The Street

The billionaire has been spending a lot of time in the city that is home to Twitter’s headquarters.

Elon Musk left Silicon Valley at the end of 2021 to settle in Austin, Texas. 

This southern city is now the headquarters of Tesla  (TSLA) – Get Free Report, the electric vehicle manufacturer and also the crown jewel of the empire of the richest man in the world.

But Musk has been back in the Silicon Valley since October to finalize the acquisition of social network Twitter at the hefty price of $44 billion. He literally moved to the headquarters of the social network located in the heart of San Francisco to make big changes with the previous management team and find new sources of income to make Twitter profitable and also to amortize its investment. 

The Techno King as he is known at Tesla had to go into debt to the tune of $13 billion with major banks to finance the acquisition of the microblogging website.

As often, Musk is not limited to managing his companies. He has been involved in politics for several months and in the life of the city, especially when it comes to elected Democrats. He has thus just launched a harsh criticism against the city by directly questioning its mayor London Breed.

‘Where Are Your Priorities?’

“So city of SF attacks companies providing beds for tired employees instead of making sure kids are safe from fentanyl,” the billionaire posted on December 7 with a link to an article about a dad who revealed that his 10-month-old baby suffered an accidental fentanyl overdose at a San Francisco playground. “Where are your priorities @LondonBreed!?”

In the article posted by Musk, which dates back to December 6, the San Francisco Chronicle reports that a father of ten-month-old twins told them that during an interview that one of the children had suffered an accidental fentanyl overdose at a Marina district playground. The medical emergency required paramedics to administer overdose-reversing medication Narcan, Ivan Matkovic, the boy’s father told The Chronicle.

City officials said they could not independently confirm all the reported details of the incident, which is still under investigation, the newspaper said.

The information seems to have shocked Musk, who has been asking households to procreate for several months in order to counter the decline in population in rich countries. 

Drugs are a silent epidemic in San Francisco. It is hidden in the back alleys of the city center and the hotel rooms for the destitute. The city’s medical examiner’s report released in January 2021 found that in 2020 drugs killed three times as many people as the covid-19 pandemic. Most of the overdoses recorded were linked to the consumption of fentanyl, a synthetic opioid.

Musk’s attack also comes as reports in the local press claim that San Francisco City Hall is seeking to investigate reports that Musk had beds set up at Twitter headquarters for employees he asks to work long hours.

Twitter 2.0 Has Dystopian Bedrooms

The billionaire, who has laid off more than half of Twitter’s 7,500 employees, has decided to transform certain rooms into dystopian rooms according to Forbes and the San Francisco Gate. 

Musk, who has often said that he slept in Tesla factories and slept at Twitter until things worked out the way he wanted, wants employees committed day and night to the mission he has set. Local authorities in San Francisco are reportedly concerned about this lack of work-life balance.

“San Francisco building inspectors are launching an investigation into reports Twitter has converted several office rooms at its headquarters into sleeping quarters for employees,” reports KQED Supervising Senior Editor, News and Newscasts Ted Goldberg. “We need to make sure the building is being used as intended” a representative of the city’s department of building inspection told the news outlet.

The City’s Department of Building Inspection is “reaching out to building management” to set up a “site inspection”.

Musk’s offensive has led elected officials in other cities to sell their city to the billionaire as the future headquarters of Twitter. This is the case of the mayor of Miami who saw an opening there.

“@elonmusk it’s TIME to move @twitter headquarters to Miami. It’s not about politics, it’s about the soul of our country,” Miami mayor Francis Suarez tweeted at Musk.

The former boss of Twitter is friend with the new boss of the social network but he seems to have differences on a crucial point.

Jack Dorsey and Elon Musk are close and friends. 

The first is the former co-founder and CEO of Twitter, while the second is the owner and new boss of the social network. 

Dorsey has often praised Musk whenever the opportunity arises. Such was the case last April when Musk made his offer to acquire Twitter for $44 billion. Dorsey did not hesitate to declare that his billionaire friend was the only one capable of relaunching the microblogging website, considered the town square of our time.

