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Time Is Money

Oct 25, 2023 • 4 min read

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U.S. Mortgage Rates
Microsoft vs Alphabet

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U.S. Mortgage Rates:

The cost of an average mortgage in the U.S. has risen to be 52% more than the typical monthly rent. The pandemic saw a significant increase in housing prices, driven in part by historically low 30-year mortgage rates, which led to a boom in home purchases. However, the Federal Reserve, in an attempt to curb rising inflation, decided to raise interest rates.
While interest rate hikes are traditionally used by central banks to control inflation by making borrowing more expensive and saving more appealing, these changes can have broad implications across various sectors. As a result of the Fed's decision, mortgage rates have more than doubled, causing a noticeable decline in existing home sales. The rate hikes have also inadvertently affected other sectors.
Businesses face higher borrowing costs, which can translate to increased prices for goods and services, impacting essentials like food. In the real estate realm, the higher interest rates have affected housing affordability, leading to slower home sales. This slowdown can ripple out, affecting sectors like construction, home improvement, and consumer goods.
A study by CBRE, referenced by the WSJ, indicates that the present difference between average mortgage and rent costs is the largest it has been since 1996. Hence, for many, renting has become a more financially viable option than purchasing a home. This situation highlights the complex balance central banks must navigate between addressing inflation and promoting economic growth.

Microsoft vs Alphabet:

Microsoft's Azure saw a 29% revenue growth due to their investments in AI, surpassing predictions. Meanwhile, Google Cloud's growth slowed, missing its targets. This led to a 7% drop in Alphabet's shares and a 5% rise for Microsoft. Microsoft's edge has come from its significant investment in OpenAI, who has sparked the AI revolution with its GPT AI models.
They've incorporated this AI across their platforms. Alphabet, however, has been focusing on their own products and introduced an AI chatbot named Bard. In terms of numbers, Azure brought in $24.3 billion for Microsoft, while Google Cloud earned $8.41 billion, its slowest growth in recent times. Both companies are investing heavily in AI.
Microsoft's recent spending suggests they're aiming to invest over $44 billion this fiscal year. Google increased their spend to $8.06 billion. Overall, Microsoft appears to be leading in the AI race, while Alphabet tries to catch up. All Eyes are on Amazon's AWS (top cloud provider by market-share) to see how they performed in Q3 2023. Amazon Q3 2023 earnings will be announced Thursday post market close.

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