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Stock futures rise as China opens borders – Warren Buffett’s key housing metric just gave a major bad sign – Retail sales jumped during critical shopping season – Apple faces $98 million in back taxes in Japan
Heading into the final trading week of 2022, stock futures rose buoyed by China saying it will open its borders next month, easing COVID restrictions and quarantine requirements on international arrivals.
Investors are hopeful that the move will not only boost China’s economy – the world’s second-largest – as travel resumes, but will also bolster global growth, Yahoo Finance reported.
On Tuesday, the Dow Jones industrial average futures rose by 160 points, or 0.48%, while the S&P 500 was up by 0.4%, and Nasdaq 100 futures inched up 0.1%, CNBC reported. China-linked stocks also rose in premarket trading.
The benchmark 10-Year Treasury Note was up +0.075 for a yield of 3.822% as of 8:45 AM EST.
Oil prices extended a recent climb near three-week highs. The U.S. benchmark West Texas Intermediate crude futures rose 1% to top $80 per barrel, Yahoo reported.
In stocks, news of an extended production path caused Tesla to slump, while the cancellation of thousands of flights saw Southwest Airlines tumble 4%.
Warren Buffett, Oracle of Omaha, said in 2010 that a “bad number” for housing starts is a good thing for the market. Buffett was referencing a cool housing market where supply outstripped demand, requiring the creation of more demand than supply by reducing the number of newly built homes.
However, currently, the housing market is the opposite. High market rates have not only decreased demand from consumers but also forced builders to cut back on construction, with new homes decreasing 0.5 percent from October, a trend expected to continue through 2023, Yahoo Finance reported. Housing starts in November fell 8.8% year-over-year.
The bottom line is: despite a current housing shortage, which Buffett saw as a good sign for the market, fewer people can afford to buy a home – which strips demand, taking away the other key factor Buffett looks for.
Investors see price declines coming in home prices, as much as 20 percent in hot markets. Some investors are moving to buying shares of individual rental properties as a way of earning passive income.
Despite inflation in the US hitting 7.1% in November, retail sales jumped by 7.6% during the critical holiday shopping season, which runs from November 1 to Christmas Eve, according to Mastercard SpendingPulse, which tracks sales across all payment types. In addition, during the same timeframe, restaurant spending was also up by 15.1%, online sales increased by 10.6%, in-store sales climbed 6.8%, and clothing rose 4.4%, FOXBusiness reported.
Apple is facing roughly $98 million in back taxes in Japan in a tax bill that appears to be tied to sales of duty-free devices to foreign tourists according to Nikkei, MSN reported. According to the report, tax-free shopping for visitors to Japan staying less than six months does not apply to purchases for resale purposes. At least one transaction at an Apple Store in Japan involved someone who purchased hundreds of iPhones at one time, according to the report. Apple is believed to have filed an amended tax return after halting tax-free shopping in June.
