✂️ Banks meeting...

and stocks keep rising

Good morning investors! This will be a very interesting week with central banks around the world set to meet.

Today we cover:

  • Preparing for Fed meetings

  • Stocks continue to rise

  • Save capital gains tax

Gold hits a new ATH 🔥: Gold climbed as much as 0.4% to a high of $2,589.03 an ounce, extending last week’s 3.2% gain.

We think it is still not too late to consider buying the shiny metal. In fact, you can even make it a part of your retirement portfolio as it can be effective in protecting your money from a crisis (find out more).

📊 Economy and News 

Interest rates changing globally this week

This week, multiple central banks are set to hold key monetary policy discussions, with investors preparing for potential interest rate adjustments, either upward or downward.

The Federal Reserve's much-awaited two-day meeting, beginning on Tuesday, is expected to be the primary focus of attention.

America: The U.S. Federal Reserve is expected to join other central banks worldwide in beginning its own cycle of interest rate cuts. The main uncertainty remains how much the Fed will reduce rates.

Traders currently expect a quarter-point reduction to be the most probable outcome, though about 41% believe the Fed could opt for a half-point cut, as indicated by the CME’s FedWatch tool.

At present, the Federal Reserve’s target rate stands between 5.25% and 5.5%.

Some economists argue that the Fed should implement a 50 basis point cut in September, criticizing the central bank for previously tightening monetary policy too aggressively. Others consider such a move risky for the markets and suggest a more moderate 25 basis point cut.

Brazil: Brazil’s central bank is scheduled to hold its next policy meeting across Tuesday and Wednesday.

For Brazil’s central bank, which has cut interest rates several times since July last year, stronger-than-anticipated second-quarter economic data is seen as likely to lead to an interest rate hike in September.

Japan: The Bank of Japan delivers its latest rate decision at the conclusion of its two-day meeting Friday.

The Bank of Japan is not expected to raise interest rates at the end of the week, although a majority of economists polled by Reuters expect an increase by year-end.

UK: Speaking ahead of the European Central Bank’s most recent quarter-point rate cut, experts think the Fed was also set to lower interest rates by 25 basis points this week, with the Bank of England “likely getting in on the party” after the U.K. economy stagnated for a second consecutive month in July.

South Africa: South Africa’s Reserve Bank is expected to cut interest rates on Thursday, according to economists surveyed by Reuters. The move would mark the first time it has done so since the central bank’s response to the coronavirus pandemic four years ago.

Norway: Norges Bank is poised to hold its next meeting on Thursday. The Norwegian central bank kept its interest rate unchanged at a 16-year high of 4.5% in mid-August and said at the time that the policy rate “will likely be kept at that level for some time ahead.”

Global hits:

Good to know: Average base pay raises at larger corporations projected to be just under 4% next year.

Also check: UAW union files unfair labor charges against Stellantis, accuses automaker of violating contract.

📈 Stocks

S&P 500 5,633.09 (+0.13%)
DJIA 41,622.08 (+0.55%)
NASDAQ 17,592.13 (-0.52%)
BRENT CRUDE 72.91 (+1.82%)
* Prices as of Sep 17th, 12:20 AM UTC

Stocks continue to rise

The S&P 500 remained mostly flat on Monday as investors awaited the Federal Reserve's highly anticipated policy meeting, where central bankers are expected to lower interest rates for the first time since 2020. In contrast, the Dow Jones Industrial Average reached a new all-time high.

Apple shares dropped nearly -3% after analysts from firms like Bank of America and JPMorgan pointed to shipping delays as a possible sign of weaker demand for the iPhone 16 Pro models compared to last year.

Chip stocks, including Nvidia, which had led the market recovery last week, saw declines as investors scaled back their positions. Nvidia fell -2.8% on Monday, while Broadcom dropped -3%, and KLA and Marvell Technology lost -3.5% and -2.5%, respectively.

Intel jumped over +6% after the company announced plans to create a separate entity for its foundry business, a structure that could allow it to raise outside funding.

The S&P 500 is now just 1% below its record high from July and could set a new all-time high this week. After a sluggish start to what is historically a weak September, the three major U.S. indexes ended last week in positive territory, with the S&P 500 and Nasdaq closing their best week of 2024.

The financial and energy sectors led the market on Monday with gains of 0.9%, outperforming the broader market. Meanwhile, information technology lagged behind, slipping 0.7%, marking the largest sector loss of the day.

Interesting: Amazon tells employees to return to office five days a week.

Shocking: Boeing freezes hiring in sweeping cost cuts as it grapples with factory worker strike.

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💵 Personal Finance

Save capital gains tax

Capital gains tax is a tax imposed on the profit realized from the sale of an asset, such as stocks, bonds, real estate, or other investments. The capital gain is the difference between the sale price of the asset and its original purchase price. If the selling price is higher than the purchase price, a capital gain is generated.

It can take out a large chunk of your profit, but there are ways to enjoy tax rates as low as 0% if you meet certain income requirements. The chart below explains it:

Here are the figures for 2024:

If you own assets such as cryptocurrency for more than one year, you qualify for long-term capital gains tax rates of 0%, 15% or 20%.

In 2023, single filers can earn up to $44,625 in taxable income — $89,250 for married couples filing jointly — and still pay 0% for long-term capital gains.

The 0% long-term capital gains brackets are even higher for 2024, with taxable income of $47,025 or less for single filers and $94,050 or less for married couples filing jointly.

Tip: This strategy needs to be used intelligently because tax gains harvesting may often be more beneficial than tax loss harvesting. Tax-loss harvesting is when you sell some of your investments at a loss to help offset capital gains. On the other hand, tax gains harvesting is when you recognize a gain on the sale of securities to incur a smaller amount of tax on that sale.

You need to know which strategy to use when. For example, tax-loss harvesting can be good for crypto investors because of a wash sale loophole. This makes the tax gain strategy more effective as it allows investors to sell at a gain and pay no tax, whereas tax loss harvesting only defers future tax.

Check this video for more on 0% capital gains tax:

💰 Be a Better Investor

“The individual investor should act consistently as an investor and not as a speculator.”

Benjamin Graham

Resources:

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.