“In principle, I don’t believe anyone should own or run Twitter,” Dorsey, who now runs payment service company Block, wrote on April 25. “It wants to be a public good at a protocol level, not a company. Solving for the problem of it being a company however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.”

He went further by saying that “Elon’s goal of creating a platform that is “maximally trusted and broadly inclusive” is the right one.”

Twitter Files

Recently, when Musk cut half of Twitter’s workforce, or 3,750 jobs, in one day, Dorsey indirectly supported him by taking responsibility for the drastic measure.

“I own the responsibility for why everyone is in this situation: I grew the company size too quickly. I apologize for that,” Dorsey posted on Twitter.

This last message shows that Dorsey is closely following the latest developments on Twitter and in particular the changes that Musk is making. The latter has displayed his objective of making Twitter the platform for free speech, in other words, a social network where any message can be posted without safeguards other than the law.

With that in mind, Musk accused Twitter’s former management team of favoring Democrats over conservatives. To convince the general public that his accusation is true, he announced the publication of the “Twitter Files” or the discussions that took place at Twitter concerning the decision to limit access to an article from the New York Post detailing scandalous revelations about Hunter Biden, son of President Joe Biden, in the middle of the presidential campaign in 2020.

“The Twitter Files on free speech suppression soon to be published on Twitter itself,” Musk posted on Nov. 28. “The public deserves to know what really happened …”

Four days later, on Dec. 2, journalist Matt Taibbi published the famous Twitter Files which contained nothing explosive. Taibbi said he had to agree to “certain conditions” to receive the files. He didn’t say which conditions.

On Dec. 2, Musk announced episode 2 of the Twitter Files before adding the next day that we will have to wait one more day.

“Tune in for Episode 2 of The Twitter Files tomorrow!” the Techno King said.

‘Let People Judge For Themselves’

But this game of hide and seek and especially what now appears as a staging to create a kind of suspense is not to everyone’s taste and Dorsey in particular. Especially since Musk says that the will behind these Twitter Files is transparency. 

It is in the name of this same transparency that his friend Dorsey has just asked him to publish all the documents and to let people form their own opinion and not to cherry pick what he judges should be put in the public square and to influence public opinion.

“If the goal is transparency to build trust, why not just release everything without filter and let people judge for themselves?” Dorsey asked his friend and fellow billionaire on Dec. 7. “Including all discussions around current and future actions? Make everything public now. #TwitterFiles.”

Dorsey was the CEO at the time the decision was made.

“Most important data was hidden (from you too) and some may have been deleted, but everything we find will be released,” Musk responded.

He did not say what data was withheld from Dorsey or when all of the documents will be released.

Dorsey is not the first to ask Musk to be judge and gone. Billionaire and entrepreneur Mark Cuban did the same and went so far as to call Musk “King.” Cuban has called on Musk to lead by example. 

He asked him to start, in the name of transparency, by making public what he considers to be free speech on Twitter. Because in the current state of affairs, the Techno King is the only one who has a clear vision of what he decrees as free speech or not. The final policy is in his discretion and no one has the power to dispute what Musk says, Cuban seems to think.

For most of the pandemic, renters suffered just as much as home buyers, with rents jumping along with with home prices.

For most of the pandemic, renters had it just as bad as home buyers, with rents soaring in sync with home prices.

But good news is starting to emerge for renters. Apartment rents slid 0.59% in November, according to RealPage, which provides services for owners of rental properties.

That annualizes to 7.3% and represents the third biggest monthly decline since 2010. It was exceeded only in April and May of 2020, when the covid pandemic began raging.

Rents now have slid for the past three months, and that cumulative drop also is the largest since 2010, except for the 2020 lockdown period.

Rental occupancy eased to 95.1% in November 2022 from 95.3% in October and 97.5% a year earlier.

“Interestingly, the issue is not renter turnover,” wrote RealPage chief economist Jay Parsons. “In fact, turnover in November 2022 was the second-lowest for any November on record, topped only by November 2021.”

