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- Tuesday's Scoop: Bounce🌤️
Hey friend - welcome back to your daily scoops on the economy and companies impacting your life.
USA is crushing it now at the Olympics. The women’s hammer throw was a heater. Women’s beach volleyball was a nail-biter.
Here’s what you need to know today to inform your work, spending, and investments:
🌎 Big picture
Americans are taking on more debt but managing to keep up with payments.
It’s more expensive than ever to insure homes in America.
America’s exporting power increased in June.
How are you feeling about the economy? |
💼Work trends
Unemployment Rate: 4.3%
Relatively low
America’s exporting power increased in June. The Commerce Department reported that the gap between what the US sells and buys from other countries got smaller. This decreasing trade deficit was driven by more exports of goods like airplanes, natural gas, and cars. While imports also went up, they did so at a slower pace. This is the first time in three months that the trade deficit has decreased, indicating stronger demand for American products abroad.
👜Cost of living trends
Inflation Rate: +3.0% (YoY), -0.1% (MoM)
Policymakers aim for 2% YoY inflation. (June CPI)
Americans are taking on more debt but managing to keep up with payments. The Federal Reserve Bank of New York's latest report shows that total household debt increased in the second quarter. Despite this rise, not that many more people fell behind on their payments. Overall delinquency rates have risen slightly over the past year but remain lower than in 2019. However, there are signs of strain with slight increases in late payments for credit cards and auto loans. The number of people behind on their credit cards has been rising quickly from a low rate over the past few years. The report broadly suggests that while borrowing costs are high, Americans are still managing their debts responsibly.
🤓 Inside Scoop: How do I know when my debt is becoming a problem?
To know whether our debt is a problem comes down to the interest rates and our ability to make payments.
High-interest debt, like credit cards, is always a problem. We avoid the dangers if we can pay the complete statement balance each month. However, carrying a credit card debt balance can devastate our financial health. The high interest rates on unpaid balances can quickly compound, growing harder to pay off and eating away at our wealth.
Paying anything less than the entire statement balance builds debt and accrues interest costs. The minimum payment is the lowest amount we can pay without damaging our credit score or suffering additional penalties like late fees.
Debt with relatively low interest rates, like student loans, mortgages, or auto leases, becomes a problem when we struggle to meet monthly minimum payments. We should automate those payments without worrying if we can cover them. If it becomes an issue, consider refinancing or bundling debt at a cheaper rate.
🏠Housing trends
30yr Mortgage Rate: 6.8%
That’s down from 6.9% a year ago. (MBA)
Median Home Price: $426,900
That’s up from $410K a year ago. (NAR)
It’s more expensive than ever to insure homes in America. US home insurers faced their worst losses in over two decades last year. According to a report from rating agency AM Best, home insurers saw a net underwriting loss of $15.2 billion in 2023, the biggest since at least 2000. This was driven by a combination of natural disasters, inflation, and increased population in high-risk areas like California, Texas, and Washington. With more people moving to these vulnerable regions, the risk of damage from floods and wildfires has grown significantly. AM Best predicts it will be tough for the home insurance market to return to profitability anytime soon, which likely means higher premiums for homeowners and more limited insurance in high-risk areas.
📈Investment trends
The Market: ⬆️+1.0%
S&P 500: 5,240.03
1Mo: -6% | 1Yr: +16% | 5Yr: +80%
The market rebounded on Tuesday from an ugly couple of days where recession fears fueled a widespread selloff. Companies' financial updates this week have been a little more encouraging, helping to calm fears about an overhyped tech industry and a stalling hiring market.
🏭 Companies worth watching
👍👎 APPROVAL RATINGS
How are these companies doing? Judge their decisions. Investing starts with an opinion. (+2 pts)
 Uber | Steady Ride Uber’s second-quarter profits showed strong growth, with increased revenue driven by a 23% rise in mobility bookings and a notable boost in delivery services. The ride-hailing company has used electric vehicles and strategic partnerships to expand in new markets, reflecting its adaptability in the competitive ride-sharing sector.
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 Caterpillar | Pricing Power Caterpillar reported surging profits due to higher prices and reduced manufacturing costs despite weakening customer demand. The machinery giant expects to be able to maintain its higher prices but anticipates fewer sales in the latter half of the year.
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 Yum! Brands | Crown Jewel Sales at KFC and Pizza Hut slumped last quarter thanks to boycotts in the Middle East and a slowdown in China, but Taco Bell continues to shine in the US. Yum Brands squeezed out a profit thanks to its cost-cutting measures and plans to roll out more digital enhancements and artificial intelligence tools.
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 Super Micro Computers | AI Boost Super Micro Computer expects even higher sales next quarter than investors' lofty projections fueled by its role in supplying the AI tech boom. The tech company plans to split its stock 10-for-1 to make it more accessible and increase spending on advanced data center architecture for AI.
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 Airbnb | Booking Blues Airbnb warned of a slowdown in global travel after reporting a decline in second-quarter profits despite record bookings and 11% revenue growth. The vacation rental platform's strong international growth couldn't offset shorter booking times and less US demand.
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🛠️ Recommended resources (+2pts)
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