Three Things (4/27)

The below content and projections are the opinion of the authors. Any conclusions or takeaways are their own. This should not be considered as investment advice. Investing involves the risk of loss and returns are not guaranteed.

1) Fidelity to allow 401(k) participants to put money in Bitcoin as crypto adoption continues across financial industry

• Employers using Fidelity for retirement plans will be able to offer Bitcoin later this year.
• This plan will allow people to put up to 20% of their savings into Bitcoin; plan administrators could lower this threshold.
• Fidelity says it expects to offer other digital assets inside 401(k) plans in the future.

Titan’s Takeaway: More people getting more access to more crypto investments is a straightforward positive for believers in the growth of the crypto economy. And unlike, say, browser integrations or new NFT marketplaces, opening crypto to American retirement savers really does tap into a deep and reliable source of investment demand.

2) Manchin floats tax hikes to fight inflation as political consequences of rising prices begin to take shape

• WV Democratic Sen. Joe Manchin said Tuesday he’s discussed a bill with Senate Majority Leader Chuck Schumer.
• This proposal would raise taxes on corporations and individuals and cut the deficit in response to inflation.
• Manchin said Schumer is “just as concerned about inflation as I am.”

Titan’s Takeaway: Manchin’s comments stood out to us as a reminder that while the economic impacts of inflation have been top of mind for investors, there will no doubt be a political price to pay as well. But with Democrats holding slim margins in Congress ahead of mid-term elections, we’d be cautious regarding any optimism that major legislation will find its way to the President’s desk in the coming months.

3) New home sales drop amid surging rates and record prices as inflation continues to stress economy

• The pace of new single-family homes sold in the U.S. fell to the slowest in four months in March, according to the latest data released Tuesday.
• The average 30-year mortgage rate rose above 5% last week for the first time since 2010.
• Data released Tuesday also showed the average price of a single-family home rose 19.8% over the last year, the third-largest increase since at least 1987.

Titan’s Takeaway: Low inventory combined with soaring demand created a red-hot housing market over the last two years, and the Fed hopes higher interest rates will help cool this market down. With signs of stress already appearing in the market after just one rate hike, we wonder how long the Fed will remain committed to higher rates as economic difficulties for consumers add up.