🏬 Commercial real estate crashing

but residential hopeful

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! Commercial real estate is feeling the effects of high interest rates and work from home culture, while residential housing is expected to rebound once interest rates come down. The SEC attacks crypto and the PGA says screw it!

📊 Economy 

Commercial mortgage defaults were up to 4% in May while vacancy rates across the U.S. hit a record 16%.

Shark Tank real estate mogul Barbara Corcoran said this yesterday,

“No one has the confidence to buy [commercial real estate] now. No one really believes it’s going to turn the corner. People are staying home. Our best offices in midtown Manhattan are 50% occupied, and in most major cities, and even secondary cities, we have a 20% vacancy rate. No one wants to take that chance. I don’t see that turning around. I think it’s going to be a bit of a bloodbath before it gets better.

Last week VC David Sacks and Elon Musk shared similar sentiments:

📰 News

World Bank Sees Slowdown

The World Bank has warned that the global economy is set to slow to its lowest level since the 2008 financial crisis.

  • The bank has downgraded its global growth forecast for 2023 to 2.1%, down from 3.1% in 2022.

  • The slowdown is being driven by a number of factors, including the war in Ukraine, rising interest rates, and supply chain disruptions.

  • The U.S. economy is projected to slow to 1.1% from 2.1% in 2022 and drop to 0.8% in 2024, mainly due to interest rates.

  • Europe is expected to slow to 0.4% this year from 3.5% in 2022 due to monetary tightening and higher energy prices.

Golf Drama (soft clap 👏🏼 )

PGA Tour and LIV Golf are merging in a $2 billion deal to become global brand.

  • The merger is said to be a major victory for both the PGA Tour and LIV Golf, as it will allow the two tours to work together to create a more competitive and sustainable future for the sport.

  • The merger is also expected to lead to increased prize money and opportunities for players, as well as a more global reach for the sport.

  • However, here’s the drama…the headline below was nearly a year ago:

⛳️ The PGA was established in 1929 and was the only game in town until the LIV Tour came around and changed the game. Throughout its history, the only way to earn money in the PGA was to win. No contracts. LIV, which is backed by the Saudi Arabia Public Investment Fund, controlled by the crown prince.

Many players signed massive contracts, however, a lot didn’t because it was backed by the Saudis, who are not the greatest when it comes to human rights.

  • Tiger Woods turned down $800 million to join.

  • Rory MacIlroy turned down a $300 million contract.

  • Will Zalatoris turned down $130 million.

Those that did join were mocked and harassed and some even banned from the PGA for life.

Then the PGA decided to merge with LIV and make everyone mad. Rumors are that 90% of the PGA players want out.

🏌🏽‍♂️ Money talks, apparently. Finally some excitement in golf.

📈 Stocks

Paypal [PYPL +0.79%] is down 80% in the past year due to sensitivity to the consumer economy, margin pressure and slow growth. However, many analysts believe it’s still a good stock to hold long-term, especially since it’s now so cheap.

Twitter ad sales continue to nosedive, down 59%, over the previous year. The value of the company is down 50-66%, depending on who you ask. Musk valued it at $20B while Fidelity, which owns shares, valued it at $15B. Musk bought it for $44B.

Spotify [SPOT -2.12%] announced more layoffs - cutting 2%.

S&P 500 is in bull market territory, however Morgan Stanley is calling for a 9% drop to 3,900, but expects equities to turn around in 2024 and 2025 with earnings growth at 23% and 10%, respectively.

Concentrated Gains

This year’s gains are from just 7 companies and investors are still buying. Equity funds saw their largest inflows in the past year last week, after seeing $77.5 B in outflows during the past year.

Caution: CBOE Volatility Index (VIX) is at levels that have historically seen before a reversal.

Inverse Cramer: Jim Cramer is calling for the DOW to lead a market surge.

The back room math nerds at Citigroup expect the tech rally driven by AI stocks to continue if the Fed pauses rates.

🔐 Crypto

Bitcoin $27,213 +5.8%
Ethereum $1,885 +4.2%
* as of 9pm EST, June 6th.

Gary Attacks

The SEC sued Coinbase [COIN -12.09] yesterday, causing the stock to drop 20% (on top of 9% on Monday), before it recovered somewhat.

  • The SEC claims Coinbase is acting as an unregistered broker and exchange and demanded they be “permanently restrained and enjoined” from doing so.

  • Monday the SEC sued Binance and its founder CZ. Binance saw $2B in customer withdrawals after the announcement.

  • “These trading platforms, they call themselves exchanges, are commingling a number of functions,” SEC chair Scary Gensler said on CNBC Tuesday. “We don’t see the New York Stock Exchange operating a hedge fund.”

Gensler showed his distain for crypto on CNBC yesterday saying,

“We don’t need more digital currency, we have digital currency. It’s called the US dollar. It’s called the Euro. It’s called the Yen. They’re all digital right now.”

Coinbase responds

They issued this tweet and this amazing video:

💰 Be a Better Investor

"If you don't feel comfortable holding a stock for 10 years, you shouldn't be holding it for 10 minutes."

- Uncle Warren

There’s been a lot of research done on day trading vs. long-term buy and hold investing and the consensus is clear: buy and hold wins by a long short. In fact, 95% of all day traders lose money.

Day trading, or even trading in and out over weeks, has more potential upside, but also much more potential downsides. Even the experts lose money.

Buffett once warned us saying, “you do not want to ever get the impression that you can pick stocks” and that “can enable you to have an edge. It just doesn’t work that way.”

But, but, wait, that’s what Buffett does! He has himself said that he’s an anomaly and most people should buy index funds and hold investments for the long-term.

🧠 Get Smarter - Terms of the Day

Day trading is the practice of buying and selling securities within the same trading day. Day traders typically use high-frequency trading strategies to profit from small price movements. Day trading can be a very risky strategy, as it requires a high level of skill and discipline. Day traders can also incur significant trading costs, such as commissions and slippage.

Buy and hold investing is the practice of buying securities and holding them for the long term. Buy and hold investors typically invest in a diversified portfolio of stocks, bonds, and other assets. Buy and hold investing is a less risky strategy than day trading, but it also has the potential for lower returns. Buy and hold investors may also incur lower trading costs, as they typically trade less frequently.

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