Learn about the potential government shutdown, the outlook for inflation and rate hikes, private credit and the economy, Amazon's acquisition of AI startup Anthropic, and the impact of higher interest rates on the real estate market.
Higher interest rates and a lack of supply contribute to a decline in US home sales.
First-time home buyers face affordability challenges due to rising mortgage rates and rapid price increases.
Amazon's investment in AI firm Anthropic expands generative AI options for customers and highlights their commitment to customer choice.
Deep dives
US Existing Home Sales Fall to Seven-Month Low
Existing US home sales fell by 0.7% in August, reaching a seven-month low. Higher interest rates and a lack of supply are contributing to the decline. Mortgage rates are expected to remain elevated, keeping inventory low. The market may see a further contraction in buyer activity as higher rates make affordability more challenging.
Affordability Concerns Impact First-Time Home Buyers
The lack of affordability in the housing market is a major issue for first-time home buyers. Rising mortgage rates and the rapid increase in home prices have made it difficult for many first-time buyers to enter the market. As a result, some first-time buyers are getting creative, such as purchasing homes with family members or renting out parts of their homes to help cover the costs. Others are opting to rent, as rental prices have fallen in some areas.
Low Inventory and High Prices Challenge Buyers
The tight inventory and high home prices are challenging buyers in the real estate market. While builders have decreased the size of new homes to meet the demand from first-time buyers, local zoning regulations limit the number of homes builders can construct. The lack of liquidity in the market is a nationwide issue, although some markets, such as second-home and vacation home destinations, have seen an increase in inventory. It remains important for prospective homebuyers to shop around for mortgages and explore various options to find the best rates and terms.
Amazon Invests in AI Firm, Anthropic, to Expand AI Offerings
Amazon has announced a financial investment of up to $4 billion in AI firm Anthropic. The investment aims to expand the relationship between Amazon Web Services (AWS) and Anthropic. AWS will provide the computing power and technology to support Anthropic's large language models, while Anthropic's models will be available to AWS customers through the Amazon Bedrock managed service. The partnership underscores Amazon's commitment to the generative AI space and the importance of customer choice in choosing AI models.
Anthropic Investment Signals Amazon's Focus on Generative AI
Amazon's investment in Anthropic reflects their increased focus on generative AI and their commitment to providing customer choice. AWS will work closely with Anthropic to improve training and inference technology. The investment also supports AWS's strategy of delivering uncompromising security and a wide choice of generative AI models to customers. The higher rates and increased property prices have impacted the US housing market, leading to a decline in existing home sales and lower affordability. While some first-time home buyers are getting creative, the overall buyer demand is expected to contract further due to high rates. Tight inventory and price challenges persist, particularly in markets with zoning regulations that limit construction. Amazon's investment in AI firm Anthropic allows for the expansion of AI offerings, providing more options to customers in the generative AI space.
Nathan Dean, Senior US Policy Analyst with Bloomberg Intelligence, discusses the impact of a potential government shutdown.Lydia Boussour, EY Parthenon Senior Economist focusing on the US, joins to discuss the Fed, the outlook for inflation, and the outlook for rate hikes and a recession. Jess Larsen, CEO of Briarcliffe Credit Partners, discusses private credit and the economy. Anurag Rana, Senior Tech Analyst with Bloomberg News, joins to talk about Amazon’s acquisition of AI startup Anthropic. AWS CEO Adam Selipsky joins Bloomberg Technology to discuss Amazon’s AI acquisition. Lisa Sturtevant, Chief Economist at Bright MLS, joins to talk about real estate and interest rates. Hosted by Paul Sweeney and Matt Miller.