Renters Stay Away

However, “the issue is at the front door,” he said. “Leasing traffic among prospective renters has plummeted throughout 2022, and November 2022 ranked as the weakest for any November in eight years.”

Bottom line: “there is very little net new demand for any type of housing right now, despite strong growth in jobs and wages,” Parsons said.

“We’ve never before seen new-lease apartment demand freeze up during a period of solid job gains like it has this year. We’re on track to end 2022 with the weakest net apartment demand since 2009. Low consumer confidence and weak household formation tells us Americans are in wait and see mode.”

Rent growth for new leases registered 6.5% in November, the lowest since June 2021.

“Among metro areas, sizable cuts came in markets of all types,” Parsons said. “Destination hotspots of Fort Walton Beach, Fla., and Boise, Idaho, led the nation with month-over-month cuts around 2%.”

Looking at larger cities, San Jose, Calif., posted the nation’s deepest month-over-month cut in November at 1.7%, as technology companies slashed staff. Bay Area neighbors San Francisco and Oakland also saw reductions of more than 1%.

Other major cities with rent reductions of more than 1% included Raleigh/Durham, Austin, Charlotte, Seattle, Phoenix, Tampa, Las Vegas and Denver.

Home Prices Sliding Too

Home prices have been sliding too. The median price for existing-home sales totaled $379,100 in October, down 1.5% from $384,800 in September and 8.4% from a record high of $413,800 in June, according to the National Realtors Association.

But the latest figure is still up 6.6% from $355,700 in October 2021. And the 30-year fixed mortgage rate averaged 6.49% in the week ended Dec. 1, up from 3.11% a year earlier, though down from recent highs.

So buying a home may well cost you a lot more renting. If you want to ultimately buy a new house, you may want to rent for now and wait for home prices and mortgage rates to fall further.

Prospective U.S. homebuyers, especially younger ones, are having a tough time transitioning from renters to owners

It’s no wonder younger Americans, many of them with good jobs and good incomes, feel the deck is stacked against them when it comes to home ownership.

Consider the average age of a U.S. homeowner is 46 – that’s up by 21.3% since 2001. Or that the average U.S. home down payment for a middle-class home is $63,000 in 2022 – up from $52,800 in 2021.

The economic environment surrounding home ownership is about the worst, if not the worst, in U.S. history.

“Gone are the days when a young couple can purchase their first home with an entry-level salary, and even further gone are the days when a one-income household could purchase a home,” said AXIA Partners Brandon Fugal. “Affordability is the primary reason younger people are struggling to buy a home, even though a large percentage of them would like to do so. Home prices have risen astronomically in the United States while the average wage has remained stagnant.”

Another primary reason that younger Americans can’t buy a home right now is geography-based.

“For younger Americans, certainly the older millennials that are making high-income jobs in San Francisco or New York City, the price of home ownership has become basically impossible,” said Rastegar Property Company chief executive officer Ari Rastegar.

Turning From Renter to Owner

Younger would-be homeowners have an uphill climb to buying a new home, but it’s not insurmountable. Take these tactics to the homebuying experience and get on the fastest path to home ownership.

Know the “dollar realities” involved in buying a home right now. Dollar-wise, there’s way more to saving for a home than you might think.

“You aren’t just saving up for a new home deposit, you’re saving up for an emergency fund, any repairs that need to be done, bills and utilities, taxes, and other big expenses, “ said Top Dollar blog founder Josh Dudick.

Making that initial step toward becoming a homeowner is going to be costly, and whatever your circumstances are, young buyers need to make a lifestyle change in order to save money.

“Whether this is little changes like going out to eat less, shopping at a different grocery store, or big changes like cycling to work each day, or not buying Christmas presents this year, you need a reality check when approaching home ownership,” Dudick said.

Think like an investor. Millennials and first-time homebuyers can get their foot in the real estate door by beginning to think like a Wall Street investor.

“Buyers need to shift their thinking when it comes to jumping into a “forever home” purchase that checks all twenty must-have boxes of their list,” said PunchList USA CEO Min Alexander.

