The best time to plant a tree was 20 years ago.
The second best time is now
-Chinese Proverb
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Welcome back to the Rambling Mind Newsletter. This is your Market Update.
Markets Year-To-Date
Who would have thought that the stock market would be up this much? (NOT I) With all the noise of a possible recession (self-included in making noise), the market has ignored everyone and kept moving up and to the right. Does this mean it will continue? Not necessarily but who cares. We take the wins when they come.
This newsletter is 1,273 words, a 6 min read
Tale of the Tape
Economy
Labor Market remained strong but like a senior in the last month of classes, it is firmly in the "I'm coasting" phase. Not too bad but not the same level as last year.
🔢By the Numbers: 209,000 jobs were added to the economy in June, according to the Nonfarm Payrolls.
The unemployment rate dropped to 3.6% from 3.7% in May.
This is 30,000 jobs less than was expected by economists.
This is the first time in over a year that the jobs number came in less than expected.
😥Bad News: Average Hourly Earnings continue to decline.
More people are getting jobs but not the jobs they actually want or that pay well.
The number of part-time workers increased as hours were cut for "economic reasons"
We are back to the 2018/19 labor market.
Takeaway: The Fed is getting exactly what it wants. Rather than crash-landing the economy to kill inflation. It was able to slow down the plane of the economy and simply run over inflation.
My Takeaway: The power is back in the hands of employers. I'm seeing it in my own company. Flexible work arrangements are slowly being clawed back. Raises are slowly being reigned back to historical numbers (5-7% raises are back to 2-3%). There's less of a hesitancy to let people go. Essentially, we are back to a world where shareholders are more important than employees. Where efficiency aka profit is the top priority and reducing cost is the number 1 priority meaning labor will be eliminated if necessary.
Don't know if y'all heard but apparently, Elon and Zuck are gonna have a cage match shortly. I doubt the fight will ever happen but I hope it does. However, while we wait to see two grown-ass men act like 5th-grade little boys that can't control their emotions. We can see them battle it out in the business world.
🤔🤨Say More: Facebook just released its Twitter clone called Threads. Facebook is calling it a microblogging app. With many disgruntled Twitter users looking for an alternative, this was the best climate for the app to be launched.
Since Musk took over Twitter, he has implemented many policies that have frustrated users. The latest policy is limiting the number of tweets non-paying users can view on the platform. He has also limited the reach non-paying users can have for their posts.
Backdrop: Other Twitter alternatives have popped up but none have been able to fully challenge Twitter's dominance.
Bluesky and Masterdon are two of the most popular alternative but most creators do not like the idea of starting from scratch
Facebook's Thread changes that.
Threads account will be connected to your Instagram account and it will allow you to port over all your followers from Instagram directly to threads.
Creators will not have to start from scratch to create a following
Plus Facebook specializes in the art of “idea-lifting” aka stealing and implementing
Snapchat to IG Stories
TikTok to IG Reels
Takeaway: This will work. People regularly take screenshots of their tweets and share them as pictures on IG. There are entire apps designed to share tweets as pictures.
Being able to share your tweets to your IG feed or IG Stories will be a very easy sell for a ton of creators. But it will be interesting to see how non-creators take it. We are creatures of habit, and most people who use Twitter hate IG so it will be interesting to see how IG infiltrates those habits. But all of us wannabe influencers will def be jumping on it ASAP (follow me @bykelechiwuaba)
In the first 2 hours of launch, the new Threads app had 2 million sign-ups. By the end of the day, it had over 30 million users.
Update: As of Sunday morning, the app now has over 90 million users
By the time you are reading this, the platform will probably have over 100 million user
It will be the fastest platform to get 100 million users in history breaking ChatGPT’s record.
Stats of the Week
Nope, it’s not you. It is true that hot.
Tuesday was the hottest day ever recorded on Earth. According to Oxford University geosystem science professor Myles Allen, the rest of summer will remain just as hot. And we will likely have even hotter days.
STAY HYDRATED FOLKS!!
🏠92%
According to Redfin, this is the percentage of homeowners with a mortgage interest rate less than 6%. This is adding pressure to the tight housing market in the US because:
The current mortgage rate is 6.92%
No one wants to give up such a cheap loan even if they want to upgrade their homes
My Take: I'm part of the housing problem. I currently have a house with a 3.85% loan and if rates never go down, it'll be incredibly difficult to give it up and buy a house that will cost so much more. But the good news there are alternative options:
I can take on someone else's loan rather than a brand-new loan
I can pay cash (gonna need to make a boatload more money)
I can leverage my investment accounts to get access to cheaper loans
These are options but not as easy as just applying for a typical mortgage. I hope things change over the next couple of years before I'm in the market again. Or maybe I'll be making so much money that it won't matter. This is the option that I want to live in.
Looking Ahead
📉Inflation
Does anyone still care about inflation anymore? Ever since gas prices returned to a typical price range, no one cares about inflation.
Random Annecdotal Story: Recently read an article that interviewed a number of people (unfortunately I cannot find the article). The key takeaway from the article was people felt inflation more when they could see gas prices going up. Now people are spending even more money but they don’t feel it as much cause they are spending the money on things like travel and leisure.
What can we expect from the June inflation report?
Nothing new. Inflation has been very slowly declining and I expect that to continue. It is expected that inflation will be about 3.6% dropping from 4% in May. But I predict travel and leisure inflation rising because revenge spending is still very real.
💰💸Earnings
I feel like companies just reported earnings a couple of weeks ago. But apparently, it's been 3 months.
Companies will begin reporting earnings for the 2nd Quarter of the year. The banks as always are up first.
Earnings are expected to decline by 7% compared to Q2 of 2022.
My Takeaway: I will be looking at the level of debt consumers are taking on as we have spent all the excess savings from the pandemic.
Extras
New York passed the first-ever law focused on managing the effects and potential damage of AI. The law is focused on AI used for hiring to ensure the algorithms used do not have built-in human biases. The law kicked into effect on Thursday, the 6th of July.
This is the first but not the last law around hiring AI. California, known for its laws, is preparing its version of the same law.