Your Financial News Roundup
December 20, 2023
1. Economy: The U.S. stock market continues its record-setting 7-week rally, while Southwest gets hit with $140M in fines after its 2022 holiday travel season mishaps.
2. Tech: OpenAI put new safety controls in place to thwart the risks of dangerous AI models; meanwhile, Google agreed to pay $700M in an antitrust settlement over its Play Store monopoly.
3. World: Texas passed a new law making illegal border crossings a state crime, and Ukraine and Russia hint at their 2024 war goals.
Personal Finance Concept [Part 12/12]: Consulting
📈 Up & To The Right: Yesterday, the stock market closed on a high note, continuing the buildup of a nearly 8-week rally. By the numbers:Dow Jones Industrial Average (DJI) rose 0.7%S&P 500 gained 0.6%Nasdaq increased 0.7%Investors are anticipating rate cuts by the Federal Reserve in 2024, surpassing earlier predictions. Despite Fed officials playing down these expectations, they have begun to acknowledge the effectiveness of their rate hikes. This Friday’s Personal Consumption Expenditures price index update, or the Fed’s preferred inflation gauge, will play a crucial role in determining the timing and necessity of rate cuts. It will also serve as a signal to investors to continue or end this stock rally. Cross your🤞🏽! (Yahoo! Finance)
Our Take: Many investors believe an end to quantitative tightening (QT) and a soft landing is coming soon due to the recent positive economic indicators. Notably, this rally includes stocks of all sectors, not just tech. However, the trend could reverse if the Fed’s messaging changes course in response to key data.
🛬 Pay to Play: The U.S. Department of Transportation (DOT) fined budget airliner Southwest $140M due to operational issues during the 2022 holiday season. Its system malfunctioned during a winter storm — leaving 2M+ people stranded for days after ~17K flights got canceled. The DOT found that the airline broke consumer protection laws. Thus, this massive penalty serves as a cautionary measure. Officials highlight that this penalty is 30 times bigger than any prior fine levied against an airline. Consequently, Southwest must set aside $90M to issue $75 flight credits to passengers experiencing arrival delays exceeding 3 hours. The fine adds to the $600M in refunds that Southwest has already paid out. (ABC)
Our Take: This is one of the biggest consumer protection actions taken in recent years, with the potential to reshape how airline refund policies operate. As extreme weather continues, airlines must modernize their flight scheduling and logistics programs.
🤖 Build Back Smarter: After November’s board shakeup, involving a few ousters, a new board, and the reinstatement of its prior CEO, OpenAI is actively enhancing its internal safety programs. The goal is to reduce the risks of harmful AI development by launching an internal “safety advisory group” to oversee technical teams and advise OpenAI’s leadership. Additionally, the board was granted new veto powers. The company published a “Preparedness Framework” that outlines how “catastrophic” risks in developing AI models will be identified, vetted, and treated. For now, OpenAI has safety teams for operational models like ChatGPT 4.0, while guardrails are created for in-development models before they launch. (TechCrunch)
Our Take: OpenAI’s commitment to safety and transparent communication can enhance public trust and ease concerns surrounding AI ethics and safety. If successful, other organizations may adopt similar measures, contributing to a more responsible and accountable ecosystem.
🥊 Google v. U.S. – Round 2: Following its recent loss in the Play Store monopoly trial against Epic Games, Google suffered another blow. The company agreed to a $700M settlement in an antitrust suit with the states, which allege that Google blocked competition against its app store. The finalized settlement terms include a $630M payment to compensate U.S. customers and an additional $70M to cover costs incurred by the states. As part of the agreement, Google must streamline app downloads from alternative app stores and enable Android app makers to use their own payment options. (AP)
Our Take: Like Apple, Google charges a 15-30% fee for in-app purchases, driving prices higher than they would be in an open, competitive market. The recent results from the antitrust cases could affect both companies’ financials, app store dynamics, and broader regulatory landscape.
🇺🇸 Texas v. U.S.: In a bold challenge to federal authority, Texas passed one of the nation’s toughest immigration laws, making illegal border crossings a more severe crime punishable by imprisonment. Governor Greg Abbott asserts the law will “stop the tidal wave of illegal entry into Texas,” while critics argue that it will lead to racial profiling. Currently, only the federal government has the power to enforce immigration laws. The new law allows local and state police to arrest anyone suspected of illegal migration, with punishments ranging from jail, fines, or deportation to Mexico. The law has faced pushback from Democrats and Mexico, with the federal government likely following suit. (BBC)
Our Take: With an estimated 8K – 12K migrants illegally crossing the border daily, many feel that the Biden administration has neglected border security. As the 2024 election nears, how Biden performs on the issue will impact voter sentiment in states and cities dealing with the crisis.