Instead, prioritize current capabilities and what their bank account can handle in order to get into the market.”

“By investing in more low-maintenance properties such as condos or smaller, short-term properties, first-time homebuyers not only can safely enter the booming real estate market sooner, while also avoiding the money-pits and costly work most dream homes require,” Alexander said.

Emphasize affordability. Increasing one’s ability to afford a new home can happen in myriad ways.

“Focus on saving more money for your home down payment to offset the cost of your mortgage and monthly fee,” said Better Mortgage head of real estate Nick Taylor. “Also, taking advantage of newer mortgage products like 10-year adjustable-rate mortgages that lower your interest rate for a 10-year period, which allows you to increase your sale price.”

Additionally, consider purchasing homes that have a lower cost-per-square-foot (most often fixer-uppers) that can be renovated to a higher home value. “Think about having a live-in tenant to offset your monthly mortgage or considering fractional ownership with you and a relative or investor,” Taylor added.

Make the right call on a bank account APY and rake in more savings

If you’re taking a lax approach to bank account yields, you’re leaving money on the table – likely more than you think.

That’s the takeaway from a new DepositAccounts study showing how much consumers can save by taking the time to compare annual percentage yields on bank checking and savings accounts.

According to the report, “shopping for the best APY on a checking account can boost your balance by as much as 5.1% in a year and 64.5% in 10 years.” Additionally, with balances of $1,000 to $25,000, the difference between the lowest and highest checking account APY can result in an additional $51 to $965 in a year and $646 to $11,685 in 10 years, the study reports.

Too Often, Bank Account Consumers Just Don’t Care

Despite the prospect of significant bank account interest gains, only 45% of U.S. bank customers actually compare bank account yields. Unfortunately, financial institutions are banking on APY shopper neglect.

“Interest rates can vary substantially, especially in today’s interest rate environment in which the Fed has raised its benchmark rate to its highest level in more than a decade,” says DepositAccounts founder Ken Tumin. “Banks make money off of customers who don’t monitor their interest rates.”

One big problem is that bank checking accounts don’t offer much in the way of interest, even though there’s cash value attached to finding a checking account with an incrementally better APY.

“Additionally, many people choose to hold the bulk of their cash savings in other types of accounts like a High Yield Savings account or a CD for higher yield,” said Origin certified financial planner Heather Comella. “They tend to maintain a cushion in their checking account but the interest on that cushion is immaterial.”

Even more unfortunate, most banking consumers don’t put much effort into finding checking accounts that earn high APYs, as they don’t realize how much interest they could accrue.

“Several online banks now pay north of 3% APY on checking account balances,” said Forbes Advisor senior banking analyst Michael Benninger. “That’s a far better rate than most brick-and-mortar banks pay on savings accounts.”

Another key consideration is convenience.

“People often bank close to their home or place of business to be able to stop in as needed,” Comella said. “People also develop relationships with local bank tellers or lenders and therefore prefer to keep their banking with those individuals they trust. Too often, these considerations outweigh the minimal increase in APY one might seek for their checking assets.”

Tips for More Robust APY Earnings

Flip the switch on lax APY comparison shopping with these “best banking account” tips.

Know where to look. An online bank typically pays higher rates for checking and savings accounts than a brick-and-mortar location. “Many financial and banking platforms offer pages that compare savings rates at different institutions across the country,” Comella said. “This can be a great starting point, then you can look at the institution’s website to better understand the account fees, interest tiers, or limitations.”

Think small. If you prefer a physical, local bank, “credit unions often pay higher interest rates than the large banking institutions,” Comella said.

Check the fine print. The biggest mistake people make when shopping for an interest-bearing bank account is to skip reading the fine print.

“Many banks advertise high APYs on checking and savings balances, but those rates often only apply to a portion of your overall balance,” Benninger said.

For example, if a bank currently advertises APYs ranging from 3% to 5% on its checking accounts those rates may only apply to the first $10,000 in the account. “Any amount that exceeds that threshold might earn just 0.2% APY,” Bennington noted. “By reading the fine print and terms of service before applying for a new account, it’s less likely you’ll be caught off guard by reduced rates.”

