🛑 The Fed is done! (for now)

and the economy is improving

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 Fed pauses, for now. The EU wants to break up Google and gets serious about A.I. regulations by passing the AIA. Plus, the best method to pay off personal debt.

📊 Economy 

Fed funds rates since 1970 (NYT)

The Fed Pauses. For now.

After 15 months and 10 rate hikes the Fed finally paused.

Don’t rejoice yet though!

According to the Fed, we’ll likely see 2 more rate increases (another 0.50%) before the end of the year in an effort to bring down inflation, with the rate expected to peak at 5.6%. The Fed said the next rate increase could be as early as next month.

They said the pause would give policy makers time to “assess additional information.”

The Fed projects inflation to remain above the 2% target for the rest of the year. May inflation fell to 4%, so still double the target but down from the high of 9.1% last June.


  • The GDP growth estimate was raised to 1% from a 0.4% target in March.

  • Unemployment is expected to decrease to 4.1% for 2024, revised down fro 4.5%.

China cuts more rates

China unexpectedly cut a key policy rate as their economy slows.

The cut is the first in 10 months.

  • The People’s Bank of China cut the rate on the 1 year medium-term lending facility (MLF) (yes, that’s really the acronym) by 10 basis points.

  • Earlier this week the Chinese central bank cut its 7 day reverse repurchase rate by 10 basis points as well.

  • The loan prime rate is expected to also be cut on June 20th.

📰 News

The EU goes after Google (again)

The European Commission has charged Google with abusing its dominance in the online advertising market.

  • The Commission alleges that Google has made it difficult for rivals to compete in the market by tying its search engine to its advertising technology and favoring its own ads.

  • Google could face a fine of up to 10% of its global turnover if found guilty and a breakup of parts of its business.

  • The commission stated that only divesting its ad business will fix the situation.

  • The case is the latest in a series of antitrust investigations into Google by the European Commission - 3 for a total of $8.6 billion.

Google’s response? The company will now have a chance to respond legally and said they disagree with the commission’s view.

The EU continues A.I. regulation

The European Union has approved landmark artificial intelligence legislation, called the Artificial Intelligence Act (AIA).

  • The AIA is the first piece of legislation in the world to regulate AI.

  • The AIA sets out rules for the development and use of AI systems, including requirements for transparency, fairness, and accountability.

Tech challenge: The AIA is seen as a challenge to the power of tech giants, who have been accused of using AI to exploit users and stifle competition.

Some established AI companies, like OpenAI, have called for regulation and have been viewed as just trying to protect their first mover advantage.

What does the AIA do?

The AIA applies to AI systems that are considered to be high-risk, which includes systems that are used for social scoring, biometric recognition, and remote biometric identification.

The AIA requires developers of high-risk AI systems to comply with a number of requirements, including:

  • Conducting a risk assessment of the system

  • Implementing technical and organizational measures to mitigate the risks identified in the risk assessment

  • Ensuring that the system is transparent and accountable

    Potential fines: The AIA also includes provisions for enforcement, including fines of up to €20 million or 4% of global turnover, whichever is greater.

Our take: The AIA is a significant piece of legislation that is likely to have a major impact on the development and use of AI in the European Union. It remains to be seen how effective the AIA will be in practice, but it is a positive step towards ensuring that AI is used in a safe and responsible way.

📈 Stocks

S&P 500 4,372.59 (+0.08%)
DJIA 33,979.33 (-0.68%)
NASDAQ 13,626.48 (+0.39%)

Lisa Su, CEO of AMD, released new A.I. chip Tuesday

AMD [AMD +2.25%] was up on reports Amazon’s AWS is considering using its AI chips.

Nvidia [NVDA +4.81%] again hit a $1 trillion market cap, but this time it stayed above through the market close. An analyst said Nvidia dictates pricing in the microchip sector, despite competition.

CVS Health Corporation [CVS -7.76%] sank on news of a report that Americans that put off surgeries during the pandemic are starting to have them.

Federal National Mortgage Association [FNMAS +10.62%] provides financing solutions for mortgages in the United States, so it and other mortgage-related stocks were up on the news the end of Fed rate hikes may be in view.

🔐 Crypto

Binance.us gets a reprieve

The federal judge overseeing the SEC’s case against Binance.us is postponing her decision on the SEC’s request to issue a temporary restraining order to freeze the platform’s assets. She prefers the two parties come to a compromise.

She stated,

“Shutting it down completely would create significant consequences not only for the company but for the digital asset markets in general. (Work it out) – The nitty-gritty of it is better handled by you than by me.” (Bloomberg)

Coinbase vs. the SEC. The SEC said it needs 120 days to potentially respond to the request from Coinbase for rulemaking on digital asset trading.

💵 Personal Finance

What’s the best way to pay off debt?

Here are a few popular methods (I used the first one to pay off $200,000):

  • The snowball method: With this method, you focus on paying off your smallest debts first, regardless of the interest rate. This can help you build momentum and motivation, as you'll see your debt balance decrease quickly. Once you've paid off your smallest debt, you can move on to your next smallest debt, and so on.

  • The avalanche method: With this method, you focus on paying off your debts with the highest interest rates first. This will save you the most money in the long run, but it may be more difficult to stay motivated, as you won't see your debt balance decrease as quickly.

  • Debt consolidation: This involves taking out a new loan to pay off all of your existing debts. This can save you money on interest if you can get a lower interest rate on the new loan. However, it's important to make sure that you can afford the monthly payments on the new loan.

  • Debt settlement: This is a process of negotiating with your creditors to reduce the amount of debt you owe. This can be a risky option, as it can damage your credit score. However, it may be a good option if you're struggling to make your monthly payments.

No matter which method you choose, the most important thing is to be consistent with your payments and to stay motivated. Paying off debt can be a long and difficult process, but it's worth it in the end.

💰 Be a Better Investor

"The best way to get out of debt is to start by paying off the smallest debts first. This will give you a sense of accomplishment and motivation to keep going."

- Dave Ramsey, Author (owns $600 million of real estate, all debt free!)

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