✂️ Inflation under control?

and Trump supports BTC

Good morning, investors! This week we will again be hearing from major names as big companies like Meta and McDonald’s are set to announce earnings.

Today we cover:

  • Inflation is coming under control.

  • A look at stocks.

  • Trump supports Bitcoin?

📊 Economy and News 

Fed’s 2% inflation target is now in sight

The Personal Consumption Expenditures (PCE) price index, a key inflation gauge monitored by the Federal Reserve for its 2% target, slowed to 2.5% for the 12 months ending in June, down from 2.6% in the previous month, according to Commerce Department data released Friday.

Economists had expected the annual increase to slow to 2.5%.

On a monthly basis, the price index increased by 0.1%, matching expectations.

Friday’s data was the clincher on what was an overwhelmingly solid second quarter for the US economy and the lengthy battle to lower inflation. During the past three months, price hikes slowed — quashing fears that the first-quarter inflation flare-up was a reacceleration — while the economy grew and labor market remained on solid footing.

The Fed meets next week for its July policymaking meeting, and markets overwhelmingly expect the central bank to hold rates steady and start cutting in September, according to the CME FedWatch Tool.

More numbers: Falling energy prices, which dropped 2.1% from May, helped to curb overall inflation in June. Goods prices also contributed to this trend, falling by 0.2%. Food and services inflation increased modestly by 0.1% and 0.2%, respectively.

Excluding the often-volatile categories of food and energy, the core PCE index rose 0.2% for the month and maintained an annual rate of 2.6%, a three-year low.

Spending increased by 0.3% from May, with Americans directing most of their expenditures towards services and experiences, such as housing and international travel. Adjusted for inflation, real spending still rose by 0.2% for the month.

Rate cut: According to Moody’s Colyar, the Federal Reserve seems poised to implement a quarter-point rate cut in September and December, with the possibility of an additional cut in November.

However, for these cuts to happen, both inflation and jobs data need to stay on their current paths, with employment data posing the greater risk, Colyar noted.

While monthly employment gains remain strong historically, they have cooled significantly from the robust job growth of the past three years. In June, the U.S. economy added 206,000 jobs, slightly down from 215,000 in May. The unemployment rate rose for the third consecutive month to 4.1%, the highest since November 2021.

This week will see the release of several key labor market reports, culminating in the monthly jobs report on Friday, which will provide crucial insights into the health of U.S. employment.

Economists expect July's job gains to total 180,000, with the unemployment rate holding steady at 4.1%, according to FactSet estimates.

Global hits:

Also check: Sales of $100 million homes are on track to double this year, as surging financial markets and hopes for rate cuts fuel a recovery in the ultra-luxury real estate market.

📈 Stocks

S&P 500 5,459.10 (+1.11%)
DJIA 40,589.34 (+1.64%)
NASDAQ 17,357.88 (+1.03%)
BRENT CRUDE 81.13 (-1.51%)
* Prices as of Jul, 28th, 12:20 AM UTC

Weekend happenings

Some major events happened over the weekend:

  • The International Association of Machinists and Aerospace Workers (IAM) Coalition of Organized Retail Employees (IAM CORE) reached a tentative agreement with tech giant Apple on Friday over improvement in work-life balance, pay raises and job security.

    Workers at the Towson, Maryland, Apple retail store will vote on the tentative agreement on Aug. 6.

    The tentative three-year agreement includes an average pay raise of 10%, limits on contracted employees and a severance clause, improvement in work-life balance and rules on transparency. The deal will maintain all current benefits and an agreement to bargain over any future additions.

    Workers at Apple’s Towson store voted in favor of authorizing a strike in May.

  • Warner Bros. Discovery is suing the NBA to keep distributing the league’s games.

    The company is attempting to use matching rights on a package of games earmarked for Amazon Prime Video, which the NBA chose as a media partner along with Walt Disney and NBCUniversal.

    The NBA sent Warner Bros. Discovery a letter Wednesday informing it that the league doesn’t believe its matching rights are valid for a streaming-only package of games.

  • GM reveals new Chevy Corvette with 1,000-plus horsepower and record top speed. The 2025 Chevy Corvette ZR1 will be powered by a twin-turbocharged, 5.5-liter, V8 engine capable of more than 1,000 horsepower — a first for Corvette — and 828 foot-pounds of torque.

    The ZR1 joins what GM is calling the “Corvette family,” leveraging the reputation of the quintessential American sports car to boost revenue and sales.

    GM previously confirmed an all-electric Corvette is coming, but it hasn’t given a timeframe.

    A Corvette SUV also has been under consideration for several years.

🔐 Crypto

Bitcoin $68,220, (+0.12%)
Ether $3,254 (+0.21%)
Solana $184 (+1.2%)
Total market cap $2.42T (+0.41%)
* Prices as of Jul 28th, 12:20 AM UTC

Trump and others support Bitcoin

Donald Trump headlined the largest bitcoin conference of the year in Nashville on Saturday afternoon.

He stated that if re-elected, he would ensure the federal government retains its bitcoin holdings, though he stopped short of proposing a formal federal reserve of digital currency.

Trump’s commitment to maintaining the U.S. government’s current bitcoin holdings was a more moderate proposal compared to others at the conference.

For instance, third-party candidate Robert F. Kennedy Jr. announced during his Friday speech that he would create a reserve of 4 million bitcoin, starting with the bitcoin seized from criminal activities. Kennedy proposed the government purchase 550 bitcoin daily until the reserve reaches 4 million.

Following Trump’s speech, Sen. Cynthia Lummis, R-Wy., presented her legislative proposal to establish an official U.S. federal reserve of 1 million bitcoin over five years.

“It will be held for a minimum of 20 years and can be used for one purpose: reducing our debt,” Lummis said.

Bitcoin’s price briefly dipped during Trump’s speech but recovered, ending slightly up for the day as of 5:15 p.m. ET.

Trump also made several crypto-friendly promises to the enthusiastic crowd, vowing to end what he termed the “anti-crypto crusade” of President Joe Biden and Vice President Kamala Harris.

This stance marks a significant shift from his previous public dismissal of bitcoin during his presidency.

Conference organizers mentioned they had briefly considered inviting Vice President Kamala Harris, though she ultimately declined.

💵 Personal Finance

Understanding private debt as an investment

Private debt is a form of investment that isn’t financed by a bank. The keyword here is ‘private’ as it refers to the investment instrument and not the borrower, as private debt is available to both public and private companies.

Private debt is typically used to finance buyouts, though it can also be used for other tasks such as expansions. The industry has grown by leaps and bounds since the 2008 crisis and has become an established asset class in its own right.

The chart above highlights how the industry is growing, especially now that Europe is catching up. Private debt AUM in Europe has grown by 380% over the past 10 years, and now constitutes over 20% of total AUM for the asset class.

In addition, the Asian private debt market has also taken off. Small and mid-sized companies faced an annual funding gap of over $4 trillion in 2019, which indicates the potential. In fact, about 23% of fund managers believe that Asia is an emerging market with the highest potential.

Private debt usually offers a return of 8 to 14%, which is pretty good. In fact, on a risk-adjusted basis, it outperforms corporate and high-yield bonds.

💰 Be a Better Investor

“Money grows on the tree of persistence.”

Japanese proverb

Resources:

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