Go online. Digital banking is another good option for APY hunters.

“Online banks have a lower operating cost structure and thus are able to offer higher rates than brick-and-mortar rates,” said MaxMyInterest chief executive officer Gary Zimmerman. “Still, you might want to keep your primary banking relationship at a brick-and-mortar bank.”

“That way, you have a local branch where you can withdraw or deposit cash while keeping your extra funds in savings accounts at online banks, where they can earn more money,” Zimmerman noted.

The plan will offer new members some benefits sooner.

The most basic, day one rule of business is that it’s much more cost effective to lock in an existing customer than it is to spend money to find a new customer. 

Basically, everyone in every industry understands this, which is why nearly every company has some sort of loyalty program, from the local sandwich shop that gives you a punch card to get that eventual free lunch, to the biggest banks in the world.

But loyalty isn’t free. It’s very arguable that no one gives their customers more perks than the airline industries, which are willing to give miles, flight upgrades, free flights (if you work hard enough) and even free Starbucks swag.

Not all loyalty programs are made the same, and some are just unnecessarily complicated, such as Delta’s overly complex Medallion program, which requires a combination of flying and spending to earn Diamond, Platinum, Gold or Silver tiers, when really people just want the free miles.

When it comes to films and books, complex is nice. But when it comes to loyalty programs, people don’t want something so complex that it requires explainer articles. Simple is the better call here. So kudos to JetBlue  (JBLU) – Get Free Report for introducing a new loyalty program that’s designed to be simple to use and easy to track while still giving fliers plenty of reasons to sign up.

JetBlue Makes It Easier Earn Mosaic Status

JetBlue has announced an upgrade to its TrueBlue program, its first in a decade. And it’s designed to be easier to use, and to help you earn the elite Mosaic status, which includes benefits such as free same day flight switches, two free checked bags, early boarding, and free wine, beer and liquor.

The most significant upgrade is that Tiles will be the way to track your journey to Mosaic status. Starting next year, you earn 1 tile for every $100 you  spend on JetBlue, JetBlue Vacations, Paisly by JetBlue. You will earn 1 tile for every $1000 you spend on all JetBlue credit cards.

You get a perk when you collect 10, 20, 30 and 40 tiles, and once you collect 50 tiles, you unlock Mosaic status. These perks will be customizable and will include perks such as early boarding, priority security, a free alcoholic beverage, double bonus points on a JetBlue Vacations package and 5,000-point bonus.

Customers can, starting next year, use a dashboard to track progress once the new program launches, just by logging in to their TrueBlue account.

JetBlue Stays True To Existing Perks

The change to the Mosaic system is the big change, but there’s other perks to be had as well.

JetBlue will combine spend counts with all JetBlue credit cards. Add JetBlue travel spend and any JetBlue credit card spend to unlock perks, and there will be credit card enhancements on select cards bring that bring (as of now unspecified) new perks to cardholders.

But JetBlue has indicated that TrueBlue will retain many features fliers have come to enjoy, including: 

All TrueBlue members will still earn TrueBlue points on JetBlue and eligible American Airlines flights, and can redeem those points for award travel on JetBlue, including seats at any time, with no blackout dates or expiration dates.

• The TrueBlue points do not expire.
• Fliers can use cash and points to pay for JetBlue flights and JetBlue Vacations packages.
• Pool points with family and friends.
• Earn double points on jetblue.com or the JetBlue app.
• You will continue to earn select reciprocal loyalty benefits for Mosaic members that travel on American Airlines.

The perk gives American Airlines travelers more flexibility when booking flights.

Many frequent travelers know the frustration of trying to get information from a chatbot or being on hold for hours to reach a representative. Perhaps the worst of all is finding the perfect price for a popular flight, having the website freeze or crash and then finding that prices changed for a more expensive ticket. (It’s never the other way around.)

