Morning Download from Invincible Money

Personal finance + economics + markets

Finance in 5 minute a day to help you make better money decisions.

Good morning investors! PacWest tanks (again), BTC fees hit ATH, Google is doubling (tripling?) down on AI and Disney tanks.

📊 Economy

Artificial Intelligent, ChatGPT in particular, is causing waves in the stock market. As I wrote Tuesday, VC firms are clamoring to investing in anything AI.

Investors are trying to figure out who will be the winners and losers thanks to AI. Compare the surge in Nvidia’s stock to the plunge in Chegg’s stock. Investors anticipating that Nvidia, which makes chips, will benefit from companies needing more computing power for AIs, while selling off Chegg after its CEO said ChatGPT took some of its market share.

• Tim Cook recently said on last week’s earnings call, “We view AI as huge, and we’ll continue weaving it in our products on a very thoughtful basis.

• Just yesterday Google announced they’ll be infusing AI into all their products (more on that below).

• “Generative AI” has been mentioned more than 300 times on company conference calls worldwide so far this year, up from about zero last year (Source: AlphaSense).

• Microsoft added about $500 B in market cap since announcing its investment in OpenAI (maker of ChatGPT).

• Google lost about $100 B after their version, called Bard, didn’t live up to expectations (although the stock has gone back up since).

• Nvidia is trading at 164 times last 12 month’s earnings, showing investors are foaming at the mouth for AI.

📰 News

PacWest announced it lost 9.5% of deposits last week and the stuck sand 30%.

Robinhood announced 24 hour trading for stocks during the weekdays. The gamification of stock trading continues.

The Biden administration proposed barring federal agencies from using salary history to set full-time pay for workers. They say this anchors employees to a set pay range throughout their careers. 21 states have already banned or limited asking what your last salary was. About time!

📈 Stocks

Google [GOOG +5.15%] announced it’s going all in on AI with all their productivity tools. By end of the year you’ll start seeing AI generated search results (actual answers to questions and not just a list of links), full responses in Gmail, prompts in Sheets and AI-generated artwork in Slides, among others.

• Check out the 5 second demo from the Google CEO.

Peleton [PTON -7.04%] down after announcing it’s recalling 2 million bikes for repairs. They said “the seat post can break unexpectedly during use, creating a potential fall and injury risk.”

• As a biker, I’m not sure how you fall off a stationary bike if the seat post breaks, but the defect has led to 13 injuries.

Krispy Kreme [DNUT +1.00] beat earnings and announced year-over-year e-commerce growth.

Disney [DIS -9.02%] beat earnings ($0.93 EPS vs $0.89 expected) and revenue of $21.82 B vs $21.80 expected. Mostly because of strong theme park revenue, but the good news was overshadowed by streaming losses.

Earnings and revenue are better than expected, with 85% of the S&P 500 have reported and 79% beat earnings and 75% beat revenue expectations.

🔐 Crypto

Bitcoin fees hit a high of $14 thanks to meme coins built on BRC-20, a new type of token on the Bitcoin blockchain. Over 14,000 tokens have already been issued with a total market cap of $600M and 24 hour volume of $200M.

Jane Street and Jump Crypto are reducing market making in the U.S. due to regulatory uncertainty. They are the world’s top market-making and trading groups.

• Galaxy Digital is moving more operations offshore, while Coinbase and Gemini have recently announced derivatives platforms outside the U.S.

MakerDAO launched Spark Protocol, which is a money market allowing users to borrow and supply Ether, stETH, DAI and savings DAI.

Ether staking exceeded withdrawals for the first time since the Shapella Upgrade.

Pepecoin is down 50% from the all-time high. I hope that trade with the 5,000,000% ROI sold near the top.

💵 Personal Finance

Research indicates that it takes 12-18 months for rate hikes to be felt, which is why the data indicates that inflation is slowing, but prices of most goods are still rising.

💰 Be a Better Investor

The quote warns against complacency and the belief that past trends and patterns will necessarily continue in the future. Instead, it emphasizes the importance of caution, skepticism, and a willingness to critically analyze market trends and historical data. As an investor, it's important to avoid making assumptions or taking undue risks based on a false sense of security, and to always remain vigilant and alert to changing market conditions.

🧠 Get Smarter

What is Keynesian economics?

An economic theory developed by John Maynard Keynes that proposes government intervention through fiscal and monetary policies to stabilize the economy during times of recession or depression. The theory suggests that the government can increase demand for goods and services by increasing its own spending or cutting taxes, and by adjusting interest rates and the money supply to encourage investment and spending.

Keynesian economics is based on the idea that during economic downturns, individuals and businesses may be reluctant to spend or invest, and that government intervention can help stimulate economic activity and restore stability.

Sound familiar?

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