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Wall Street Whispers: Your Weekly Financial Briefing & Part 5 of "Credit Alchemy" Series

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Chakkani Newsletter
May 18, 2024

Hey Chakkani Fam! Welcome to Your Weekly Financial Briefing! We've got bite sized market moves, big tech bets, and whispers of change from all over the world. Grab a cup of joe (or your preferred drink) and let's dive:

Bears & Bulls: Markets Notes & Numbers

  • S&P 500: 5,303.27 +6.17 (+0.12%)

  • NASDAQ: 16,685.97 -12.35 (-0.07%)

  • Dow Jones: 40,003.59 +134.21 (+0.34%)

  • 10-Year Treasury Yield: 4.422 (+0.045%)

  • Bitcoin: $66,788 +1,497.92 (+2.29%)

    All data as of last trading day's market close time read more…

Market Bites::

1. Dow Dances Past 40,000: A Stock Market Tango: The stock market waltzed to a new high as the Dow Jones Industrial Average (^DJI) twirled past 40,000 for the very first time. 🎉 Despite a Thursday stumble due to Fed officials’ cautionary whispers about interest rates, Friday’s encore saw the indexes pirouetting higher. 💃

🔍 Spotlight on Fed Moves:

  • US Federal Reserve Governor Michelle Bowman, decked out in Nashville style, reminded us that curbing inflation remains a work in progress. She’s ready to cha-cha with rate hikes if data stalls. 💃🏽

  • Fed Chair Jerome Powell, unfortunately sidelined by COVID-19, will now deliver his speech via pre-recorded video. 🎙️

🚀 Individual Movers:

  • Reddit (RDDT) shares moonwalked up 10%, fueled by a partnership with OpenAI. Expect ChatGPT to soon drop some wisdom from its forums. 🌐

  • GameStop (GME) shares, once soaring like a meme stock rockstar, now moonwalked backward by 19%. Apparently, online shopping stole the show. 🛒

📈 Market Outlook:

  • The Dow’s tango at 40,003.59 points left everyone breathless. The S&P 500 (^GSPC) did a subtle shimmy, while the Nasdaq Composite (^IXIC) dipped its toe in the dance floor. 💃🕺

🔮 Week Ahead:

  • Corporate earnings are taking their final bow, but the spotlight remains. Zoom (ZM), Lowe’s (LOW), Target (TGT), and Nvidia (NVDA) are all set to strut their stuff. 🚀

  • Speaking of Nvidia, their AI hardware waltz continues, fueled by data and tech sector cravings. 🤖

  • Fed officials will testify on Capitol Hill, revealing their inflation-fighting choreography. Critics, meanwhile, eye elevated home prices and their impact on first-time homebuyers. 🏠

So, dear investors, keep your dancing shoes on—the market’s got more moves to show! 💃📈🕺

2. Monopoly Money and the Fed: A Playful Comparison: Elon Musk, the tech-savvy showman, recently took a playful jab at the Federal Reserve by comparing its money-printing prowess to a classic board game. 🏦🎲

🔍 The Monopoly Analogy:

  • Musk shared a screenshot from the Monopoly rulebook, highlighting the part where the bank never goes bankrupt. In Monopoly, the “banker” can magically create new money. 💸

  • With a wink and a nod, Musk captioned it as “how the Federal Reserve works.” Apparently, the Fed’s money printer is as unstoppable as a Monopoly banker with a Get Out of Jail Free card. 🤑

🗣️ Warren Buffett’s Whisper:

  • Even the venerable Warren Buffett chimed in. He praised Fed Chair Jerome Powell as a wise man but reminded us that Powell doesn’t control fiscal policy. Occasionally, Powell sends out a disguised plea: “Please pay attention to this!” 🙌

🏛️ Fiscal Constraints Ahead:

  • As the next administration in Washington contemplates its moves, Goldman Sachs points out a sobering reality. Both President Biden and former President Trump faced similar constraints—they couldn’t expand fiscal policies as freely as they might have wished. 📉

  • The U.S. national debt, now towering at $34.7 trillion, raises eyebrows. Each taxpayer’s share? A hefty $266k. 🤔

💡 Bitcoin: The Finite Alternative:

