🗳 Crash before elections?

and managing debt

Author

Michael Wight
July 09, 2024

tGood morning, investors! The S&P 500 and the NASDAQ hit new all-time highs again as crypto continued to be highly volatile.

Today we cover:

  • American job market.

  • Crash before election?

  • Boeing is guilty.

📊 Economy and News 

It’s hard for Americans to land a job

For nearly four years, job seekers have been in the driver's seat as employers scrambled to fill millions of positions to keep up with post-pandemic demand.

Many companies were hesitant to mandate a return to the office, worried that employees might quit. If they did leave, finding another job that fit their preferences—and often with a higher salary—was usually quick and easy.

But things are starting to change. The once red-hot labor market is now cooling down, making the job hunt a bit more challenging for seekers.

The quits rate has held steady at just 2.2% for seven months running, after reaching 3% during the pandemic. When people switch jobs, that typically can correlate to bigger pay bumps. which, in turn, could potentially make it more difficult to rein in inflation.

Job-switchers’ pay raises have pared down significantly from the “Great Resignation” period. In fact, median pay raises are just below 2019 levels, David Tinsley, senior economist at the Bank of America Institute, told CNN.

The median duration of unemployment jumped higher last month, to 9.8 weeks from 8.9 weeks in May, and landed at a level not seen since January 2023, Bureau of Labor Statistics data shows.

Continuing claims for unemployment benefits, which are filed by people who've been receiving benefits for at least a week, rose to 1.858 million during the week ending June 22. This is the highest level we've seen since November 2021.

Initial claims, which are a good indicator of layoffs, have also been steadily increasing. As of the week ending June 29, the four-week average of first-time claims was at 238,500, the highest since August 2023.

Although there was a net gain in jobs last month, with 206,000 people hired, not all industries saw job growth.

In fact, some sectors, like retail and manufacturing, lost more jobs than they added, with declines of 9,000 and 8,000 jobs respectively. The professional and business services sector, which includes roles like accountants and marketing professionals, saw the biggest drop, employing 17,000 fewer people than in May.

Global hits:

Stocks to fall during election? A decline of 10% in the benchmark S&P 500 stock index before the U.S. presidential election in November is "highly likely," said Morgan Stanley Chief Investment Officer Mike Wilson.

Among the reasons for a decline are uncertainty over how swiftly the Federal Reserve will bring interest rates down from nearly two-decade highs and falling pricing power on the part of companies, increasing the likelihood of disappointing earnings results, he said.

"The average company has not had good earnings results," he said, adding that a nearly 17% gain in the S&P 500 for the year to date has been powered by a small number of companies.

At the same time, price to earnings multiples have been rising. "Valuations to me look very unexciting," he said.

Also check: Inflation expectations are a bit of a mixed bag right now. Over the next year, people expect inflation to drop to 3.0% from 3.2%, but looking three years ahead, they think it will go up slightly to 2.9% from 2.8%. On a brighter note, expectations for home price increases and other essentials like rent and food have also fallen. 🏠

On the consumer credit front, borrowing is on the rise again. In May, total borrowing jumped by $11.3 billion, marking the biggest increase in three months. Credit card debt surged at an annual rate of 6.3%, while auto and student loans saw a more modest rise.

📈 Stocks

S&P 500 5,572.85 (+0.10%)
DJIA 39,344.79 (+%) (-0.079%)
NASDAQ 18,403.74 (+0.28%)
BRENT CRUDE 85.43 (-0.45%)
* Prices as of Jul 9th, 12:20 AM UTC

Boeing to plead guilty to criminal fraud charge

Boeing has agreed to plead guilty to criminal fraud related to the fatal 737 Max crashes. This plea brands the U.S. aerospace giant as a felon but allows it to avoid a trial, helping it move past its safety and manufacturing crises.

Under the deal, Boeing faces a fine of up to $487.2 million. However, the Justice Department has recommended the court credit Boeing with half of what it paid under a previous agreement, reducing the fine to $243.6 million. A federal judge must approve the plea deal for it to take effect.

If approved, the deal could complicate Boeing’s ability to sell products to the U.S. government due to its new status as a felon, though the company can seek waivers. About 32% of Boeing’s nearly $78 billion revenue last year came from its defense, space, and security unit.

The plea deal also includes the installation of an independent monitor to oversee Boeing's compliance for three years during a probationary period. Additionally, Boeing must invest at least $455 million in compliance and safety programs, according to a court filing.

💵 Personal Finance

Getting rid of debt – step I

Bad debt is a major problem. With average consumer debt in America on the rise, it's no surprise that debt delinquency – missed payments of 30 days or more – has increased for nearly all debt types. Even with that $16.9 trillion shared by about 340 million people, consumer debt statistics show that Americans are feeling the pain.

But, there are ways to get out of debt. Firstly, understand that debt can include mortgages, student loans, credit cards, and other types of personal debt.

Getting out of debt can put you in better financial health and open more opportunities.

In this four-part series, we’ll tell you all you need to do to get rid of debt.

1. Understand Your Debt

Review all your loan statements and bills to understand your monthly debt obligations and the interest rates on each debt.

Consider making a list of all your outstanding debts, including the interest rates, to identify which ones are costing you the most.

Request a free copy of your credit report from one or more of the three credit-reporting agencies. This will help ensure you haven't overlooked any debts and that there are no unfamiliar accounts listed. To find out your credit score, check with your bank or credit card company, as they often provide this information for free.

Ensure your monthly debt payments and essential expenses are less than your income.

💰 Be a Better Investor

"Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1."

Warren Buffett

What did you think of today's newsletter?

Login or Subscribe to participate in polls.

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