Wednesday,
July 28, 2021

Market recap

Dow Jones

35,058.52

-85.79 (-0.24%)

S&P 500

4,401.46

-20.84 (-0.47%)

Nasdaq

14,660.58

-180.14 (-1.21%)

Intel

$53.18

-$1.13 (-2.08%)

Twitter

$68.35

-$0.34 (-0.49%)

UPS

$195.33

-$14.53 (-6.92%)

Amid evolving news surrounding COVID-19 and the economic reopening, your financial needs are our top priority. For more information,click here.

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Top Story

Intel Wants to Regain its Semiconductor Dominance

Intel to Churn Out New CPUs

Intel (INTC) wants to regain its position as the world’s top semiconductor manufacturer. Currently, Taiwan Semiconductor Manufacturing (TSM) and Samsung Electronics are ahead of Intel in semiconductor manufacturing. Intel has vowed to churn out more powerful central processing units, also known as CPUs, every year for the next four years. The chip maker’s goal is to be in first place in terms of processor performance by the end of 2025. Intel plans to roll out a new desktop CPU in 2021 and a server CPU in early 2022.

By committing to producing faster chips every year, Intel is signaling that it believes there is more room for chip advancements, even though creating improved chips is becoming more expensive and more technically difficult.

Intel to Release New Chips

By 2023, Intel plans to release a new series of PC and server CPUs manufactured with extreme ultraviolet lithography, a new circuit-printing method. This technique enables the production of very tiny transistors. Billions of transistors are required to enable computation in desktops, laptops, and servers. By 2025, Intel aims to roll out powerful semiconductors which use transistor technology called Intel 18A.

Intel is confident it will meet its performance goals, pointing to its adoption of extreme ultraviolet technology to streamline the chip-manufacturing process and its willingness to look for outside help to advance innovation. But Intel is not the only chipmaker working on advanced semiconductors—TSMC is also building chips with very small transistors.

Chip Making for All

In addition to rolling out speedy CPUs, Intel is aiming to regain market share lost to the likes of Nvidia (NVDA) and Advanced Micro Devices (AMD). To achieve this, the company wants to become a leading manufacturer of chips for other companies. It is investing billions of dollars in the initiative and is in talks to acquire GlobalFoundries, a chip-making specialist. Intel already counts Qualcomm (QCOM) as a customer, a company which has been a big client of TSMC and Samsung in the past.

Intel dominated the semiconductor market for years. Even today, it is still the leader of the pack based on sales. But its market cap is below that of its competitors, and Intel wants this to change. It will be interesting to see if Intel’s new chips help it regain its position in a complex industry.

The ABCs of Student Loan Refi: a talk with SoFi’s Erika Kullberg and Brian Walsh, TODAY!

Let’s talk refinancing! Join Erika Kullberg and Brian Walsh this afternoon as they talk all things student loan refi, including formulating repayment strategies so you can start to pay off your debt. Join us today, July 28th at 4pm PT!


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Remote Work’s Impact on Smaller Cities

Remote Work May Be Here to Stay

Companies across the globe had to adapt to remote work environments during the pandemic. More than a year and a half later, a number of technology companies including Facebook (FB), Twitter (TWTR), and Salesforce (CRM) are embracing this new way of working for the long run. Remote work has a number of advantages for companies, like being able to hire individuals located across the country instead of one geographic area.

Many remote workers in smaller cities are earning high salaries at jobs which used to be based in large cities, resulting in local firms increasing wages in order to remain competitive. Some companies in smaller hubs are hoping this trend will be short-lived, but others believe remote work is here to stay and they are adapting accordingly.

Remote Work Allows Companies to Attract a More Diverse Talent Pool

Even prior to the pandemic, technology companies were embracing remote work. The pandemic significantly accelerated this trend. Employees grew accustomed to working remotely and many companies saw that productivity didn’t take a significant hit.

At Twitter, employee requests to work remotely in the same place or in a new city were nine times higher in 2021 than in 2019. In the past 12 months, roughly 10% of the social media company’s San Francisco workers have relocated. Even before the pandemic, Twitter wanted to decentralize its workforce. Since 2018 the company has been incorporating more remote work into its model in order to attract a more diverse pool of talent.

Mini Offices a Growing Trend

Tech companies are also beginning to use smaller offices and co-working spaces located across the country. Slack (WORK) began a six-month test in April, giving its full-time staff WeWork memberships. Meanwhile, Dropbox (DBX) intends to open mini offices in a variety of cities during the next 18 months. The idea is to create several mini hubs to retain talent no matter where employees want to live. Of Dropbox’s new hires this year, about 60% come from outside of its major hubs in San Francisco, New York, and Seattle.

It is becoming clear that remote work will continue in some capacity in the future. It will be interesting to see how this continues to impact real estate markets, work culture, and more.

Is the Housing Market Rally Sustainable?

Real Estate Market Still Frothy

Home prices have surged throughout 2021, with tight inventory and low interest rates sparking bidding wars across the country. That has shut many buyers out of the market as home builders are reluctant to add new supply given higher labor and material costs. As a result, home prices have increased by as much as 20%, leading many to worry about a crash. After all, home prices appreciating by double digits is not sustainable forever.

However, the real estate market may not be headed for a crash like what took place in 2008. Current conditions are much different than they were during the 2008 real estate bubble, which resulted in record foreclosures.

Inventory Remains Tight

For one thing, the supply and demand environment is different than it was in 2008. Fifteen years ago there was a glut of inventory in the housing market. About 2 million homes were constructed each year at the building peak during that period. Today the rate is just 1.6 million.

Given severe housing shortages, there is less risk of a housing bubble bursting. Home prices are still climbing at record rates. In May, home prices increased 16.6% across the nation compared to a year ago. This marked the highest monthly increase since the S&P CoreLogic Case-Shiller report launched more than thirty years ago.

Market May Be Cooling Gradually

While the real estate market is still frothy, there are signs it is beginning to cool down somewhat. Skyrocketing prices and a lack of inventory have led to a decline in sales of new and existing homes in recent months.

New home sales decreased 6.6% in June—the most significant dip since April of last year. This marks the third month of slowing sales. The pace of sales of existing homes has also been slowing in recent months but moved higher in June, albeit slightly. If buyers remain on the sidelines it could send prices lower and cool off an extremely hot real estate market.

Not-So-Breaking News

Financial Planner Tip of the Day

“When you approach homeownership focusing on the size and amenities of the property rather than what you can realistically afford to pay each month, you may be putting yourself in a precarious financial position. A mortgage payment is one piece of your overall financial puzzle, and can be treated accordingly.”

Brian Walsh, CFP® at SoFi

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