🪔 What to expect this week

and prepare for some changes

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Good morning investors! Bitcoin remained above $100,000 over the weekend – hitting a new high of above $106,000 – as stocks slowed down last week.

Today we cover:

  • What to expect this week

  • The rise of BNPL services

  • Becoming financially secure

📊 Economy and News 

Markets Brace for Key Central Bank Decisions as Year-End Approaches

Here's what to watch this week in markets:

Federal Reserve Decision

The Federal Reserve is expected to announce a 25-basis point rate cut on Wednesday, marking its third consecutive reduction. With the move already priced in, attention shifts to the Fed’s guidance on rate policy for 2025.

The Fed’s updated economic projections may shed light on future rate paths. Fed Chair Jerome Powell recently noted that the economy has outperformed expectations, suggesting a possible slower pace of cuts next year. Analysts are divided, with some anticipating dovish signals amid cooling inflation and weak job growth, while others believe Powell will stress flexibility if inflation picks up.

Bank of Japan Outlook

The Bank of Japan meets on Thursday, and speculation is mounting that officials will maintain their current policy stance. Recent reports suggest the BOJ is leaning toward a pause, awaiting further wage data and clarity on external risks. However, uncertainty remains, as any deviation by the Fed on Wednesday could stir volatility in currency markets, particularly in the dollar-yen exchange rate.

Bank of England Decision

The Bank of England is expected to hold rates steady at 4.75% on Thursday, deferring additional rate cuts until February. Weak economic data, including two months of GDP contraction and sluggish retail sales, has fueled concerns over the UK’s outlook. Despite these challenges, the BoE remains focused on long-term growth, having trimmed its 2024 forecast to 1% but projecting a stronger rebound in 2025.

Global PMI Data

Fresh global PMI data this week will gauge economic health after November's indicators signaled spreading sluggishness from manufacturing to services. Eurozone PMI fell to 48.3, indicating contraction, while UK PMI edged just above the neutral mark. U.S. activity also slowed, with political and trade uncertainties potentially weighing on business confidence.

Oil Market Dynamics

Oil prices rallied last week, driven by expectations of tighter supplies from additional sanctions on Russia and Iran, coupled with hopes for stronger demand from lower interest rates. Brent rose 5% for the week, while WTI surged 6%, hitting its highest level since early November.

The European Union’s latest sanctions package targeting Russia’s shadow tanker fleet, alongside the Fed and ECB's rate cut trajectories, underscores the complex interplay of geopolitics and monetary policy on energy markets. Lower rates are seen as a potential boost to economic activity and oil demand heading into 2025.

Global hits:

Check this: Walgreens is reportedly looking to take itself private in a deal with Sycamore Partners.

Just in: Trump calls for end to daylight saving time. Also, CNN wonders if Sony is making a comeback.

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📈 Stocks

S&P 500 6,051.09 (-0.0026%)
DJIA 43,828.06 (-0.20%)
NASDAQ 19,926.72 (+0.12%)
BRENT CRUDE 74.49 (+1.47%)
* Prices as of Dec 15th, 12:20 AM UTC

Record Cyber Monday Highlights BNPL Boom

Cyber Monday saw Buy Now, Pay Later (BNPL) services hit a new milestone, with U.S. consumers spending $991.2 million—a record-breaking single-day total. As holiday shopping surges, BNPL continues to grow in popularity, with 2024 outpacing previous years.

In 2023, BNPL spending reached $75.1 billion, up 14% from $65.6 billion in 2022. Retailers increasingly adopt these services, which drive higher sales and fuller carts, especially among cost-conscious shoppers.

However, financial experts caution against the risks of BNPL, particularly for younger and financially vulnerable users. A Federal Reserve survey revealed that BNPL users are more likely to face hardships, including difficulties paying bills and housing instability.

Surprising: Elon Musk says SEC orders him to pay fine over Twitter purchase or face charges. Elsewhere, Google and Samsung are taking on Apple and Meta with their own mixed-reality headset.

Controversial: Under Andrew Ferguson’s leadership, the FTC is likely to scale back Lina Khan’s broad regulatory efforts, focusing instead on enforcing existing laws. Key initiatives at risk include the proposed ban on non-compete clauses, expansive updates to U.S. merger guidelines, and broader consumer protection rules, as Ferguson has argued that such sweeping regulations exceed the FTC’s authority. His tenure is expected to prioritize targeted antitrust enforcement while leaving larger regulatory changes to Congress.

💵 Personal Finance

Smart Financial Habits for a Secure Future - Part I

Planning for retirement and financial stability can feel overwhelming, but adopting smart strategies early on can make all the difference. Here are five key lessons to ensure a more secure financial future:

1. Live Within Your Means

Lifestyle inflation can erode savings quickly, especially when raises are spent on luxury rather than practicality. Managing your finances effectively starts with knowing where your money goes. Adopting the 50/30/20 rule, cutting unnecessary expenses like unused subscriptions, and prioritizing home-cooked meals over dining out are great ways to control spending. Living below your means today can pave the way for a wealthier tomorrow.

2. Start Saving Early

The earlier you start saving, the more you can harness the power of compound interest. A small, consistent contribution from your 20s can grow exponentially over the decades, outpacing late starters by tens of thousands of dollars. Even saving $100 monthly in a high-yield account can lead to substantial gains, proving that time is the most powerful ally for long-term savers. Try this calculator to plan your retirement.

3. Invest in Stocks, Mutual Funds, and ETFs

Investing goes beyond saving, offering a pathway to wealth generation. Assets like stocks and ETFs historically deliver higher returns than savings accounts, with the S&P 500 averaging a 10 percent annual return. Start with employer-sponsored 401(k)s or IRAs, and explore diversified options like index funds to build a robust portfolio. Regular contributions and dollar-cost averaging can help mitigate market volatility and grow your wealth steadily.

There’s more, check tomorrow’s issue for additional tips.

💰 Be a Better Investor

“Debt is one person's liability, but another person's asset.”

Paul Krugman

Resources:

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