-later fintech company Affirm Holdings, marking the firm’s largest investment to date.

Under the agreement, Sixth Street will provide over $20 billion in loan support to Affirm over the next three years.

In recent months, several non-bank lenders have started acquiring buy-now-pay-later companies’ consumer loan portfolios, including auto loans and mortgages. Earlier this month, Prudential Financial’s PGIM Fixed Income unit purchased about $500 million in Affirm loans.

Sixth Street’s asset-backed lending division previously acquired Goldman Sachs’ GreenSky loan portfolio.

______

6. US obesity rate finally declines

For the first time in over a decade, US obesity rates have shown a decline, with the widespread use of weight-loss drugs such as Ozempic appearing to play a key role.

In previous years, the number of obese Americans had steadily increased, along with average BMI levels. However, in 2023, the national obesity rate fell from 44.1% to 43.96%. While the drop is small, researchers consider it a significant milestone.

The study found that the biggest declines were observed in the southern US, where prescription rates for weight-loss drugs are also the highest.

A Lancet study estimated that if obesity trends continue, the US healthcare system could face severe financial strain over the next 25 years.

______

7. New York’s relative cost of living hits 15-year low

According to new data from the US Bureau of Economic Analysis, the cost of living in the New York metropolitan area is now 12.5% above the national average, the lowest level since 2008.

From 2008 to 2022, New York’s cost of living ranged between 13% and 15.5% higher than the national average.

Since the pandemic, states such as Florida, Arizona, Georgia, and the Carolinas have become increasingly popular destinations for Americans, driving up prices in those regions. The most affordable areas in the US remain in the Midwest and South.

Meanwhile, California’s affordability continues to deteriorate, with 10 of the 15 most expensive US cities located in the state last year.

______

This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.