Morning Download from Invincible Money

Personal finance + economics + markets

Finance in 5 minutes a day to help you make better money decisions.

Good morning investors! Artificial intelligence leads to job loss AND more AI jobs available. Just depends where you look. Manufacturing is down, liquidity is about to dry up, but Apple’s big announcement took center stage.

📊 Economy 

A.I. was responsible for 4.8% of US job cuts in May. That’s 3,800 jobs out of 80,000.

• All the jobs lost to A.I. were in the tech sector and it’s expected that A.I. will continue to lead to some job loss, according to Challenger, Gray, and Christmas.

• The rest of the layoffs were due to restructuring expenses, cost-cutting measures, mergers and acquisitions, and tough economic circumstances.

However, the largest banks around the world are racing to hire human A.I. talent so they can apply A.I. to their operations to be more efficient. At some bank’s the A.I.-related job listings make up 40% of the open jobs.

Unretirement

Thanks to inflation and increased housing costs, some retirees are going back to the workforce.

• 55% said they went back to work because they needed the money. (Paychex survey)

• Housing costs in the U.S. are up 8.1% from April ‘22 to ‘23, which affects low income households and those on fixed income the most

• 10 million households headed by someone 65 or older pay 1/3 of their income on housing and half of those pay 50%, so when housing costs go up, it’s harder to make ends meet.

US ISM down to 42.60

The US ISM Manufacturing New Orders Index hit a recent low at 42.60, down from 45.70 (-6.78%) last month and 55.10 (-22.69%) a year ago.

A number below 50 means the manufacturing sector is contracting and could signal a broader economic slowdown. For this reason, it’s a closely watched indicator of economic activity.

The reasons it could be low include weakened demand, rising costs and businesses see an uncertain economy so they delay investments and hiring.

Some implications include:

• Lower economic growth: A contracting manufacturing sector can lead to lower economic growth. This is because manufacturing is a major driver of economic growth, providing jobs, generating income, and stimulating demand for other goods and services.

• Higher unemployment: A contracting manufacturing sector can lead to higher unemployment. This is because businesses may be forced to lay off workers in order to reduce costs.

• Lower wages: A contracting manufacturing sector can lead to lower wages. This is because businesses may be less able to afford to pay high wages when they are facing lower demand.

• Slower inflation: A contracting manufacturing sector can lead to slower inflation. This is because businesses may be less able to pass on higher costs to consumers when they are facing lower demand.

Note: It’s just one indicator of economic activity. Other indicators, such as the unemployment rate (good but rising), the GDP growth rate (slow), and the inflation rate (high and steady), should also be considered when assessing the overall health of the economy.

📰 News

✈️ The global airline industry expects profits to double to $10B this year.

👨🏾‍🎓 College enrollment peaks as fewer people choose to go to college PLUS there are fewer college-aged students.

🏧 U.S. banks could be forced to hike their capital requirements by 20% this month if regulators get their way. This is an effort to strengthen the U.S. banking system after all the failures of the past few months. It could mean less liquidity and fewer loans for consumers.

💰 Debt Ceiling Aftermath

Thanks to the debt ceiling standoff, which has now been resolved, the U.S. Treasury’s cash balance got too low and needs to be replenished.

• The Treasury will issue new bonds and bank deposits will be used to pay for them, resulting in a drain of liquidity.

• JPMorgan expects the drain to be $1.1 trillion, potentially causing stocks and bonds to fall 5%.

• Bank of America said the impact of the printing is equal to a 25 bps hike in interest rates.

📈 Stocks

The Future of Computing?

All eyes were on Apple today as they announced their Vision Pro headset.

Apple [AAPL -0.76%] stock hit an all-time high today, but closed slightly lower.

The stock is up 39% YTD, while the NASDAQ is up 26.5% YTD.

• The new $3,500 Vision Pro headset is Apple’s most significant new product since the iPhone launch in 2007. Apple said it will be “a new kind of computer that augments reality by seamlessly blending the digital world with the real world” and will be “the most advanced personal electronics device ever.”

• The headset looks like ski googles and projects a web browser, video calls and games and makes them appear much larger.

• For example, you could have a large personal movie theatre all your own while sitting on a plane. It’ll also launch with Disney+ streaming.

• CEO Tim Cook said it will “introduce us to spatial computing” as he believes it’s the start of AR (Augmented Reality).

🔐 Crypto

Atomic Wallet exploited for $35 million, affecting 1% of its 5 million users. It’s unknown how the attack was carried out, but some report having their entire portfolios wiped out.

Insurance: Evertas has increased their coverage limit for a single crypto policy for custodians and exchanges from $5 million to $420 million signaling a massive boost for crypto risk management.

Binance market share drops to lowest level in 8 months, from 57% to 43%, likely due to exiting Canada, ending its zero-fee promotion for BTC trading pairs and suspension of Australian dollar transfers on its Australian subsidiary.

UK Crypto Regulations

The UK is considering a dedicated person to oversea crypto regulation (they didn’t have that already? 🤔 The UK’s Crypto and Digital Asses All Parliamentary Group (APPG) made 53 recommendations for regulating the industry and this was one of them.

The committee chair stated, “"Given the rapid growth of cryptocurrency and digital assets, the timing of this report is vital to protect consumers whilst ensuring the U.K.’s leadership in this sector can be realised.”

💰 Be a Better Investor

💵 Personal Finance

The phrase "time in the market beats timing the market" is a popular investing adage that suggests that it is better to stay invested for the long term, rather than trying to time the market by buying and selling at the right times.

Market timing is the practice of trying to predict when the market will go up or down and then buying or selling investments accordingly. This can be a difficult and risky proposition, as it is impossible to predict the future with certainty.

On the other hand, time in the market is simply the practice of investing for the long term, regardless of market conditions. This approach is based on the idea that the stock market has historically trended upwards over time, so investors who stay invested for the long term are more likely to see positive returns.

There is a lot of evidence to support the idea that time in the market beats timing the market. For example, a study by Vanguard found that investors who stayed invested in the stock market for 20 years, even during periods of volatility, had an average annual return of 10.6%. On the other hand, investors who tried to time the market and only invested during periods of rising prices had an average annual return of just 7.2%.

Here are some of the benefits of time in the market:

• It is easier to do. 

• It is more likely to be successful. 

• It is less stressful. 

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.