While everyone was calling for a recession, the US labor market ignored all of that and added 528,000 Jobs. Economist had estimated for the economy to only add 260,000 jobs. So to all the Debbie-Doubters (myself included), you were WRONG! A ton of economists who had been arguing that we were not in a recession, were ready to scream "I TOLD YOU SO!"
“How's that recession call going?“ - Ian Shepherdson, chief economist at Pantheon Macroeconomics
“The US labor market continues to confound expectations with another very strong jobs print in July.“ - James Knightley, chief international economist at ING
“The report throws cold water on a significant cooling in labor demand, but it's a good sign for the broader U.S. economy and worker.“ - Stephen Juneau, U.S. economist at Bank of America
“If the U.S. economy is in a recession, no one seems to have told employers.“ - Sarah House, senior economist at Wells Fargo
So the Stock Market must have had a good week, Right?
About that
I mean it was in the positive direction for most of the week. However, after the jobs number dropped, the stock market decided to pull a UNO reverse. Why?
Well because this gives the Fed the ammo they need to continue raising rates for the foreseeable future. Which as Warren Buffett says "Interest rates are like gravity for stocks." So investors were not pleased at all. Guess we are back to the days of BAD is GOOD and GOOD is BAD
Overall, it was a good week
MARKET RESULTS:
Tale of the Tape
Economy
US Household debt as of the end of the 2nd Quarter sit $16.15 trillion. This is a $2 trillion increase from the end of 2019 before stimulus went out and line everyone's pocket. Remember in 2020 when I was celebrating that people were paying their debts off.
Well that ain't happening anymore.
This is the highest amount it has ever been. I don't expect it to slow down any time soon. (Especially with inflation running so high).
$11 trillion comes from mortgages which makes sense. Housing is the largest part of most people's monthly expenses
Auto loans surprisingly only makes up $1.59 trillion
Credit cards (my mortal enemy), balance increased to $4.22 trillion.
Y'all be mindful out there. Especially with those credit card balances because if you have not noticed (which I bet most of us have not) your interest rate on your cards are much higher than they were just a couple months ago.
While your bank wants to pay you
Rant
Never take debt if the debt is not going to make you money aka NO CONSUMPTION DEBT!! If you cannot afford to buy the thing cash, DO NOT BUY IT!! It is not worth your entire life being ruined for a pair of shoes, clothes, vacation, etc. You can always buy these things later.
Amazon
Amazon did so much last week that it has its own section of the newsletter.
Amazon Announces One Day Delivery
To which you say, "Hasn't that been a thing for a while?"
Yes, you are correct.
But now, they are using their massive warehouse and delivery infrastructure to deliver packages for other brands. Brands like Pac Sun (which I buy shirts from) and GNC (the popular vitamin and random supplements shop). Are some of the first brands to be woven into the Amazon Prime One Day Delivery network.
The service will be available in 10 cities to begin which are Atlanta (More like HOTLANTA #iykyk), Chicago, Dallas, Las Vegas, Miami, Phoenix, Scottsdale, Seattle, and Washington, D.C
However, there are two catches:
You have to be an Amazon Prime member of course
You have to buy at least $25 worth of goods or you pay $2.99 for shipping. That is not a bad price, most places do a minimum of $50.
For the brands, it helps make their products more loved as we have all been spoiled by Amazon's ability to delivery things at ridculous speeds. It will also give them more exposure because Amazon will be working with them to sell products.
However, it can be a double-edged sword for brands. They can lose the direct consumer relationships they benefit from. Plus all the data about the sales goes through Amazon. Meaning Amazon controls the relationship with the consumer and that is the number 1 thing that a small business benefits from. It will be interesting to see what other brands do. I expect more brands to follow suit because our generation lacks patience.
For Amazon, I see them essentially becoming the Walmart or Target of the online retail world. Think back in the day when you had to go to multiple stores for a bunch of things (well you probably cannot because Walmart has existed all our lives), now you can go to either of these stores and get almost anything you need. They removed decentralized shopping. Plus we all know what happened when Walmart became a behemoth, they were able to throw their weight around and demand better prices for their bottom line. In the process killing a bunch of stores. I believe Amazon will be able to do something similar, they already do it to small sellers on the Amazon marketplace.
Amazon followed that announcement up with another blockbuster to close out the week. A couple weeks ago Amazon entered fully into the healthcare space by buying One Medical. They followed that $3.9 billion deal with another acquisition. On Friday, Amazon announced they had acquired iRobot, the makers of the Roomba vacuums that everyone seems to have these days, for $1.7 Billion.
Why would Amazon buy a consumer products company?
