Morning Download 

Personal finance + economics + markets

Together with Shortform

Good morning investors! We'll be hearing from some big companies this week as Nvidia and Zoom are expected to announce earnings.

Fun fact: The average person starts investing at 33.3 years of age (but you shouldn't wait this long)

Today we cover:

• The OpenAI drama.

• Airlines stock set to go higher?

• Municipal bonds and how they can help you save income tax money

Follow us on Twitter for more.

📊 Economy and News 

All about the OpenAI Drama

OpenAI surprised the world on Friday with when the company abruptly fired Sam Altman, the Silicon Valley CEO behind the artificial intelligence-powered chatbots ChatGPT and GPT-4.

Why? Microsoft-backed OpenAI said the decision was taken due to losing confidence in Altman’s ability to lead the company.

Several theories have been doing the rounds on the internet. Some believe that Altman circumvented the board in a major deal and some believe it's linked to a privacy incident.

Back already? OpenAI investors are already pushing to bring Altman back as CEO. In fact, some reports suggest that the board has already made an offer to Altman, who is seriously considering it.

That would mark a shocking reversal of one of the more bizarre chapters of Silicon Valley leadership changes — and a key decision that could affect control over the future of AI, one of the key technologies expected to pave the way for the decades to come.

Global hits:

• Gas prices are falling.

• Apple and other major companies are boycotting X.

• SpaceX’s Starship rocket reaches space but is intentionally destroyed mid-flight.

Also check: OpenAI shakeup has rocked Silicon Valley, leaving some techies concerned about the future of AI.

📈 Stocks

S&P 500 4,508.24 (+0.12%)
DJIA 34,945.47 (-0.13%)
NASDAQ 15,833.17 (+0.10%)
BRENT CRUDE 81.28 (+0.21%)
* Prices as of Nov 20th, 12:20 AM UTC

Airlines expect big numbers this holiday season

The Transportation Security Administration expects to screen 30 million passengers this holiday season – from Nov. 17 through Nov. 28, the most ever. The Sunday after Thanksgiving is expected to be the busiest day during that period with an estimated 2.9 million passengers taking to the skies.

This might be a good sign for the airline industry, which has been struggling since the pandemic. The Ukraine war and the situation in Israel affected revenues but there’s hope that increased domestic demand will push airline stocks.

Delta, American Airlines, United Airlines, and other national and international names have been down from the highs they touched before the pandemic. Some experts expect these stocks to jump in the next 12 months.

Keeping this in mind, we dissected Delta the previous week and gave it a hold rating. You can check this issue and many more by joining the PRO newsletter – free for the first month. Start your trial now so you never miss out on a good opportunity.

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🔐 Crypto

Bitcoin $37,173 (-0.64%)
Ethereum $2,000 (-0.36%)
Total market cap $1.41T (+1.82%)
* Prices as of Nov 20th, 12:20 AM UTC

What’s happening in the crypto world

Here’s all that you need to know:

• The active supply of Bitcoin and Ethereum is at record lows with $1 billion worth of ETH tokens having exited crypto exchanges in the last few weeks.

• Fidelity has plans to create an Ether ETF.

• Yearn.finance token tumbles 43%, community speculates on exit scam. On the other hand, interest in Bitcoin is still increasing with Fool.com calling it one of the best assets to invest in. Furthermore, Cathie Wood expects Bitcoin to reach $600,000.

💵 Personal Finance

Municipal bonds and how they can help you save income tax money

Introduction to municipal bonds

Also called muni, municipal bonds are bonds issued by local or state governments, or government-owned entities.

These 'investment instruments' work like traditional bonds. When you buy a municipal bond, you lend money to the government in exchange for interest that is to be paid over a predetermined period.

Once the bond reaches maturity date, the owner receives the full payment (the original investment) from the buyer.

Commonly used in the US, these bonds are also available in other countries under different names, such as local authority bonds.

How can municipal bonds help save tax money?

Though not all, most municipal bonds are tax-exempt, including federal and state taxes. However, you may have to pay state taxes if you do not live in the state where the bond is issued.

This feature enhances the bond’s value and gives investors a chance to diversify their investment portfolio.

Let’s compare how municipal bonds fare against traditional or taxable bonds. We can use this formula to calculate the yield:

Let’s say an investor is in the 35% tax bracket and he chooses to invest in tax-free muni bonds that yield a return of 4%.

Now, apply these to the formula:

Now, you will have to find a taxable bond that offers at least 6.15% to enjoy the same returns as the municipal bond.

Also, we must mention that not all activities enjoy the tax-exempt status.

Careful how you buy them

Warning: Be careful when checking the secondary market as munis bought at a discount will be taxed at the capital gains rate. The table below shows how it's taxed:

The difference between the bond's net present value and the principal payment at the time of maturity is taxed at 15% (capital gains rate). Based on this, it can be concluded that the bond bought at a discount rate will be worthless. Here’s how:

You might end up paying more than the bond's value ($96.22 versus $95.62) due to this rule. Hence, don't just look at the price of the bond but also the yield to maturity to ensure tax consequences do not affect your return.

The best way to buy municipal bonds is from a broker-dealer, bank or investment advisor, through a self-managed account or ETF.

Check this video for more on municipal bonds:

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