Sunday Finds + 3 Thoughts From Last Week
Podcast episodes on American Express and DexCom This week
Welcome to Chit Chat Money’s Sunday Finds + 3 Thoughts From Last Week. In this newsletter you will find three topics I thought about last week, links to shows we’ve recently released, and links to some interesting articles, podcasts, and tweets. Check out the archive here.
Chit Chat Money Podcasts From Last Week:
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1. Mortgage rates are officially back above 7%
After dipping in late 2022 and early 2023, the average rate for 30-year mortgages in the United States shot up above 7% again this week:
At the start of this year, with rates slightly lower, it appeared the housing market was starting to recover just in time for the traditionally busy spring season. But that recovery has now stalled, and rising rates are only part of the picture.
According to Redfin, this means the average mortgage payment is up 26% year-over-year and now sits at approximately $2,500 a month.
This is up from approximately $1,500 in 2020, meaning that new homebuyers are — on average — spending $1,000 more each month to finance their home purchases. That equates to $12,000 in extra shelter costs every year.
The median salary in the United States is $70,000. Doing some quick math, that means on average, new homebuyers are spending an extra 17% of their income to finance homes compared to 2020.
I sound like a broken record, but how does this eventually not have negative consequences?
I know, I know, I know, there is a huge chunk of the population that has fixed mortgage payments with interest rates below 5% that they will have no problem paying off. I’m not talking about them.
There is a consistent flow of new people who want to buy homes every month. Unless home prices fall or these people suddenly start making 20% more in salary each year, this demographic is going to have significantly less disposable income to spend on entertainment, travel, and other discretionary items.
2. Electric vehicles don’t live up to their range estimates
Put another win in the column for the “almost all data you see is wrong” contingent:
I’m also shocked to see Tesla as the most egregious offender here. Who would have ever guessed that?
This is another win for plug-in hybrids, which currently get no love from consumers but are clearly better all-around for almost all drivers. Why? They are cheaper, give you gas-free transportation 98% of the time (they have 50-mile battery ranges), and have the flexibility to go on long road trips without stopping for 20-minute battery charges.
It’s actually hard to find a reason why you would want to buy a fully electric vehicle over a hybrid (disregarding tax credits). But for some reason, we are all enamored with Teslas and F-150 Lightnings. Can’t expect humans to act rationally I guess.
3. YouTube’s Priorities For 2023
New YouTube President Neal Mohan posted a letter outlining the company’s priorities for 2023. It was littered with a lot of CEO mumbo-jumbo, but also had some fascinating tidbits on what the most influential video platform in the world will be doing this year.
Here are some snippets I thought were interesting:
YouTube’s creative ecosystem supported more than two million jobs in 2021 in Brazil, Canada, the United States, Indonesia, Japan, South Korea, France, Australia, Germany, the United Kingdom, India, and Turkey combined, according to research by Oxford Economics
More and more, that leads back to the largest screen in most households, the TV. TV was our fastest growing screen last year, and we're seeing growth and momentum internationally.
We're bringing the best of YouTube to the living room - the creators people love, the streaming they want, and the useful features they've come to expect from YouTube
One area creators are increasingly interested in is podcasting. In fact, YouTube is now the second most popular destination for listening to podcasts according to Edison. This year we're making it even easier for creators and artists to showcase their podcasts on YouTube. New features in YouTube Studio make it easier to publish podcasts, and we’ll also start bringing both audio and video-first podcasts to the millions of people who use YouTube Music in the United States, with more regions to come.
And the power of AI is just beginning to emerge in ways that will reinvent video and make the seemingly impossible possible. Creators will be able to expand their storytelling and raise their production value, from virtually swapping outfits to creating a fantastical film setting through AI’s generative capabilities
The key to YouTube’s moat is the fact it shares revenue with creators, something Meta and TikTok have struggled to do successfully.
It is hard to see how YouTube doesn’t continue to grow its share in overall video consumption, connected TV, sports, podcasts, and gaming over the next few years.
Would it be surprising to see the division generate $100 billion in annual revenue five years from now? I don’t think so.
See you next week,
Brett
***Our fund, Arch Capital, may own securities discussed in this newsletter. Check our holdings page and read our full disclosure to learn more.***
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3 Good Reads
Skyline Champion Corporation (“SKY”, “Skyline”, and “Company”) offers a leading portfolio of manufactured and modular homes, park model RVs, accessory dwelling units (“ADUs”) and modular buildings for the multi-family and hospitality sectors and is considered the second largest player in the industry. The Company employs ~8,400 people and operates through 37 manufacturing facilities in the US and 5 in Canada and 31 sales centers.
Why the Data Makes No Sense - Kyla’s Newsletter
But we are most definitely in a grain-of-salt economy. Data is not a definitive, but it is a tool meant to be used in conjunction with other tools. It’s not a final painting, but rather the strokes on the canvas that require us to step back, take a closer look, and really reflect on narrative, reality, and interpretation.
Netflix and Scale? - Business Breakdowns
1) Netflix has spent over $100 billion on content over the past 9 years
2) Over the past 5 years, Netflix has added almost 5x the number of international subscribers relative to the US and Canada (UCAN).
International additions: 99 million
UCAN additions: 22 million
1 Good Podcast
The Invisible Billionaire - Founders Podcast
What I learned from rereading The Invisible Billionaire: Daniel Ludwig by Jerry Shields.
Smart, Insightful, and Funny Tweets:
Very insightful data on EV ranges and I agree with you on hybrids being a viable bridge to making a full transition to EVs when we have all or most of the infrastructure pieces in place.
And that Mark Mobius warning is a big canary in the coalmine for anyone investing in China. Especially as they try to re-ramp up their economic growth coming out the COVID lockdowns.