Morning Download from Invincible Money

Personal finance + economics + markets

Finance in 5 minutes a day to help you make better money decisions.

Good morning investors! U.S. Treasury Sec. Yellen confirmed what we’ve all suspected - the dollar is in decline as the world’s reserve currency. The economy is slowly recovering as retail sales are up and no one wants CDBCs, but do the governments of the world care?

📊 Economy 

The Dollar Decline

Treasury Sec. Yellen said this week to expect a gradual decline in the U.S. dollar’s share of global reserves.

• During a congressional hearing she was asked about de-dollarization and added that the dollar will remain dominant since most countries have no alternative.

• In recent years other countries have been looking for USD alternatives, specifically the BRICS countries (Brazil, Russia, India, China and South Africa).

She stated that,

"The dollar plays the role it does in the world financial system for very good reasons that no other country is able to replicate, including China," she said. "And that is we have deep liquid open financial markets, strong rule of law and an absence of capital controls that no country is able to replicate. It will not be easy for any country to devise a way to get around the dollar."

History of the decline

The dollar’s dominance has been slowly decreasing for 20 years, but accelerated in 2022, partly due to an increased interest in gold and a desire by countries around the world to be less reliant on the United States.

Yellen stated that the debt ceiling crisis didn’t help since it undermined global faith in the country’s ability to meet its debt obligations and hurt its reputation.

Others have said that the U.S. and its allies sanctioning Russian roubles and cutting them off from the SWIFT system to tune of $300 billion was a wake up call for nations to be less dependent on the U.S.

I made a video about the decline of the dollar 2 months ago. Check it out:

If you’re interested in this subject, this YouTube channel covers it extensively.

📰 News

Jack Dorsey disses Apple’s Vision Pro

Apple’s Vision Pro VR goggles were announced last week and not everyone was thrilled. Mark Zuckerberg said last week Meta has a different mission to connect people and pointed out that all the Apple demos showed people alone watching a screen.

Now, Twitter founder Jack Dorsey, is saying if it goes mainstream he fears we’ll all end up like the lazy characters in the movie Wall-E who sit around and watch TV all day.

Retail Sales Up in May

Retail sales rose 0.3% in May, following a 0.4% rise in April.

• Sales increased in most retail categories, including at grocery stores (+1.2%), car dealerships (+0.8%), and furniture stores (+0.6%).

• Sales dropped at gas stations (-0.4%), possibly a result of dipping prices at the pump.

• Overall retail spending has moderated from its pandemic highs, climbing 1.6% year-on-year in May.

• Consumer spending accounts for about two-thirds of GDP and its strength will be key to economic growth.

Stats show that while retail sales are still growing, the pace of growth is slowing down. This is likely due to a number of factors, including rising inflation and interest rates. However, consumer spending remains strong, and it will be important to watch how it continues to evolve in the coming months.

The DOJ is looking into the PGA - LIV Tour merger

• The Justice Department's investigation is likely to focus on whether the merger would reduce competition in the golf industry.

• The PGA Tour and LIV Golf have been accused of anti-competitive behavior by poaching top players and colluding to set prices.

• The investigation could take several months to complete.

📈 Stocks

S&P 500 4,425.84 (+1.22%)
Dow 30 34,408.06 (+1.26%)
Nasdaq 13,782.82 (+1.15%)

Manchester United [MANU +6.5%] and Federal National Mortgage Association [FNMAS +11.86] both had another good day yesterday after big gains on Wednesday.

Adobe [ADBE +2.37%] reported better-than-expected earnings for the 2nd quarter of 2023 thanks to AI features being introduced to Acrobat, Express, Photoship and Premiere Pro.

• Revenue for the quarter was $4.82 billion (vs $4.77 b expected).

• Earnings per share were $3.91 (vs. $3.79 expected).

The big winner yesterday was the CAVA Group, Inc [CAVA +99.0] whose stock nearly doubled after an IPO, becoming the largest restaurant IPO since Sweetgreen in 2021.

🔐 Crypto

No One Wants CDBCs

A recent survey by the Cato Institute found that only 16% of Americans support the government issuing a central bank digital currency (CBDC).

A central bank digital currency (CBDC) is a digital or electronic form of fiat currency that is issued by a central bank.

The survey found that most Americans are skeptical of CBDCs because they see them as a liability of the central banks, unlike existing digital payment methods like credit cards, which are a liability of commercial banks.

Quick stats:

• Only 28% of Americans are familiar with CBDCs, with 16% supporting and 34% opposing them.

• Republican voters tend to be more informed about CBDCs than Democrat voters, with Republicans slightly less likely to support them.

• Men are twice as likely as women to support CBDCs, and almost a third of African Americans and Americans under 30 support CBDCs as well.

Concerns about CBDCs include government control over spending, government surveillance, elimination of cash, increased risk of cyberattacks, forced spending during a recession, and freezing bank accounts of protesters.

Opposition to surveillance is still high at 61%. (Who are the other 39%?!) Democrats are more comfortable with the government seeing CBDC transactions as long as they don't control them, while Republicans oppose CBDCs causing small banks to go out of business.

Some Americans support CBDCs if they are used to combat illicit financial activity, ensure welfare payments are spent on essentials, bank the unbanked, or prevent recessions. However, these supposed benefits are not highly supported, and the primary benefit of fighting financial crime is unlikely to be achieved under a CBDC system.

More than three-quarters of Americans are more concerned about the real risks of CBDCs, with Republicans being significantly more concerned than Democrats. Overall, the survey shows that there is more opposition than support for CBDCs in both political parties.

Watch more here:

💵 Personal Finance

Investing in Real Estate

Real estate investing can be a great way to build wealth over the long term. Here are some of the advantages of investing in real estate:

• Potential for high returns: Real estate has historically outperformed other asset classes, such as stocks and bonds, over the long term. This is because real estate is a tangible asset that is not subject to the same volatility as the stock market.

• Cash flow: Rental properties can generate positive cash flow, which can be used to offset the cost of the mortgage, taxes, and other expenses.

• Tax benefits: Real estate investors can take advantage of a number of tax breaks, such as deducting mortgage interest, property taxes, and depreciation.

• Appreciation: Real estate values tend to appreciate over time, which can lead to significant profits when the property is sold.

• Diversification: Real estate can help to diversify your investment portfolio and reduce your risk.

Of course, there are also some risks associated with investing in real estate. These include:

• High cost: Real estate can be a relatively expensive investment, especially if you are buying a single-family home.

• Illiquidity: Real estate can be difficult to sell quickly, especially if the market is slow.

• Maintenance: Rental properties require regular maintenance and repairs, which can be costly.

• Tenants: Dealing with tenants can be a challenge, and there is always the risk of non-payment or damage to the property.

Despite the risks, real estate can be a very rewarding investment. If you are willing to do your research and manage your property carefully, you can potentially generate significant income and build wealth over the long term.

💰 Be a Better Investor

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