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! CPI numbers are out and inflation is slowing for the 10th month in a row, but still way above the 2% target.
📊 Economy
⬇️ Inflation is slowing. The Consumer Price Index (CPI) rose 4.9% over last year and 5% in March, which is the smallest annual increase since April 2021. However, prices rose 0.4% in April vs. 0.1% in March driven by housing, used vehicles and fuel.
This new data may give the Fed a reason to pause rate hikes, which have been increased the fastest since the 1980s.
Target benchmark rates are now between 5% and 5.25%, the highest since 2007.
🏛️ Congressional leaders and Pres. Biden made no progress on the debt ceiling talks yesterday, but have agreed to meet again this Friday. June 1st, when the country will start to miss payments, is looming.
📉 Famed investor Stanley Druckenmiller said he’s “not predicting something worse than 2008” and that he’s defined a hard landing as unemployment exceeding 5%, corporate profits down at least 20% and rising bankruptcies. He’s not saying it’ll happen, but just to watch for it.
Most importantly for us investors, he said “You’re going to have unbelievable opportunities in the next couple of years.”
📰 News
🐥 Twitter announced encrypted DMs like WhatsApp and Telegram. Musk added they will also offer “voice and video chat from your handle to anyone on this platform” soon.
🤖 Yesterday I wondered what ever happened to IBM’s Watson, which was suppose to be the next big thing in AI 10 years ago. Turns out, Tuesday they launched Watsonx, a new AI to help companies integrate AI into their business. So meta.
Wendy’s has partnered with Google and is testing an AI chatbot that takes your order at the drive through. Set to launch in June in Columbus, Ohio and will focus on providing quick responses, customizing orders and streamlining the ordering process.
📈 Stocks
Nintendo [NTDOY -2.05%] announced a 5.5% decrease in revenue for its last fiscal year, including a 22% drop in sales of its Switch largely due to “shortages of semiconductor and other components.” They expected further slow sales into 2024 and have no immediate plans for a Switch 2.
AirBNB [ABNB] down 9% after reporting bookings were slow as people consider traveling less. EPS were up $0.18 and revenue up 20% to $1.82 B.
Electronic Arts [EA -3.80%] beat EPS and Revenue estimates, largely thanks to FIFA 23, which came out in September and was the most successful launch in the franchise history. EA is retiring the FIFA brand and launching their own game, EA Sports FC.
Under Armor [UAA -5.66%] missed EPS expectations and said it needs to move inventory so look for discounts at your local store.
Attention dividend investors!
Saudi Arabia’s Aramco dividend is the largest and set to get even larger by 10-20% according to a forecast by RBC Capital Markets LLC.
🔐 Crypto
Paypal announced its customers hold nearly $1 B in crypto, mainly BTC and Ethereum.
Bitcoin and Ethereum down for the 4th day in a row, while alt volume is up.
Grayscale files for Ethereum Futures and Bitcoin Composite ETFs.
🔍 The European Central Bank (ECB) is rushing to roll out its digital Euro, which could be approved as soon as this year.
💻 The digital Euro may have programmable features, but the ECB claims it will never be programmable.
💳 The digital Euro will use a digital Euro account identifier to prevent individuals from opening multiple accounts and have limits on individual accounts.
📉 The ECB is obsessed with ensuring that the digital Euro is adopted and envisions a world where most digital Euro payments are made using QR codes.
🛡️ Concerns about privacy and unprecedented surveillance with the digital Euro.
📅 The digital Euro could come as soon as 2025.
💬 The ECB will work closely with stakeholders to ensure that the digital Euro meets their needs, without actually consulting the users.
💰 The ECB is afraid of losing control over their national currencies to the US dollar or private entities like Facebook's failed digital currency Libra and USD-denominated stablecoins.
🌍 Euro stablecoins could be a viable alternative for the ECB to track and control every transaction while keeping heavily indebted Southern European countries afloat.
👋 The ECB's sudden change in stance is evidence of a departure from the original idea of a digital Euro. (Source)
💵 Personal Finance
What’s your FICO score made of?
FICO score is a type of credit score that has 5 components. 35% make up payment history, 30% make up how much you owe, 15% is the length of credit history, 10% is the credit mix and the other 10% makes up your new credit.
The fastest way to increase your credit is to pay down your consumer credit so you’re under a 30% utilization rate. For example, if you have a $1000 credit card limit, always keep the balance below $300.
💰 Be a Better Investor
If you're early on in your career and they give you a choice between a great mentor or higher pay, take the mentor every time. It's not even close. And don't even think about leaving that mentor until your learning curve peaks.
🧠 Get Smarter
The word "bankrupt" comes from the Italian phrase "banca rotta," which means "broken bench." In medieval Italy, moneylenders would conduct their business on benches in public marketplaces. When a moneylender ran out of money or became insolvent, his bench would be broken, symbolically indicating that he could no longer conduct business.
Over time, the term "bankrupt" evolved to refer to any individual or business that is unable to pay their debts. The word was first used in English in the mid-16th century, and it has been in use ever since to describe a financial state of insolvency.
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👩🏽⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.