Used car prices just plunged 10% over the past year — here are the market segments that fell the furthest

S&P 500

3,752.75

+86.97(+2.37%)

 

Dow 30

31,082.56

+748.97(+2.47%)

 

Nasdaq

10,859.72

+244.87(+2.31%)

 

Russell 2000

1,742.24

+37.85(+2.22%)

 

Crude Oil

85.14

+0.63(+0.75%)

 

Gold

1,662.50

+25.70(+1.57%)

 

Silver

19.40

+0.71(+3.80%)

 

EUR/USD

0.9862

+0.0075(+0.77%)

 

10-Yr Bond

4.2130

-0.0130(-0.31%)

 

GBP/USD

1.1302

+0.0067(+0.60%)

 

USD/JPY

147.6300

-2.4600(-1.64%)

 

BTC-USD

19,204.76

+18.62(+0.10%)

 

CMC Crypto 200

435.25

+3.49(+0.81%)

 

FTSE 100

6,969.73

+25.82(+0.37%)

 

Nikkei 225

26,890.58

-116.38(-0.43%)

 

Used car prices just plunged 10% over the past year — here are the market segments that fell the furthest

Despite the Fed’s aggressive rate hikes, inflation remains a big concern.

In September, consumer prices in the U.S. rose 8.2% from a year earlier. Core inflation, which excludes food and energy costs, jumped to its highest level since 1982.

But now, there’s finally something that suggests we could be at a turning point — used car prices.

Don’t miss

A TikToker paid off $17,000 in credit card debt by cash stuffing

Chances are good you’re overpaying for car insurance. Here’s how to spend less on peace of mind

Used car prices

According to the Manheim Used Vehicle Value Index, in the first half of October, wholesale used vehicle prices fell 2% from the month before.

The index currently reads 200.5, representing a 10.3% decline from October 2021.

The drop was seen across the board. Luxury cars led the pack with a 13.5% year-over-year decline in prices, followed by SUVs (-12.3%), midsize cars (-10.4%), pickup trucks (-8.4%), vans (-6.3%) and compact cars (-5.4%).

Substantial year-over-year declines in used car prices could be a sign that hot inflation is finally cooling off.

When surging used car prices started contributing to inflation in December 2021’s CPI report from the Bureau of Labor Statistics, White House economic advisor Jared Bernstein called it “remarkable and revealing.”

“For one, it’s a reminder of how extremely unusual this current inflation is,” he said in a tweet. “The world has not forgotten how to produce new (and thus used) cars and we should expect this series to revert once the underlying supply constraint eases.”

Home prices

Another big contributor to inflation is home prices — and they might be on the way down as well.

The S&P CoreLogic Case-Shiller index showed that home prices in 20 large cities in the U.S. fell 0.44% in July, marking the first decline in a decade.

Read more: ‘The numbers just don’t work’: While rising mortgage rates have some homebuyers giving up, others think they’ve found a workaround

Of course, houses — whether you want to buy or rent — are still a lot more expensive compared to a year ago. But experts point to how the recent sequential decline isn’t properly reflected in the inflation figures.

“We pointed out that the way these indices are constructed, that housing costs are very lagged, and they’re going to continue to go up, even though as we saw the Case-Shiller Housing Index, and the National Housing Index, housing prices are going down,” Jeremy Siegel, professor of finance at the Wharton School of Business, told CNBC last month.

Should the Fed pivot?

Investors care about inflation not only because it erodes the purchasing power of money, but also that it affects what the Fed would do.

As we know, the Fed has been quite hawkish — which is one of reasons stocks are getting pummeled this year.

But Siegel suggests that instead of making decisions based on lagging indicators, the Fed “has to be forward looking.”

“They have to look at what’s going on in the market, in the housing market, in the rental market, in the commodity market.”

Siegel isn’t the only one who’s questioning the Fed’s hawkish stance. Ark Invest’s Cathie Wood recently penned an open letter to the U.S. central bank.

“The Fed seems focused on two variables that, in our view, are lagging indicators — downstream inflation and employment — both of which have been sending conflicting signals and should be calling into question the Fed’s unanimous call for higher interest rates,” she said.

“Could it be that the unprecedented 13-fold increase in interest rates during the last six months — likely 16-fold come November 2 — has shocked not just the U.S. but the world and raised the risks of a deflationary bust?”

Currently, market participants expect the Fed to announce another 75 basis point rate hike in November.

What to read next

Should I wait for the housing market to plummet before buying a house? 3 reasons why this housing downturn is nothing like 2008

‘It was tough, scary times’: Baby-boomer financial experts who lived through the Great Inflation recount ways to ride out a recession

Here’s how much the average American 60-year-old holds in retirement savings — how does your nest egg compare?

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Advertisement

Benzinga

With Prices Dropping And Interest Rates Rising, Is Now A Good Time To Invest In Real Estate?

