Wall Street Whispers: Your Weekly Financial Briefing & Part 8 of "Credit Alchemy" Series

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: 5,346.99 -5.97 (-0.11%)

• NASDAQ: 17,133.13 -39.99 (-0.23%)

• Dow Jones: 38,798.99 -87.18 (-0.22%)

• 10-Year Treasury Yield: 4.434 (+0.153)

• Bitcoin: $69,331.27 -1,365.09 (-1.93%)

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

Market Bites::

1. S&P 500 Closes Flat Near Record, Posts Winning Week: The S&P 500 ended Friday with a flat performance, briefly touching an all-time high during the day. Despite a stronger-than-expected jobs report, the broad market index slipped 0.11% to close at 5,346.99. The Dow Jones Industrial Average declined by 87 points to 38,798.99, while the Nasdaq Composite edged down 0.23% to finish at 17,133.13.

For the week, all three major averages recorded gains: the Dow posted a 0.29% increase, the S&P 500 added nearly 1.32%, and the Nasdaq advanced 2.38%.

The jobs report revealed that nonfarm payrolls increased by 272,000 in May, surpassing the Dow Jones estimate of 190,000 and April’s gain of 175,000. Average hourly wages rose 0.4% last month and ticked up 4.1% year-on-year. However, despite the job gains, the unemployment rate inched higher to 4%.

Investors had hoped for weaker job figures, anticipating that it would prompt the Federal Reserve to cut interest rates later this year. However, with the labor market showing resilience, Wall Street now seems focused on the idea that the economy can continue growing without further rate cuts.

IBM vice chairman and former National Economic Council Director Gary Cohn emphasized the importance of a strong economy, stating that GDP growth, corporate earnings, and consumer health will ultimately prevail in the long run.

The European Central Bank’s recent rate cut adds pressure on the Fed to potentially adjust its policy. The Fed’s decision on rates is expected next week after its June 11-12 policy meeting.

Additionally, chipmaker Nvidia closed slightly lower on Friday but still ended the week up 10%, setting a record high after surpassing the $3 trillion market cap milestone.

2. Bitcoin Reacts to Strong U.S. Jobs Report: In response to a better-than-expected U.S. jobs report, Bitcoin (BTC) experienced a sharp pullback. The price of BTC fell from a two-month high, briefly touching $72,000, to its current level of $70,900, representing a 0.5% decline over the past 24 hours. The report revealed that nonfarm payrolls increased by 272,000 in May, surpassing estimates, and the unemployment rate ticked up to 4.0%.

The employment data prompted investors to rethink expectations about Federal Reserve policy. Previously, there were hopes for imminent rate cuts, but with the labor market showing resilience, Wall Street now considers the economy strong enough to continue growing without further interest rate reductions.

Additionally, the recent rate cuts by the European Central Bank and the Bank of Canada have added pressure on the Fed to potentially adjust its policy. As a result, the odds of a Fed rate cut have risen sharply, but today’s strong jobs numbers may reverse that thinking—at least in the short term.

In summary, Bitcoin’s swift pullback and other market reactions highlight the impact of economic data on asset prices, emphasizing the delicate balance between central bank policies and market dynamics.

3. Graza: The Olive Oil Success Story: Andrew Benin, a 31-year-old entrepreneur, has turned his passion for olive oil into a thriving business. Here’s how he built Graza, an olive oil company projected to achieve over $48 million in gross sales by 2024.

1. The Catalyst: A Sensory Experience in Spain

   • In December 2019, during a trip to Spain with his now-wife, Benin tasted the best olive oil of his life. This sensory experience inspired him to create his own brand.

   • Graza, named after the village of Grazalema in Spain, was founded in October 2020.

2. Choosing the Right Olive Variety

   • Benin selected the Picual olive, known for its robust flavor and durability. It could withstand the journey from Spain to the United States.

3. Innovative Packaging: The Squeeze Bottle Form Factor

   • Inspired by a shower gel bottle, Benin decided to package Graza olive oil in signature squeeze bottles.

   • Chef Michael Anthony encouraged him to make the oil accessible to as many people as possible.

4. Building a Team

   • Benin partnered with Allen Dushi, co-founder and COO of Graza, who brought valuable retail experience.

   • Together, they sent 300 packages to influencers, kickstarting the company’s growth.

5. Early Investments

   • Neil Parikh, co-founder of Casper, invested $50,000 in May 2021, allowing Graza to create its product and establish its online presence.

Graza’s success story demonstrates how passion, innovation, and strategic partnerships can turn a simple idea into a multimillion-dollar business.

4. Former IRS Employee Charged in $2.1 Million Exxon Mobil Tax Credit Theft Attempt: Rodney Quinn Rupe, a former IRS employee, faces charges in Utah federal court for attempting to steal $2.1 million in tax credits owed to Exxon Mobil. Here are the key points:

1. The Scheme:

   • Rupe diverted Exxon’s tax credits by using a taxpayer database he had access to.

   • He received a U.S. Treasury check for $2,100,377 after successfully diverting the funds.

   • His plan involved creating an entity called Ex Xo Exteriors Ltd.

