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- 🥊 2 more rate hikes considered
Morning Download from Invincible Money
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Good morning investors! In today’s issue we cover:
The Fed suggesting 2 more consecutive rate hikes
New home sales are up
Consumers are confident, but still worry
The future is here: A.I. and space tourism
Ever heard of Walgreens Boot Alliance? (me either)
Overstock is no more
📊 Economy
More rate hikes probable
U.S. Federal Reserve Chairman Jerome Powell said that the central bank is still considering raising interest rates at two consecutive meetings because of the risk of not doing enough to bring down inflation.
This would be a more aggressive approach to tackling inflation, which is still running at a 40-year high.
Powell said the Fed is "strongly committed" to bringing inflation back down to its 2% target.
When asked for his thoughts on a hike he said, “We have not made a decision to go to that. It may work out that way. It may not work out that way. But I wouldn't take, you know, moving at consecutive meetings off the table at all.”
Real Estate - new home sales boom
Boom: U.S. home sales are up 20% since last year.
New homes: Sales were up 12.2% from May to April - after increasing for the 3rd month in a row. The median sales price was down by 7.6% to $416,300.
Why? Thanks to the higher rates, homeowners with a low-rate mortgage don’t want to sell and buy a new home with a much higher rate. Therefore, due to low inventory of homes on the market, home buyers have been going after new construction.
Consumers more confident, but…
The consumer confidence index reached its highest level since January 2022, showing that consumer’s view on the current conditions are the highest they’ve been in 2 years. Also, inflation expectations fell to the lowest level since 2020.
Buuuut, 69% of consumers expect a recession in the next 12 months.
U.S. banks pass stress test
The Federal Reserve announced that all 23 of the largest banks in the United States passed its annual stress test. The test simulated a severe recession and found that the banks would still have enough capital to lend to businesses and consumers even under those conditions.
Smaller banks aren’t required to be tested and the large banks passing the test is only one way to measure the resiliency of the banking sector.
The stress test is designed to ensure that the largest banks in the United States have enough capital to weather a financial crisis. The results of the stress test are seen as a sign of the health of the banking system.
📰 News
Amazon building an A.I. marketplace
The company has a different vision from Open AI’s ChatGPT or Google’s Bard. Instead of creating one A.I. model for everything, Amazon is creating an marketplace with dozens of foundational models from Stability, Falcon, and Anthropic.
How can customers use it? The models will be available in Amazon’s enterprise A.I. solution called Bedrock and will allow customers to pick what they want to use and build on top of it. (via The Neuron)
U.S. considers bans on A.I. exports
The Biden administration is considering new restrictions on exports of artificial intelligence chips to China due to concerns that China could use the chips for weapon development and hacking. The restrictions would apply to chips made by Nvidia and other chipmakers. (WSJ)
Google DeepMind says they’ll be better than ChatGPT
Google DeepMind CEO Demis Hassabis said the company is working on a new AI system called Gemini that will be more capable than that behind OpenAI's ChatGPT.
Gemini will use techniques from AlphaGo, DeepMind's AI system that was the first to defeat a professional human player at the board game Go.
If all goes according to plan, Gemini will have the ability to plan or solve problems as well as analyze text and will help Google catch up to Microsoft’s ChatGPT.
Hassabis says that Gemini could be used for a variety of tasks, such as writing creative text formats, translating languages, and answering questions in an informative way. 🤔 Sounds familiar.
Virgin Galactic jumps into space race
The company will launch its first commercial spaceflight today, called Galactic 01. It will carry a crew of 3 from Italy where they will conduct microgravity research.
(Does that “research” mean floating around and doing flips in zero G’s?)
📈 Stocks
S&P 500 4,376.86 (-0.04%)
DJIA 33,852.66 (-0.22%)
NASDAQ 13,591.75 (+0.27%)
VIX 13.43 (-2.26%)
Nvidia [NVDA -1.81%] fell along with other A.I.-related stocks on the news of a possible hardware export ban.
Overstock.com to change its name to Bed Bath & Beyond as they close the acquisition of the BB&B assets, stating that it’s an iconic name and well-known in the home retail marketplace.
❌ Walgreens [WBA +1.54%] missed earnings expectations with $1.00 EPS (vs $1.07 expected), ✅ but earned $35,42 billion in sales (vs. $43.24 billion expected.
Fun fact: Walgreens is officially called Walgreens Boots Alliance Inc.
Walgreens is a well-known pharmacy retail chain in the United States, but in 2014 it entered into a strategic partnership with Alliance Boots, a European pharmacy retailer. As a result of this partnership, the company was renamed Walgreens Boots Alliance Inc.
The merger created one of the largest pharmaceutical wholesalers and retail pharmacy chains in the world. However, it's worth noting that the Walgreens brand is more commonly used and recognized by the general public.
🔐 Crypto
Bitcoin $30,081.95 (-1.8%)
Ethereum $1,828.33 (-3.3%)
Total market cap $1.2 T (-2.2%)
SBF denied: Judge denies motion to dismiss charges against Sam Bankman-Fried. His attorney’s had filed a pretrial motion to discuss all but 3 criminal charges. The federal judge said he considered the arguments and considered them “either moot or without merit.”
Mythical Games, the studio behind “NFL Rivals” and “Blankos Block Party” has raised $37 million with another $20-30 million expected to be announced later this year. Last year they raised $150 million at a $1.25 billion valuation. The company said their unicorn status remains intact, but didn’t put an exact value on it.
ARK goes to the front of the line
The senior ETF analyst at Bloomberg shared this last night, suggested Cathie Wood’s ARK has modified their Bitcoin ETF filing to be like BlackRocks:
💰 Be a Better Investor
"Competition is the best of all schools."
🧠 Get Smarter
What the job of U.S. Federal Reserve?
The Federal Reserve's mandate is to "promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."
This is known as the "dual mandate."
Maximum employment means that the economy is running at its full potential, with everyone who wants to work able to find a job.
Stable prices means that inflation is low and stable, so that people's purchasing power is not eroded over time.
Moderate long-term interest rates means that interest rates are not too high or too low, so that businesses can borrow money to invest and grow, and consumers can afford to buy homes and cars.
The Federal Reserve uses a variety of tools to achieve its mandate, including:
Setting the federal funds rate, which is the interest rate that banks charge each other for overnight loans.
Purchasing or selling government bonds, which can affect the amount of money in circulation.
Changing reserve requirements, which are the amount of money that banks must keep on deposit at the Federal Reserve.
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