⛽️ Oil to $100?

and stocks slip

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Good morning investors! Buyers are worried as October continues to be a difficult month.

Today we cover:

  • Oil to hit $100?

  • Stocks slide.

  • Ripple goes down.

📊 Economy and News 

Oil to hit $100?

Oil prices jumped after Biden comments on possible Israel retaliation against Iran; however past geopolitical scares have often failed to materialize into major supply disruptions. Still, experts caution that the situation could still escalate, driving oil prices significantly higher.

Key Oil Price Scenarios:

  • Current Situation: Oil prices are hovering around $70 per barrel, well below last year's peak of nearly $90. The market remains subdued due to concerns over a supply glut, weak demand from China, and internal OPEC+ issues.

  • Mild Escalation: If Israel strikes Iranian energy facilities, prices could rise to $86 per barrel. Iran’s ability to sell oil, primarily to China, has persisted despite sanctions, but key infrastructure like Kharg Island—responsible for 90% of Iran's exports—remains vulnerable.

  • Severe Disruption: An attack on the Strait of Hormuz, a vital chokepoint for global oil shipments, could drive prices above $100 per barrel. This is considered a more unlikely scenario, but experts warn the market would temporarily spike before stabilizing.

  • Potential Responses: In case of disruptions, OPEC could step in to compensate for lost supply, though it would take time. The U.S. may also release oil from its Strategic Petroleum Reserve to ease market pressure.

While oil prices remain stable for now, the situation bears watching closely, as any disruption could have global economic impacts.

Global hits:

  • Lower mortgage rates are sparking an uptick in the U.K. housing market, with home sales rising last month at the fastest pace since the post-lockdown boom.

  • U.S. bans Chinese firms in Uyghur region as Beijing fights forced labor claims.

  • Despite dovish remarks from Japanese Prime Minister Shigeru Ishiba causing a sharp yen drop, analysts remain firm on their long-term Bank of Japan policy outlook. On the other hand, Sterling plunged more than 1% against the dollar, euro after Bank of England governor’s comments on rates

Higher jobless claims: Initial filings for unemployment benefits nudged higher last week and were a bit above expectations.

Interesting: Starbucks is investing in two new farms in Central America to get closer to a goal of protecting its coffee supply from climate change. Elsewhere, OpenAI gets $4 billion revolving credit line, giving it more than $10 billion in liquidity.

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📈 Stocks

S&P 500 5,699.94 (-0.17%)
DJIA 42,011.59 (-0.44%)
NASDAQ 17,918.48 (-0.037%)
BRENT CRUDE 13 (+%)
* Prices as of Oct 4th, 12:20 AM UTC

Stock Market Closes Lower

Stocks dropped on Thursday as concerns over Middle East tensions kept investors cautious ahead of September’s payroll report. U.S. crude futures surged over 5%, pushing their week-to-date gains above 8%, driven by fears of escalating conflict.

Energy stocks benefited from the rally, with the S&P 500 energy sector climbing 5.9% for the week, marking its best performance in over a year. However, most of the market struggled, with nearly 80% of S&P 500 stocks falling. Small-cap stocks also slipped, with the Russell 2000 down 0.7%.

As the week draws to a close, all three major indexes are on track for losses. The Dow and S&P 500 are both down 0.7%, while the Nasdaq has fallen 1.1%. This comes after a strong first three quarters, with 2024 showing the biggest nine-month gain since 1997, according to Bespoke Investment Group.

Meta, however, had a good day as it hit another all time high of $583.36.

Not surprising: .Grocery stores and retailers say consumers are panic buying products over shortage concerns as the U.S. East and Gulf Coast ports strike continues.

Bad News: Tesla recalls more than 27,000 Cybertrucks to fix rear-view camera delay. On the other hand, Levi Strauss delivered mixed quarterly results and said it was looking to sell its Dockers business.

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🔐 Crypto

Bitcoin $60,634 (+0.10%)
Ether $2,349 (+0.02%)
Solana $136 (+0.13%)
Total market cap $2.11 (+0.12%)
* Prices as of Oct 4tg, 12:20 AM UTC

Ripple crashes after SEC chooses to appeal

XRP fell over -9% to 52 cents on Thursday, following the SEC’s move to appeal a 2023 court decision. The ruling had determined XRP is not a security when sold to retail investors on exchanges.

Ripple, XRP's largest holder, won a partial victory in the case last summer after a three-year battle with the SEC. U.S. District Judge Analisa Torres ruled XRP is not a security for retail investors but is considered an unregistered security when sold to institutional investors.

Ripple’s chief legal officer, Stuart Alderoty, called the SEC’s appeal “disappointing, but not surprising,” and said the company is considering a cross-appeal.

💵 Personal Finance

Should you contribute the max?

Maxing out is good in most cases, but not always. We suggest that you decide ‘how much to contribute’ based on these factors:

Non-retirement goals

Don’t just consider retirement goals, look at non-retirement goals as well. Here’s a checklist to look at:

  • Get rid of debt.

  • Build an emergency fund.

  • Get insurance, including health insurance, long-term care insurance, disability insurance, and life insurance, and ensure it is adequate.

  • Establish a will or trust.

We suggest that you complete these goals before considering to maxing out a retirement plan. Also, a lot depends on your personal goals. For example, some individuals might prefer to own a house than to max out 401(k) contributions.

Reminder: Contribute the minimum (at least) to get your employer’s match for a company-sponsored retirement plan, if it’s offered

Look at alternatives

Consider alternative investments, as fees and taxes play a key role. If your employer-sponsored plan has high fees, you might direct extra funds to a traditional or Roth IRA. After maxing out IRAs, reinvesting in your 401(k) could be beneficial.

The main difference between traditional and Roth accounts is when you're taxed: Roth contributions are made after taxes, but retirement withdrawals are tax-free. Roth accounts also offer a wider range of investment options, like ETFs.

Summary: Max out your retirement accounts if you can do it without being in debt and giving up on other (important) goals.

Some people even consider cryptocurrencies an alternative. In fact, about 44% of Americans with retirement savings have invested in cryptocurrency.

Bitcoin has ben one of the best performing assets this year, so it might be a good idea to consider it but we suggest that you first understand the economy and where the price is heading.

Check this interesting video for more:

💰 Be a Better Investor

The key to money is to stay invested.

Suze Orman

Resources:

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