2. Charges:

   • Rupe is charged with wire fraud, mail fraud, bank fraud, and theft of government property.

   • His actions violated the trust placed in him as an IRS account management worker.

3. Timeline:

   • In April 2021, Rupe accessed Exxon’s taxpayer account through the IRS database.

   • He assigned a newly created Employer Identification Number (EIN) to Ex Xo Exteriors Ltd.

   • In April 2022, he transferred $2.02 million in tax credits from Exxon’s account to Ex Xo Exteriors Ltd.

   • In August 2023, Rupe moved the diverted tax credit funds to another tax year.

4. Consequences:

   • The IRS issued a $2.1 million refund to Ex Xo Exteriors in the form of a Treasury check.

   • Rupe attempted to deposit the check at multiple America First Credit Union locations.

5. When Will Mortgage Rates Go Down?: The recent surge in mortgage rates has left many wondering when they might start to decrease. To understand this, let’s explore the factors at play:

1. Inflation and the Federal Reserve:

   • Mortgage rates are indirectly influenced by the Federal Reserve’s actions. As inflation rose, the Fed increased its benchmark federal funds rate to curb spending.

   • Despite these efforts, inflation remains above the Fed’s 2% target, prompting them to maintain higher interest rates.

   • Until the Fed believes inflation is under control, mortgage rates are likely to stay elevated.

2. Predictions and Economic Signs:

   • Experts anticipate that rates will gradually improve as inflation eases and economic indicators change.

   • Signs of a slowdown, such as decreasing inflation numbers, slower job creation, and potential unemployment filings, could prompt the Fed to lower the federal funds rate.

   • The CME FedWatch Tool suggests a small rate cut is likely at the September meeting, with more potential cuts afterward.

3. Challenges in Forecasting:

   • Predicting exact rate movements is challenging. Economic conditions can shift unexpectedly.

   • While some indicators point to potential rate drops in the fall, past predictions have been unreliable.

4. Rate Projections:

   • Industry players offer varying projections:

     • Freddie Mac expects rates to stay above 6.5% through Q2.

     • Fannie Mae forecasts an average 30-year fixed rate of 6.6% in 2024, gradually dropping to 6.1% in 2025.

     • The National Association of Realtors predicts rates in the 6.1% to 6.8% range.

     • The Mortgage Bankers Association (MBA) estimates an average of 6.7% in Q2, ending 2024 at 6.4%.

     • Bank of America’s economists anticipate the first rate cut in December.

     • Bright MLS forecasts rates hitting 6.2% by Q4.

     • KPMG Economics expects significant declines in 2025, with rates close to 7% for spring home buying.

5. The Uncertainty Factor:

   • Economic dynamics are complex, and unforeseen events can impact rate trends.

   • Stubborn inflationary pressures may delay rate cuts, but eventual declines are likely.

In summary, while there’s no crystal ball, gradual rate improvements are expected. Keep an eye on economic indicators and the Fed’s actions for clues on when rates might ease.

6. Walmart’s Flipkart and PhonePe IPO Plans: Walmart’s Flipkart marketplace and PhonePe digital payments platform are considering initial public offerings (IPOs).

• The IPOs could take a couple of years to materialize.

• PhonePe, based in India, is one of the largest payment platforms in the country.

• PhonePe’s tie to India’s instant money transfer system, Unified Payments Interface (UPI), makes it a significant player.

• Walmart may prioritize PhonePe’s IPO ahead of Flipkart, despite Flipkart being a more mature business.

• Both Flipkart and PhonePe have strong growth potential and could contribute to Walmart’s goal of doubling its gross merchandise volume in foreign markets to $200 billion within five years.

• PhonePe reported a 77% surge in consolidated revenue for financial year 2023, driven by increased usage in India’s booming digital payments market.

• With over 490 million registered users, PhonePe holds a near 51% share of the value of transactions on India’s UPI as of March 2023.

7. Nvidia’s co-founder and CEO, Jensen Huang’s Wealth Surge: Nvidia’s co-founder and CEO, Jensen Huang, has seen his wealth soar as the market value of the computer-chip maker reaches $3 trillion. Here are the key points:

• Wealth Surge:

  • Huang’s net worth has surged over $62 billion this year due to strong demand for Nvidia chips used in artificial intelligence applications.

  • He now ranks as the world’s 13th-richest person with a net worth of $106.1 billion, surpassing Michael Dell.

• AI Boom:

  • Huang is part of a new wave of tech billionaires benefiting from the AI revolution.

  • Lisa Su (CEO of Advanced Micro Devices) and Charles Liang (Super Micro Computer Inc.) are also riding this wave.

• Nvidia’s Milestone:

  • Nvidia became the first computer-chip company to achieve a $3 trillion market capitalization, surpassing Apple.

  • The company’s success is driven by its dominance in high-end accelerators used for AI training.

• Dell’s Role:

  • Michael Dell, founder of Dell Technologies Inc., has a net worth of $105.9 billion.

  • Dell benefits from the AI trend as corporations require servers and infrastructure to utilize Nvidia’s advanced chips.

