🪔 What to expect this week

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Good morning investors! This is going to be a very busy week with major happenings and earnings reports.

Today we cover:

• What to expect this week

• How Netflix reacts after a price hike

• Retirement and longevity

📊 Economy and News 

A Crucial Week Ahead: Fed Decisions, GDP Insights, and Tech Earnings

Investors are gearing up for a pivotal week filled with key economic updates and high-profile earnings reports. The Federal Reserve's interest-rate decision on Wednesday and a slew of earnings from top companies are expected to drive market sentiment.

Federal Reserve Chair Jerome Powell will address the media following the Federal Open Market Committee (FOMC) meeting. His remarks will be closely monitored for clues about the future trajectory of interest rates, particularly as a new presidential administration begins. Key economic indicators, such as the fourth-quarter GDP and December’s Personal Consumption Expenditures (PCE) inflation data, will also be released, providing insights into the state of the U.S. economy.

Earnings in Focus: Tech Titans and More

This week will also see earnings reports from major companies, including several members of the Magnificent 7: Microsoft, Meta Platforms, and Tesla are set to report on Wednesday, with Apple following on Thursday. These updates are anticipated to shed light on the performance of the tech giants, with Microsoft’s AI investments, Meta’s growing tech ambitions, and Tesla’s vehicle delivery numbers all under scrutiny.

Other notable tech companies, such as ASML Holdings, IBM, Intel, and ServiceNow, will also release their results this week. Meanwhile, oil giants ExxonMobil, Chevron, and Shell are expected to share quarterly updates amidst optimism surrounding energy policies.

Key Economic Data: Inflation, GDP, and Employment

The week kicks off with updates on new home sales and continues with the release of data on home prices, durable goods, and retail inventories. The fourth-quarter GDP report on Thursday will be a focal point, with expectations of a 3% growth rate, slightly above the previous quarter’s 2.8%.

On Friday, the PCE price index for December will be released, a critical measure of inflation that could impact market expectations for future rate decisions. Employment data, including the Employment Cost Index, will provide additional perspective on labor market conditions.

Broader Market Impacts: From Autos to Telecoms

Earnings reports from companies like AT&T, General Motors, and Caterpillar will offer glimpses into other critical sectors of the economy. General Motors, for instance, will present its financials on Tuesday after recent strategic decisions like the closure of its Cruise robotaxi program.

Additionally, financial giants Visa, Mastercard, and SoFi will reveal their latest results, providing insight into consumer spending trends amid cooling debt levels.

Global hits:

• Moody's raises Argentina's rating for the first time in five years.

• People leave New Zealand in record numbers in the 12 months through November.

• Moody's revises Kenya's ratings to 'positive' on potential liquidity risks easing.

Must check: Dollar on track for worst week since November 2023. Also, a million tax filers are getting letters from the IRS indicating they have money coming to them because they were eligible to receive the 2021 Recovery Rebate Credit but didn’t claim it on their 2021 federal tax return.

Also look: Existing home sales in the U.S. dropped to 4.06 million in 2024, the lowest level since 1995. High home prices and elevated mortgage rates continued to strain affordability, further dampening an already sluggish market.

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📈 Stocks

S&P 500 6,101.24 (-0.29%)
DJIA 44,424.25 (-0.32%)
NASDAQ 19,954.30 (-0.50%)
BRENT CRUDE 78.50 (+0.27%)
* Prices as of Jun 27th, 12:20 AM UTC

How Netflix reacts after a price hike?

We have seen a pattern between Netflix revenue and price hikes, which is even more important to discuss now that another hike is coming.

Price increases often result in a temporary slowdown or slight decline in subscriber growth. For example, after the price hike in 2021, Netflix lost 200,000 subscribers in Q1 2022, marking its first decline in a decade. While some price-sensitive users cancel their subscriptions, others downgrade to cheaper tiers, such as ad-supported plans, mitigating the loss of paying customers.

Despite slower subscriber growth or minor cancellations, revenue usually rises following price increases. For instance, the 2021 price hike resulted in an 8.3% revenue growth year-over-year in Q1 2022, as higher prices per user offset subscriber losses. The company’s average revenue per user (ARPU) also tends to increase, helping Netflix generate more income from its existing customer base.

Over time, Netflix has demonstrated resilience after price increases. Many subscribers view the service as a key part of their entertainment budget, making them less likely to cancel permanently. By continuously investing in high-quality content, Netflix retains users and supports higher prices. For example, despite the subscriber dip in early 2022, strong content releases later that year helped Netflix regain over 2 million subscribers in Q3.

Exciting: Trump discussing TikTok purchase with multiple people, decision in 30 days.

💵 Personal Finance

Retirement and Longevity

This is an excerpt from one of our very highly rated Retirement Download issue that you can read here. For more exciting retirement content, don’t forget to subscribe to Retirement Download for free.

The Dangers of Underestimating Retirement Longevity

The main problem with planning for a shorter retirement is that it’s based on two major assumptions that may not hold true:

1. You’ll be able to work as long as you want: Many people expect to work until their desired retirement age, but this isn’t always the case. As people age, they often become more expensive to employ and may be replaced by younger, cheaper workers. In fact, the median retirement age for U.S. workers is 62.

2. You know how long you’ll live: Assuming that you can predict your life expectancy is risky, especially with advances in medical technology that can extend lifespans. Many people don’t account for the possibility of living much longer than expected, which can put a strain on retirement savings.

Planning for Longevity: Advice from Financial Experts

Financial planners advise being cautious when it comes to planning for retirement longevity. The worst-case scenario is running out of money during retirement, which could lead to financial strain, debt, or an inability to afford necessary care. To avoid this, planners typically model retirement outcomes using more conservative assumptions.

We suggest planning as though you could live to 95, 99, or even 100 years old, rather than relying on the average life expectancy. This approach increases the likelihood that your savings will last for the duration of your life.

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

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