Morning Download from Invincible Money

Personal finance + economics + markets

Finance in 5 minutes a day to help you make better money decisions.

Good morning investors! The debt ceiling deadline looms closer, the U.S. national debt climbs higher and Bill Gates predicts the winner of the A.I. race. Let’s dive in!

📊 Economy 

Debt Ceiling Standoff

U.S. President and Speaker McCarthy met last night to try to resolve the debt ceiling. McCarthy said the meeting was “productive,” but productive no results.

What could be the consequences if they can’t agree and the U.S. defaults?

• Financial market turmoil: Loss of investor confidence, stock market decline, and bond sell-off.

• Increased borrowing costs: Higher interest rates for the U.S. government, impacting businesses and consumers.

• Economic recession: Contraction in credit availability, reduced spending, job losses, and economic downturn.

• Damage to global financial system: Instability, potential losses for banks and financial institutions.

• Loss of credibility: Diminished trust in U.S. fiscal responsibility, long-term impact on economy and foreign investment. (more here)

Silver lining: The S&P 500 rose slightly ahead of the meeting, so investors have hope of a resolution.

U.S. Running Out of Cash

💵 Goldman Sachs predicted the U.S. Treasury’s cash levels will dip below the $30 billion needed to meet obligations by June 8th or 9th.

As of last Thursday, cash balance was $57.3 billion.

National Debt

The debt continues to increase to nearly $32 Trillion or $250,000 per taxpayer, while the Federal Debt to GDP is at 120%. (Watch the numbers go up here.)

📰 News

🤖 Bill Gates says the AI winner will be whoever creates a really useful assistant.

• He predicts that AI-powered smart assistants will eventually replace search engines and e-commerce platforms. (👀 Google and Amazon)

• These assistants will be able to understand our natural language and complete tasks for us, such as making reservations, ordering food, or setting alarms.

• Gates believes that these assistants will become so ubiquitous that they will be "the operating system for our lives."

• “Whoever wins that, it will take the current dispersed high-profit areas and move it to a single area,” Gates said. Translation: Winner takes all!

📈 Stocks

🍏 Apple [AAPL -0.54%] edges closer to a $3 Trillion valuation!

• Apple's stock price has surged in recent months, reaching an all-time high.

• The rally is due to strong earnings and revenue growth, as well as the company's strong products and brand.

• However, some analysts believe the stock is overvalued and that the rally could be coming to an end.

✅ JP Morgan chase raised its net interest income target for 2023 to $84 billion.

• The increase is due to the bank's acquisition of First Republic Bank earlier this month.

• JPMorgan CEO Jamie Dimon said the bank is "well-positioned for continued growth in 2023."

🏛️ Company Spotlight: JP Morgan

JPM is the largest bank in the United States by assets ($450 B market cap), and it has a strong track record of financial performance. The company has a diversified business model, which includes retail banking, commercial banking, investment banking, and asset management. JPM also has a strong capital position, and it is well-capitalized to weather economic downturns.

However, JPM is not without its weaknesses. The company has been criticized for its high fees, and it has also been fined for various regulatory violations. Additionally, JPM is facing increasing competition from other large banks, as well as from non-bank financial institutions.

Here is a table that summarizes the key financial information for JPM and its competitors:

As you can see, JPM is the largest bank in the United States by market capitalization and revenue. The company also has the highest net income of any of its competitors. However, JPM's ROE is lower than that of its competitors, which may be due to the company's high fees.

🔐 Crypto

👺 MetaMask, a popular cryptocurrency wallet, has denied claims that it will begin collecting taxes on crypto transactions. The company says that the recent changes to its terms of service do not apply to users and only pertain to products and paid plans offered by ConsenSys, the company that owns MetaMask.

👴🏻 U.S. President Joe Biden has said he will not support a debt deal that would benefit cryptocurrency traders, as the country faces a potential default on its debt obligations. Biden has been critical of cryptocurrency in recent weeks, arguing that it is used by wealthy tax cheats and could pose a risk to the financial system.

Conversely, U.S. Presidential candidate Vivek Ramaswamy announced he’ll accept Bitcoin donations and a few other cryptocurrencies. Democrat candidate Robert F. Kennedy Jr. previously announced the same.

🌪️ An attacker managed to get a malicious proposal passed by the Tornado Cash DAO, which gave them complete control over its governance system. The attacker then used this control to steal $25,600 worth of TORN tokens. The attacker has since submitted a proposal to undo the attack. (Details)

🐧 Pudgy Penguins, a popular NFT collection, saw over $500,000 in sales of its new “Phygital” toy collection on Amazon in just two days. The toys are physical replicas of the NFTs, and they come with a digital code that unlocks the corresponding NFT on the blockchain.

💵 Personal Finance

Retirement: Thinking of retiring in the next 10 years or already retired? Watch my latest video on “My Retirement Mistakes” after I retired at 47 and had some surprises. Don’t make these same mistakes!

💰 Be a Better Investor

🧠 Get Smarter - Economics

Two schools of economics have had significant impact on economics thought and governmental policy across the world. They are the Austrian and Chicago schools of economics.

Summary:

• The Austrian school believes the economy is too complex to be managed by government intervention; favors laissez-faire economics.

• The Chicago school believes the government can play a role in promoting economic growth, but this role should be limited; favors a more active role for government in the economy.

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