There is no problem so bad that you cannot make worse.
-Astronaut Chris Hadfield
Welcome back to the Rambling Mind Newsletter. This is your Market Update.
Markets
September is living up to its history of being the worst month for stocks.
This newsletter is 1828 words, a 9 min read
Tale of the Tape
Economy
Inflation for the month of August was worse than expected.
🔍Details: Overall inflation has the highest monthly gain in 2023. Prices increased by 0.6% from July and 3.7% from last year.
Core CPI (excludes food and gas prices) increased by 0.3% from July and 4.3% from last year.
This is down from July and points to things moving in a positive direction
Why?: The driver for increased inflation has everything to do with the 2-ton death machine called a car.
Insurance cost for a car is up almost 20% on average from a year ago.
The increase is due to increased car prices causing increased costs for repairs and replacing the cars
Car parts are increased as well which adds more cost to repairs
Increased healthcare costs
I have benefitted and suffered from these increases this year, after my car accident.
Gas prices increased 10% in August due to higher oil prices as Saudi Arabia chose to limit production and refineries shut down in Texas due to the extreme heat conditions.
Takeaway: The good news is the Fed pays more attention to Core Inflation. So it is unlikely this inflation increase will cause the Fed to increase interest rates later this week. The bad news is car expenses are going to continually be expensive for the foreseeable future. So prepare accordingly. If you are currently buying a car, factor in the increased cost of gas, insurance, etc. Because it ain't getting cheaper. Especially now that the United Auto Workers Union went on strike last week.
Shutdown Eminent
Remember earlier this year, when we were all panicking about a possible government shutdown due to the Senate and House not signing off to increase the government budget? Nope, you aren't having Deja vu. It is really happening again
🔍Details: According to Axios, "The House of Representatives needs to pass 12 appropriations bills needed to fund the government by Sept. 30 — and it hasn't yet passed a single one."
House Republicans are squabbling once again about the same things they squabbled about earlier this year
They want to reduce spending and also want to begin an impeachment inquiry on President Biden.
Takeaway: Government spending is about 25% of the US GDP. Through the number of people it employs directly and businesses it has ongoing contracts with. The current leaders have no sense of actually doing the job their jobs. Everything has become a means to garner more votes and gain supporters. It is no longer about actually helping the people who voted you into office but rather standing against those whom you disagree with.
The budget is nothing more than to decide how to spend the money they already committed to spending. So it makes absolutely no sense that various officials are trying to use it to hold up the process. Ignoring all the various people they are hurting on the way.
Child Poverty Rate Doubles
Speaking of people hurting by the government choosing to bicker over ridiculous stances. According to the US Census Bureau, the Child poverty rate in the US has returned to its pre-pandemic levels after falling to an all-time low in 2021.
🔍Details: During the pandemic, the government instituted multiple policies to help lift almost 3 million children out of poverty.
One of those policies was an increased child tax credit which expired in 2022
Takeaway: What kind of country do we want to be? One that is quick to help the largest corporations or richest folks with our complex tax code while allowing children and mothers (the most vulnerable in society) to suffer?
Or One that is known for our ability to protect the weakest?
Another Example of Government sucking: A Federal judge shut down the extension of the DACA (Deferred Action for Childhood Arrivals) program.
United States Government vs. Google
This is the biggest antitrust case since Microsoft in 1998. Now Google takes the mantle in this new technological age.
🔍Details: The antitrust case is due to Google's 90% market share over the search engine market. The question of the case is if Google achieves its large monopoly position illegally. Example:
Paying Apple to be the default search option on all Apple devices
Using its Android devices to force users into the Google Ecosystem
Google says no those are not illegal because although they may pay to be the default option. The option to change their search engine is not blocked therefore it is not illegal.
Takeaway: The findings of this trial will change the tech landscape forever. Even if Google wins, expect the DOJ to extract their pound of flesh from Google just like they did with Microsoft. It is so ironic that it was partly due to that antitrust trial that Google Chrome is as popular as it is today.
This is especially a bad time for Google to be so focused on a lawsuit as it battles to ensure it remains on the front foot in the AI race. If Google is distracted or holding back its resources in order for confidential and proprietary information not to be released. It will limit their ability to go full force in the AI race.
Apple's event last Tuesday was exactly as expected.
🔍Details: Here are the items announced:
The biggest change to the iPhone 15 lineup is something old to the rest of the world but brand new to iPhone users, USB-C.
