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Good morning investors! Yesterday was a great day for the market as big tech recovered and Meta came up with a stellar report. However, crypto is once again under pressure.

Today we cover:

• A rate cut in September?

• Meta earnings and more

• How much does it cost to raise a child?

📊 Economy and News 

Rate cut in September?

Federal Reserve officials have decided to maintain short-term interest rates, indicating that inflation is nearing their 2% target.

There were no clear signals from central bankers about an imminent rate cut.

Federal Reserve Chair Jerome Powell stated that any rate cut at the September meeting would be unrelated to the forthcoming presidential election. He emphasized that the central bank would remain “absolutely” apolitical if it decided to lower borrowing costs, but also warned against assuming a cut was certain.

“We never use our tools to support or oppose a political party, a politician, or any political outcome,” Powell said.

He also noted that the central bank’s economic forecasts are not influenced by the presidential election outcome.

Powell appeared to dismiss the possibility of a 50 basis-point rate cut by the central bank.

“I don’t want to be really specific about what we’re going to do, but that’s not something we’re thinking about right now,” he said.

Currently, low unemployment and a low level of layoffs indicate a “normalizing labor market,” according to the Fed chair.

Global hits:

• Euro zone inflation rises to 2.6% in July, above expectations.

• ASML shares pop 7% after report that U.S. will exempt allies from new China chip restrictions.

• Lithium giant Albemarle halts Australia plant expansion, reviews costs on weak lithium price.

Currency wars: Japan confirmed $36.8 billion currency intervention as weak yen pushes BOJ to hike interest rates. On the other hand, banks are bullish on the British pound despite the possibility of an imminent snapback.

📈 Stocks

S&P 500 5,522.30 (+1.58%)
DJIA 40,842.79 (+0.24%)
NASDAQ 17,599.40 (+2.64%)
BRENT CRUDE 80.54 (+2.02%)
* Prices as of Aug 1st, 12:20 AM UTC

Meta and more report earnings

Meta shares jumped +8% in extended trading after the company beat Wall Street estimates for revenue and profit and issued a better-than-expected forecast for the current period.

Here are the results, compared to LSEG estimates:

• Earnings: $5.16 a share vs. $4.73 per share expected

• Revenue: $39.07 billion vs. $38.31 billion expected

Meta provided revenue guidance for the third quarter of $38.5 billion to $41 billion, or $39.75 billion at the middle of the range. Analysts were expecting a forecast of $39.1 billion.

The company reported second-quarter revenue growth of 22% from $32 billion a year earlier, marking a fourth straight quarter of growth in excess of 20%. Net income jumped 73% to $13.47 billion from $7.79 billion, or $2.98 a share, a year earlier.

Meta said expenses in the second quarter were $24.2 billion, which included the charge from Meta’s recent agreement to settle a facial recognition data lawsuit by the state of Texas for $1.4 billion.

Reality Labs: Meta’s Reality Labs unit, which houses its metaverse technologies, recorded an operating loss of $4.48 billion in the second quarter.

Since late 2020, the Reality Labs unit has generated cumulative losses of about $50 billion.

Revenue in Reality Labs, largely derived from the company’s Quest family of VR headsets and Ray-Ban Meta smart glasses, came in at $353 million, representing growth of 28% from $276 million a year earlier.

Users: Meta reported that it had 3.27 billion daily active people (DAP) in the quarter, matching StreetAccount estimates.

Exciting: Nvidia shares closed up +13% on Wednesday after remarks from top customer Microsoft and rival AMD signaled there wouldn’t be a slowdown in the multibillion-dollar buildout of AI servers.

Here are some other earnings reports:

• Arm results exceeded expectations, but earnings guidance did not. The chip-design company has stopped reporting the number of chips reported as shipped each quarter.

• Qualcomm reported fiscal third-quarter earnings on Wednesday that beat Wall Street expectations, particularly for sales, and provided strong guidance for the current quarter. Its biggest and most important business is processors and modems for smartphones, which was up 12% year over year.The company’s IoT and automotive businesses also beat Wall Street expectations.

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💵 Personal Finance

The cost of raising a child - Part II

How much does it cost to raise a child?

Planning to start a family and not sure if you can afford it? It is important to be aware of the cost of raising a child so that you are prepared for it.

Firstly, the question can be a little complicated to answer because the cost depends on a lot of variable factors, including the age of your child, the number of children you have, the lifestyle you have, and the city or country you live in.

For the purpose of this guide, we’ll talk about the US. The cost, in your country, however, may largely differ, but this will give you a basic idea.

The average middle-income family with two children will spend $310,605 to raise a child born in 2015 up to age 17.

Here are some of the largest contributors:

Food

Food is a major contributor even if you make your own. A typical family of four spends about $11,500 per year on food at home. It goes up to $18,500 for some families, i.e., 27% of the average household income of $67,521.

If you only look at the cost of feeding a child, it stands at about $900 per year.

Tip: Avoid eating out and prepare food at home to save food costs.

Housing

This might come as a surprise to some… after all, you probably already live in a house, then how is it an added expense? This is because you may have to move to a bigger house when you have a child. Also, if moving abroad, some countries, such as Austria, require people to have a specific number of rooms if they want to move in with the family.

According to data from the USDA, lower-income families spend about 8.7% of their income on housing a child. For middle-income families, it’s 4.5%, and for higher-income families it’s 2.9%.

Tip: It might be a good idea to move to an affordable city, or even a different country, to save money.

Childcare

Childcare costs anywhere from $5,436 to $24,243 annually. The cost depends largely on your location as daycare in cities like New York and Washington is more expensive than daycare in cities like Jackson and Oxford, Mississippi. Moreover, the amount includes education.

Tip: Consider government facilities and ask for discounts.

This isn’t it, there’s more we want to talk about, so wait for the next edition of this newsletter for more on the cost of raising a child. We will cover more about the financial aspect of bringing up a child and highlight the right time to have a kid so you can stay financially strong while having a good time with your family.

Check this video for more insights:

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

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