Your Financial News Roundup
June 14, 2023
1. Economy: The latest CPI report led to a stock market rally; while May’s data reveal a rise in foreclosures.
2. Tech: The UK is testing AI’s use in breast cancer diagnosis; meanwhile, Redditers are protesting against upcoming increases in API pricing.
3. World: The Supreme Court wants Alabama to redistrict its partisan electoral map; and crises around the world are causing a record number of individuals to be displaced.
Personal Finance Concept [Part 7/8]: Day Trading
💵 Inflation Falling: The latest inflation report showed that prices continued to decline in May and that inflation was lower than predicted. The Consumer Price Index, a measure of inflation, climbed 4% from January to May — marking the slowest growth in 2 years. Though inflation peaked at 9% last summer, recent data shows the Fed’s rate increases are successfully curbing consumer demand. Investors expect the Fed will skip on rate hikes this week, but will raise them in July — leading to a stock market rally. (NYTimes)
Our Take: The Fed is slowing its pace to let the economy adjust, meaning we may see a rate peak soon. However, it’s important to note that the battle isn’t over yet.
🏚️ Foreclosures On The Rise: Foreclosure-related filings in May rose by 7% from April and 14% from a year ago. Florida had the highest number of foreclosures at 2,901, followed by California at 2,451, and Texas with 2,286. The rise in foreclosure filings nationwide suggests the trend will likely continue, though not at the same level as the Great Recession. Despite the increases, foreclosure levels are around the same as pre-pandemic lows. (NBC News)
Our Take: The housing market is experiencing challenges likely due to inflation and the pressures of rising costs of goods and services. But, compared to previous downturns, the market remains relatively stable.
🕵🏾♀️ An Improved Cancer Detective: The UK’s Aberdeen Royal Infirmary is testing if AI can assist doctors with detecting breast cancer in patients. The number of radiologists is falling in the UK, while women are getting more mammograms. Because of the pilot, June, a trial participant, learned she had early-stage breast cancer and got timely treatment. The hope is that radiologists can pair with AI to review the 1.72M images read each year, reducing the image reading burden by 50%. (BBC)
Our Take: AI has the potential to transform patient treatment and medical research by bringing the future of medicine to us sooner and cheaper. Early cancer detection and other AI medtech can be both effective and affordable, especially if deployed in large healthcare markets like the U.S.
🪧 Rebels of the Internet: 7,000+ Reddit pages (or “subreddits”) and third-party apps went dark this week in protest of the platform’s plan to charge for its application programming interface (API). In April, Reddit announced it would change its API pricing due to companies like OpenAI and Google using its data for free to train their AI products. While third-party developers expected this move, they were shocked by the potential astronomical costs, which would effectively cause many of them to shut down. (ABC)
Our Take: A blanket pricing approach alienates the moderators, developers, and users who build on Reddit and give it value. As Reddit eyes a potential IPO, it will need to balance between profits and appeasing its community.
🤯 A Win For Democracy: In a positive development for voting rights, the Supreme Court ruled that a Republican-made electoral map in Alabama weakened Black voters’ power. Conservative Justices Roberts and Kavanaugh joined hands with the Court’s liberals in requiring Alabama to redraw a district with a large number of Black voters. This ruling is a victory for the Voting Rights Act (VRA) and will impact other lawsuits against Republican-made electoral maps, amid broader efforts by states to limit voting access. This decision suggests that Roberts and Kavanaugh are open to moderation. (Reuters)
Our Take: In a past ruling, the Roberts court defanged the VRA, arguing it was no longer needed. However, electoral maps have been unfairly gerrymandered for decades along partisan or racial lines, making this ruling a welcome change to this trend.
