Morning Download from Invincible Money 

Personal finance + economics + markets

Good morning investors! Let’s start this week with this quote:

“Every problem has a solution. There's ALWAYS a way to fix something. So rest assured, all the right solutions will become known to you soon.”

Last week wasn’t very positive but things are starting to get better again.

Today we cover:

• Consumer sentiment is falling but there’s hope

• The US is more expensive than ever but we’re working to make it right

• Stocks this week + earnings

• Car ownership versus Uber

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📊 Economy 

Consumers are worried but the future looks great

For the first time this season, US consumers do not seem optimistic about the economy. This comes after two consecutive months of gaining confidence.

Consumer sentiment fell to 71.2 in August, 0.4 points down from July. Positive inflation numbers and improved job data had sent the sentiment up; however, expensive housing and increasing gas prices seem to have hampered consumer confidence.

“The University of Michigan’s measure of consumer confidence edged lower in August but is likely set to drop even further because of the recent increase in retail gasoline prices,” wrote Ryan Sweet, chief US economist at Oxford Economics.

However, things might improve next year as shelter inflation is expected to reach 0% in 2024. Moreover, some predict it to turn negative by the end of 2024.

📰 News

Families need $709 more today than they needed two years ago (to survive)

US inflation seems to be affecting everyone, including families. The average US family needs $709 more today than they did two years ago to buy the same goods and services.

“High inflation of the past 2+ years has done lots of economic damage,” said Mark Zandi, chief economist at Moody’s Analytics.

Housing costs have proven to be the main driving factor. However, it's not the only contributor as families are also spending on other things such as groceries, vehicles, and recreational services.

It must be mentioned that while paychecks have also increased in the last two years, they haven’t grown at the same rate for most people. Earnings are stuck at 2019 levels when adjusted for inflation. This means you’re making less money today (in real terms) than you did in 2020.

Yet, things are looking to get better as wages have started to grow at a nice pace. For the first time in two years, wages rose by over 4% while consumer prices increased by 3%.

Quick hits:

• ChatGPT passes the AP Bio exam, leaving Bill Gates gobsmacked.

• About 80% of bosses are unhappy with their initial return-to-office decisions.

• How the retail industry plans to use the latest technology to reduce theft.

📈 Stocks

S&P 500 4,464.05 (-0.11%)
DJIA 35,281.40 (0.30%)
NASDAQ 15,028 (-0.67%)
VIX 14.84 (-6.37%)
* Prices as of Aug 14th, 12:20 AM UTC

What to expect this week

This is going to be one of the last busy weeks of this earnings season with big retailers expected to announce earnings. Reports so far have been positive but experts believe that the last leg may have some bad news. Moreover, the Census Bureau is expected to announce retail sales data on Tuesday, which will tell more about consumer spending.

Furthermore, we'll get to know about the expected monetary policy changes when the Federal Reserve releases minutes from the latest FOMC meeting on Wednesday. All in all, it’s going to be a very busy week.

Earnings this week:

Some of the largest stores in the country are expected to announce earnings this week:

• Monday.com, XP (14-Aug)

• Home Depot (15-Aug)

• Cisco Systems, Target (16-Aug)

• Walmart (17-Aug)

• Deere, Palo Alto Networks (18-Aug)

🔐 Crypto

Bitcoin $29,373 (-0.05%)
Ethereum $1,847.55 (-0.03%)
Total market cap $1.17 (-0.02%)
* Prices as of Aug 14th, 12:20 AM UTC

Can stablecoins help the US Dollar?

Brian Brooks, a partner at Valor Capital Group, believes that stablecoins can help the USD, if regulated properly. A former CEO of the U.S. arm of crypto exchange Binance, he agrees with Bernstein's term “killer app for crypto” because of their ability to facilitate payments.

“Citizens in countries that have high inflation are really strongly demanding dollar-denominated products to keep their money safer after they’ve earned the money,” he said while talking to CNBC’s “Squawk Box” Friday. “In many countries where you can’t get a dollar bank account, stablecoins are your best solution.”

Big giants are entering the stablecoin market. PayPal now has its own stablecoin and others may follow suit.

“Demand for [stablecoin products are] a way for us to make the dollar relevant again at a time when governments around the world are looking to decouple from the dollar,” said Brooks. “That’s really a pretty important policy issue. It’s not about crypto, it’s about the role the United States plays in the financial system.”

💵 Personal Finance

Cars are expensive now, should you ditch one for Uber?

US car loans stand at $1.5 trillion and most consumers are struggling to make payments. There are over 286 million cars on the road in the country and car ownership is getting harder and harder due to inflation, supply chain issues, and rising interest rates.

Over 91% of US households own at least one car. However, a large percentage of these vehicles are loaned.

The average person pays about $725 in monthly car loan payments for a new vehicle. It falls to $516 for a used vehicle. The number is significantly higher than the 2022 figures when the average monthly payment for a new car was only $650 and about $505 for a used vehicle.

This is a lot of money and it makes us question if it's time to ditch a car and choose Uber. In order to answer this question, you first have to understand the true cost of each.

Uber Versus Owning a Car

Uber and Lyft have already overtaken taxis. Still, only about 4% of consumers use ride-hailing services. Let’s first understand how much it costs to own a car:

• You have to make monthly payments ($725 or so).

• There are insurance charges that stand at about $1,824 per year.

• Car maintenance costs about $1,200 each year.

• Expect to spend about $8,000 to fuel your vehicle if you drive at least 10,000 miles per year.

• Depending on where you live, parking fees can be up to $500 a year or more in some cases.

All in all, owning a car will set you back about $11,000 per year (minus monthly loan payments).

Now, let’s talk about Uber or other such services.

When you go for ride-sharing options, you do not have to worry about parking fees, maintenance fees, etc. You pay a fare and reach your destination. As a result, it’s considered relaxing as well. But, what about costs?

It can be hard to tell because there are many variables at play. We suggest you look at these factors when deciding whether to buy a car or use car-hailing services.

• The busier you are, the harder it is to own a vehicle as more time is wasted maintaining and parking a car.

• The level of comfort you are used to. If you want a luxurious experience then ride-hailing may be more expensive.

• If you go long distances then ride-hailing may not always be suitable.

Our take: All in all, we can say that rideshare services can be cheaper for people who live in a busy area and do not drive much. Similarly, those who drive over 10,000 miles each year should consider buying a car. The average cost per mile begins to decrease as you drive more; however, it also depends on the type of your vehicle.

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