Three Things (11/29)

“The only time you fail is when you fall down and stay down." — Stephen Richards

Dovish Fed

Christopher Waller and Michelle Bowman, two Federal Reserve officials who led the push for higher interest rates to curb inflation last year, signaled they may be comfortable holding rates steady for now. Waller mentioned that policy is well positioned to return inflation to the Fed’s 2% goal while Bowman refrained from mentioning anything regarding future hikes. 

The commentary is a vote of confidence from two of the most hawkish Fed officials and a sign that we may be approaching the end of the rate cycle. Although rate hikes may be coming to an end, how long we need to stay at current levels will become the focus for investors moving forward – a higher for longer scenario will likely have downstream impacts on capital investment, borrowing, and consumer sentiment moving forward. 

Record home prices

The ceiling for government backing on mortgages on single-family homes in the highest-cost areas will increase to nearly $1.15 million in 2024, according to an announcement on Tuesday. That limit, the maximum for a loan to be bought by Fannie Mae and Freddie Mac, is up from about $1.09 million this year. For the rest of the country, the limit for loans to be purchased by the mortgage giants will climb to $766,550 from $726,200 this year.

The updates are likely a result of the current reality in real estate: home prices rose to a new record in September due to the shortage of homes for sale. Although Fannie Mae and Freddie Mac don’t issue mortgages, they buy them from lenders, bundle them into securities and guarantee investors that they will be paid. The increase in loan value should spur lending activity at the top of the market following a year of dramatic price increases.

AI front and center

The 13th annual Forbes 30 Under 30 list for 2024 was released on Tuesday. Forbes evaluated more than 11,000 candidates on factors including funding, revenue, social impact, inventiveness and potential. Kendall Jenner, Hailey Bieber, and Lamar Jackson headline a star-studded cast of honorees.

The 30 Under 30 list has long been a fan favorite meme after notorious fraudsters like Elizabeth Holmes, Sam Bankman-Fried, and Caroline Ellison have made the list in years past. We found it interesting that there was an acute focus on companies working in artificial intelligence – it’s revealing of where investors and the media have been focusing their time recently. Could this be another hype cycle in waiting?