The Daily Valet. - 7/28/22, Thursday

✔️ Another One?

Thursday, July 28th Edition

Cory Ohlendorf, Editor in Chief of Valet.

Are you feeling lucky? Better buy a lottery ticket.

Cory Ohlendorf , Editor ⋯ @coryohlendorf

Today’s edition is presented by

Today’s Big Story

Another Interest Hike?

The economy is a bundle of contradictions, but the Fed remains committed to tackling inflation

Another month, another Federal Reserve interest rate hike. On Wednesday, the Fed raised its benchmark interest rate by 0.75%—the second hike of this magnitude in just two months by the U.S. central bank in its quest to rein in the record inflation.

The economy doesn’t make a whole lot of sense, does it? As the Intelligencer puts it, for every good piece of data out there (unemployment near multigenerational lows, consumers increasing spending) there’s something else (inflation at multigenerational highs, consumers decreasing spending) to cancel it out.

As we’ve said before, interest rates are the Fed’s main tool to combat inflation. Inflation is driven by strong consumer demand. By raising interest rates, which makes things more expensive, the central bank is hoping to dampen Americans’ willingness to spend money. But slow the economy enough and you get a recession.

Fed chair Jerome Powell told reporters that he does not believe the U.S. economy is currently in a recession. “And the reason is there’s just too many areas of the economy that are performing too well,” he added, referencing the labor market specifically. Though he admitted that the path to a “soft landing” has gotten more narrow and could get narrower still.

How will it all affect your finances? It depends. The New York Times reports that Americans have seen the effects on both sides of the household ledger: Savers benefit from higher yields, but borrowers pay more. Credit card rates are closely linked to the Fed’s actions, so those with revolving debt can expect to see rates rise—usually within one or two billing cycles. The average credit card rate was recently 17.25%, according to Bankrate.com, up from 16.34% in March, when the Fed began its series of rate increases.

Car loans are also expected to climb, but those increases continue to be overshadowed by the rising cost of buying a vehicle and what it costs to fill it up. And it’s not a great time to take on a new mortgage. But on the plus side, you can now earn more on bonds, CDs and other fixed income investments.

↦ FYI: Cryptocurrencies have continued to sink in value since the Fed began raising rates. Bitcoin has plunged from a peak at about $68,000 to $21,000.

U.S. Offers Swap for Release of Griner

The government could swap a Russia arms dealer for the WBNA star and another American

The U.S. has offered Russia a deal for a prisoner swap: They'll hand over Viktor Bout, a notorious Russian arms dealer, for Brittney Griner, the WNBA player, and Paul Whelan, a former Marine—both of whom, the State Department says, were wrongfully detained

After months of internal debate, Secretary of State Antony J. Blinken said Wednesday that the United States had “put a substantial proposal on the table” and that he would soon press for the Americans' return in his first conversation with his Russian counterpart since Russia invaded Ukraine five months ago.

According to the BBC, the Russian arms dealer, dubbed the merchant of death, is currently serving a 25-year prison sentence on charges he attempted to sell weapons to a Colombian rebel group to kill Americans. White House spokesman John Kirby confirmed an offer had been made “several weeks ago,” but noted Russia “hasn't favorably engaged so far.”

The U .S. government has long resisted prisoner swaps, claiming concerns that they only incentivize countries to detain Americans so they can be used as bargaining chips. But advocates have questioned these concerns and have argued that it is more important that Americans are able to come home.

↦ Dig Deeper: Brittney Griner spoke with the New York Times about her time in Russia, saying that she'd been tossed into a bewildering legal system with little explanation of what was happening.

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Lottery Jackpot Tops $1 Billion

The odds of winning the Mega Millions are now around 1 in 302 million

More than a billion dollars is on the line for the next Mega Millions lottery drawing tomorrow night. No ticket matched all six winning numbers after Tuesday night's drawing, pushing the jackpot from $830 million to $1.025 billion, lottery officials said Wednesday.

Since this is only the fourth time a lottery game has reached such heights, plenty of people who rarely play the game are considering risking $2 or joining an office pool in hopes of an immense payoff. Honestly, I'm considering a 7-11 run myself.

