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! Wall street makes a Plan B in case the politicians can’t get it together, Nvidia to the moon and a reminder to enjoy life.

📊 Economy 

Debt Ceiling Drama

Next Friday, June 2nd, millions of Americans will be counting on their social security checks - totaling $25 billion. Those checks won’t go out if the impasse isn’t resolved.

• “When they find out that they’re not getting that check, our phones will light up like a Christmas tree,” said Senator Chris Coons of Delaware

• No deal yet as President Biden heads out of town for Memorial Day weekend, angering some Democrats. Although, Biden said the U.S. won’t default.

💰 Wall Street is preparing for a possible U.S. debt default, which could have a devastating impact on the financial markets. The industry is developing a playbook to minimize the damage, which includes:

• Allowing investors to continue trading U.S. Treasuries even if the government misses payments. This would help to keep the markets liquid and prevent a sharp increase in interest rates.

• Preventing computer glitches and cascading panic. The industry is working with regulators to develop contingency plans in case of a default. This would help to ensure that the markets remain stable and that investors do not panic.

A default on U.S. debt would be a major event, and it is unclear what the full impact would be. However, it is likely to lead to higher interest rates, a decline in stock prices, and a slowdown in economic growth.

The playbook is still being developed, but it is clear that Wall Street is taking the possibility of a debt default seriously. The industry is hoping that its preparations will help to prevent a major financial crisis. (More)

📰 News

Summer travel heats up

Summer travel is expected to be busy this year, with AAA predicting that 37 million Americans will drive at least 50 miles from home.

• Airline fares and hotel prices are also expected to be high, due to inflation and pent-up demand from travelers who were unable to travel during the pandemic.

• The average round-trip flight between the U.S. and Europe is now up to $1,200, and hotel prices are up 20% from last year.

• Travelers can save money by booking flights and hotels in advance and by being flexible with their travel plans.

• “Travel remains a bright spot relative to other sectors, but we’re also seeing signs of moderation in the travel space,” said Anna Zhou, an economist for Bank of America.

📈 Stocks

💾 Nvidia [NVDA +24.37%]. A couple of weeks ago I wrote about how the AI revolution was driving demand for Nvidia chips. Now that demand is showing up in the stock. The company reported earnings of $11 Billion (vs. $7.2 B expected).

• The stock shot up 25% and added over $200 billion to its market cap, taking it close to $1 Trillion.

• Here is the market cap of its competitors:

  • AMD [AMD]: $175 billion

  • Intel [INTC]: $120 billion

  • Micron [MU]: $73 billion

Not only did Nvidia add the market cap of AMD in one day, it’s added 9.6% to the S&P 500 so far this year.

Microsoft and Google are also both up 31% and 36% YTD, respectively.

👚 Abercrombie & Fitch [ANF -5.31%] shot up 30% on strong earnings as a result of a rebranding to try to appeal to a wider audience. Sales were up 3% and income rose to $16.57 million. The stock cooled off a bit before close yesterday.

🔐 Crypto

🚨 Alert! Crypto security firm Unciphered claims to have found a way to physically hack into the Trezor T hardware wallet.

• Trezor says it acknowledged a similar-sounding attack vector a few years ago.

• The attack requires physical theft of the device and sophisticated technological knowledge and advanced equipment.

🏀 Shaq finally served

• Shaquille O'Neal has been served with two class-action lawsuits, one alleging that he falsely promoted FTX cryptocurrency exchange and the other claiming that he founded and promoted a Solana-based NFT project that was an unregistered security.

• The FTX lawsuit alleges that O'Neal made false and misleading statements about the risks of investing in cryptocurrency, and that he failed to disclose that he was being paid by FTX to promote the exchange.

• The Astral NFT lawsuit alleges that O'Neal founded and promoted the Astrals NFT project without disclosing that he was being paid by the project's creators. The lawsuit also alleges that the Astrals NFT project was an unregistered security.

💁🏻‍♂️ DeSantis announced bid to U.S. presidency on Twitter Spaces and states he’ll protect Bitcoin. Earlier this month he prohibited CBDCs in Florida.

• "I think people should be able to do bitcoin. As president, we'll protect the ability to do things like bitcoin."

• So great to hear that if he’s elected, we can “do Bitcoin”! Someone make T-shirts.

💵 Personal Finance

Be better at spending

This is a concept in personal finance that’s new to me - spending. In the latest episode of the “My First Million” podcast they talked about the idea of having someone coach you on being good at spending money. I mean, actually spending it. It’s the opposite of frugality. But within reason.

As we’re saving and investing and building our portfolios, we get used to not spending money and watching every penny.

We don’t want to ever spend anything and we may be missing out on some great experiences.

Last year during the crypto boom I was doing pretty good, but I didn’t spend any of that money. I got greedy. Looking back, especially now that most of it is gone, wouldn’t I have been better off if I would have taken that vacation or remodeled my garage?

Frugality is important, but so is spending to enjoy life. Finding the balance is the tricky part.

💰 Be a Better Investor

I’ve found this to be more true the older I get (I’m nearly 50), especially as I talk to people who have retired. The common thread is that whether you’re working or retired, you need something to be passionate about.

It doesn’t matter what it is - gardening, Pokemon cards, golf, a business - just have something because when you stop working, having that hobby will give you more joy and happiness than sitting on the couch watching TV.

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