Thank you, EU for forcing Apple to join the world in using a UNIVERSAL standard.
Other changes are upgrades to the cameras and new chips for faster processing
Prices: The iPhone 15 starts at $799, and the iPhone 15 Plus starts at $899
iPhone 15 Pro starts at $999, and iPhone 15 Pro Max starts at $1,199
iPhone 15 Pro has an Action Button that can be programmed for quick actions.
Never thought I would see the day that Apple would actually let people customize part of their phone
New Apple Watches with new chips and a brighter display
Apple introduced a double tap gesture that is really cool and I think was the biggest takeaway from the event.
Prices: Watch Series 9 starts at $399 with GPS (or $499 with GPS and cellular)
The Ultra 2 costs $799 with GPS and cellular. (Literally the price of the phone and it will still sell easily)
Takeaway: I find this tweet to be spot-on about where Apple is now as a company. Unlike the tweet, I see it as a very positive thing. Apple is a mature business that does not have to fight for attention or approval. Costco is one of the Greatest Businesses in the world because its customers know exactly what they will get with Costco. Costco is not trying to be all things to all people, if you choose to get a membership to Costco you are accepting the trade-offs. Same with Apple, Apple does not want everyone to buy its devices. It wants the right people to buy them, Apple is not trying to convince anyone about what it offers. It assumes you already know what it offers.
My Takeaway: Apple is king. No matter how much I bash them for being late or slow. The consistency and discipline they have displayed have continued to work to their benefit. Now could it work against them? YES. Apple is no longer just a tech company. Apple is now a consumer-defensive company like Costco and Walmart.
There is a reason Warren Buffett's portfolio is 51% of this company. Important note: the position grew to be 51%.
Stats of the Week
$154.3 Trillion
With a strong and surprisingly resilient housing market combined with a strong recovery from the stock market. According to the Federal Reserve, US households just hit a new record in total wealth in the second quarter of 2023.
Stock contributed a growth of $2.6 trillion
Real Estate added $2.5 trillion
Asterisk: There is a massive gap between those who have and those who are trying to have. Especially in the housing market, the rise in housing net worth means it is even more unaffordable for most people.
$400
People paid upward of $400 for horrible seats in hopes of watching Messi play against Atlanta. But Messi did not make the trip to Atlanta. So for everyone who keeps saying "This is a once-in-a-lifetime opportunity" I hope you learned a good lesson. Things change FAST!!
Looking Ahead
Papa Powell and His Fed Crew meet next week on Tuesday and Wednesday to once again decide if interest rates need to be increased or remain the same. It is widely believed that the Fed will choose to hold interest rates steady as inflation (mainly core inflation which the Fed prefers) has continued to fall this year.
Sports I Love
Do I even need to say it at this point?
Thank God I have Madrid to wash the trash taste of Man U out of my mouth.
College Football
This game was exciting but it started at 10 PM Eastern and went on until like 2 AM. I am too much of an old man to stay up that long, so I passed out during the first Overtime. Glad to wake up to see Prime win another game.
Extras
It seems cooler heads have prevailed in the spat between Disney and Charter. After causing many football fans pain two weeks ago. Disney and Charter decided to let bygones be bygones and agreed to a deal for Disney's various channels to be placed back on Charter Cable.
Details: Both companies signed a new multiyear distribution deal to restore ESPN and some other premium channels to Charter's 15 million cable customers (which still is unbelievable that they have that many subscribers).
Channels coming back to Charter include Disney Channel, National Geographic, FX, ABC local stations, and the SEC Network.
Channels no longer available to Charter: Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild and Nat Geo Mundo
Customers will also be able to buy Disney+, Hulu, or The Disney Bundle directly from Charter
Charter customers will also get Disney+ Basic and Hulu included in one of Charter's Cable Bundles
In His Words: CEO Bob Iger of Disney and CEO Chris Winfrey of Charter said in a joint statement, "This deal recognizes both the continued value of linear television and the growing popularity of streaming services while addressing the evolving needs of our consumers."
Takeaway: Both companies realized no one wins when you go to war. Sure you may get your way temporarily but in the end, you lose. In the time period both companies were bickering, I know many people who just decided to use YouTube TV and ignore both parties. Both companies were fighting over a melting ice cube and almost drowned.
*I am a tiny shareholder in this company.