ABCs of the Market for December 1st, 2023

Happy Friday! It’s Dec. 1, 2023. We have three great stories to wrap up the past two weeks in markets, business, and the economy for you and your family.

Here are the highlights:

• Airlines are devaluing rewards. Time to take a vacation!
• Better not wait to buy a home. Home prices rose for the 8th consecutive month.
• Cybertruck is here. Elon Musk’s latest car has arrived.

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Airlines Are Devaluing Rewards At Record Pace

The COVID-19 pandemic gave airlines the most trying conditions they’ve experienced since 9/11, but nearly three years later, air travel is more popular than ever. But by the time 2023 is over, airline revenue will still be down 7% from 2019 according to data from Statista — and profit margins are expected to come in at an anemic 1.2%.

That has many large airlines devaluing their rewards programs, such as the benefits and miles you get for flying frequently. And in 2024, there could be even more changes as airlines continue to weather their economic situation:

• United Airlines led the pack by massively devaluing miles without notice in June 2023. After the changes, you need 30%+ more miles to book an Award flight.
• Delta Airlines went on to rock the boat with massive changes to its SkyMiles Reward program, putting greater emphasis on credit card spend in its calculation of benefit levels. It also limited access to its famous Delta SkyClub for AmEx cardholders.
• Southwest gave its ardent fans a heads up, at least — but on the first day of 2024, it will devalue points by 4%, according to a press release it made last week.

Why does it matter for EarlyBird families?

Although Congress has proposed a bill to prevent these kinds of ‘no notice’ valuations from taking place, it’s unlikely to save your points anytime soon — so if you or your family vacation every once in awhile, let this be your sign to use those points. If you’re struggling to use the points, you can get a free trial on a platform like point.me to find the best points deals.

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Better Not Wait: Home Prices Are Rising

When the Federal Reserve raises interest rates, the price of bonds, stocks, and other assets should fall — but housing prices didn’t catch the memo.

Home prices set a new record in September, rising for the seventh consecutive month according to the Case-Shiller National Home Price Index. Home prices were up 3.9% year-over-year, causing the index to register its highest reading ever.

• High interest rates have locked in many homeowners… Since many households bought homes during periods of historically low interest rates, many will stay put, reaping the benefits of their 2-4% mortgage rate.
• And that has the housing supply at historic lows… There were just 1.15 million existing homes on the market in October according to data from the National Association of Realtors, which is nearly half the long-term historical average of available inventory.
• Oh, and housing demand isn’t going anywhere… if you think there’s not a lot of houses now, just wait until mortgage rates aren’t over 7%. As mortgage rates fall, the number of people who can afford to finance houses could rise significantly, tightening the number of available homes.

Why does it matter for EarlyBird families?

94% of Americans polled by LendingTree say that homeownership is part of the American dream, but there’s no problem with renting — in many parts of the country, not having to pay a mortgage, property tax, utilities, and other essentials might actually save you money. Those savings might empower you to save a little more for yourself or your family. But prospective homeowners serious about buying in the next few months should consider homes regardless of today’s mortgage rates, because homes probably won’t be getting cheaper anytime soon.

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Cybertruck Is Here: Why Tesla’s Latest Car Is So Expensive

Did America need a futuristic-looking, all-steel pickup truck? Probably not, but Tesla’s Elon Musk is testing demand for its 845 horsepower electric beast, Cybertruck.

• Cybertruck is Tesla’s first new vehicle since the Tesla Semi in 2022, and its first mass-market vehicle since the Model Y launched in 2020 — and its unique-looking design has been hell on wheels (literally) for the automaker.
• Tesla CEO Elon Musk unveiled the car at a keynote in 2019, promising an EV unlike any other — with a 500mi range EV and a killer starting price: $39,900.
• Unfortunately, the controversial vehicle won’t be able to deliver on either figure. At today’s big unveiling, Musk announced that it would be 50% more expensive — at $60,990. The higher price was revised as a result of the car’s complicated assembly and production, which Musk has previously called “production hell.”

That could put it out of reach for more than 1 million people who put down a $100 deposit to purchase the vehicle — and put it in a difficult place to compete with combustion engine trucks like the Ford F150, or Rivian’s competing R1T electric pickup.

Why does it matter for EarlyBird families?

Are you in line to buy your Cybertruck? We’re guessing that you probably aren’t, but if you are, you’ll have to wait awhile. Musk says production of the pickup truck won’t really get to capacity until 2025 — a common theme with car companies at the moment. Over the last year, U.S. auto sales have been at their worst in decades, making it hard to find a car for a good price. And like homes, they might not be going down for awhile. If you’re in the market for a car, it might pay to start early — and consider used vehicles in your search.

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What else is up?

• RIP Charlie Munger, investing legend and business magnate. Munger was a pivotal force in Warren Buffett’s Berkshire Hathaway, informing the Oracle of Omaha’s investment philosophy over a five-decade career. He was 99. Read about his life.
• Spotify Wrapped and Apple Rewind are here. 2023 isn’t over, but the Holiday music is ringing in retail stores — and that means it’s time to take score of your top songs and artists this year. If you’re an Apple Music user, click here to find out — and if you’re a Spotify person, click here.
• Disney faces new shareholder battle. Billionaire investor Nelson Peltz thinks Disney has lost its way — and is leaving money on the table for shareholders. He’s coming for Disney, just months after scrapping a proxy battle where he hoped to win board seats to steer the company. See the latest on Disney’s new beef.