  • Amid this financial dance, Bitcoin emerges as an intriguing player. Unlike Monopoly money or the Fed’s printing press, Bitcoin has a fixed supply. It’s like a digital gold—scarce and decentralized. 🌟

  • WatcherGuru, a savvy observer, hinted at this in a reply to Musk’s post. “Imagine a currency not controlled by any individual or government,” they mused. 🌐

📈 Investment Twist:

  • For those intrigued by Bitcoin’s allure, there’s a workaround. Enter the iShares Bitcoin Trust (IBIT), a spot ETF. It’s like buying a ticket to the Bitcoin rollercoaster, already up ~30% this year. 🎢

So, dear investors, whether you’re rolling the dice in Monopoly or eyeing Bitcoin, remember: In this financial game, the stakes are high, and the rules keep evolving! 🎲🌎💡

3. Wall Street’s Risk Tango: When Bonds Play Hard to Get: Wall Street’s appetite for risk remains surprisingly robust despite the return of decent bond payouts. While Treasuries have played their part, the predicted retreat from speculation hasn’t fully materialized. Over the last five days, Bitcoin surged 9%, stocks and commodities rallied, and social media posts fueled a resurgence in meme stocks like GameStop and AMC Entertainment.

Interestingly, risk-free rates haven’t dampened enthusiasm for more complex investment products. Exchange-traded funds (ETFs) that use derivatives to boost cash payouts have attracted $13 billion in fresh investments during the first four months of the year. This defies theories from the pre-pandemic era that linked speculative asset fervor to a lack of safer alternatives.

Edward Park, chief asset management officer at Evelyn Partners, suggests that the abundance of money in the markets—whether due to fiscal stimulus or prolonged low rates—may be driving this behavior. GameStop’s resurgence, for instance, could be a symptom of this liquidity rather than a sign of excessive risk-taking.

Gary Cohn, former economic adviser to President Donald Trump, recently argued that high rates are discouraging investors from taking risks. However, the real concern lies elsewhere: the market’s exuberance. Hedge funds and other investors are so bullish that any misstep could lead to swift consequences. Increased concentration in certain stocks and elevated investor positioning adds to the fragility of the market.

Despite these dynamics, major assets—stocks, bonds, and commodities—have rallied this week. Softer retail sales data and cooling inflation have fueled optimism that the Federal Reserve will soon reverse its tightening policy. The S&P 500 has climbed for a fourth consecutive week, and the Dow Jones Industrial Average surpassed 40,000 for the first time.

Retail involvement in the market is also on the rise. Off-exchange venues, where computerized traders match order flow from brokerages, saw transactions spike to a record 52% of the market’s total. Retail traders are uniting once again in 2024, keeping a close eye on message boards and investment opportunities. 📈🤝🌟 

4. Metal Surge and Domestic Resilience: India’s Blue-Chips Shine: India’s blue-chip stock indexes had a stellar week, their best since early February. Metal stocks led the charge, while sustained domestic buying offset persistent foreign outflows. Let’s break it down:

  • NSE Nifty 50 and S&P BSE Sensex: Both gained about 2% this week, marking their strongest performance since February.

  • Metals: Surged by an impressive 6.6%. This boost was fueled by a cooling U.S. inflation, which led to a moderation in the U.S. dollar, and China’s steps to allow local governments to purchase apartments and relax mortgage rules.

  • Automaker Mahindra & Mahindra: Had its best week in 39 months, rising by 14.66%. Positive commentary from brokerages on its earnings outlook contributed to this surge.

  • Real Estate Stocks: Climbed 6.5%, with Oberoi Realty leading the charge (jumping 18.6%) after its post-results rally.

  • U.S. Interest Rate-Sensitive IT Stocks: Gained 1.4%, buoyed by softer-than-expected U.S. inflation data, reigniting hopes of early rate cuts.

📊 Market Momentum and Stability:

  • Despite profit booking by some foreign investors, the market shows positive momentum, with bulls returning.

  • Persistent domestic buying and steady inflows from mutual funds are keeping the markets stable.

  • The sustained foreign selling, at a 16-month high, is cushioned by domestic resilience.

📉 Volatility and Future Outlook:

  • Volatility remains high, hovering around 19-month highs.

  • Elections results on June 4 are eagerly awaited.

