Your Financial News Roundup
December 6, 2023
TL;DR
1. Economy: New data shows the economy heading toward a “soft landing” without a major recession; while the Supreme Court hears a case affecting a third of the U.S. tax code.
2. Tech: Big Tech pays for the experts consulting Congress on AI regulations; meanwhile, Spotify plans to lay off 1,500 workers to increase its profits and appease investors.
3. World: The leader of the COP 28 climate talks denies stopping fossil fuel use will help the climate, and Israeli Prime Minister Benjamin Netanyahu’s corruption trial resumes.
Personal Finance Concept [Part 10/12]: Content Creation
Economy
🌅 Rosiness On The Horizon: Good news! Recent data indicates the economy will achieve a “soft landing,” where inflation returns to ~2% without a major recession or unemployment spike. Plus, Fed Chair Jerome Powell has signaled that the Fed may stop raising interest rates even if the economy starts growing faster. As a result, the cost of borrowing will fall over time, and stock markets could experience a more tame boom cycle. Key indicators include:
- Core CPI, a widespread inflation measure, has risen at a yearly pace of 2.8%.
- Disinflation is occurring. Used-car prices are trending downwards, housing inflation (including rent) is slowing down, and supply chain improvements suggest appliance prices will decline.
- People are becoming more productive. The increase in the # of hours worked has slowed while output remains constant.
- Increasing productivity means companies can pay their employees more without passing the cost onto customers.
- Over the last 3 months, average hourly earnings have grown 3.2%, while unemployment has ticked up to 3.8%.
The biggest threat to this positive outlook is if the labor market weakens substantially. (BI)
🚫 Cancelling Taxes: The Supreme Court heard arguments for Moore v. US, a landmark case that may redefine how unrealized gains get taxed. Unrealized gains are the growth in an asset’s value (i.e. stocks, bonds, or crypto) that an investor owns but has not yet made money from. After facing a $15,000 tax bill on their unrealized gains, the Moores contended that the transition tax was unconstitutional since they had not directly profited yet. The Court’s decision could reshape how Congress writes tax laws, potentially costing the government $340B+ in tax revenue over the next 10 years. (InvestorPlace)
Our Take: A change in the taxation of unrealized gains will have widespread effects, altering the tax treatment of various transactions, from reinvested stock dividends to the yield from staked cryptos. The current Court’s conservative majority increases the odds of a tax change that would heavily favor investors and financial institutions.
Tech
😶🌫️ Big Tech’s Invisible Hand: In its efforts to regulate emerging AI technology, Congress is turning to fellows from a DC-based scientific nonprofit, the AAAS, who have gotten integrated into key Senate offices. Many of these AI experts hold PhDs and formerly worked in tech. Becausee the AAAS is funded by Microsoft, OpenAI, Google, IBM, and Nvidia, the arrangement raises concerns about potential conflicts of interest. However, AAAS asserts that funders have no say in who gets selected to be a fellow or their placements. Moreover, this dependency on outside groups points to the lack of funding for permanent policy staff in Congress — a problem of its own making. (Politico)
Our Take: Though AAAS claims that tech firms only make up 35% of its funding, it is also funded by tech industry nonprofits. Craig Mundie, an advisor to OpenAI and Microsoft, proposed the AI fellowship idea. With this move, Congress has opened itself up to the sway of external parties with their own agendas rather than trusted in-house officials.
⏯️ Press Play to Layoff: Despite positive earnings, Spotify CEO Daniel Eck plans to lay off 17% of its workforce, or about 1,500 jobs — its 3rd layoff of 2023. Eck claims that higher capital expenses and operating costs are thinning profits, so layoffs are needed to close the gulf between costs and its goals. After the news, the streamer’s stock got a 9% bump during Monday’s trading session and is up 130% YTD. (Yahoo! Finance)
Our Take: Although tech layoffs may persist, executives are recognizing the benefits of ripping the band-aid off swiftly instead of doing smaller, periodic layoffs. Taking a decisive approach improves employee morale and helps the company move forward. Layoffs are more susceptible in tech firms still striving for consistent profitability and tend to be well-received by profit-over-growth-minded investors.
World
🇦🇪 A Complex Affair: The UN’s annual climate conference, COP 28, is being hosted in the oil-rich United Arab Emirates (UAE) this year. It is led by its controversial climate envoy, Sultan Ahmed Al-Jaber, who claims that there’s no evidence that stopping fossil fuel use will help the climate. In a tense exchange, he urged people to be “pragmatic” about reducing fossil fuel use and to provide a concrete roadmap for phasing out fossil fields while promoting sustainable socioeconomic development. (CNN)
Our Take: Sultan Ahmen Al-Jaber’s comment points to the complex debate over the future of fossil fuel use. Despite pressure from developed nations, many developing nations do not want to sacrifice economic growth by switching to pricier renewable energy sources.
🧑🏽⚖️ Court Is Now In Session: Israeli PM Benjamin Netanyahu’s corruption trial resumes after a 2-month hiatus triggered by the October 7th Hamas-led attack on Israel. He is pleading not guilty to charges of bribery, fraud, and breach of trust. The most serious charges allege he gave regulatory benefits worth $250M+ to a friend who controls a telecom firm in exchange for positive news coverage. Netanyahu dismisses the trials as a power play by liberals to unseat him. However, critics argue that a divisive law he passed, stripping the judiciary of its authority to rule a Prime Minister unfit, was enacted for his benefit. This law is currently under challenge in Israel’s courts. (CNN)
Our Take: Israel’s politics are quite messy as Netanyahu pushed for judicial reform that many saw as unnecessary and corrupt given his ongoing trial. Tensions rose so high that many military reservists refused to report if called, hurting Israel’s security readiness. As a result, 94% of Israelis blame the government for Oct. 7th, and 86% see it as a failure of leadership, with 56% saying Netanyahu should resign after the war.
