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Weekly Big Updates On Markets & Trending Insights #3 By OPM Capital

Its Felix from OPM Capital, where we knit the complex threads of trending business & market events into a comfy sweater of understanding.

Author

Felix He
January 20, 2024

Weekly Big Updates On Markets & Trending Insights #3 By OPM Capital

Jan 20th, 2024

HAAAAPY SATURDAY! Felix here and Welcome back to OPM Capital weekly updates, your weekly roundup of the most important financial news.

Every day I read, research, and hunt through the economic landscape... so you don't have to. šŸ˜Š 

Here's what's caught my attention this week:

Market Update End of Week:

In todayā€™s email:

  • 3 Critical Consumer Events To Be Aware of in Q1 2024

  • Latest Stories & OPM Thoughts

  • Other News That Are Important to you

  • Personal Finance Tips

  • OPMā€™s Portfolio Update

Quote of the day:

Choosing peace over revenge is a powerful demonstration of wisdom, self-control, and the ability to rise above negativity.

3 Critical Consumer Finance Events in Q1 2024

Retail sales exceeded expectations in December. Department stores, car dealerships, and online shops all led the way, indicating that American consumers did not hold back last month.

But, maybe they should haveā€¦

The Fedā€™s latest Consumer Credit report reveals a worrying trend. Credit card and ā€œBuy Now Pay Laterā€ services usage soared during the holidays, pushing credit balances over $5 trillion for the first time.

Now, as the bills come due, delinquencies are picking up.

The percentage of borrowers who are 1, 2, or 3 months late on payments has surpassed pre-pandemic levels. And the percentage of cardholders who paid their balance in full fell to just 33% ā€“ the lowest level since 2020.

Despite this debt surge, Americans arenā€™t planning to cut back. They expect both essential and nonessential spending to rise.

On one hand, consumer spending is ~2/3 of the economy and keeps the wheels turning.

On the other hand, increasing debt and declining savings rates could be setting us up for a harsh reality check.

HOW COULD IT AFFECT ME?

Can we continue to fuel growth through spending, or will the weight of expensive credit card debt start to tip the scales? Time will tell. Itā€™s important to know that banks are tightening up their lending requirements, during times like this itā€™s best to prioritize keeping a low balance on your credit card accounts. Donā€™t let those INTEREST payments eat you up.

Homebuilder confidence surged in January as mortgage rates continued to trend lower, according to the National Association of Home Builders/Wells Fargo Housing Market Index released Wednesday.

Builder confidence in the market for newly built single-family homes surpassed market expectations, climbing seven points to 44 on the index. The optimism comes as mortgage rates begin to fall and data points to an improving economy heading into 2024.

To put it into perspective, consider the median U.S. house price, which hovers around $425,000.

For a buyer opting for a conventional loan covering 80% of this cost, this 2% reduction in mortgage rates translates to more than $450 in monthly savings.

This level of savings may re-open the door to homeownership for many. Others, however, may opt to plow those savings right back into more house. In that case, the drop in rates can add upwards of $70,000 to their home-buying budget.

3 - Coinbase vs. the SEC

Crypto is a lot like a video game - before leveling up, thereā€™s a boss fight. Except in crypto, itā€™s the same big, bad boss every timeā€¦ the SEC.

Right now, the fight is the SEC vs Coinbase.

Hereā€™s whatā€™s going on:

  • The SEC sued Coinbase for ā€œoperating as an unregistered broker, exchange, and clearing agencyā€ last year.

  • In the process, the SEC accused Coinbase of selling securities and namedropped 13 cryptocurrencies including SOL, ADA, MATIC, etc.

  • The SEC is arguing those tokens are securities because people buy them as a way to invest in a common ā€œenterpriseā€ and possibly profit from its success. (According to the Howey Test, that makes it a security).

  • Coinbase is arguing that buying tokens doesnā€™t guarantee the buyer any rights (or profits) as part of the purchase. The exchange compared buying tokens to buying Beanie Babies, which arenā€™t securities

Why this case matters: The judge's decision in this case will likely clarify the SEC's jurisdiction over the crypto sector and could set a precedent for how crypto is regulated in the U.S.

Latest Headlines of the Week:

"Right now, when you take out a loan, you get clear disclosures. There's some core consumer protections. The overdraft loophole allows banks to sidestep that."

Source: Nerdwallet

The electric vehicle tax credit has been expanded and modified. Here are the rules, restrictions and how to qualify.

Jobseekers could see a more cautious, competitive labor market in 2024 as employers slow hiring and hand out smaller raises ā€” but some roles offer brighter prospects than others.

Top Stories of the week

Social media platform Reddit has drawn up detailed plans to launch its initial public offering (IPO) in March, moving forward with a listing it has been eyeing for more than three years, according to people familiar with the matter.

It would be the first IPO of a major social media company since Pinterest's (PINS.N), opens new tab debut in 2019, and would come as Reddit and its peers face stiff competition for advertising dollars from the likes of TikTok and Facebook (META.O)

My thoughts: 3 interesting routes this IPO might take:

  1. Price collapses post lockup as early investors cash out at IRRs above their threshold.

  2. Reddit subs such as WSB pump up the stock, turning the platform itself into a meme stock in an ironic new form of decentralized market manipulation

  3. regulatory scrutiny increases as aggressive ad targeting leads to market instability. Mod content filtering receives increased scrutiny and as a result, content becomes either farther right leaning (X) or self enforcing echo chambers for foreign adversary interference (going into 2024 election)

IMO the IPO is a way to cash out for the current crop of investors who know there is no future growth here compared to better options. Aka, it is suckers who will buy at whatever the evaluation is

JetBlue Airways and Spirit Airlines on Friday said they are appealing a federal judgeā€™s ruling earlier this week that blocks the two carriersā€™ planned merger on antitrust grounds.

My thoughts: Spirit Airlines stock climbs 60% since Dave Portnoy called it a ā€˜mega buyā€™.. wonder what caused the turnaround.

The coveted Southwest Companion Pass is an elite travel benefit thatā€™s almost too good to be true.

This pass allows another passenger to fly with you for free (plus taxes) an unlimited number of times for the life of the pass. T

raditionally, the pass is valid for the rest of the year itā€™s earned, plus the entire following year. And while earning the pass now will be beneficial for some, if you play your cards right, you can actually earn the pass through Dec. 31, 2025.

OPM Weekly Money Blogs:

Join Me on the Journey: How I'm Ethically 2X-ing My Net Worth in 2024 (Without the Burnout!) ā€“ Let's Make Wealth Together!

OPM Portfolio Update & Sentiment:

  • Paypal up 12% since we last called it. Currently trading at $66.11 after hours. Average cost basis around $55. Itā€™s currently my biggest position and planning to add more around $60-$63. TP is $85

(Posted on Jan 6th)

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