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! The U.S. is no closer to reaching a debt ceiling deal, dollar stores are the rage as consumers look for deals and corporate bankruptcies are up. What a great start to the morning, eh?

📊 Economy 

Keep an eye on rising corporate bankruptcies.

• In the first four months of 2023, there were 236 corporate bankruptcies in the United States, up from 138 in the same period of 2022.

• The number of bankruptcies is expected to continue to rise in 2023, as businesses struggle to cope with rising costs and a slowdown in economic growth.

• The sectors most at risk of bankruptcy include retail, manufacturing, and transportation.

What’s the cause of the rise in corporate bankruptcies?

• Rising inflation is making it more difficult for businesses to cover their costs, including wages, rent, and supplies.

• Supply chain disruptions are making it harder for businesses to get the goods and materials they need to produce their products.

• The war in Ukraine is disrupting global trade and causing energy prices to rise.

These factors are putting a strain on businesses' finances and making it more difficult for them to stay afloat. If these pressures continue, it is likely that we will see even more corporate bankruptcies in the coming months.

The U.S. tries to negotiate with creditors.

The U.S. Treasury Department has asked federal agencies to delay some payments as it tries to avoid hitting the debt ceiling on Tuesday.

• The move is a last-ditch effort to avoid a government shutdown, which would have serious economic consequences.

• If Congress does not raise the debt ceiling, the Treasury will eventually run out of money to pay its bills, which could lead to a default on U.S. debt. (Source)

Credit Agencies On Hold

• "While we do not expect S&P (Standard & Poors) to downgrade the US further, Moody’s or Fitch may put the US on negative outlook or even negative watch due to further debt ceiling brinkmanship." - Priya Misra, global head of rates strategy at TD Securities.

😱 Moody’s reports that if the U.S. goes 1 week without paying its bills, 1.5 million jobs will be lost and the unemployment rate will go from 3.4% to 5%.

After 2 months, 8 million jobs could be lost and unemployment would jump to 7.8%.

📰 News

🥸 An AI-generated spoof of a CNBC report rattled the markets last week, sending stocks tumbling and causing confusion among investors. The report, which was quickly debunked, claimed that Apple was planning to cut its quarterly earnings forecast. The incident highlights the growing risks posed by AI-generated content, which can be used to spread misinformation and cause market volatility.

💵 A growing number of consumers are opting to use cash only, citing privacy concerns and a desire to avoid fees associated with credit and debit cards. This trend is posing a challenge to digital payment providers like Apple Pay, which rely on consumers to link their bank accounts to their devices. (Source: WSJ)

💲 Big brands are increasingly betting on dollar stores as a way to reach lower-income consumers. Dollar stores offer a convenient and affordable shopping experience for these consumers, and they are growing rapidly. As more and more consumers struggle to make ends meet, dollar stores will offer a valuable and affordable shopping experience.

• Dollar store sales expected to reach $100 billion this year.

• The 34,000 dollar stores outnumber McDonald’s, Starbucks, Target and Walmart locations COMBINED!

• One analyst calls it “one of the fastest growing channels in retail.”

📈 Stocks

📢 Yelp [YELP +8.18%] - Activist investor Jana Partners wants Yelp to sell itself, arguing it is undervalued and could fetch a high price from a strategic buyer. The market liked it as the stock rose nearly 10%.

✅ Zoom [ZM -8.20%] beat earnings with $1.16 EPS (vs. $0.99 expected) and sales with $1.1 billion (vs. $1.08 billion expected). The stock is still considered to be overvalued by anaysts, resulting in a sell-off.

🔐 Crypto

Staked ETH has reached another record high of 22.58 million.

Outflows from digital asset investment products hit a 5 week streak totaling $32 million.

Hong Kong will begin accepting applications for crypto exchange licenses on June 1.

💵 Personal Finance

Here are some tips for saving for retirement:

• Set a goal. How much money do you want to have saved by the time you retire?

• Create a budget. Track your income and expenses so you can see where your money is going.

• Make a plan. Decide how much you can afford to save each month.

• Automate your savings. Set up a direct deposit from your paycheck into your retirement savings account.

• Invest your money. Choose investments that are appropriate for your age and risk tolerance.

• Rebalance your portfolio regularly. As you get closer to retirement, you'll need to adjust your investments to become more conservative.

• Get professional help. If you need help, consider working with a financial advisor.

Retirement planning can be complex, but it's important to start planning early. By following these tips, you can set yourself up for a comfortable and secure retirement.

How much do you need to retire?

Watch this video where I break down the math.

💰 Be a Better Investor

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