🆘 Seeking Asylum: A record-breaking 110M people have had to flee their homes due to conflict, persecution, or human rights violations, according to the U.N. High Commissioner for Refugees. Last year, the U.N. refugee agency recorded 35 emergencies, including the war in Sudan, Russia’s invasion of Ukraine, and conflicts in the Democratic Republic of Congo, Ethiopia, and Myanmar. The rapid rise of asylum-seekers has led to increasing pushback from overwhelmed governments. (AP News)
Our Take: The staggering number of refugees reflects a global displacement crisis. Addressing this issue will require international attention, cooperation, and concerted efforts to protect and support those forced to flee their homes.
Finance Concept of the Week
The Investor’s Playbook [Part 7/8]: Day Trading
Investment Strategies for Financial Success
Day trading is a short-term strategy where traders aim to profit from an asset’s price movements within a single trading day. This looks like buying and selling assets, such as stocks, currencies, and crypto, throughout the day and closing all positions by the end of the day.
Common methods to identify potential trading opportunities include:
- Scalping: Scalping is what most people imagine when they think of day trading. This high-speed strategy focuses on making small profits from frequent trades. Scalpers typically move in and out of positions in seconds or minutes.
- Momentum Trading: Momentum traders look for assets that are experiencing significant price movements. They aim to ride the momentum and make profits as the price continues to move in the anticipated direction.
- Breakout Trading: Breakout traders focus on taking advantage of situations where an asset’s price “breaks out” of an established range. The strategy is based on the belief that significant price movements tend to occur after a consolidation period or when a price level gets breached.
- Technical Analysis: Day traders heavily rely on technical analysis tools and indicators to identify trading opportunities. They analyze price charts, patterns, volume, and more to make trading decisions.
- Potential for Profits: Day trading offers the potential for making quick profits if successful trades are executed. Because you are taking advantage of short-term price fluctuations, you often realize gains or losses immediately.
- Increased Liquidity: Day traders typically target highly liquid markets, such as stocks, currencies, and crypto. This liquidity makes it easy to enter and exit positions at desired prices.
- Flexibility: You can trade from anywhere with an internet connection and at any time during trading hours. Whether you want to trade part-time or full-time, or from the comfort of your home, that’s entirely up to you.
- Drums Up Excitement: Day trading can be intellectually stimulating for people who enjoy monitoring the markets, analyzing charts, and moving fast.
- High Risk: Day trading involves inherent risks. Price fluctuations can be unpredictable, and market conditions can change rapidly, resulting in substantial losses if trades go wrong.
- Emotional Stress: Because you are monitoring trades, making quick decisions, and managing positions within a short timeframe, you may face emotional pressure. That can lead to impulsive decisions and excessive trading, hurting your performance.
- Skill and Experience Required: Successful day trading requires a deep understanding of technical analysis, market dynamics, and risk management. Novice traders without proper knowledge and experience may find it difficult to consistently make profits.
- Regulatory and Tax Considerations: Day trading is subject to specific regulations and rules, such as account minimums and pattern day trading rules. Additionally, they are taxed at a higher rate than long-term gains, which can lead to a hefty tax bill.
Tips and Tricks
- Education and Practice: Invest time in learning about how day trading works and different strategies you can take. Practice with simulated trading platforms or paper trading to gain experience without risking real money.
- Develop a Trading Plan: Establish clear trading plans that outline your entry and exit strategies, risk tolerance, and position sizing. Stick to your plans and avoid impulsive decision-making.
- Risk Management: Set strict stop-loss orders to limit potential losses and protect your capital. Avoid risking a significant portion of your trading account on a single trade.
- Start Small: Begin with a small trading account and gradually increase your position size as you gain experience and confidence. Avoid overleveraging and risking more than you can afford to lose.
Day trading is best for those who have a deep understanding of financial markets, technical analysis, and risk management. It requires discipline, dedication, and grit to handle fast-paced changes.
Tip of the Week
💸 Be wary of using reward credit cards, as the “feel good” dopamine hit can tempt you to overspend and accumulate interest charges — erasing the value of any rewards points.
Personal Finance Resources
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