Good morning investors! Bitcoin jumped to $65K yesterday as stocks continued to do well.

Today we cover:

• Yellen sees a soft landing

• Now the port is on strike

• Southwest Airlines is changing

📊 Economy and News 

Yellen: U.S. Economy on Track for Soft Landing Despite Inflation Challenges

U.S. Treasury Secretary Janet Yellen said the U.S. economy is headed toward a "soft landing," supported by strong labor market and inflation data. She noted that while inflation is easing, the "last mile" to control it lies in reducing housing costs.

Yellen also highlighted the importance of reducing the U.S. deficit to manage long-term interest costs while continuing to invest in key sectors for future growth. On financial stability, she affirmed that banks are well-capitalized, though regulators are discussing ways to improve access to liquidity for banks with uninsured deposits.

Rising Yields: Despite the rate cut, Treasury yields, especially on longer-term bonds, have been rising.

Bond market analysts attribute much of this increase to a correction, as markets had previously overestimated the extent of rate cuts ahead of the Fed meeting.

However, some experts view the Fed's emphasis on stabilizing the weakening labor market as a sign that they may be more willing to accept slightly higher inflation than usual.

Rising Orders: Finally, new orders for U.S. capital goods rose unexpectedly in August, but business investment in equipment has slowed during the third quarter.

Global hits:

• European stocks higher as mining stocks lead gains; French luxury giants LVMH and Kering up 8%; however, H&M shares fall as much as 8% on profit miss and scrapped earnings margin target.

• Canada makes it easier for mortgage borrowers to switch lenders.

• Wells Fargo sees China's economy growing 4.6% in 2024, below the government's 5% goal. Reports suggest the country is planning to issue $284 billion of sovereign debt this year to help revive economy while also offering a one-time allowance to disadvantaged people.

Another strike: Longshore workers from ports stretching from Maine to Texas plan to go on strike in October, which will impact everything from fresh produce like bananas to imported European wine and spirits, as well as clothing, toys, household items, and European automobiles. The availability of crucial parts for U.S. factories may also be impacted, putting the jobs of American workers in jeopardy and making things more expensive.

📈 Stocks

S&P 500 5,745.37 (+0.40%)
DJIA 42,175.11 (+0.62%)
NASDAQ 18,190.29 (+0.60%)
BRENT CRUDE 71.13 (-3.04%)
* Prices as of Sep 27th, 12:20 AM UTC

Southwest Airlines is changing

Southwest Airlines has raised it’s summer revenue forecast, authorizing $2.5 billion in share buyback. This comes after the company announced plans to reduce service next year to and from Atlanta, the world’s busiest airport.

The company also plans to introduce new features: extra legroom seats starting in 2026, assigned seating, international partnerships and overnight flights.

Southwest said its three-year plan will add $4 billion to earnings before interest and taxes in 2027.

The report sent the stock up about +7%.

Worrisome: Airbus is slow to deliver raising fresh concerns over annual target.

💵 Personal Finance

How much should you spend on food?

Most people spent 11.3 percent of their disposable personal income on food last year. So, how much should you spend on food? According to the Consumer Price Index, the average cost of eating food at home rose 11.4% in 2022 versus 2021. Things only worsened last year with the index climbing 3.7% from September 2022 to September 2023.

See what the USDA tells

The USDA offers guidelines to help families set their monthly grocery budgets:🥦 

• Liberal budget: Expect to spend $365.20 a week or $1,582.90 a month.

• Moderate-cost plan: Expect to spend $302.80 a week or $1,311.50 a month.

• Low-cost plan: Expect to spend $243.80 a week or about $1,055.80 a month.

• Thrifty plan: Expect to spend $225.10 a week or $975.20 a month.

These figures show that it is possible for a family of four to survive with less than $1,000 (groceries). However, each family is different and there are several factors that can impact your budget, including:

• The age of your children. Teenagers tend to eat more. A moderate budget for a teenage boy between ages 14 and 18 would be $87.90 in groceries a week for a moderate budget. For comparison’s sake, a child who is 9 to 11 years old, according to the USDA's moderate budget, would eat $76.30 in food every week.

• Men eat more than women, so if you have two boys then your budget may be higher. For example, the FDA says that it costs $70 a week to feed a teenage girl between the ages of 14 and 18, $17.90 less a week than for a teenage boy.

Any other ideas?

You can also use the 50/30/20 rule to budget for groceries. Here’s what it says:

• Spend 50% of your monthly after-tax income on needs, 30% on wants and 20% on savings and debt repayment.

Now, sticking to the 50/30/20 rule means breaking your salary (let’s say you make $3,000) according to the formula:

• $1,500 for needs

• $900 for wants

• $600 for savings and debt repayment (Remember, you can use our Budget Calculator for the job)

Now, the entire amount ($1,500) is not for groceries. How much to spend on groceries depends on factors such as your other needs. Let’s say you only have $300 left after spending on rent and utilities (other needs).

Now, $300 may not be enough to cover a month’s groceries. In this situation, you can take additional money from your “wants” budget while working to improve your financial situation.

If you are going out of budget then check this video for tips on how to save money on groceries:

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

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