I am so thankful for each and every single one of you. You could spend your time doing so many other things but you chose to spend it reading this post.
THANK YOU SO MUCH!!
There is only one thing on my mind this week and that is the World Cup. Let’s see if I can actually write coherent sentences about money. This week we discuss the danger of increased consumer spending and credit card debt.
This week’s Rambling Mind is 1459 Words and 7 min read.
🥱Stock Market Returns
Tale of the Tape
Economy
Credit Card balances increased by 15% in the third quarter of the year. This is the most significant annual increase in credit card balances in over 20 years.
How This Happened?: Inflation and excitement to spend and be free after the pandemic.
By The Numbers: Credit Balances increased from the second quarter to $38 Billion
Young Borrowers (those under the age of 30) are taking on more and more debt.
Low-income earners are also taking on more debt to cover regular expenses
Delinquencies rates although still low are starting to pick up
Takeaway: We have to keep watching this because if people are relying heavily on their credit cards to cover their regular bills, we are in a really bad place for the economy. I don't expect a slowdown in spending any time soon. The holiday shopping season is about to begin in full force (more on this below).
On Tuesday, the Producer Price Index was released. This shows the change in wholesale prices aka prices that businesses pay. It showed prices are no longer rising but are now decreasing. Month-over-month producer inflation was -0.1%, This sent the Stock Market on a rally to close out Tuesday.
On Monday, Amazon announced that it would lay off 10,000 employees in an effort to cut costs. The cuts will focus on its Alexa, HR, and retail division.
Amazon is the second Big Tech company to announce major layoffs following Facebook's announcement two weeks ago. As the economic picture remains murky, companies especially tech companies are trying to reign in spending on unprofitable portions of their business.
Alexa Division posted a $5 billion loss last year
Amazon also announced a voluntary severance package to incentivize employees to retire by November 29th. The package will include three months’ pay plus one week of salary for every six years with the company.
Amazon added that layoffs will continue well into 2023, as it looks to reduce costs.
Not Alone: Google is also being pressured by investors to cut costs by laying off employees in its "Other Bets" Division of the business. Which created moonshot ideas like Waymo, Google Image Search, Nest, Google Maps, Gmail
Other Bets posted a $17 Billion loss over the last five years
My Takeaway: Never trust a company. You are not family, you are a part of a team. We are nothing but a cog in the system. Remember when you think compensation, a company thinks cost. Always, take care of yourself first and foremost cause the company will never hesitate to take care of itself.
Big Picture: Tech makes up less than 1% of the total US workforce. Meaning although this sucks for those affected, this is not a sign of what's happening in the labor market as a whole. Tech Companies are just way more visible due to the high media coverage of these companies.
Investor Rant🤬: This once again proves the short-sightedness of investors. They quickly forget that the reason companies are successful is not just focusing on their current business but also continually investing for the future. Most investors only care about the next quarter or at best the next two quarters. They want cash today and mostly don't care about the business being around for the long term. I hate the way they treat workers as nothing more than cogs I finally understand why most managers hate investors but feel handcuffed by them. It takes a special kind of manager to ignore the crowd and build out the business he or she knows will succeed. Investors are just like children, they are happy and chase after the flashy thing when all the hype is there but as soon as things get hard they bail. Here is a quote from the letter that was sent to Google by one of its largest investors:
“Unfortunately, enthusiasm for self-driving cars has collapsed and competitors have exited the market. Waymo has not justified its excessive investment and its losses should be reduced dramatically.”
It was all good just a week ago. Now it’s no longer good. LIKE WTF!!
I am not saying, Google should not focus on running the business properly and part of that process is cutting back when things are hard. I just do not want to hear short-term investors being the ones to call for the changes. Because as soon as jobs are cut, the extra cash will not be invested in profitable business ventures. The money will just be funneled into share buybacks which does nothing for the business. These investors will leave and Google will be left with the clean-up of recreating its culture and figuring out actual long-term growth strategies.
Rant Over
Stats of the Week
Black Panther: Wakanda Forever had a blowout opening weekend bringing in $180 Million at the Box Office in the US
Internationally, it brought in $330 Million
This is the biggest-ever November movie release and the second-best opening of the year. The first is Marvel's Spiderman: No Way Home.
Disney stays WINNING!! At least when it comes to the movie experience. The switch to streaming is costing the company way more than expected
Disney's stock is trading at 2014 levels. I am very tempted to buy more
NOT FINANCIAL ADVICE
The number of humans on the planet according to projections by the UN.
In 1974, there were 4 billion people on the planet
The main driver, people are living longer and fewer child deaths
Number of University of California system faculty members who walked off the job on Monday for the biggest strike of the year
The faculty members want higher pay as housing costs in California continue to rise faster than the Artemis 1 Rocket
Looking Ahead
Economy
We gotta come up with another name for Black Friday. These companies have expanded that one day of sales to be entire weeks. “Black Friday” deals have been happening since Monday of last week. There is a reason for the expanding shopping holiday.
By the Numbers: According to the National Retail Federation
166.3 million people are planning to shop between Thanksgiving and Cyber Monday. This is 8 million more than last year and the highest number on record
Between $943 Billion and $960 Billion will be spent this holiday season. This is a 6-8% increase from 2021
Every retail company wants a piece of this action
My Takeaway: Just because something is on sale does not mean you are saving money. If you never needed to buy the thing in the first place but now want it because you saw an ad for a sale. You are not saving money!! You are spending money! Do not fall for the marketing tactics of these companies. KEEP YA DOLLAS IN YA POCKET!!
Enjoy Thanksgiving with your family. I wish everyone a great itis.
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Remember GENEROSITY > greed
God bless Each and Everyone of y’all
✌🏾
Extras
The human race is older than ever before. The median age of the human race is 30 Years Old. In 1974, the median age was 20 Years Old.
The good news is people are living much longer.
The bad news is we are making fewer babies: 2.4 Births vs 4.3 in 1974. As long as we stay above 2.1 births we are good.
However, as with any average, it doesn't give details. The age varies mightily based on the country. Generally, high-income nations have an older population.
Nigeria has a median age of 17. Great for economic potential.
Japan has a median age of 49. This is super old aka not good for economic growth.
On Tuesday night, NASA finally launched the Artemis I Rocket to the moon. It is an unmanned rocket that will loop around the moon and return to earth. The trip should take about 26 days if everything goes well.
Takeaway: This is the first time since the 1970s that a rocket has been sent to the Moon. It is expected to pave the way for new space exploration where we go to the moon regularly.