ABC's of the Market

ABCs of the Markets for February 9th, 2024

By

Jordan Wexler

Last updated:

November 20, 2024

5 Minutes

EarlyBird helps parents, family, and friends collectively invest in a child’s financial future. Learn more.

What You'll Learn

Happy Friday and Happy Super Bowl weekend! It’s Feb. 9, 2024. We have three great stories to wrap up the past few weeks in markets, business, and the economy for you and your family.

Here are the highlights:

  • Amazon Prime is Past Its Prime? Why are customers leaving the $139/yr subscription behind?
  • Big Tech made the difference in 2023. Can it do it again in 2024?
  • Car and home insurance has skyrocketed. Natural disasters and bad drivers are to blame.

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Amazon Prime Customers Worry the E-Commerce Giant’s Subscription Is Past Its Prime

Source: https://unsplash.com/photos/blue-and-white-van-parked-near-white-building-during-daytime-4zSqHtIx8H8

Amazon Founder Jeff Bezos used to describe himself as “obsessed” with building customer-friendly products — and if not for that obsession, Amazon might never have turned into a $1 trillion company. But he has another famous saying: where data and anecdotes disagree, the anecdotes are usually right. That means trouble for the world’s e-commerce giant, which has seen its stock soar to record highs this year, but is facing an increasingly frustrated customer base.

  • What happened? Amazon Prime has risen from $99/yr to $139/yr over the last six years, all while the tech giant has lost high-quality retailers — which have been replaced by lower-quality third-party sellers. These sellers have been more profitable for Amazon, but have disappointed customers.
  • Paying more for less. Customers are also frustrated by paying fees for returns, lower-quality customer service, and ads during their favorite shows and movies on Amazon Prime Video. If that sounds familiar, it’s because it’s a common theme in the economy right now: customers are paying more for what used to be free or lower-cost, whether it’s travel upgrades, online subscriptions, or dining.
  • As a result, customers are canceling. There’s no shortage of customers canceling their Prime subscription on r/AmazonPrime, which shows a deluge of frustrated customers, who are fighting back against lower-quality goods, customer service, and delayed refunds.

Why does it matter for EarlyBird families?

If you’re wondering what value you get out of subscriptions, you’re not alone. Even as inflation is slowing, many Americans are cutting back on unnecessary spending — resisting the march of higher subscription costs, lower-quality service, and nonsense fees. If you’re not making the most of your subscriptions — like Prime’s video or music streaming services, for example — you might be surprised to hear there’s a cheaper way to get free shipping: just make an order over $35.

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Big Tech Carried the Market in 2024. Can It Continue To?

If not for a surprise tech rally to wrap 2023, the S&P 500 might not have been able to pull out the impressive 23% return it gave believers last year. But it comes with a nasty downside: all of the growth came from just six stocks — while the other 494 components of the S&P floundered to negative earnings growth. And unfortunately, those companies can’t expect to run those same plays in 2024 to win over investors.

  • What did Big Tech do? Meta called it its “year of efficiency”, Google called them “cost cutting measures”, and Amazon called it what it really is: cost cutting. All three major companies added billions in market capitalization by laying off employees and cutting back on travel, computer spending, and sloppy supply chain efforts. As a result, the six largest companies in the S&P saw their fourth quarter earnings grow more than 62%.
  • What about the 494 others? Well, they were unmagnificent. The remaining 494 components of the S&P 500 saw their fourth quarter earnings fall 8.6% year-over-year, which brought the index’s total earnings growth to 1.6% according to data from FactSet and The Wall Street Journal.
  • What awaits in 2024? Big Tech can’t rely on layoffs and cost-cutting to pull off their meteoric earnings growth this year… but the good news is that they might not need to for the markets to continue soaring to record highs. This year, America’s biggest companies will get back to growing — and data from FactSet shows that analysts expect the S&P 500’s revenue to grow 11.2% this year, which will boil down to 5.4% higher profits this year.

Why does it matter for EarlyBird families?

The S&P 500 is one of America’s most magnificent examples of diversification, which is something that all investors need in their portfolio. With over 500 stocks in the index, Americans can appreciate from the ups and downs of all sorts of industries — and while 2023 was Big Tech’s big year, the index is built to make up for the shortcomings of sectors or industries when they aren’t performing.

