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: 5,738.17 -7.20 (-0.13%)

• NASDAQ: 18,119.59 -70.70 (-0.39%)

• Dow Jones: 42,313.00 +137.89 (+0.33%)

• 10-Year Treasury Yield: 3.751 (-0.038)

• Bitcoin: $65,959.26 +909.62 (+1.4%)

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

Market Bites::

1. Dow Hits Record High as Tame Inflation Boosts Small Caps; Nasdaq Slips: 

Key Points:

1. Dow Jones Closes at Record High: The Dow rose 0.33%, closing at a record 42,313.00, as a subdued inflation report fueled optimism for more Federal Reserve rate cuts.

2. Inflation Eases: U.S. Personal Consumption Expenditures (PCE) showed inflation at 2.2% in August, helping to temper fears of rising costs.

3. Small-Cap Gains: The Russell 2000 index, which tracks small-cap stocks that benefit from lower interest rates, climbed 0.67% to a one-week high.

4. Nasdaq and S&P 500 Slip: The tech-heavy Nasdaq fell 0.39%, while the S&P 500 edged down 0.13%, though both indexes remain near record highs.

5. Rate Cut Expectations Rise: Following the inflation data, market expectations for another 50-basis-point Fed rate cut in the near future increased to 52.1%.

6. Stock Movers: Nvidia fell 2.17%, dragging down the Nasdaq, while Bristol-Myers gained 1.58% after FDA approval of its schizophrenia drug. Costco shares dropped 1.76% after reporting disappointing fourth-quarter revenue.

Summary:

The Dow Jones Industrial Average closed at a record high after a tame inflation report strengthened hopes for more Federal Reserve rate cuts. While the Nasdaq and S&P 500 dipped slightly, small-cap stocks surged on the prospect of lower rates. The market's attention now turns to labor market data expected next week.

2. Yields and Dollar Dip as Dow Hits Record After US Inflation Data: 

Key Points:

1. Dow Closes at Record High: The Dow Jones Industrial Average gained 0.33%, closing at a record 42,313.00. In contrast, the S&P 500 and Nasdaq both ended lower, falling 0.13% and 0.39%, respectively.

2. Inflation Data Boosts Rate Cut Expectations: The U.S. Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation measure, rose by a modest 0.1% in August, driving expectations for a 50-basis-point Federal Reserve rate cut in November. Markets now see a 56.7% chance of this outsized cut, up from 49.9% before the inflation report.

3. Global Stocks and Treasury Yields: Global stocks reached record highs, bolstered by China’s economic stimulus. European shares closed at all-time highs as well. U.S. 10-year Treasury yields fell 3.5 basis points to 3.754%, as inflation data and geopolitical concerns, including Israel's actions in Lebanon, pushed investors toward safer assets.

4. Strong Gains for Chinese Stocks: China's blue-chip CSI 300 index jumped 4.5%, marking its best weekly gain (15.7%) since 2008, driven by stimulus measures from China's central bank. Hong Kong’s Hang Seng Index also surged, rising 13% for the week.

5. Yen Strengthens: The yen gained 1.82% against the dollar after Japan’s former Defense Minister Shigeru Ishiba emerged as the likely new prime minister, signaling potential shifts in economic policy.

6. Commodities and Currencies: Aluminum prices reached a 16-week high on the London Metal Exchange, reflecting optimism from China’s stimulus. The dollar weakened, with the dollar index falling 0.17% to 100.43, while oil prices rose slightly, with U.S. crude closing at $68.18 per barrel.

Summary:

The Dow hit a record high as inflation data showed continued moderation, boosting expectations of further Federal Reserve rate cuts. Treasury yields and the dollar fell amid easing price pressures and geopolitical tensions. Global stocks, especially in China, rallied on fresh stimulus, while commodities like aluminum saw significant gains. Investors now turn their focus to labor market reports and additional economic data.

3. US Rate Cut, China Stimulus Spark Optimism for More Asia Private Equity Deals: 

Key Points:

1. Improved Market Sentiment for PE Deals: U.S. interest rate cuts, alongside China's economic stimulus, are expected to drive private equity (PE) deal activity in Asia. Lower financing costs and enhanced market sentiment are predicted to facilitate smoother exits for PE firms.

2. Rate Cuts Boost Exit Opportunities: The recent U.S. Federal Reserve rate cut, its first in over four years, is expected to lower borrowing costs, easing conditions for leveraged buyouts. Industry experts believe this will narrow the valuation gap between buyers and sellers, creating more opportunities for PE-backed mergers and acquisitions (M&A).

3. China's Stimulus as a Catalyst: China's broader-than-expected stimulus, focusing on monetary policy and property market support, aims to restore confidence in its economy. This stimulus, combined with potential fiscal measures, is expected to further enhance liquidity and boost asset valuations, benefiting PE firms seeking exits.

4. Asia PE-Backed M&A on the Rise: Despite fewer new deals this year, PE-backed M&A activity in the Asia Pacific, including Japan, grew by 14%, reaching $105 billion. This was largely due to a $16 billion deal led by Blackstone's consortium to acquire Australian data center provider AirTrunk.

