AIRLINES: Wings of Recovery

Global airlines are on track to achieve unprecedented revenue levels this year and are expected to continue this growth through 2024 as the industry gradually recovers from the impacts of the COVID-19 pandemic. However, it's worth noting that higher interest rates may limit the extent of profit expansion.

The International Air Transport Association (IATA) has projected an industry profit of $23.3 billion for this year, a figure significantly exceeding their expectations from June and nearly five times their initial outlook at the beginning of the year. This exceptional performance can be attributed in part to the reopening of the Chinese market.

The windfall profits generated by elevated air-cargo rates have also dissipated. Cargo revenue is projected to decrease to $111 billion by 2024, marking a significant decline from the peak of $210 billion in 2021. However, it is important to note that this figure will still surpass the 2019 level of $101 billion.

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BANKS: CEOs Face Senate Grilling

CEOs of major Wall Street banks, including Citigroup, Bank of America, Goldman Sachs, Morgan Stanley, and JPMorgan, are expected to testify before the Senate Banking Committee.

They'll advocate for relaxing new regulations introduced by the Federal Reserve and other agencies in July, which require nearly a 20% increase in capital reserves for large banks to enhance resilience against financial crises. These rules target banks with assets exceeding $100 billion, including mid-to-large-sized institutions. Regulators aim to prevent crises similar to this year's midsize bank failures.

JPMorgan CEO Jamie Dimon will argue that these rules may lead to higher interest rates for certain groups, such as first-time homebuyers and low-to-moderate-income individuals.

Other CEOs, including Goldman Sachs' Solomon, will echo concerns, emphasizing that the proposal "negatively impacts capital market functioning."

REFINANCES: Demand Surges as Rates Drop

After a remarkable surge of over 8% in October, mortgage rates are now easing back toward the 7% threshold, sparking renewed interest in the refinancing sector.

During the preceding week, the average contract interest rate for 30-year fixed-rate mortgages, falling within the conforming loan limits (up to $726,200), declined from 7.37% to 7.17%. This reduction was accompanied by a decrease in points, moving from 0.64 to 0.60, which includes the origination fee for loans requiring a 20% down payment. This decline represented the lowest rate level seen since August.

As a result, there has been a notable 14% increase in applications for refinancing home loans compared to the previous week. Impressively, this figure is 10% higher than the corresponding week in the previous year. Nevertheless, it's worth noting that the current level of refinancing demand remains relatively restrained, especially considering that a significant number of borrowers had already pursued refinancing during the initial years of the pandemic, a period characterized by numerous record-low interest rates.

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Bushnell’s Missed Opportunity

This man lost out on almost $1 trillion dollars because he told Steve Jobs no... 

Before Steve Jobs founded the most valuable company in the world, he worked at Atari. 

Nolan Bushnell was the founder of Atari and Chuck-E-Cheese and was someone Steve Jobs looked up to. 

Jobs came to Bushnell and offered him the chance to invest in Apple. For only $50,000, Bushnell could have owned 33.3% of Apple. 

Bushnell didn't believe investing $50,000 into two guys working out of their garage was worth the risk. Apple didn't have a viable product at the time, and he wasn't sure if Jobs was the right guy for the job. 

If Bushnell had made the investment and never sold, he would have turned $50,000 into almost $1 trillion. (This doesn’t account for dilution, etc…)

Chart of the Day

📊 These four charts show major U.S. index performance in December in the last four years. Other than a poor performance in 2022, all other years were in the green.

The author, publisher or insiders of the publisher may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.

Sources:

1. Bloomberg (www.bloomberg.com) _{Global Airlines Set for Record Revenue With Pandemic in Past}

2. Bloomberg (www.bloomberg.com) _{5 Things To Know}

3. CNBC (www.cnbc.com) _{Mortgage refinance demand jumps 14% as rates fall to the lowest point since August}