If it feels like things got a lot worse in the last year, you’re definitely not imaging it. With the entire industry and struggling to rehire the people who were laid off during the pandemic, airline customer service is one area where understaffing is mostly strongly felt. 

Earlier this month, low-cost airline Frontier  (ULCC) – Get Free Report nixed its call-in customer service entirely and now requires all problems to be reported (and resolved) online.

Hold That Flight For 24 Hours, Please

While getting rid of all call centers is extreme, making it easy for travelers to do certain things online is an easy way to bring down the number of calls and consequently staff needed. Things like moving flight dates, trying to get back a fare spotted online and following up on a hold are things that are easy to make available online but are sometimes restricted for those traveling on the airline’s lowest fare.

For years now, American Airlines  (AAL) – Get Free Report has been known to offer customers the chance to hold a fare for 24 hours. So long as the date of the ticket one planed to purchase was more than a week away, customers had the option of locking in the fare they found online and taking one day to mull it over without the risk that prices would increase.

This fall, the airline ran a test in which it got rid of this feature and instead provided customers with the options to instead get a full refund on a flight within 24 hours. The latter is not a “perk” but a requirement by the U.S. Department of Transportation for all airlines traveling in or into the U.S that some will often not advertise to minimize such customer requests.

When customers progress to the airline’s “Review and Pay” page, they will see a “hold” option on flights eligible for this feature. Customers who did pay for a ticket will also be able to cancel them online without calling an agent for a full refund regardless of status or fare type.

“We continue to evaluate our product offerings to customers on aa.com and understand customers may need flexibility when booking travel plans,” an airline representative told Travel + Leisure .

Here’s What’s Going on With the Airline Industry These Days

Over the last year, booking flexibility became especially salient for travelers given that covid testing requirements could suddenly uproot one’s travel plans.

As both domestic and international restrictions loosened, airlines also started toughening up on cancellations and changes — some have brought back fees for doing so as a way to bring in profit without doing the one thing that travelers hate even more: raising prices.

“Staffing shortages are still looming as inflation hits every industry,” Sarah Jean Callahan of TheStreet wrote on making the best of holiday travel. “Airlines are feeling the sting of low staffing going into their peak season, while passengers are feeling the sting of higher prices for their travel plans all around. It’s not just airline tickets that cost more, it’s everything.”

The Amazon of used cars lost a third of its market value on Wednesday and payment deadlines loom.

Carvana, the Amazon of used cars, on Wednesday is having one of its worst days on Wall Street.

Carvana shares fell more than 36% to $4.27 as doubts about the company’s ability to meet its payment deadlines piled up.

The figures are terrible: The stock has lost 45% since the beginning of December. The month of November was brutal as Carvana shares fell 43%. The stock, which ended 2021 at $231.79, is now down 98% since January. 

The market capitalization now sits at $760 million. In a nutshell, the comparative market value, if shares outstanding were the same in both periods, would have been $41.45 billion on Dec. 31, 2021.

The question now seems to be whether the company can get through this very difficult period or whether it could file under the bankruptcy laws. Analysts are concerned about its cash position.

Creditors Are Losing Patience

Carvana was a market and hedge fund darling just over a year ago.

But recently the private-equity firm Apollo Global Management  (APO) – Get Free Report and Pacific Investment Management, known as Pimco, signed a pact to join in negotiations with the company in order to recover their investments, reports Bloomberg News.

They are part of a group of funds holding about $4 billion of Carvana’s unsecured debt. 

Carvana’s $3.3 billion bond due in 2030 trades at roughly 42 cents, down from 79 cents at the start of the year, according to Bloomberg News.

The duration of this pact is three months, which suggests that these funds are convinced that the company, which aimed to revolutionize the way used cars are purchased, will be in default very soon. 

With Carvana bonds below 50 cents on the dollar, investors signal that the probability that the company does not meet its obligations is high.

“These developments indicate a higher likelihood of debt restructuring that could leave the equity worthless in a bankruptcy scenario, or highly diluted in a best case,” Wedbush analyst Seth Basham wrote to a note to clients on Dec. 7.