🚀 Small- and Mid-Caps Shine:

  • The broader small- and mid-cap indices outperformed the benchmarks, rising 1.65% and 0.88%, respectively. Strong earnings from several constituents drove this performance.

In summary, India’s blue-chip stocks are riding the metal wave, backed by domestic strength and cautious optimism. 🇮🇳📈💪

5. Global Equity Funds: Riding the Rate Cut Wave: U.S. equity funds have seen a substantial inflow in the seven days leading up to May 15, driven by expectations of Federal Reserve rate cuts following subdued U.S. jobs data and a softer-than-anticipated inflation reading. Here are the key highlights:

  • Inflows: Investors poured a net $5.78 billion into U.S. equity funds during this week, marking the largest weekly inflow since March 20.

  • Consumer Price Slowdown: Wednesday’s report revealing a cooling in U.S. consumer prices fueled market anticipation of at least two rate cuts by year-end.

  • Large Cap Dominance: U.S. large-cap funds attracted approximately $5.38 billion, representing the largest net weekly inflow since March 27.

  • Multi-Cap and Small-Cap Trends: Multi-cap funds received about $1.05 billion, while mid- and small-cap funds experienced net outflows of $817 million and $191 million, respectively.

  • Sectoral Insights: Sectoral equity funds received a modest $22 million after six consecutive weeks of net outflows. Notably, industrials, financials, and utilities attracted $515 million, $385 million, and $359 million, respectively. However, the tech sector witnessed net selling of approximately $757 million.

  • Bond Fund Trends: U.S. bond funds continued their positive streak, accumulating a net $2.39 billion in inflows for the fourth consecutive week.

  • Allocation Details: Investors allocated funds to various categories, including U.S. loan participation funds, general domestic taxable fixed income funds, and short/intermediate government and treasury funds.

  • Investment-Grade Funds: U.S. short/intermediate investment-grade funds experienced a significant pullback, with net outflows totaling $1.18 billion, marking the largest since November 8, 2023.

In summary, the U.S. equity market remains dynamic, with investors closely monitoring economic indicators and adjusting their allocations accordingly. 📈💼🇺🇸

6. Frozen Assets, Bond Plans, and Ukraine: Yellen’s G7 Diplomatic Dance: U.S. Treasury Secretary Janet Yellen is about to lead a high-stakes tango at the G7 summit. Here’s the scoop:

  • The Plot: Imagine a $300 billion treasure chest of Russian sovereign assets, frozen since Moscow’s 2022 invasion of Ukraine. It’s like a geopolitical deep freeze, with a side of intrigue.

  • Yellen’s Moves: She’s pushing fellow G7 finance officials to thaw these assets. But wait, there’s a twist! Europe’s cautious—worried about the euro’s health and legal drama. So, instead of a full heist, they’re opting for a more conservative plan: stash the estimated $3.5 billion annual interest earnings into a Ukrainian fund.

  • The Controversial Twist: The U.S. proposes pulling forward the interest to back a bond or loan. Picture this: Ukraine gets a $50 billion lifeline to fend off Russian pressure. But—here’s the catch—it’s like a 20-year custody battle. Western powers must babysit these assets.

  • The Diplomatic Duel: Yellen’s rallying the G7 troops. “We can’t let Putin just chill,” she says. “Let’s show him we mean business!” They’re all practicing their economic foxtrot, trying to get on the same page.

  • The French Connection: France nods in agreement. “Oui, oui! More resources for Ukraine!” They’re huddling at the G7 level, decoding the best option.

  • Putin’s Poker Face: Meanwhile, Russian President Vladimir Putin watches from the shadows. Yellen’s message? “You can’t just wait out our coalition.” Putin raises an eyebrow. The stakes are high.

  • The Bond Gambit: The U.S. whispers, “How about a bond? Collateral from those Russian assets.” The G7 ministers huddle, debating feasibility. The final decision? Well, that’s still up in the air.

So, dear audience, grab your popcorn. The Yellen-Yalta showdown is about to begin! 🕊️🌍💼

7. GameStop’s Stock Tango: From Roaring Kitty to Cash Splash: GameStop, the rollercoaster darling of retail investors, just pulled off a daring move. Here’s the play-by-play:

  • The Setup: GameStop’s shares were soaring like a caffeinated rocket this week. Why? Keith Gill, aka “Roaring Kitty,” fired up the meme-stocks frenzy in 2021 with his bullish calls on GameStop. The internet cheered, and the stock danced.

