Morning Download from Invincible Money 

Personal finance + economics + markets

In partnership with Brilliant

Good morning investors! Mixed results from yesterday’s poll about whether you’ll use Meta’s new Threads. 40% said they’d try it, 40% said no way and 20% said they just want to see Musk and Zuck fight in the Colosseum.

0% said the Threads sounded awesome.

Today we cover:

1. A strong job market leads the market lower. Why?

2. Wen superintelligence?

3. Did we switch from a “rolling recession” to a “rolling recovery”?

4. What the VIX is telling us

📊 Economy 

Strong jobs report, but market tanks. What gives?

497,000 private sector jobs added in June, more than double expectations.

Breakdown: Leisure and hospitality had 232,000 hires. Construction was 97,000 and trade, transport and utilities had 90,000.

Analysis: So twice as many jobs added, then why did the market drop 300 points?

A strong job market means more people are getting hired, earning money and spending it. That increased spending leads to consumer demand which contributes to inflation.

The fear: So a strong job market makes the Fed’s job of keep inflation low more difficult and increased the likelihood of more rate hikes to slow down the economy and bring down inflation to the 2% target.

Quitting has also slowed

The rate at which Americans are quitting their jobs has slowed since peaking during the pandemic.

The so-called quits rate, which measures the number of resignations as a share of total employment, fell from 3% last April to 2.5% this April.

• This nearly matches the pre-pandemic level.

• The decline in quits is another sign that the labor market is cooling (even considering the strong numbers reported today) from ultra-hot levels as the Federal Reserve raises interest rates, which could help the Fed get inflation down.

Our take: The Fed will likely raise rates 2 more times this year since the market is uncertain. They don’t want to take any chances of not acting and seeing an uptick in inflation.

📰 News

The Rolling recovery is here

Ed Yardeni has been talking about being in a “rolling recession,” meaning some industries are doing poorly, but others are okay. However, he just said we switched to a “rolling recovery,” in part thanks to the 12% rise in new home sales. He stated that the residential real estate sector has been in a recession for 8 quarters and this turnaround marks the start of the economic recovery.

Meanwhile, Tom Lee at Fundstrat seems to agree. He raised his S&P 500 target from 4,750 to 4,825, a 9% increase from here!

Quick hits:

When Superintelligence? OpenAI forms a group to deal with emerging “Superintelligence,” which they expect to emerge this decade. (Whoa!)

• Another term is AGI, which stands for Artificial General Intelligence. What we have now is Artificial Narrow Intelligence, which means AI’s can only do specific tasks.

• Artificial Super Intelligence would be smarter than humans and learn at an exponential rate.

• In short: Artificial Narrow Intelligence → Artificial General Intelligence →Artificial Super Intelligence → Skynet?

Cars in the U.S. are now the least affordable ever. Most major car companies are experiencing strong sales and raising prices. Tesla shipped an all-time record and GM reported a 19% increase in cars sold over last year.

Cathie Wood of ARK Invest sold Tesla and bought Meta. Tesla was down 3.2% and she only sold $8 million worth, but bought $1.6 million of Meta.

📈 Stocks

S&P 500 4,411.59 (-0.79%)
DJIA 33,922.26 (-1.07%)
NASDAQ 13,679.04 (-0.82%)
VIX 15.44 (+8.89%)

Why the VIX spiked

☝🏽 Look at the VIX number above. You may have noticed the last couple of weeks, the VIX has been opposite the market numbers. Market is up. VIX is down and vice versa.

Today is a more extreme example. The VIX jumped nearly 9%!

Why? An increase in the VIX means that investors are expecting more volatility in the stock market.

Volatility means greater swings, up or down. It is not the same as risk, which is a very common misconception. Volatility can actually be really good for investors. For example, Bitcoin is very volatile, but also the best returning asset this year and for the past 10 years.

Note: It is important to note that the VIX is not a perfect predictor of future volatility. There have been times when the VIX has been high and the stock market has gone up, and there have been times when the VIX has been low and the stock market has gone down. However, the VIX can be a useful tool for gauging investor sentiment and for assessing the risk of the stock market.

Active stocks

Sweetgreen [SG +15.49%] up 15% after Bank of America upgraded it.

Bank of America [BAC -2.75%] itself was down despite announcing an increase in their dividend by 9.1%. It was down due to a discrepancy in how the bank and the Fed views its risk management in case of a recession.

Overstock [OSTK -10.80%] came down from its surge upon announcing they’re changing their to Bed, Bath & Beyond after buying the defunct companies intellectual property.

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🔐 Crypto

Bitcoin $30,286.38 (-0.7%)
Ethereum $1,881.82 (-1.5%)
Total market cap $1.22 (-0.6%)
* Prices as of July 6th, 5:00 PM EST

Ethereum Update

For Ethereum investors, it’s been an interesting year. The Shapella upgrade was a success, boosting the price. Some early whales sold some ETH, but institutions are buying. There’s even talk of an Ethereum ETF once all the BTC ETFs get approved.

I recommend this great video for an update on Ethereum:

💰 Be a Better Investor

Zuck throws down with Threads

Threads had a strong launch with 30 million users on the first day. It’s too early to tell if it will go the way of all the “Twitter killers” before it or take off like Instagram.

In the meantime, here are some important stats on a potential match between Elon and Zuck.

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