Finance Concept of the Week
Lucrative Size Hustles [Part 10/12]: Content Creation
Earn extra income on the side and live on your own terms
Thanks to the meteoric rise of social media, content creation is now a billion-dollar industry, with millions of people identifying as content creators. A relatively new addition to the entertainment industry, the creator economy includes influencers, bloggers, videographers, and more. With easy access to the internet, anyone can be a part of the creator economy.
How to Get Started
Figure out what type of content you want to post and your niche. Content creation is like a science, meaning you should experiment and test different types of content, platforms, and topics. If you don’t know where to start, look at what your competitors are doing and use their performance to assess what will resonate the best with your audience. For instance, you may notice that your competitor only talks about specific topics or only posts on Tuesdays.
Once you get a good idea of what works, stay consistent. If you are only creating videos or posting once a year, it’s unlikely that you will build a loyal audience. People prefer to follow creators who provide value regularly. If your life is hectic, create a posting schedule and set realistic expectations of how often you can post.
As you build an audience and get better at creating content, diversify your income streams so you are not overly reliant on a single income source. Research different ways to monetize your content, including affiliate marketing, sponsored posts, member-exclusive content, selling products or merch, etc. If you are a YouTuber specializing on personal finance, consider offering a membership program on Patreon with exclusive content on current-day market news.
Continue investing in learning and improving as a content creator. Attend workshops and educational classes to learn new strategies and tools. Go to networking events for content creators or reach out to creators you admire. Work on your negotiation skills to secure better deals and partnerships.
Top Platforms to Use
- YouTube: Content creators on YouTube can make money from ad revenue via video ads and sponsored ads. YouTube also offers the YouTube Partner Program (YPP), which gives you access to YouTube resources and monetization and access to its Creator Support teams. YouTube earnings may range between $1.61 and $29.30 per 1,000 views if you are a part of the YPP. Certain topics, such as personal finance, can lead to greater earnings.
- Instagram: Creators on Instagram can earn money via the Instagram Live Badges, Instagram Reels Play Bonus Program, branded content, Instagram shops, in-stream video ads, and affiliate programs. The Instagram Live Badges allow fans to send tips to their favorite creators during live streams. Top influencers on Instagram can earn over $1 million from brand deals.
- TikTok: TikTok is not as established as YouTube or Instagram when it comes to its ads program. However, the platform does have a Creator Fund that pays users with at least 10,000 followers and 100,000 views over the last 30 days. You can also partner with brands you like, sell products through TikTok shopping, drive revenue via ads, and participate in affiliate programs. Most creators make less than $500 a month, but the top TikTokers can earn $50,000 to $150,000 for a successful brand partnership.
- Twitch: The Twitch Partnership Program is geared towards creators who stream various content, such as games, music, talk shows, art, etc. Twitch Partners can set different tiers of subscriptions to earn revenue and get a percentage of ad revenue. Viewers can also buy Bits to support their favorite streamers or pin a message in Hype Chat, allowing creators to earn a share of the revenue.
Pros
- Creative Expression: Content creation allows you to express your creativity and share your unique perspective with a global audience.
- Community Building: You can build a supportive community around your content, connecting with like-minded individuals who appreciate your work.
- Monetization Opportunities: Successful content creators have various avenues for making money, such as ads, sponsorships, merchandise, and crowdfunding.
- Skill Development: Content creation involves various skills, including writing, video editing, graphic design, and social media management, allowing you to continuously develop and refine your abilities.
- Personal Branding: Content creation enables you to build a personal brand, which can open up opportunities for collaborations, partnerships, and other ventures.
Cons
- High Competition: The online space is highly competitive, making it challenging to stand out and gain visibility.
- Pressure to Stay Relevant: Trends and algorithms change rapidly, and there is constant pressure to stay relevant and adapt to new platforms and formats.
- Time-Consuming: Creating high-quality content can be time-consuming, from planning and producing to editing and promoting, which may lead to burnout if not managed properly.
- Negative Feedback: Content creators may face criticism and negative comments, which can be emotionally taxing. Developing a thick skin is essential.
- Uncertain Job Security: Unlike traditional employment, there is no guaranteed job security or benefits, and success often depends on factors beyond your control.
What Else Is New?
- Inflation in Europe fell to 2.4% in October, while it fell to 3% in the U.S.
- U.S. 3rd Quarter GDP grew at 5.2% — beating expectations.
- Tesla’s long-awaited Cybertruck falls short and receives mixed reviews.
- The S&P 500 closing last Friday set a 2023 high.
- Bitcoin hit $42,400 on Monday, contributing to crypto’s surge to a $1.54T market cap.
#Oof
Personal Finance Resources
🚀 Check out our collection of personal finance resources on Gumroad, featuring both free and paid options:
Stay tuned for updates! In the meantime, if there’s any other product you’d like to see, feel free to suggest it here.
Subscribe
If you liked what you read, subscribe to our weekly newsletter here!