Very simple Amazon wants to live in your home and make it as seamless as possible for them to be a part of everything you do. Amazon wants to know your habits and make life more "convenient" for you. Hence, they are basically putting Alexa into every single product imaginable. Plus they want to build an ecosystem of products, they tried launching an Alexa robot but by making this acquisition they are basically making that robot more useful.
More importantly, Amazon wants DATA. With Amazon echo speakers and now the Roomba robots, Amazon can easily know what size the rooms of your house are. With that information can make suggestions about the appropriate sized couch to buy or blinds or etc. With an Alexa microwave Amazon can know what you eat and when you eat it and can suggest what you need to order. They can also know, based on your house size and where it is located, your income bracket (SCARED YET?)
Now think about if they integrated this information with their other acquisition, One Medical. Where they can know you are sick before you even know you are sick and suggests forcefully certain products for you. All of this in the name of "convenience".
It is kinda scary just how much Amazon is trying to get into our lives. I do not want to live a life that is determined by some algorithm. We already have that with social media platforms and look where that has us.
Stats of the Week
US Crude oil prices are below $90 for the first time since January
This is massive news for inflation because oil has been one of the biggest aspect of pushing inflation higher and if it continues falling, we will back to level terms
Gas prices could be back below the $4 range nationally in the next week or so
If that happens the Fed might not have to continue jacking up rates
Also the cartel known as OPEC, agreed to increase production of oil.
It wasn't by much (just 100,000 barrels/day) but it's something
Mortgage rates are falling. Rates fell to under 5%
We need this to keep falling so homes can become affordable (unlikely though)
Nothing new here just another crypto Ponzi scheme being unraveled by the SEC
11 people were charged with stealing $300 million from retail investors
It was your classic take money from Person B to pay Person A. Except it was fancied up with the Blockchain
Once again proving that anything that seems to good to be true, IS!!
Looking Ahead
There is only one thing anyone will care about next week.
INFLATION
On Wednesday, we get Consumer Price Index Numbers aka Inflation Numbers for the month of July. This will tell us if Inflation has peaked and we can start breathing again.
My prediction that no one asked for: inflation will come in at about 8.5%, much lower than the 9.1% of June. With oil and energy prices retreating for the last 5 weeks, the energy price surge we saw earlier this year that put pressure on the rest of the economy will begin fading away. But I could be wrong (would not be the first time).
However, here's a little dirty secret that most people are not talking about. Right now inflation might come down in the short term and look good. But then rebound in the long term because we still have an energy crisis in Europe due to the war in Ukraine. So we haven't dealt with the underlying issues that caused the inflation explosion. We also have a major food crisis affecting a lot of the developing world. Good news on that front is Ukraine and Russia came to a deal to allow Ukraine ships to deliver grain to the rest of the world. However, there is still a planting issue to be figured out and it'll take years to balance everything. Sorry for being a Debbie Downer.
On Friday, we get Consumer Sentiment Index for the end of July beginning of August. As we have come to learn this year, how you and I feel about the economy matters much more than what is actually happening in the economy. If people are feeling better about their future, I expect the news to be very positive moving forward. For the month of July people felt the economy was in a worse place than during the 2008 Financial Crisis. I expect this to have improved a lot since then.
EARNINGS
For the Stock Market, there is only one company that I care to hear anything from. That is DISNEY. A few weeks ago, Disney and Marvel dropped the next phase of the Marvel Cinematic Universe and a trailer for the new Black Panther movie. This reminded me of why I believe Disney is in a league of their own and caused me to buy more of the stock (not financial advice). The earnings will reveal if that was an overly emotional move (which it was).
Sports I Care About Update
Premier League returned on Friday and so did my pain and anguish.
Man United started the season exactly where they left the end of last season.
Extras
Friendship Across Social Class Lines
Seems the age old saying of "Show me your friends and I will tell you who you are."
According to a study from Nature, friendships across classes is a key driver of wealth and success for those who are not as fortunate as some of us
The study used data from Facebook to analyze 72 million friendships between US adults. They found:
"If poor children grew up in neighborhoods in which 70% of their friends were rich, their future incomes would be 20% higher than their counterparts who grew up without these bonds across class lines."
It was seen to be more important than family structure, school quality, racial makeup, and job availability
But like with me and eating Taco Bell, there is always a catch
Making friends across these social classes is HARD. In the world we live in today, we are no where as connected as we once were.
Our school systems have been created in such a way that those interactions are totally removed as your school is determined by your tax zones meaning if you are not already wealthy you will not be in the area to get exposed to those families.
We are no longer as religious as we once were in the US, those religious centers was a place for these dynamics to happen
From the study, "for people in the bottom 10% of the income distribution, only 2.5% of their friends are in the top 10%"
Thank you for Rocking With ME
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Remember GENEROSITY > greed
God bless Each and Everyone of y’all
✌🏾