❌ Fire Gensler & reform the SEC?

and U.S. inflation slows

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! Inflation slows and the market likes it, AMD goes after Nvidia while C3.ai rides the A.I. wave and 2 U.S. Congressmen propose firing Gary Gensler and reforming the SEC.

📊 Economy 

Inflation was up 0.1% over in May

Cooling inflation pops stocks

All major stock indexes closed up yesterday as the latest inflation numbers were down and the markets are now pricing a 95% chance the Fed doesn’t raise rates today at 2pm EST.

Consumer prices (CPI) for May was up 4% over last year and rose 0.1% from last month, the slowest pace since April 2021 showing slowing inflation.

  • Lower energy prices (-11.7% YOY) and a slight rise in food costs (+0.2%) were the main drivers.

  • Core inflation (excluding energy and food), slowed slightly at 5.3%.

Headline inflation is still above the 2% target, but headed in the right direction.

What’s next? The Fed must decide if they want to pause and let this play out or continue to raise either in June (today) or July to continue the downward trend.

Contrarian: economist Mohamed El-Erian said not raising today “could potentially be the least desirable” of three options the Fed has by waiting 6 more weeks to maybe raise again.

  • He said, "An additional month of data is unlikely to significantly enhance the Fed's understanding of the effects of a policy tool that acts with variable lags…Recent data favours a hike for a central bank that has repeatedly insisted that it is 'data dependent'.“

    Read his opinion in the Financial Times here.

Social Security Cost of Living Adjustment

Every year the payment from the U.S. social security system is adjusted to keep up with the cost of living. The change of COLA (cost of living adjustment) could be less than expected next year at 2.7% due to slowing inflation.

  • This year’s increase was 8.7% or an extra $140 monthly on average!

  • The 2.7% may not be enough if prices don’t come down. Just because inflation slows, doesn’t mean prices will decrease. There’s some evidence that prices are “sticky” and only go up over time.

An analyst at the Senior Citizens League said,

“While the rate of inflation is slowing, that doesn’t always translate to lower costs for consumers — this is most especially true in the case of health care costs such as premiums and out-of-pocket costs.”

📰 News

Young Americans anxious about money

A new survey reveals 33% of Gen Z and 36% of millennials feel financially unprepared. Another survey found that 70% of young people “believe the current economic environment is hurting their ability to be financially independent adults.”

  • Inflation and a potential recession are the main worries.

  • The rising cost of housing and student loan debt are next.

The good news is that 75% are striving to be financially literate.

UPS strike potentially brewing

The Teamsters union is currently holding a vote among its 330,000 members to authorize a strike against UPS that would be the largest strike in U.S. history and could happen within 8 weeks.

The facts:

  • 6% of U.S. GDP (gross domestic product) moves in UPS trucks.

  • 17 million packages a day in the U.S.

  • FedEx and the US Postal Service wouldn’t be able to pick up the slack.

  • UPS and the union have been negotiating for a month and have made progress.

What do they want?

  • Close the gap between different classes of workers.

  • Better working conditions, including A/C in delivery vans.

  • Higher pay.

📈 Stocks

S&P 500 4,369.01 (+0.69%)
DOW 30 34,212.12 (+0.43%)
Nasdaq 13,573.32 (0.83%)

AMD goes after Nvidia with their new chip

AMD [AMD -3.61%] unveiled a new generative A.I. chip yesterday, called the MI300x with a very large memory of 192GB that could be used for A.I.’s large language models (LLMs).

  • The GPU chips are in hot demand and short supply as they’re not only used in gaming, but A.I. platforms like ChatGPT and others. AMD’s CEO Lisa Lu claimed they’d be able to make enough chips to meet demand.

How does it compare? Nvidia’s H100 supports 120GB of memory.

Why was the stock down then? The stock is already up 82% YTD, so this may be a case of “buy the rumor, sell the news.”

C3.ai [AI +14.65%] up bigly again today

Looking for a way to play the A.I. trend?

C3.ai is an A.I.-for-the-enterprise company and was up big yesterday on no news from the company itself. So far this year, it has traded on news in the broad A.I. sector and yesterday was no exception.

Oracle announced strong demand for its cloud services due to strong A.I. needs, so C3’s stock went along for the ride. Monday, Oracle reported sales jumped 54% in Q4 thanks to A.I. demand.

Not so fast! However, C3.ai’s sales for Q4 were flat and the company said they expect only 15% growth for this fiscal year. So with a price-to-sales of 15, this stock may be getting ahead of itself.

Apple Downgraded

Apple [AAPL -0.26%]. After closing Monday at an all-time high, Apple closed slightly lower today.

  • Analysts: UBS downgraded the stock from Buy to Neutral. Overall consensus among all analysts is a Buy rating.

Quick headlines

Cathie Wood at ARK Invest takes some profits by selling some Tesla and Nvidia stocks after they both rallied recently. She has said she’s investing in both for the long-term, but occasionally buys and sells them.

Symbotic Inc [SYM +15.25%], the warehouse and automation company, had a big day after announcing expansion plans.

Manchester United [MANU +13.76%] rose on a tweet from a Qatari newspaper the football club may be sold.

🔐 Crypto

2 U.S. Congressmen draft bill to reform the SEC & fire Gary Gensler. The bill is called the “SEC stabilization Act” and will be introduced into the U.S. House of Representatives.

U.S. Congressman Warren Davidson stated,

“U.S. capital markets must be protected from a tyrannical Chairman, including the current one. That’s why I'm introducing legislation to fix the ongoing abuse of power and ensure protection that is in the best interest of the market for years to come. It’s time for real reform and to fire Gary Gensler as Chair of the SEC."

Stablecoin Tether explains the $1B Mint on Ethereum is for chain swaps as part of an “inventory replenish” on the Ethereum network and won’t affect the overall market cap of USDT since it’s an “authorised but not issued transaction.”

💵 Personal Finance

Debt is an emergency!

Mr. Money Mustache is one of the early pioneers of the FIRE movement (Financial Independence, Retire Early).

In a classic article he states that,

“Your Debt is not something you “work on”. It’s a HUGE, FLAMING EMERGENCY!!!”

Debt isn’t something to be accepted and slowly paid down as we eat out at restaurants and buy fancy shoes. It must be attacked aggressively because the longer we have consumer debt, the longer it takes to reach financial independence.

Our society has taught us to be consumers and to accept debt, like credit card debt, as normal. In fact, credit card debt in the U.S. just hit an all-time high. Rising costs is contributing to the debt, but the overall lesson is that the sooner you tackle your debt head-on, the faster you’ll build wealth.

💰 Be a Better Investor

"The only way to get out of debt is to make a budget and stick to it."

- J.D. Roth

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