  • Dell and Super Micro are seen as Nvidia’s preferred partners in this business line.

• Nvidia’s Momentum:

  • Nvidia continues to innovate, planning annual upgrades to its AI accelerators.

  • Its ecosystem of hardware and software solutions remains ahead of rivals like AMD and Intel.

In summary, Jensen Huang’s wealth surge reflects Nvidia’s pivotal role in the AI landscape, and the company shows no signs of slowing down.

8. US Labor Market Adds More Jobs Than Expected in May: The US labor market added 272,000 nonfarm payroll jobs in May, surpassing economists’ expectations of 180,000.

• The unemployment rate rose to 4% from the previous month’s 3.9%.

• Despite signs of a slowdown, the economy and labor market have held up, leading to a dilemma for the Federal Reserve regarding interest rate decisions.

• Wages increased 4.1% year over year, reversing a downward trend.

• Labor force participation declined slightly, but prime-age workers’ participation reached its highest level in 22 years.

• Healthcare, government, and leisure and hospitality sectors saw the largest job increases.

• Investor confidence in Fed rate cuts shifted after the labor report, with a 53% chance of rate cuts in September.

• Other data also reflects a resilient labor market returning to pre-pandemic levels.

9. Gold’s sharp decline: On June 7, gold experienced a sharp decline due to a combination of factors:

• Strong US Jobs Report:

  • The US Labor Department’s report showed that Nonfarm Payrolls (NFP) rose by 272,000 jobs in May, surpassing expectations.

  • This positive employment data doused expectations for US interest rate cuts this year.

  • The dollar rallied, making gold more expensive for overseas buyers.

• China’s Bullion Purchases:

  • Data revealed that China, a top consumer of gold, held off on bullion purchases in May.

  • This added to the bearish sentiment in the gold market.

• Market Impact:

  • Spot gold dipped about 3% to $2,304.54 per ounce, while US gold futures settled 2.8% lower at $2,325.

  • Silver, platinum, and palladium also experienced declines.

  • Traders adjusted their bets on rate cuts, with the first cut now more likely in November instead of September.

• TD Securities’ Perspective:

  • Analysts at TD Securities noted that while China’s pause in purchasing affected gold, it could be a sign of a more price-sensitive approach given recent price increases.

In summary, gold faced headwinds from strong economic data and China’s buying behavior, impacting its price and investor sentiment.

10. Gregoire Tournant, a former Allianz fund manager, pleads guilty: Gregoire Tournant, a former Allianz fund manager, has pleaded guilty over his role in the collapse of the Structured Alpha funds in 2020. Here are the key points:

• Charges and Guilty Plea:

  • Tournant admitted to two counts of investment adviser fraud.

  • He faces up to 10 years in prison and agreed to give up $17.5 million in ill-gotten gains.

  • The Structured Alpha funds lost about $7 billion due to the pandemic-induced market panic.

• Background:

  • Tournant created and oversaw the Structured Alpha funds as chief investment officer.

  • Allianz agreed to pay over $6 billion and its US asset management unit pleaded guilty to securities fraud to resolve government probes into the collapse.

  • The funds had bet heavily on stock options as a form of insurance against market selloffs.

• Prosecutors’ Allegations:

  • Tournant misled investors about the funds’ risks by altering performance data and diverging from promised hedging strategies.

  • He obstructed a US Securities and Exchange Commission probe by directing a colleague to lie.

In summary, Tournant’s guilty plea is related to the collapse of the Structured Alpha funds, which caused significant investor losses.

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!

Hard vs. Soft Inquiries: The Detective’s Guide

Unmasking the Credit Inquiry Mystery

Introduction

Welcome to the eighth chapter of our credit chronicles! Today, we’re putting on our detective hats to unravel the mystery of credit inquiries. Are they friend or foe? Let’s investigate! 🔍

1. Hard Inquiries: The Intruders

The Scene

• Scenario: You apply for credit—mortgage, car loan, or a new credit card.

• The Culprit: Lenders and creditors.

• The Impact: A temporary dip in your credit score (usually a few points).

2. Soft Inquiries: The Friendly Observers

The Scene

• Scenario: Checking your own credit, pre-approved offers, background checks.

• The Culprit: You (yes, you!), employers, landlords.

• The Impact: No harm to your credit score.

3. The Detective’s Checklist

Hard Inquiry Clues

• Frequency: Too many in a short period raise eyebrows.

• Timing: Recent inquiries matter most.

• Types: Multiple credit card applications? Red flag!

4. The Alibi: Rate Shopping

• The Defense: When shopping for a mortgage or auto loan.

• The Rule: Multiple inquiries within a 14-45 day window count as one.

• Why? To encourage smart rate shopping.

  

5. The Verdict

• Hard Inquiries: Necessary but handle with care.

• Soft Inquiries: Harmless observers.

• Your Role: Be vigilant, but don’t fear the inquiries.

—

Conclusion

Congratulations! You’ve cracked the credit inquiry case. Remember, inquiries are part of life—just keep them in check. Stay tuned for our next episode: “Credit for Life: Navigating Major Milestones.” 🌟

—

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 a very 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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