5. PE Firms Anticipate Robust Exit Environment: Industry leaders, such as Blackstone, are optimistic about the favorable conditions for exiting portfolio companies in Asia. Blackstone recently sold multiple assets in Japan and Korea and is confident in the region's continued robust exit environment.

Summary:

The combination of U.S. interest rate cuts and China’s stimulus measures is expected to significantly improve conditions for private equity in Asia. Lower financing costs and increased market liquidity should make exits easier, while improving asset valuations will enhance dealmaking opportunities. Despite fewer new deals in 2024, the overall value of M&A has risen, highlighting the potential for further growth in the sector.

4. Irish Budget Surplus Set to Surge to 8% of National Income Following Apple Windfall: 

Key Points:

1. Significant Budget Surplus for 2024: Ireland's budget surplus is projected to rise dramatically to 8% of modified gross national income (GNI) in 2024, up from the previously forecast 2.8%, due to a 14 billion-euro back tax payment from Apple.

2. Government Surplus Estimate: The general government surplus is expected to reach around 25 billion euros in 2024, a major increase from the 8.6 billion euros forecasted in April. This spike is largely attributed to the Apple tax payment.

3. Impact on Budget: Despite the Apple windfall, the Finance Minister, Jack Chambers, clarified that these funds would not affect the upcoming national budget but would be outlined in terms of future spending plans.

4. Increased Public Expenditure: The government has committed to increasing public expenditure by 6.9% in the national budget, exceeding its own 5% spending growth cap for the third consecutive year.

5. Corporate Tax Revenue: Ireland's corporate tax receipts, driven by multinational companies in the tech and pharmaceutical sectors, are expected to total around 30 billion euros this year, excluding the Apple tax.

6. Future Surplus Projections: For 2025, Ireland is forecasted to post a surplus of 3.75% of modified GNI, though this figure does not account for measures to be revealed in next week's budget.

7. Apple's Contribution Timing: The Irish government expects to receive 8 billion euros from Apple in 2024, with another 6.1 billion euros coming in 2025. However, the full 14.1 billion euros will be recorded in the national accounts this year.

Summary:

Ireland's budget surplus is set to surge to 8% of its national income in 2024, largely thanks to a 14 billion-euro tax payment from Apple. The windfall will significantly boost the government's fiscal position, with corporate tax revenues also remaining robust due to multinational contributions. Despite the unexpected funds, the windfall won't influence the imminent national budget but will be addressed in future financial planning.

5. Jobs Data to Test U.S. Stock Market's Soft-Landing Hopes Amid Fed Rate Cuts: 

Key Points:

1. Crucial Jobs Data Ahead: Investor optimism about a soft landing for the U.S. economy will be tested with the upcoming September labor market report on October 4. Previous job reports have shown weaker-than-expected gains, increasing the significance of the latest data for market sentiment.

2. S&P 500 Performance: The S&P 500 is up 20% year-to-date, nearing record highs. This has fueled hopes that the Federal Reserve can manage inflation without significantly hurting economic growth. The index is set to end the third quarter with its best January-September performance since 1997.

3. Impact of Rate Cuts: The Federal Reserve's recent 50 basis point interest rate cut has buoyed markets, but some analysts worry that it might not be enough to prevent an economic downturn. The next jobs report could either reinforce hopes for a soft landing or lead to a market correction.

4. Jobs Report Significance: The nonfarm payrolls for September are expected to increase by 140,000, according to Reuters data. If job growth falls short of expectations again, it could impact the Fed's next move at its November 6-7 meeting, where rate cuts are being considered.

5. Federal Reserve Watch: Investors are also keeping a close eye on an upcoming speech by Fed Chairman Jerome Powell on Monday, which could provide further insight into the central bank's economic outlook.

6. S&P 500 Historical Trends: Historically, when the S&P 500 has gained at least 15% by September, it has seen further gains in the fourth quarter in most cases, averaging 5.4%. This trend provides optimism for continued stock market strength heading into year-end.

7. Recession Fears: While U.S. growth remains in focus, a survey of fund managers highlighted that a U.S. recession is the top risk for markets. Defensive sectors like utilities and consumer staples have performed well, signaling investor caution over a potential downturn.

8. Potential Upside: Some analysts, like Garrett Melson from Natixis Investment Managers Solutions, argue that recession fears may be overblown and that there is potential for further upside in economically sensitive sectors such as industrials and financials as strong economic data could boost these groups.

Summary:

The U.S. stock market's resilience and investor hopes for a soft economic landing will face a critical test with the release of September's jobs data. With the S&P 500 up 20% year-to-date, investors are looking to the Federal Reserve's recent rate cuts and upcoming economic reports to maintain the momentum. However, concerns about a looming recession persist, making the next jobs report a key indicator for market direction.

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!

