Morning Download from Invincible Money 

Personal finance + economics + markets

Good morning investors! Tuesday wasn’t very good for the stock market. All major indexes fell on banking concerns and a weakening Chinese economy.

Today we cover:

• This expert doesn’t have a positive outlook.

• Good news for stablecoins.

• Americans aren’t sure about retirement.

Ready to get serious about your money?
Get Morning Download Pro.

📊 News 

Fitch still eyeing banks?

It has been about two months since Fitch Ratings cut its assessment of the banking industry’s health. Surprisingly, the move did not trigger a strong reaction as there were no downgrades. However, there seems to be trouble ahead, if Chris Wolfe, a Fitch Ratings analyst, is to be believed.

“Another one-notch downgrade of the industry’s score, to A+ from AA-, would force Fitch to reevaluate ratings on each of the more than 70 U.S. banks it covers,“ he said while talking to CNBC.

US banks have been in trouble for a while. In fact, 10 small and midsized banks were downgraded by Moody's last week. And, Fitch now wants to tell people that bank downgrades are a possibility, which may trigger a strong reaction.

“The problem created by another downgrade to A+ is that the industry’s score would then be lower than some of its top-rated lenders. The country’s two largest banks by assets, JPMorgan and Bank of America, would likely be cut to A+ from AA- in this scenario, since banks can’t be rated higher than the environment in which they operate,” said Wolfe.

If this happens, some weaker lenders may inch closer to non-investment-grade status.

Quick hits:

• High exports help Japan report a 6% GDP growth.

• Tesla comes out with cheaper models called Model S and Model X for $10,000 less.

• The new Covid variant (Eris) is on the rise, but there isn’t much to worry about.

📈 Stocks

S&P 500 4,437.95 (-1.16%)
DJIA 34,946.39 (-1.02%)
NASDAQ 15,037.65 (-1.10%)
VIX 16.46 (+11.05%)
* Prices as of Aug 16th, 12:20 AM UTC

‘The Big Short’ investor Michael Burry isn't bullish

Michael Burry, best known for predicting the 2008 housing crash, is back in the news for holding bearish options against both the Nasdaq 100 and S&P 500 Index.

He has bought put options worth about $739 million against the Invesco QQQ Trust ETF, which consists of top Nasdaq 100 companies. In addition, he has hedged about $886 million against the S&P 500.

This indicates he has a pessimistic outlook; however, not much is known about these investments, i.e.: when these were made and when he intends to sell these options.

Note, that he didn’t actually spend $1.5 billion. He bought options to control that value. The options cost much, much less.

🔐 Crypto

Bitcoin $29,079 (-0.30%)
Ethereum $1,818.12 (-0.46%)
Total market cap $1. 16T (-1.14%)
* Prices as of Aug 4th, 12:20 AM UTC

Singapore prepares to regulate stablecoins

Singapore is now among the few countries ready to normalize stablecoins.

Designed to hold a constant value against a fiat currency, stablecoins are said to be more efficient than cryptocurrencies with some having been backed by real-world assets.

Many big names, such as PayPal, have issued stablecoins pushing the market to $125 billion with USDT and USDC dominating the market with a 90% market share. Yet, stablecoins are unregulated in most jurisdictions.

The Monetary Authority of Singapore has created a framework that spells out some key requirements, as seen below:

These rules, however, only apply to stablecoins that meet these conditions:

• Mimic the value of the SGD or any G10 currency

• Are issued in the country

💵 Personal Finance

Americans are not sure about retirement

About 66% of Americans above the age of 55 say they are not sure of retirement, according to this Axios-Ipsos poll. Most people (70%) are unsure due to rising financial costs and about 20% believe they will never be able to retire.

This is alarming because about half of Americans under 40 wish to retire before they're 60 years old. Unfortunately, most people nearing the age of retirement are not financially prepared.

About 50% of people between 55 and 66 have little to no personal savings. Furthermore, a growing number of seniors are now homeless. As a result, nearly 50% of seniors are looking to move to a city or country that is more affordable.

Unfortunately, the situation has only worsened in the last few years. Expectations for a comfortable retirement have fallen greatly in the last two years, as seen in the chart above.

Why? Employers aren't offering perks like they once did. As a result, not everyone has access to pensions. Also, increasing prices are forcing more and more Americans to use their retirement savings.

Increase your chances of a happy retirement

If you retirement is looking harder than ever then know that you are not alone. Still, there are things you can do to retire peacefully:

• Start today, it’s never too early to start retirement planning. Don’t wait for things to change, start saving for your retirement now and turn to retirement accounts to secure your money.

• Invest as much as you can and never put all your eggs in one basket. Diversify and consider a mix of investment options, such as stocks, real estate, and digital coins.

• Make sure to review your portfolio every now and then and make changes to it based on your requirements and the changing market situation.

• Know how much money you need for retirement. Americans think they may need about $1.3 million to retirement comfortable but that doesn't hold true for everyone. In fact, only about 10% of retirees have $1 million or more in savings. This figure proves that it is possible to retire with less money; however, it depends on where you wish to retire and what kind of lifestyle you want to have.

• Create a budget and know where your money is going. Next, reduce expenses by getting rid of things you do not want. For example, rethink if you need that Netflix subscription, especially now that it’s more expensive to subscribe to such services.

• Work on a retirement timeline with your partner and talk about your retirement plans. About 50% of couples report being misaligned about what they want to retire, which can make things complicated.

Don’t let the huge figure of $1.3 million deter you, it is possible to retire with much less in your account, as seen in this video:

💰 Be a Better Investor

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