And here's an interesting point: Your chances of winning the jackpot pretty much remain one in 302.5 million—regardless of whether the big prize is $20 million or more than a billion. You do, however, increase your odds of winning if you buy more tickets. But before shelling out too much, keep in mind that in the big scheme of things, 50 or even 500 chances out of 302.5 million isn't much better than one.

If you do win, well, first remember your favorite newsletter writer. And then prepare to pay some serious taxes. According to CNBC, the cash option—which most jackpot winners choose instead of an annuity—is $602.5 million. The mandatory 24% federal tax withholding on that amount would handover about $144 million to the IRS. Then you might be on the hook for state taxes too. Why you could end up with only $400 million. But you could live on that, right?

↦ FYI: The Mega Millions lottery can be played in every U.S. state except for Alabama, Alaska, Hawaii, Nevada and Utah.

The Rolex Boom

Between supply, demand and a little bit of FOMO, it’s hard to get your hands on one

Despite concerns about the global economy, the luxury watch business is booming like never before. But unfortunately, it's made it hard to find a Rolex. There's just nowhere near enough supply to keep up with demand in today's market, and Rolex hasn't been able to ramp up production to meet it.

Stores are regularly out of stock and there are long waitlists for popular models. The pandemic, paradoxically, saw interest in Rolex soar, as people had more disposable income in lockdown and flocked to trusted, time-honored brands. You could say that Rolex has become a victim of its own success.

But there's another reason Rolex has become so unattainable—the proliferation of grey market dealers who dominate the market, buy up stock and sell it on at a substantial premium. According to Gear Patrol, a collector mentality, combined with the brand's cult following all conspire and ping off one another to inflate prices.

That thriving and rich secondary market means you need to know what you're buying. Leo spoke with Fabrice Guéroux, a horological expert and author of two books on counterfeit watches, who said you need to find a reliable watch dealer, but still says they're reliable investments. “You put your money in the bank and get 5%, if you're lucky. But you can buy a watch and in that same time, make 400% on it, and that's not getting lucky, that's getting rich.”

In Other News

↦ Senator Joe Manchin Surprisingly Announces Spending Deal With Biden Administration—Including Health Care, Climate

↦ The Great Millennial Migration That Wasn’t

↦ Mad Men’s Smoke and Mirrors Have Aged Like a Fine Whiskey

Other Things We’re Talking About Today

The ‘Godfather’ house

This armored SUV

The science of looking good

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What if you could build your wealth and feel good about the investments you made? Sounds like a real win-win situation. Cytonics is offering you the chance to get in on a groundbreaking cure while potentially increasing your net worth.

Here's the reality: Osteoarthritis (OA) is a debilitating joint disease that affects nearly 10% of the U.S. population (that's over 27 million people). And with baby boomers now hitting their 80s, that number could reach over 25% of the adults in less than a decade.

But at the moment, the only available therapies for OA just treat the symptoms of the disease (joint pain and inflammation). They do nothing to treat the root cause.

Cytonics has created a revolutionary treatment that not only stops the progression of OA, but can actually restore damaged joints back to a normal, healthy state. This experimental new drug, “CYT-108”, is a first-in-class therapy that is ready for FDA human clinical trials. Now you can be one of the first to invest in this breakthrough biotech innovation.

CYT-108 is an improvement to the company's FDA-approved flagship therapy that has successfully treated over 8,000 patients to date. With backing by Johnson & Johnson and funding from the National Institutes of Health, CYT-108 is the future of osteoarthritis treatment. Once approved by the FDA, CYT-108 will be the only pharmaceutical that targets the root cause of OA, actually reversing the joint damage caused by the disease instead of just masking symptoms.

Now you have the rare opportunity to invest in Cytonics before they IPO or are acquired by Big Pharma. Either option would no doubt be advantageous to savvy early investors.

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What We’re Eyeing

Maybe it's because we're rewatching 'The Bear' again. But these pro-level Birks have us saying “yes, chef.” They've got all the components of your favorite WFH Boston clogs, but these are outfitted with a comfortable and grippy rubber sole and an extra leather strap around the heel to make them a little more secure. Cut from a durable black leather, they may be made for the kitchen, but we could (and will) wear them anywhere.

↦ Get It: $100 by Birkenstock