🛏️ A Brief Respite: Amidst Putin’s very legit reelection bid, families of Russian soldiers held a rare protest asking him to bring their men home and to stop the war. Though Putin has drafted thousands this year, hundreds of thousands more fled the country to escape fighting in the increasingly unpopular war. Meanwhile, Ukraine’s President Zelensky seeks to deploy an extra 500K troops into the conflict but faces an ammo shortage and lack of foreign support. The U.S. and Hungary have held up $60B and $55B in aid, respectively. Regardless, the White House and E.U. leaders vow to help. (CNN) (BBC)
Our Take: With Ukraine’s counteroffensive at a standstill, the leaders of both nations are making bold claims to drum up support for their 2024 war aims during a critical election year. Both nations will hunker down this winter to focus on refining their plans and making them a reality.
Finance Concept of the Week
Lucrative Size Hustles [Part 12/12]: Consulting
Earn extra income on the side and live on your own terms
One of the beauties of providing consulting services is the opportunity to sell your knowledge to others. If you have a high level of expertise in a certain field, you can leverage your experience to build a lucrative consulting business.
How to Get Started
Start by putting together a business plan that will act as a guide for your business. Some things to think about include your business name, business structure, administrative tasks, revenue projections, top competitors, service offerings, and branding. Before officially conducting business, you must register with your state’s Secretary of State and confirm any other legal requirements.
Consulting involves various services. So, to determine your pricing, you’ll need to decide what types of services you want to offer. You can provide a broad range of support for businesses or focus on a specific niche, such as personal finance, small business advising, or hiring practices for startups.
Another factor to consider is whether you want to have short-term or long-term clients. One-off consultations may require more time and effort than long-term as you’ll frequently have to familiarize yourself with new clients. Typically, you can price your services at a fixed rate, hourly rate, or a monthly retainer.
Once you have a good idea of your service offerings and pricing strategy, it’s time to market your consulting services. An easy way to legitimize your business is to buy a custom domain and build your website. Low-cost and user-friendly platforms to consider include Squarespace, Wix, and WordPress. Other ways to start marketing include search engine optimization (SEO), email marketing, guest posts and publications, ads, local networking groups, and online business directories.
Top Platforms to Use
- Personal website: Creating a professional website allows you to showcase your expertise, services offered, testimonials, and contact information. You can use your website to publish blog posts or whitepapers in your area of expertise, past experiences, credentials, and more.
- LinkedIn: LinkedIn is a great way to highlight your skills and experience. You should make it a habit to regularly post insights, advice, service offerings, etc., to get people’s attention. Additionally, you can like, share, and comment on other people’s posts to network.
- Freelance Platforms: Websites like Upwork, Fiverr, and Guru connect freelancers with clients seeking consulting services. To get started, create a detailed profile, add your portfolio, and bid on relevant projects.
- Social Media: Many consultants use social media platforms like Instagram, TikTok, and Facebook to promote their consulting services. To gain traction, you should regularly share valuable content and engage with your audience.
- Varied Work: Consultants typically work on a wide range of projects, which can keep work intellectually stimulating. If you get bored easily, consulting gives you the flexibility to do a range of different tasks.
- Expertise Utilization: Instead of doing all the work yourself, you can transition to sharing your knowledge. Consultants often leverage their specialized knowledge and skills to help businesses and individuals solve problems and become more efficient.
- High Earning Potential: Successful consultants can earn a high income, especially if there is strong demand in their niche. Top consultants can charge hundreds or even thousands of dollars per hour for their services.
- Independence: Your clients are looking to you for advice and guidance, giving you autonomy to make decisions about their business and the projects they take on.
- Constant Marketing and Networking: If you are an independent consultant, you must continuously market yourself and network to secure new clients and projects. If you fail to generate a regular stream of clients, you may face job insecurity and inconsistent income.
- Pressure to Deliver Results: Consultants are generally hired to produce tangible results, such as reducing business expenses or building more efficient processes. This can lead to high levels of stress and pressure to deliver impact.
- Scope Creep: Some projects may expand beyond the initially agreed-upon scope, leading to potential challenges in managing time and resources.
- Client Dependent: The loss of a major client can hurt your financial situation as consulting is heavily client-based.
What Else Is New?
- U.S. gas prices are now at an average of $3.03, with most states finding prices below $3/gallon.
- Media mogul and China critic Jimmy Lai awaits trial in Hong Kong.
- Catholic priests can now bless same-sex unions.
- A state funeral was held for former Supreme Court Justice Sandra Day O’Connor in DC.
- Apple will take select watches off the market following a patent dispute.
- Colorado’s Supreme Court ruled that Trump cannot appear on the state’s 2024 ballot due to his involvement in the Jan 6th insurrection.
Personal Finance Resources
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