The analyst cut his target price on the stock by 89% to $1.

Other analysts echo the sentiment, including Bank of America Securities’ Nat Schindler.

“We now believe that without a cash infusion, Carvana is likely to run out of cash by the end of 2023,” Schindler said on Nov. 30. 

And “there is no indication yet of a potential cash infusion, for example from the Garcia family” — Chairman and CEO Ernie Garcia and his father — “and it is impossible to predict if and when that would occur.”

Carvana didn’t respond to a request for comment.

Slashing Costs

The company has between $6 billion and $7 billion in debt net of the cash on the balance sheet, according to FactSet. 

But Carvana is not profitable: its adjusted Ebitda-margin loss increased by 6.2% in the third quarter. Ebitda refers to earnings before interest, taxes, depreciation and amortization, which helps investors to gauge the financial health of a company.

The company is drastically slashing costs to slow the bleeding: After cutting 2,500 jobs in May, the company recently announced an additional 8% cut in the workforce, or 1,500 employees.

Carvana, founded in 2012 and based in Arizona, took advantage of favorable conditions to market its new way of buying a car. The group’s car vending machines fared well during the pandemic, a period when consumers wanted to avoid physical contact as much as possible, to limit their exposure to the virus. 

The federal government had also flooded consumers with money via stimulus programs. Interest rates were almost at zero, which meant that financing the purchase of a vehicle cost practically nothing. 

Added to this, the supply chains of car manufacturers were disrupted, which made the production of new vehicles difficult. Faced with these challenges, consumers turned to the second-hand market as the waiting times for new vehicles were long. Used car prices therefore jumped, making it a good environment for Carvana. 

But everything has completely changed for Carvana. The company is notably facing the aggressive increase in interest rates by the Federal Reserve in order to fight inflation. The rate rise is a double whammy for Carvana. It increases the cost of credit for consumers wanting to buy a vehicle and it also increases borrowing costs for businesses wanting to invest.

Additionally, high interest rates are bad for Carvana, as the group has a lot of debt and therefore owes millions of dollars in interest related to its debt. The company burned more than $1 billion in cash in the first three quarters of the year.

What Is the Beige Book?

The Beige Book is a publication that reflects the latest economic conditions across the 12 districts of the Federal Reserve. Its official title is “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” and the report also reflects changes in economic sentiment since the prior report.

The publication is based on qualitative data, which is anecdotal evidence and information derived from observations and responses from participants that can be analyzed (as opposed to quantitative data, which are based on numerical values.)

Why Is It Called the Beige Book?

The Beige Book gets its name from the color of the cover of the published report. The report was first published in 1970 and had been known then as the Red Book—also based on the color of its cover. In 1983, the neutral color was adopted, giving the report its present nickname.

Another briefing report nicknamed the Tealbook is provided to the Federal Open Market Committee as well. Its official title is the “Report to the FOMC on Economic Conditions and Monetary Policy,” and it contains detailed analysis of the latest economic and financial conditions and projections as well as information on alternatives to monetary policy.

How Is the Beige Book Compiled?

Each of the Federal Reserve’s 12 districts compiles information on the latest economic conditions for its area, and all of these separate, regional reports are then gathered into a national summary. A diverse set of sources includes businesses, economists, community groups, and market experts who are interviewed by phone and surveyed regularly either by mail or online.

The survey is known as the Intermittent Survey of Businesses, and questions focus on labor markets and prices in every district, but each region has its own unique characteristics, as categorized and listed by district number (based on the November 2022 report) in the table below. For example, the Dallas district has a specific focus on retail sales, like whether inventories are piling up, while Minneapolis focuses on minority- and women-owned business enterprises, such as how Native American businesses are coping with wage pressures.

A sample question of the survey sent to respondents reads below:

Do you expect your firm to increase employment, remain unchanged, or decrease employment over the next twelve months?

a. Increase

b. Unchanged

c. Decrease

Why Is the Beige Book Important?