One of the biggest decisions a person will make is whether or not they will buy real estate — maybe a house, rental property, duplex or apartment building. Making such a decision can be very emotional, although it’s very important. It can be both exciting and frustrating to make an offer on a property and be rejected and then to bid on another property and gain exactly what you want. Real estate buyers have been on an emotional roller coaster since early 2021. The global pandemic caused a tremen

MarketWatch

What’s needed for stocks to rally is capitulation, but that could come from unexpected sources, strategist says

As Tom Lee, head of research at Fundstrat says after conversations with clients this week: “The main question is why should any investor expect equity prices to stage any meaningful gain from here, in the midst of a Fed tightening cycle and in the midst of great uncertainty around the Russia-Ukraine war, increasing stress in financial markets (UK issue tabled for now) and in the midst of massive gloom of CEOs and Americans and investors.” A scenario where the CBOE Vix index (VIX) the gauge of expected S&P 500 volatility, spikes above 40, stocks drop another 20% and there is some sort of financial accident, like a hedge fund imploding. “But this is not the only ‘capitulation’ that could lay ahead,” he argues in his latest note.

Reuters

Analysis-As U.S. Treasuries tumble, some investors say turning point is near

Some investors believe Treasury yields are close to peaking, even as markets continue pricing in more hawkishness from a Federal Reserve bent on taming the worst inflation in decades. It’s a refrain that has been heard more than once in 2022, as a steep selloff in Treasuries steamrolls investors who bet markets would soon reverse, while battering stocks and fueling the dollar’s climb. The tumble in bonds has intensified in recent days, as U.S. Treasury yields – which move inversely to prices – hit their highest levels since the 2008 global financial crisis on concerns that the Fed would need to raise rates more aggressively to bring down consumer prices.

Associated Press

Boeing crashes: Passengers’ families deemed crime victims

A federal judge ruled Friday that relatives of people killed in the crashes of two Boeing 737 Max planes are crime victims under federal law and should have been told about private negotiations over a settlement that spared Boeing from criminal prosecution. The judge said the next step is to decide what remedies the families should get for not being told of the talks with Boeing.

Bloomberg

Yellen Rejects Concern About Inflation Becoming Entrenched

(Bloomberg) — Treasury Secretary Janet Yellen dismissed the idea that high inflation is becoming embedded in the US economy, pointing to moderate expectations for price gains over the longer haul.Most Read from BloombergSandy Hook Families Ask Judge to Max Out Alex Jones PenaltyTrump Firm’s Tax Fraud Trial Promises Ex-CFO as Star WitnessTwitter Tumbles as US Weighs Security Reviews for Musk Deals“The way inflation would become embedded is if you saw expectations for inflation over the medium te

American City Business Journals

It’s ugly: SVB Financial shares plunge 24% on disappointing outlook

SVB Financial Group, parent of Silicon Valley Bank, saw its stock drop nearly 24% Friday as analysts slashed their price targets on the bank’s shares. It’s been an ugly year for SVB, which has lost two-thirds of its market value since Jan. 1. Piper Sandler cut its price forecast on the shares to $265 from $400, and RBC Capital slashed its target to $350 from $474.

Reuters

BOJ makes emergency bond buys for second day but yields keep rising

TOKYO (Reuters) -The Bank of Japan conducted emergency bond buying operations for a second straight day on Friday, as the 20-year government bond yield rose to a new high in a further challenge to the central bank’s resolve to defend its ultra-easy policy stance. In its latest move to curb elevated yields, the BOJ offered to buy 100 billion yen ($664.98 million) of bonds with maturities between 10 and 25 years. The BOJ conducted a similar operation on Thursday, only to see yields on some notes rising to multi-year highs.

American City Business Journals

San Francisco records major drop in median house sales price

It hasn’t been the October the San Francisco real estate industry was hoping it would be. Third-quarter median home sales prices have retreated dramatically from spring peaks, a decline brokers attribute to changing market conditions prompted by increases in interest rates and declines in stock markets and consumer confidence. The median price of closed sales fell from $2 million in the second quarter to $1.65 million in the third quarter, a huge 17.5% decline, according to September data from Compass (NYSE: COMP).

Benzinga

Norwegian Cruise Line’s Stock Price Will More Than Double, Says This Analyst

Tigress Financial analyst Ivan Feinseth reiterated a Strong Buy rating on the shares of Norwegian Cruise Line Holdings Ltd (NYSE: NCLH) and announced a price target of $32. The analyst thinks the cruise line operator is best positioned to benefit from the post-pandemic recovery and increasing consumer spending on travel and outperform its industry peers led by its premium product offering and best-in-class fleet in the highly profitable luxury and ultraluxury market segments. Record revenue and

American City Business Journals

The Funded: Instacart has pushed back its planned IPO until next year

When it comes to going public, Instacart is reportedly settling for deferred gratification. The San Francisco startup, which confidentially filed its initial public offering paperwork earlier this year, has decided to delay going public until next year, according to The New York Times. The news comes after Instacart has slashed its valuation three times this year.

Leave A Reply

Your email address will not be published.