š±šø Hey Siri, Define Transitory
Happy Hump Day everybody,
This past week we saw DeLorean show off their new EV scheduled for 2024, WHO refused to rule out a monkeypox pandemic risk, Twitter handed a $150M privacy fine, accounting firm EY considering split of audit and advisory, Jack Dorsey leaving Twitterās board, and Nancy Pelosiās husband was charged with a DUI in California.
Enjoy this weekās Hump Days!
- Humphrey, Rickie & Tim
Update
I wanted to say a huge THANK YOU! We recently crossed the 5,000 subscriber mark for Hump Days. Weāre having a blast creating this newsletter, and we hope that you enjoy reading it on Wednesdays and Sundays as well.
Last week I spent Wednesday and Thursday in Las Vegas going on The Iced Coffee Hour, a podcast hosted by Graham Stephan (the YouTube Personal Finance Legend) and his assistant Jack Selby. We filmed for about 1:48h, but I think it will be trimmed down to 1 hour and 20 minutes (so they tell me). Iāll be sure to share the podcast here once itās uploaded.
It is a bit surreal, seeing as how I started making content as being a fan of Grahamās. Back in 2016 I remember popping on one of his videos while I foam rolled at home on the floor of my living room. That would become a pretty regular habit of mineā¦ foam rolling and watching YouTube. It was nice to engage with him after all this time and get to know what heās like ā heās very down to earth and just as frugal as he puts on in his videos.
All of us went to dinner after the podcastā¦ an all you can eat sushi joint called Sushi Neko in Vegas. There were 7 of us and when the bill came ($250 dollar tab), I offered to pay for it. Graham suggested we play Credit Card Roulette insteadā¦ thatās where we both put in our credit cards and had the waiter pick one of them. Whoeverās card he pickedā¦would pay.
Graham ended up losing and had to pay for the meal, and he had a VISCERAL reaction to losing! I felt bad, but it just goes to show you how much he lives below his means and how he hasnāt lost touch with dollar amounts even though heās doing very well for himself financially.
He inspired me to make more YouTube videos, which I hope you will enjoy in the coming weeks.
- Humphrey
In the Markets
Featured Story
Remember the days when the Fed came out and told us that this period of high inflation was merely transitory? Well from the looks of it, I think weāre beyond the bounds of the word transitory.
On Friday, data was released which revealed the Fedās preferred gauge of price pressures, the personal consumption index, rose by 6.3% last month from April 2021, three times the Fedās 2% target. In a rare occurrence, President Joe Biden held an Oval Office meeting with Federal Reserve Chair Jerome Powell amid the highest inflation in decades.
The two met to discuss the state of the American and global economy. Around the world, countries such as France, Spain and Germany are facing similar inflation trends with Germany jumping a frightening 8.7% in May. Christian Lindner, Germanyās Finance Minister was quoted saying,
āInflation is an enormous economic risk. We must fight it so that no economic crisis results and a spiral takes hold in which inflation feeds off itself.ā
Stateside, Fed officials raised interest rates by a half-percentage point earlier this month and Powell has signaled similar rate hikes into June and July to cool price pressures. Although, these rate hikes have sparked concerns as to whether the Fed has moved too aggressively so as to trigger severe financial-market volatility that could be the catalyst for a recession.
One Fed official, Governor Christopher Waller, has come out and said that he expects 50 point hikes to continue and that he would support hikes that would take rates past āneutralā to fight inflation. Waller added that he thinks the Fed can raise rates and tamp demand without causing a severe economic downturn.
Inflation is cutting into all of us, but at least we have the tools to fight it. I imagine President Joe Biden is eager to get the record-breaking inflation, which has angered Americans and hurt his standing with voters, back under control before the 2024 election. Letās just hope that Governor Waller is right.
Weekly News Roundup
Biden to Meet Powell to Discuss Economy as Inflation Bites (Bloomberg)
President Joe Biden met with Federal Reserve Chair Jerome Powell amid the highest inflation in decades to discuss the state of the American and global economy. The personal consumption expenditures price index rose by 6.3% last months from April 2021, three times the Fedās 2% target. Fed officials raised interest rates by a half-percentage point earlier this month and Powell signalled this kind of hike would continue into June and July to cool price pressures.
TC: The meeting felt like it was more for optics than actual discussion. Regardless, all eyes are on the Fed as they aim for āsoft-ishā landing.
US Plans Economic Talks with Taiwan in Latest Challenge to China (Bloomberg)
The US and Taiwan plan to announce negotiations to deepen economic ties in a fresh challenge to Beijing, which has cautioned Washington on its relationship with the island. The talks would focus on enhancing economic cooperation and supply-chain resiliency.
RH: Taiwan boasts the third largest semiconductor manufacturing company in the world and at a time where that technology is in everything from new cars to your new futuristic smart refrigerator, these talks to bolster supply-chain resiliency are very welcome.
Twitter Shareholders Sue Elon Musk and Twitter Over Chaotic Deal (CNBC)
Twitter shareholders are suing Elon Musk, and Twitter itself, over their handling of a chaotic acquisition process that has contributed to volatile price swings in the companyās stock price. In a proposed class-action lawsuit filed on Wednesday, Twitter shareholders allege that Musk violated Californiaās corporate laws on several fronts, and in doing so engaged in market manipulation.
RH: This story just seems never ending. Iām at the edge of my seat waiting for what will come next!
Charts of the Week
The recent bounce in the S&P 500 could partly be attributed to net insider buying at its highest level since 2019ā¦
Despite the recent bounce, many are calling it a ābear market rallyā. The S&P 500 is still above its historical forward P/E multiple, implying that there could be more downside to come.