  • The Twist: But wait! GameStop decided to hit the dance floor again. They’re selling up to 45 million shares. Why? Well, when your stock skyrockets four or fivefold, and you’re low on cash, it’s time to waltz to the equity market and raise some moolah. 💃

  • The Reality Check: Sure, it makes sense from a corporate perspective. But—cue the dramatic music—it dampens the recent rally. Existing shareholders? Brace yourselves for dilution. 🥀

  • The Market Tango: GameStop’s shares are now pirouetting at $20.56, giving the company a $6.3 billion market value. But hold your breath—it moonwalked to $19.8 billion earlier this week. May’s dance moves? A sizzling 90% gain so far.

  • The Encore: GameStop filed for a mixed-shelf offering. Imagine a buffet of securities: bonds, stocks, and more. It’s like a financial smorgasbord. 🍽️

  • The Forecast: Brace yourselves again. First-quarter net sales are doing the limbo, dropping to $872 million - $892 million from last year’s $1.24 billion. Ouch!

  • The Backstory: GameStop’s brick-and-mortar stores? They’re feeling the digital shift. Customers are pirating away to buy video games and collectibles online. Arrr, matey! 🏴‍☠️

  • The AMC Encore: AMC, the theater chain, joined the show too. They completed a $250 million share sale program. And they’re doing an equity-for-debt swap to trim their debt. It’s like a financial tightrope walk.

  • The Analyst’s Take: Michael Pachter from Wedbush says, “Deploy cash wisely or keep issuing shares at stratospheric levels.” Translation: Keep dancing or face the inevitable music. 🎶

So, dear investors, grab your popcorn. The GameStop saga continues—a financial thriller with more twists than a pretzel factory! 🎢🎭🚀

8. Earthquake: Mexico and Guatemala Shake: A magnitude 6.4 earthquake struck near the coast of Chiapas, Mexico, sending tremors across the border into Guatemala. Here’s the seismic scoop:

  • Depth and Impact: The quake rumbled at a depth of 75 km (46.6 miles). In Mexico, the national civil protection agency is on high alert, but initial reports show no significant damage.

  • Guatemala’s Shaky Situation: In Guatemala, the quake made its presence felt in the capital, Guatemala City. The country’s disaster agency, CONRED, reported structural damage in the departments of Quetzaltenango and San Marcos. A landslide even blocked part of a road.

  • Tsunami Watch: Thankfully, there’s no risk of a tsunami, according to the U.S. Tsunami Warning System and Mexico’s navy.

So, dear earthlings, stay grounded and keep an eye on the seismic dance floor! 🌎🌊🕺

9. Columbia University’s Graduation Tango: Protests, Cancellations, and Dueling Perspectives: Columbia University’s grand graduation ceremony has been silenced by the echoes of pro-Palestinian protests. Here’s the dramatic plot:

  • The Scene: Columbia’s Ivy League campus buzzed with fervor as students rallied for a Gaza ceasefire and demanded divestment from Israel-linked companies.

  • The Cancellation: Alas, the main graduation ceremony was axed due to insurmountable security concerns. Disappointment hung heavy in the air.

  • The Search for Alternatives: Columbia scoured the city for an alternative venue, but alas, none could accommodate the 50,000+ students, families, and guests.

  • The Ripple Effect: Protests at Columbia sparked a nationwide movement. Universities across the U.S. joined the dance, relocating, modifying, or canceling commencement ceremonies.

  • The Dueling Perspectives: A block away, pro-Israel demonstrators commemorated the Holocaust and denounced perceived anti-Jewish sentiments. Evil and response collided.

  • The Unresolved Chorus: As the curtain falls, questions linger. How do we understand the world’s complexities? Can dialogue bridge the divide?

