Morning Download from Invincible Money 

Personal finance + economics + markets

Good morning investors! Welcome to the 12th consecutive day in the green for the U.S. markets! How long can it last? 🤞🏾

Today we cover:

1. Where is the U.S. economy going?

2. Alphabet beats earnings and PacWest tanks 27%

3. Inflation still high around the world

4. 93% of central banks working on a CDBC 😬

5. What is KYC?

📊 Economy 

What recession?

🤞🏾The stock market was up for the 12th day in a row! How long can it last?

This rally has come despite a number of recession signals, such as rising interest rates and a slowdown in economic growth.

There are a few reasons why the stock market is shrugging off these recession signals.

First, investors are hoping that the Federal Reserve will be able to engineer a soft landing, meaning that it will be able to raise interest rates enough to cool inflation without causing a recession.

Second, investors are betting that inflation will continue coming down in the coming months, which would also help to support the economy.

Third, the rally has also been supported by strong earnings from corporate America. We’ll see more earnings reports this week.

However, there are still risks ahead. An escalation of the war in Ukraine could continue to disrupt the global economy or if inflation does not come down as quickly as expected, the Federal Reserve may have to raise interest rates even more, which could lead to a recession.

Some analysts are warning that the rally may be unsustainable, and that the stock market could be headed for a correction.

Analysts are more mixed now than ever, so what do you think?

📈 Stocks

S&P 500 4,567.46 (+0.28%)
DJIA 35,438.07 (+0.08%)
NASDAQ 14,144.56 (%+0.61%)
VIX 13.86 (-0.36%)

Alphabet (Google) beats on earnings

🔠 Alphabet [Goog +0.75%] stock was up 6% after hours after reporting Q2 revenues of $74.6 billion (vs $72.75 billion expected) and EPS of $1.44 (vs $1.32 expected). (Breakdown here)

To give us an idea of how much of their business comes from ads, check out where the money came from in Q2:

• Google ad revenue was $58.14 billion

• YouTube ad revenue was $7.66 billion

• Google Cloud revenue was $8 billion

🏧 PacWest [PACW -27.04%] has had a tough year. After the fall of SVB, the regional bank got a lot of heat as depositors fled the bank. The wounded bank has agreed to merge with smaller rival, Banc of California. The stock tanked 27% and is down 66% this year.

⚡️ General Electric [GE +6.27%] has been considered a dog ever sine legendary CEO Jack Welsh left in 2001. Maybe things are turning around as they beat earnings for Q2, reporting $0.68 EPS (vs. $0.46), which is a 48% upside surprise. Reported revenue was $16.70 billion (vs $15.15 billion expected).

🌏 World Economy

Persistent worldwide inflation 

While recession in the U.S. is seeming less likely, but still possible, France and Germany are both struggling with recession and a contracting economy.

• France inflation is +4.50%

• Germany inflation is +6.37%

The European Central Bank will be making a rate decision this week, as well as the U.S. Fed (today).

Japan: The Bank of Japan is meeting this week also (3.3% inflation).

Russia is reporting +3.6% inflation, but economist Steve Hanke says it could really be as high as 60% due to the ruble’s exchange rate.

🔐 Crypto

Bitcoin $29,222.74 (+0.3%)
Ethereum $1,861.42 (+0.6%)
Total market cap $1.22 T (+0.7%)
* Prices as of July 25th, 9:10 PM UTC

🌎 Worldcoin had a nice opening day yesterday, but is not without controversy. Since a lot of readers seem interested in it, here’s a nice article from Bankless about the pros, cons and controversy.

🏦 93% of central banks are working on a CDBC (Central Bank Digital Currency) according to the BIS (Bank of International Settlements).

Who? The BIS is the bank for central banks.
 Watch the report from Coin Bureau here.

💰How is Ethereum doing? According to a Q2 report:

• Network revenue is down 33.3%

• ETH inflation rate decreased 213% to -0.8%

• Average daily active addresses down 6% to 444,419

• Staked ETH up 59% to 20.6M

• DeFi TVL down 24% to $26.9 billion

• TVL on L2s up 157%

The short version is that usage is down thanks to crypto winter, but devs keep improving the protocol and holders continue to stake ETH.

💵 Personal Finance

What is KYC?

If you’ve invested in crypto or opened a bank or brokerage account, you’ve likely heard of KYC or Know Your Customer.

What is it?

It is a process that financial institutions use to verify the identity of their customers and to assess their risk. KYC is designed to prevent financial crime, such as money laundering and terrorist financing. It’s also suppose to protect privacy, but can be a hassle for customers and costs banks to ensure they’re compliant.

The KYC process typically involves collecting information from customers, such as their name, address, date of birth, and identification number. The financial institution may also ask customers to provide proof of identification, such as a passport or driver's license.

When did it start? KYC regulations originated from years of unchecked financial crimes. The initial guidelines were drafted in 1970 when the U.S. passed the Bank Secrecy Act (BSA) to prevent money laundering. Notable additions came years later, after the Sept. 11, 2001 terrorist attacks and 2008 global financial crisis.

💰 Be a Better Investor

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