Together with Masterworks

Good morning investors! Last week was exciting with mixed reports from Boeing, Meta, Alphabet, and Microsoft. This week, the main focus will remain on interest rates and earnings.

Today we cover:

📊 Economy and News

The Commerce Department's indexes, which the Fed heavily relies on for gauging inflation, indicate that prices are still rising significantly above the 2% annual target.

The problem: There's currently an excess of money circulating in the financial system, providing consumers with sustained purchasing power. In fact, consumers are spending more than their incomes, a situation that is not sustainable and does not promote disinflation.

Moreover, consumers are using their savings to finance these purchases, which could lead to a precarious situation in the future, if not immediately.

More spending, less saving: The Bureau of Economic Analysis indicated that spending outpaced income in March, as it has in three of the past four months, while the personal savings rate plunged to 3.2%, its lowest level since October 2022

The worry: The persistent inflation data raised concerns that the Fed might need to maintain higher rates for an extended period or potentially raise them at some point. In fact, some fear that it might contemplate future hikes.

The meeting: Investors will be awaiting indications about whether the Fed still expects to cut interest rates at some stage this year when officials conclude their two-day policy meeting on Wednesday.

Job data: Friday’s monthly jobs report will give a fresh look at the strength of the labor market. Economists expect 243,000 new jobs in April, moderating from 303,000 in March. The unemployment rate is expected to remain steady at 3.8%.

Ahead of Friday, there will be ADP data on private sector hiring as well as the report on JOLTS job openings and other survey data that will help firm up expectations.

📈 Stocks

S&P 500 5,099.96 (+1.02%)
DJIA 38,239.66 (+0.40%)
NASDAQ 17,718.30 (+1.65%)
BRENT CRUDE 89.50 (+0.55%)
* Prices as of Apr 29th, 12:20 AM UTC

Some big tech companies announced earnings last week and two from the Magnificent Seven are expected to announce this week – Amazon on Tuesday, and Apple on Thursday

Apple shares have tumbled over -10% so far this year and the iPhone maker is expected to post a decline in first quarter earnings after China smartphone shipments fell 19%.

Amazon's cloud computing business will be in focus while investors will also be watching what the online retailing giant has to say about consumer spending.

Some other big names expected to announce earnings include eBay, Moderna, and Mastercard.

Reminder: American is reducing service on a host of long-haul routes, citing Boeing’s delivery delays.

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💵 Personal Finance

The global crowdfunding market stood at $1.9 billion in 2021, and is expected to hit the $6.8 billion mark by 2031. Said to be growing at a CAGR of 14.3% for the 10 year period, it’s a highly rewarding industry worth investing in.

It is defined as " the practice of funding a project or venture by raising money from a large number of people, typically via the internet."

When we talk about crowdfunding, we usually think of it as a tool to gather money. However, it can also be used as an investment vehicle. Here’s how:

Equity Crowdfunding

As the name suggests, equity crowdfunding involves purchasing equity or ownership in a company. 

The first step is to find people looking for investment in the form of crowdfunding with a share of ownership in return. You make money when you bet on the right company, i.e.: when it grows in the future or gets acquired by a larger company.

In most cases, you will then have the option to sell your shares or receive dividends. 

Debt Crowdfunding

Debt crowdfunding involves providing loans to individuals or businesses. These loans typically come with a fixed interest rate, and investors make money through the interest paid on the loans.

A lot of people look for this way of raising funds as it is less demanding than banks and other traditional funding methods. However, from an investment perspective, it can be very risky because you might not get your money back. Still, people use this option because the interest rate is usually higher than what traditional banks offer.

Note: Some debt crowdfunding platforms also offer the option to sell loans to other investors on a secondary market.

Real Estate Crowdfunding

Real estate crowdfunding allows investors to pool their money with others to invest in real estate properties. It is similar to an ETF where several people come together to buy a property and make money in a variety of ways, including:

Rewards Crowdfunding

Investors in rewards crowdfunding typically receive a product or service in exchange for their investment. These rewards can be in a variety of forms. For example, a chance to attend a special event. Though not always of monetary value, these rewards can end up being beneficial.

In some cases, you may even have the option to get your hands on a new product for free. Rewards offered depend on the nature of the product. For example, if you fund a movie, you will typically get a chance to attend the premier with stars, see your name on the big screen, but not necessarily make money.

How to start: The first step is to look for a platform where you can find opportunities. Some of the top websites include KickStarter, SeedInvest, RocketHub, StartEngine, and GoFundMe.

You will have to sign up for an account (usually free) and go through available projects.

Don’t make haste. Look at projects carefully and invest in something you truly believe in.

💰 Be a Better Investor

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

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Disclosure: Past performance is not indicative of future returns, investing involves risk. See disclosures masterworks.com/cd