The report is used to help the Fed understand the state of the economy before making decisions on monetary policy. The Fed uses various types of data on the economy including leading and lagging indicators such as retail sales, auto sales, manufacturing output, inflation, and unemployment—all of which are quantitative in nature.

Having perspectives from executives, business owners, and community leaders can provide valuable insight into the state of the economy that indicators lack. A question on the outlook of spending or the economy could provide clues on what the conditions might be in the short or long term. Answers from the surveys could also indicate how macroeconomic factors such as interest rates and inflation are affecting businesses and how consumers may react.

When Is the Beige Book Released?

The Fed releases the Beige Book eight times a year. The report is typically published about two weeks before the regularly scheduled meeting of the FOMC.

VinFast says its vehicles are ‘differentiated, especially across the emerging EV space.’ Here’s what the company is touting.

VinFast, the Vietnam-based electric-vehicle maker, is shifting into high gear.

The company on Dec. 7 said it had filed for an initial public offering with the U.S. Securities and Exchange Commission.

The company plans to list on Nasdaq under the ticker symbol VFS. The number of shares to be offered and the price range have not yet been determined, VinFast said.

Citigroup Global Markets, Morgan Stanley, Credit Suisse and J.P. Morgan Securities are the lead bankers on the offering.

Established in 2017, VinFast is part of the VinGroup conglomerate, which was founded by Pham Nhat Vuong, Vietnam’s first billionaire.

The company said on Nov. 25 that it was sending its first batch of 999 VF 8s, the company’s five-seater electric SUV, to America aboard the Silver Queen, a Panamanian charter ship.

The first VinFast customers in the U.S. can expect their cars by the end of December.

‘Low-Cost … Premium Quality’

“We believe our vehicles are differentiated, especially across the emerging EV space, through our low cost structure relative to our peers, as well as our premium-quality product offering, including advanced technology and new-mobility features for our drivers, a fashionable and luxurious design, and our comprehensive Smart Services solution,” the company said in its SEC filing. 

VinFast said it expected to remain competitive “by focusing on SUVs, the most popular consumer vehicle segment, and including in our products top-tier technology and luxurious outfitting that is not standard for similar vehicles at our price points.”

“We strongly believe in the future of smart mobility and strive to provide the VinFast platform as an access point to that future,” the filing said.

VinFast is planning to expand its manufacturing capabilities to the U.S.

The company said in July that it had received a $1.2 billion incentive package from North Carolina for its electric-vehicle manufacturing facility at the Triangle Innovation Point in Chatham County.

The facility will cover 2,000 acres, with sections for electric cars and buses production and assembly, and ancillary industries for suppliers. The factory is designed to reach the capacity of 150,000 vehicles per year.

The company is stepping into a very crowded field of competitors, including market leader Tesla  (TSLA) – Get Free Report, most of the legacy car makers and many startups, according to research firm Tracxn.

VinGroup Has ‘Deep Pockets’

Some of the EV startups are having a hard time.

Last month, Lucid Group’s  (LCID) – Get Free Report shares fell after the Newark, Calif., company’s third-quarter sales and earnings missed estimates and reservations for the company’s luxury electric vehicles declined.

Rivian  (RIVN) – Get Free Report, which counts Amazon  (AMZN) – Get Free Report as one of its investors, saw billionaire George Soros continuing to liquidate his shares in the company.

VinFast lost about $1.3 billion in 2021, and an additional $1.4 billion through the first three quarters of 2022

Michael Goldberg, a professor with the Weatherhead School of Management at Case Western Reserve University, noted recently that “VinGroup is involved in quite a few businesses and have deep pockets.” He added that VinFast “is not a thinly capitalized startup in the EV space.”

The IPO announcement comes days after VinGroup unveiled a strategic collaboration with Google Cloud  (GOOGL) – Get Free Report to modernize and connect its critical systems and data at a group-wide level.

“With Google Cloud’s leading cloud infrastructure and unified data platform, we can analyze and understand customer needs, provide personalized products and services, and create compelling customer experiences,” Le Thi Thu Thuy, vice chairwoman of VinGroup and chairwoman of VinFast, said in a statement.