That’s why every EarlyBird portfolio has exposure to the S&P 500, along with a supporting cast of other funds tracking global bonds, growth stocks, and fast-growing emerging market stocks from countries like China and India. It’s a reminder that every time you use EarlyBird, you’ll get consistent and recurring exposure to the world’s most-promising assets, while ensuring that your wealth-building is done at the risk profile that’s right for your family.

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Car and Home Insurance Costs Are Way Up: Here’s What to Know

Source: https://unsplash.com/photos/a-house-made-out-of-money-on-a-white-background-1sCXwVoqKAw

It’s not just you: your car and home insurance really is more expensive. In fact, it might be one of the fastest-accelerating costs burdening Americans over the last few years. Rising home and auto prices have forced insurers to boost rates for coverage — and two other factors are leaving insurers in a precarious situation…

  • Fires, floods, hurricanes, and the Pineapple Express… Over the last few years, the number of natural disasters has increased significantly — which has left insurers holding the bag when expensive homes in states like Florida and California face the wrath of Mother Nature.
  • It’s like nobody knows how to drive anymore… Make no mistake, Boeing might have a problem with its 737 MAX 9 jets, but Americans have a much bigger problem with safety on the roads. For the last decade, vehicle deaths have been on the rise in the U.S., which include everything from an increase in reckless driving to distracted driving causing pedestrian collisions.

Why does it matter for EarlyBird families?

Over the last three years, insurers have lost nearly $61 billion on property-casualty insurance policies, which is why premiums are skyrocketing.

To make the higher payments, some families are choosing to forego certain kinds of coverage like earthquake or flood insurance to make the higher payments — which is risky given the fact that places like California are seeing 1-in-1,000 year rains, just two years after a historic drought.

And in some cases, insurers are leaving regions like Florida citing the rising risk of climate change and the high cost of rebuilding homes after a disaster.

However, insurers are always trying to win business and write new policies — which makes now a great time to shop insurance prices. Nobody is saying you have to leave your current insurer, but you might find better deals out there, or benefit from bundling property at your insurer of choice.

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What else is up?

  • Commercial real estate concerns are back on Wall Street. The good news? There’s not much to fret on Main Street. This week, shares of New York Community Bancorp, which counts just 3% of its assets in commercial real estate, fell more than 60% after its credit was downgraded. Investors are once again responding dramatically… but it’s not really clear if they should be. Read more in CNBC.
  • Ex-WeWork CEO Neumann seeks deal for bankrupt coworking giant. Adam Neumann, who has spent the last three years building a residential empire in the American Southeast is making a bid for the coworking company he founded. Read more in Axios.
  • More tenants can now add their rent payments to their credit score. About one-third of Americans rent, but many don’t have their monthly payments reflected on their credit. Increasingly, third-party services are now offering services to have on-time rent payments reported to major credit bureaus, helping boost renters’ credit scores. Read more in NYT.

This page contains general information and does not contain financial advice. All investments involve risk. Any hypothetical performance shown is for illustrative purposes only. Actual investment performance may be different for many reasons, including, but not limited to, market fluctuations, time horizon, taxes, and fees. Please consult a qualified financial advisor and/or tax professional for investment guidance.

Author

Jordan Wexler

CEO, Co-Founder

EarlyBird CEO and co-founder, Jordan Wexler, is a loving uncle to two beautiful children and a godparent of twins. It was when he welcomed these children into the world and showered them with gifts that he first saw the core problem EarlyBird needed to solve—that there was no simple and meaningful way to gift a financial asset or invest in the children we love most. Launched publicly in December 2020, EarlyBird has since helped over 100K families start their journeys toward building generational wealth.

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Download EarlyBird today and start investing in your child’s tomorrow.
INVEST EARLY, GROW TOGETHER
Get started with your first $10 on us, when you create an account today!
INVEST EARLY, GROW TOGETHER
Download EarlyBird today and start investing in your child’s tomorrow.
INVEST EARLY, GROW TOGETHER
Get started with your first $10 on us, when you create an account today!
INVEST EARLY, GROW TOGETHER
Download EarlyBird today and start investing in your child’s tomorrow.
INVEST EARLY, GROW TOGETHER
Download EarlyBird today and start investing in your child’s tomorrow.
INVEST EARLY, GROW TOGETHER
Download EarlyBird today and start investing in your child’s tomorrow.
INVEST EARLY, GROW TOGETHER
Download EarlyBird today and start investing in your child’s tomorrow.
INVEST EARLY, GROW TOGETHER
Download EarlyBird today and start investing in your child’s tomorrow.
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