🍋 Paycheck to Paycheck
Good Morning! If you're at Credit Suisse, it definitely is. The bank handed out $300 million in July to stop top bankers from leaving the firm that's been plagued by scandals, losses, and leadership changes. Estée Lauder is shelling out cash and is in talks to buy Tom Ford, a potential $3 billion deal. PespsiCo is investing in another company as well. $550 million was used to buy a stake in healthy energy drink company Celsius. Staying in the food and drink world, chicken sandwiches are getting a makeover at places like Panera Bread and Popeyes. The input cost, poultry has gone up, and so has competition, but fast food is doubling down.
1. Story of the Day: Paycheck to Paycheck Economy
We're not in a depression, and we may not even be in a recession, but things are tough for the average American. As of June, 61% of Americans, or roughly 157 million adults, are living paycheck to paycheck according to a new LendingClub report. That's a 3% increase since May, and 6% increase over the last year.
These stats aren't only representative of minimum wage workers either. People who earn $200k a year or more are also living paycheck to paycheck... 36% of them, which is also up from last month.
Inflation is the scapegoat here. Even though average hourly earnings are up 5.1% in a year, the increase in prices of goods has outpaced by almost 2x with the CPI print in June hitting 9.1%. This means that people are struggling to afford their usual lifestyles, and the trend doesn't seem to be slowing anytime soon.
The depressing cherry on top? Americans are having to dip into savings to get by. The average savings amount for consumers has dropped to $10,757 in June from $11,274 in May, according to LendingClub. This means that people are having to resort to credit cards to get by, increasing monthly balances, and leaving them vulnerable to increased interest rates.
Short Squeez Takeaway: Hard to believe how more than one-third of the people making $200k+ are living paycheck to paycheck. But when the average 1-bedroom rent in NYC costs $3,950 and the other half of the paycheck goes to taxes (& bottle service?) it's not that hard to imagine. Those struggling to afford their day-to-day lifestyle tend to rely more on credit cards and with upcoming rate hikes, they are becoming even more financially vulnerable. This crazy time in the markets and economy might serve as a good catalyst to shifting to better spending and savings habits for the future.
2. Markets Rundown
Markets took a breather after a good week, and finished slightly lower after their best monthly gain since November 2020.
Movers & Shakers
- (+) Boeing ($BA) +6% after it was reported the FAA improved inspection protocol revisions that should allow deliveries of the 787 Dreamliner to resume.
- (+) PerkinElmer ($PKI) +5% after the life sciences company reported better than expected sales and profit for Q2.
- (–) Jacobs Engineering ($J) -6% because the company lowered guidance for FY 2022, citing currency translation adjustments as a headwind.
- Apollo-led group in talks to buy Atlas Air, which has a market value of $2 billion
- Mulberri, a business insurance startup, raised $4 million
- Global Payments bought EVO Payments for $4 billion
- Leapfin, a financial management startup, raised $12 million
- Fly.io a cloud infrastructure startup, raised $37 million
3. Top Reads
- Why the dollar’s gain is big tech’s pain (Axios)
- What the six key recession indicators show (BB)
- Why no one’s showing up for work this summer (WSJ)
- US banks passed latest stress test but are still unhappy (BB)
- The 100 wealthiest Americans have lost $622 billion since November (BB)
- Why 65% of Americans are wrong to keep cash out of a volatile stock market (CNBC)
- Why it’s hard to get startup funding now - and what to do about it (WSJ)
- Climate insurance is risky business (Axios)
- How can big cities get us to live there again? (WSJ)
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4. Book of the Day: Never Eat Alone: And Other Secrets to Success, One Relationship at a Time
Do you want to get ahead in life? Climb the ladder to personal success?
The secret, master networker Keith Ferrazzi claims, is in reaching out to other people. As Ferrazzi discovered in early life, what distinguishes highly successful people from everyone else is the way they use the power of relationships—so that everyone wins.
In Never Eat Alone, Ferrazzi lays out the specific steps—and inner mindset—he uses to reach out to connect with the thousands of colleagues, friends, and associates on his contacts list, people he has helped and who have helped him.
And in the time since Never Eat Alone was published in 2005, the rise of social media and new, collaborative management styles have only made Ferrazzi’s advice more essential for anyone hoping to get ahead in business.
The son of a small-town steelworker and a cleaning lady, Ferrazzi first used his remarkable ability to connect with others to pave the way to Yale, a Harvard M.B.A., and several top executive posts.
Not yet out of his thirties, he developed a network of relationships that stretched from Washington’s corridors of power to Hollywood’s A-list, leading to him being named one of Crain’s 40 Under 40 and selected as a Global Leader for Tomorrow by the Davos World Economic Forum.
Ferrazzi’s form of connecting to the world around him is based on generosity, helping friends connect with other friends. Ferrazzi distinguishes genuine relationship-building from the crude, desperate glad-handing usually associated with “networking.” He then distills his system of reaching out to people into practical, proven principles.
“It’s better to give before you receive. And never keep score. If your interactions are ruled by generosity, your rewards will follow suit.”
5. Short Squeez Picks
6. Daily Visual: Millennial Net Worth Doubles in Two Years
Millennial net worth; Q3 2001 to Q1 2022
7. Daily Acumen: Enough
"No matter how much money we currently have, there’s always the temptation to want more. This is understandable—we like the idea that the future will be brighter than today—but it also carries risks.
There’s the obvious danger: We’ll never feel satisfied with what we have. For most of us, the big financial finish line is retirement. How much do we want saved up by then, so we can retire in comfort? Even if we later revise that number, it’s helpful to set a goal, so we know what we’re aiming for—and what success looks like.
There’s also the less obvious risk: We might continue to invest aggressively, even though we’re comfortably on track to meet our financial goals. Yes, if we’re ahead of where we need to be, arguably we can afford to take additional risk. But this added risk could come back to haunt us, and we might end up snatching defeat from the jaws of victory.
Remember, the goal isn’t to grow absurdly rich, but rather to have enough to lead the life we want. What if we forget about that goal? The math of investment losses is brutal: If we invest aggressively and lose 50% of our portfolio’s value, we need a 100% gain to get back to even.
When we ponder what constitutes enough, we shouldn’t just think about our nest egg. It’s also a concept worth applying to the size of our homes, the possessions we accumulate and even our career.
We don’t want to reach the end of our working life and feel we could have achieved so much more. Instead, we should figure out what would constitute success, write it down—and then, fingers crossed, achieve our goal and feel satisfied with our accomplishments."
Source: Humble Dollar
8. Crypto Corner by Bonkalytics.com
- SEC charges 11 people with crypto pyramid scheme
- Can VC’s game crypto out of this downturn?
- Crypto price declines are laying the foundation for future growth
- NY Attorney General courts crypto whistle blowers
- Bankrupt crypto lender Celsius could leave customers last in line to get paid
- Binance.US delists cryptocurrency cited by SEC as a security
For more crypto-focused content, sign-up here.
9. Memes of the Day
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