Understanding the Stock Market: A Beginner's Guide to Investing

The stock market can be an exciting and dynamic way to grow your wealth, but for many beginners, it can also feel intimidating and complex. Whether you're saving for retirement, building wealth, or just looking to make your money work harder for you, investing in stocks can be a powerful tool. In this article, we’ll break down the basics of the stock market, explain how it works, and provide practical tips on how to get started with investing.

1. What is the Stock Market?

The stock market is a collection of exchanges where stocks (also known as shares or equities) of publicly traded companies are bought and sold. It serves as a marketplace where investors can trade ownership stakes in companies. The two most well-known stock exchanges in the United States are the New York Stock Exchange (NYSE) and the Nasdaq.

Here’s a quick overview of key terms:

• Stocks: Shares of ownership in a company. When you buy a stock, you become a shareholder, which means you own a piece of that company.

• Stock Exchange: A marketplace where stocks are bought and sold. Exchanges can be physical locations, like the NYSE, or electronic, like the Nasdaq.

• Stock Market Index: A measurement of a section of the stock market. Popular indices include the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite. They provide a snapshot of how the market or a specific sector is performing.

2. How Does the Stock Market Work?

The stock market operates on the principles of supply and demand. Here’s a simplified explanation of how it works:

1. Initial Public Offering (IPO): When a company wants to raise capital, it can go public by issuing shares in an Initial Public Offering (IPO). This is the first time the company offers its stock to the public.

2. Buying and Selling Shares: Once a company’s shares are listed on a stock exchange, investors can buy and sell these shares. When you buy a share, you are purchasing a small piece of that company, hoping it will grow in value over time.

3. Price Determination: The price of a stock is determined by supply and demand in the market. If more people want to buy a stock than sell it, the price will go up. Conversely, if more people want to sell a stock than buy it, the price will go down.

4. Dividends: Some companies pay dividends to shareholders, which are a portion of the company's profits distributed regularly (often quarterly). Not all companies pay dividends, especially if they are focused on growth and reinvest profits back into the business.

3. Why Invest in the Stock Market?

Investing in the stock market can offer several benefits, especially when done with a long-term perspective:

• Wealth Building: Over time, stocks have the potential to provide higher returns than many other investments, such as bonds or savings accounts. This can help you build wealth more effectively.

• Compound Growth: Reinvesting dividends and allowing your investments to grow over time can lead to compound growth, where your investment gains start to earn returns themselves.

• Diversification: The stock market offers a variety of investment options across different sectors and industries, allowing you to diversify your portfolio and manage risk.

• Ownership and Influence: Owning stock means owning a part of a company. While a single share doesn’t give you much influence, owning more shares gives you a say in important company decisions through voting rights.

4. Getting Started with Stock Market Investing

Starting your investing journey might seem overwhelming, but it doesn’t have to be. Here are some practical steps to help you get started:

1. Educate Yourself
   Action: Before diving in, take time to learn about the stock market, how it works, and different types of investments. There are plenty of resources available, including books, online courses, and financial news websites.

2. Set Financial Goals
   Action: Determine why you’re investing and what you want to achieve. Are you saving for retirement, a down payment on a house, or simply looking to grow your wealth? Your goals will influence your investment strategy.

3. Establish a Budget
   Action: Decide how much money you’re willing to invest and how often. Never invest money you can’t afford to lose, and consider your budget carefully, including savings, emergency funds, and other financial obligations.

4. Choose a Brokerage Account
   Action: To buy and sell stocks, you’ll need to open a brokerage account. Compare different brokers based on factors like fees, account minimums, and the tools and resources they offer.

5. Start Small and Diversify
   Action: Begin with a small amount of money and consider investing in low-cost index funds or exchange-traded funds (ETFs) that offer broad market exposure. These funds can help you diversify and reduce risk.

6. Stay Consistent and Patient
   Action: Investing is a long-term game. Stay consistent with your investments, even in volatile markets, and avoid making emotional decisions based on short-term market fluctuations.

Visualizing Your First Investment: A Simple Example

Let’s say you decide to start investing with $1,000. You open a brokerage account and choose to invest in an S&P 500 index fund, which tracks the performance of 500 of the largest companies in the U.S. If the stock market averages an annual return of 7% over the next 30 years, your initial $1,000 investment could grow to approximately $7,612, thanks to compound growth.

This example illustrates the power of starting early and letting your investments grow over time. Even small amounts can make a big difference when invested wisely.

Conclusion

Investing in the stock market can be a rewarding way to grow your wealth and achieve your financial goals. By understanding how the market works, setting clear goals, and developing a disciplined investment strategy, you can navigate the complexities of the stock market and build a robust financial future.

Remember, successful investing requires patience, education, and a willingness to take calculated risks. Start small, stay informed, and let time and compound growth work in your favor.

In our next article, "Inflation and Your Money: How to Keep Your Purchasing Power," we’ll discuss how inflation affects your finances and strategies you can use to protect your wealth against rising prices.

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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!

If you liked this, check out all of past series including and all our previous articles here.

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

We will bring the next series to you in the next week episode.

Until next time, wishing a very happy wealthiness (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. 🌟📊💳

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