So, dear audience, the stage is set—a clash of convictions, a symphony of voices. 🎓🌍

10. Justice Department Redux: Trump’s Tactical Tango” 🏛️🔍: Donald Trump’s allies are crafting proposals to reshape the Justice Department, aiming to curtail its independence and transform it into a conservative attack dog. If successful, this overhaul could significantly impact the department’s role in safeguarding democratic institutions and upholding the rule of law. The plan involves flooding the Justice Department with loyal conservatives and restructuring it to centralize key decisions within administration loyalists. The FBI, often seen as biased by Republicans, would face new constraints on its authority. This move diverges from the department’s core values of “independence and impartiality.” While Trump’s campaign emphasizes that official announcements should come directly from him or authorized team members, the potential changes could have far-reaching consequences. As the election approaches, Trump’s advisers may have an opportunity to implement their vision for the Justice Department. 🏛️🔍🇺🇸

Phew, that's a lot to unpack! Remember, this is just a snapshot of the complex and ever-evolving financial landscape. So, stay informed, diversify your investments, and don't forget to have a little fun along the way!

Bonus Tip: Want to dig deeper into any of these stories? Let me know in the comments below, and I'll be happy to share some additional resources!

And there you have it, folks! Remember, folks, the financial world is like a game of Monopoly—sometimes you’re the banker, sometimes you’re stuck in jail, and occasionally you land on Boardwalk and buy a hotel. Happy investing! 📈💰

 P.S. Did we miss anything major? Hit us up via an email with your hot takes and financial insights!

The Dark Side: Credit Repair Myths Busted

Separating Fact from Fiction

Introduction

Welcome to the fifth chapter of our credit saga! Today, we’re donning our detective hats to debunk common credit repair myths. Brace yourself—some of these myths have been masquerading as truth for far too long. Let’s shine a spotlight on reality! 🔦

1. Myth: “Quick Fixes Exist!”

- The Tale: You’ve heard it—“Boost your score overnight!”

- The Truth: Credit repair takes time and patience. No magic wands here.

- Action Item: Avoid shady services promising instant miracles.

2. Myth: “Credit Repair Companies Are Essential!”

  • The Tale: Pay hefty fees, and they’ll work wonders.

  • The Truth: You can do it yourself—for free!

  • Action Item: DIY credit repair. It’s empowering.

3. Myth: “Dispute Everything!”

  • The Tale: Challenge every negative item on your report.

  • The Truth: Only dispute legitimate errors.

  • Action Item: Focus on accuracy, not a wild dispute spree.

4. Myth: “New Credit Erases Past Mistakes!”

  • The Tale: Open new accounts to wipe the slate clean.

  • The Truth: New credit won’t erase old slip-ups.

  • Action Item: Repair, then consider new credit.

5. Myth: “Pay for Deletion Works!”

  • The Tale: Pay a collection agency, and they’ll erase the record.

  • The Truth: Rarely effective. Legitimate debts stick around.

  • Action Item: Negotiate, but no guarantees.

—

Conclusion

Congratulations! You’ve just unmasked credit repair myths. Remember, knowledge is your superpower. Stay tuned for our next episode: “Debt Dilemmas: Balancing Act.” 🌐

—

So, there you have it! With a little guidance and the right tools, you'll be a master in understanding (and hopefully master it) financial concepts in no time. Go forth, plant your seeds, and watch your wealth garden flourish!

This is the next part in this comprehensive series on “Credit Alchemy: Transforming Your Worth into Wealth” ( we want to get you ready for the next step in your life, whatever it may be).

If you liked this, check out other series including, a 9 part extensive series on “All Things Tax Related” and 5 Part series on Investing and all our previous articles here.

So, whether you are crawling and sprinting, let's do this together!

Until next time, wishing you happy wealthness (you see what we did there:)) to you!

📚 Bonus Resources:

  1. Investopedia: Investopedia provides comprehensive information on creditworthiness, including factors that impact it, how to check your credit report, and steps to enhance your creditworthiness. Remember that your creditworthiness affects loan approvals, interest rates, and more.

  2. The Balance: The Balance explains creditworthiness and emphasizes the importance of monitoring your credit score. You can access your credit score for free through services like Credit Karma, Credit Sesame, or WalletHub.

  3. SuperMoney: SuperMoney offers practical steps for managing creditworthiness. You can obtain a free annual credit report from AnnualCreditReport.com or use free credit monitoring services like Credit Karma or Credit Sesame.

Remember to stay informed, check your credit score regularly, and make timely payments to maintain a strong credit profile. 🌟📊💳

Your Wealth Journey Awaits!

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