The Daily Valet. - 9/14/22, Wednesday
✔️ How Does This Affect You?
Wednesday, September 14th Edition
Look around … because a millionaire might not be too far away.
Cory Ohlendorf , Editor ⋯ @coryohlendorf
Today’s edition is presented by
Today’s Big Story
Inflation Remains High
The Dow tumbles 1,200 points for its worst day since June 2020 after hot inflation report
For the better part of a year, the inflation narrative among many economists and policymakers was that it was essentially a food and fuel problem. Once supply chains eased and gas prices abated, the thinking went, that would help lower food costs and in turn ease price pressures across the economy.
And after soft July readings, there was good reason to hope that the U.S. was gliding toward lower inflation without much economic distress, but August’s consumer price index numbers undermined that hope. The government said Tuesday that inflation ticked up 0.1% from July to August and 8.3% from a year ago
Axios said the numbers “were terrible news for everyone rooting for the economy to come in for a soft landing.” Yes, the prices of gasoline and other forms of energy fell, “but prices of most of the other things people buy—including essentials like food, rent and medical care—are still rapidly rising.”
The inflation data instantly dashed Wall Street’s hopes that the Federal Reserve might ease up on its campaign of aggressively raising interest rates. The Dow tumbled 1,276 points, or 3.9%, following the release of the report. According to CNBC, the drop erased nearly all of the recent rally for stocks—just five stocks in the S&P 500 finished in positive territory.
That probably doesn’t change the Federal Reserve’s plans to raise interest rates another 0.75 percentage point next week. That would be the third consecutive move of that size and would bring rates to a range of 3 to 3.25%. Fed officials have been raising interest rates since March to slow the economy, but the approach risks tipping the U.S. into an economic downturn and putting millions out of work.
However, ABC News reports that other indicators suggest the economy continues to hum along. Hiring fell from its breakneck pace but remained robust in August—the economy added 315,000 jobs and the unemployment rate rose to 3.7%. The tightrope the Fed will have to walk is raising rates but trying to avoid an increase in the unemployment rate.
↦ FYI: “Demand-driven inflation” is one way to say that consumers—who account for nearly 70% of economic growth—keep spending, even if they resent having to pay more.
‘Doomsday Glacier’ Is Disintegrating
But has the word ‘doomsday’ lost all meaning?
As many scientists and climate change activists are pointing out lately, the “doomsday” implied in the term “Doomsday Glacier”—the nickname given to the Thwaites Glacier in Antarctica—may be coming soon.
Warmed by recent ocean currents, the glacier (which is larger than the entire state of Florida) is losing contact with the sea floor and “holding on today by its fingernails,” according to a new study published this week.
So the breakup of this glacier appears imminent, and the consequences of that melting are no joke. According to a 2020 estimate, roughly 4% of climate change-caused sea-level rise so far came from Thwaites alone, and a sudden total collapse could raise sea levels 25 inches more.
But does a doomsday nickname do more harm than good? “On the one hand, it is a wakeup call, aka take these things seriously,” NASA earth scientist Eric Rignot told Cnet. “On the other hand, it summarizes the situation as if there was only one bad glacier out there.” And there are other, bigger ice formations to worry about and scientists says there's a lot more research left to do.
↦ Be Prepared: The ultra-wealthy are building luxe survival shelters under their mansions. Think a plush panic room, complete with a private pool.
Partner
Everyone hopes to strike it big in the stock market. What if there was a stock that performed so well, it's been dubbed the “millionaire maker”?
Railway Workers Could Go on Strike
It would be the first widespread U.S. railroad strike in 30 years. Here’s what that means.
Freight railroad companies and unions representing workers have been locked in a dispute over pay and working conditions. And if it's not resolved by Friday, the conflict could spill over into a serious logistical crisis.
A strike would not only affect our supply chain, it would strand commuters who rely on railways to get to work as well the nation's energy supply and drinking water. A nationwide shutdown, Jalopnik reports it could mean billions in economic damage. The possibility of a strike is already causing some railways, like Union Pacific, to reject hazardous or security-sensitive materials due to the very real possibility that there will be no workers to handle the shipments come Monday—a move labor leaders call an unnecessary act of “corporate extortion.”
CNN reported Tuesday that the White House is urgently discussing contingency plans as the threat of a rail shut down looms, with agencies across the federal government working through how they could potentially use federal authority to keep critical supply chains operational as labor talks continue to sit at an impasse.
The impasse is tied to disagreements between management and labor over sick time and penalties for missing work—a politically challenging stalemate for President Biden, who according to the Washington Post, “aims to advocate for union workers but has prioritized untangling the nation's besieged infrastructure in the COVID era.” Senior officials are now looking at how highways, ports and waterways could be used to offset the disruptions a strike would kick off.
↦ FYI: Labor Day only became a national holiday thanks to a deadly railroad workers’ strike.
Where Are the Millionaires?
Well, a lot of them are in New York
New York is the world's wealthiest city with the largest number of resident millionaires and billionaires, according to a new report from investment advisory firm Henley & Partners released on Tuesday.
The London-based analysts collaborated with New World Wealth, a global wealth intelligence firm based in South Africa, to crunch the numbers for their annual report. Apparently, the Big Apple is home to 345,600 millionaires, including 737 centi-millionaires (those with a net worth of $100 million or more). And don't forget the 59 billionaires. The report noted that when you include affluent commuter towns such as Greenwich, Connecticut, as well as Great Neck and Sands Point on Long Island, that billionaire count goes up by more than 120.
In fact, American cities made up half of the top 10 cities with the most millionaires. Still, a closer look at the data reveals that New York city lost 12% of its high net-worth individuals in the first half of 2022. San Francisco's Bay Area saw a 4% increase, which bumped it just above London (which saw a 9% decline).
The firms also highlight the fastest-growing cities in the world in terms of wealth. Saudi Arabia's capital Riyadh, and Sharjah, the United Arab Emirates's third most populous city, top that list. Meanwhile, Austin is the first American city to appear on the fastest-growing list, as its high-net-worth population has increased 14% in 2022 alone—with 15,800 such people residing in the Texas boom city.
↦ FYI: According to financial journalist Thomas J. Stanley, only two out of every 10 millionaires inherited their wealth. The other 80% earned their cash on their own.
In Other News
Other Things We’re Talking About Today
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Partner
The “Millionaire-Maker” Stock
The Motley Fool is tripling down on this one. Should we pay attention?
The stock market is notoriously fickle. It takes a steady hand, some faith and good advisors to make sure you invest wisely and ride out any uncertainty. Of course, some bets seem safer than others.
The Wall Street Journal reports that thousands of ordinary Americans have become millionaires thanks to one particular stock. And since it's still trading at just 1.44 times book value, the team at The Motley Fool is convinced that this stock is not done minting millionaires. They even went so far as to say that during times of market volatility and uncertainty, this one stock in particular could form the foundation of any portfolio.
In fact, their analysts are so confident in this “millionaire-maker” that they've issued a “triple-down buy alert” on this particular company. That's rare. In the past two decades, the Motley Fool Stock Advisor has only issued this alert for 31 stocks—including Netflix, Shopify and Amazon. There's just one catch: The details of the stock report are only shared with members of The Motley Fool's flagship investing service, Motley Fool Stock Advisor. While you've no doubt heard about the Fools and their market-tripling stock picks, now's the time to try them out and get in on some smart investment planning.
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What We’re Buying
A tote bag sourced from 100% sustainable nylon materials that fits everything from a weekend outfit to your EDC for work—all for under a hundred bucks.
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Morning Motto
Remember, simpler is usually better.
↦ Follow: @rickrubin
That’s all for today...
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