✂️ Eight Rate Cuts Now Expected

Together with Frec

Good morning,

A quick breakdown — in case you just don’t have the time.

1. ⭐ Fed rate cut projections are screaming “recession.”

2. ⭐ Breaking down market conditions and major mid-year trends.

3. ⭐ An overview of Warren Buffet’s buys and sells.

4. ⭐ CNBC might have created the greatest buy signal of all time.

5. ⭐ Starbucks stole Chipotle’s CEO and the stock rose +25%.

6. ⭐ Optimize your portfolio with Seeking Alpha.

Market Overview

Chart of the Week

Interest rate futures are signaling a recession — now factoring in eight Federal Reserve rate cuts over the next 12 months, the highest number since the 2008 Financial Crisis.

Market expectations have shifted dramatically in the past week, reflecting growing concerns about economic weakness.

Historically (over the past 60 years) whenever the market anticipated -200 basis points of rate cuts, a U.S. recession followed within a few months. This year, the market is expecting a -100 basis point decline in rates, with a 49% probability of a -50 basis point cut in September.

This is a significant increase from the forecast in April when only one -25 basis point reduction was expected in 2024.

Together with Frec

Our friends at Frec just announced a major milestone, reaching $100 million in total customer assets just 9 months after launch! This is a testament to the strong demand for direct indexing, an investment strategy previously limited to clients of wealth advisors. 

Frec also introduced four new indices, bringing their total to nine — the most comprehensive selection of any consumer investment platform. You can now direct index Russell 1000, 2000, and 3000, & ESG alongside Frec's flagship S&P indices and more.

Direct Indexing is nearly identical to investing in ETFs, but with a key advantage: it allows you to reap tax benefits by directly owning the underlying stocks. This unlocks significant tax loss harvesting, which is automatically captured by Frec. 

The end result? You get market performance with added “tax deduction points” that you can use to offset any capital gains you might have. Best part is, if you don’t use them in a particular year, they carry over indefinitely until they’re used.

We personally invest with Frec, and are really impressed with the tax-loss harvesting capabilities that this company has unlocked for the everyday person.

In Case You Missed It…

👉 Episode 77: Analyzing BlackRock’s Favorite Investment Themes (2024)

In this week’s episode of the Rich Habits podcast (linked here), Robert and Austin hosted Jay Jacobs — Head of Active and Thematic ETFs at BlackRock.

BlackRock recently published a Thematic Mid-Year Update, which guided the talking points of the episode:

1. Current Market Conditions — with the recent chaos in the markets, there are ‘knee jerk’ reactions everywhere. Red days are a great reminder that you need to know your financial objectives and stick to them. With a long time horizon, market pullbacks are more easily viewed as opportunities.

2. Crypto Update — all things considered, the entrance of Bitcoin and Ethereum to the stock market via ETFs has been productive for the space (BTC more than ETH). Most notably, the recent market volatility didn’t shake out investors.

3. Artificial Intelligence — thinking about AI through a “picks and shovels” viewpoint means that significant infrastructure is needed for AI to actually grow as much as possible. Whether it’s data centers, semiconductors, or raw materials — the integration of AI across industries should continue for years to come.

4. Geopolitics / Supply Chains — not only is the United States dealing with elections, but about half of the world’s populations are in an election year. Foreign policy is rapidly reshaping supply chains, causing the global economy is continually see shifts that impact the manufacturing and technology sectors.

In summary, the purpose of this episode is for our listeners to learn about investment opportunities surrounding these themes straight from the horse's mouth!

👉 TODAY: Pre-IPO and Angel Investing Webinar

We are approaching ONE THOUSAND of you that have registered for today’s webinar! Join us as we talk all about pre-IPO & angel investing! We’ll leave ample time for questions from the audience and it will be recorded.

Sign up for free by clicking here!

👉 Q&A: Betterment’s Core Portfolio, Investing in Student Housing, & ARMs

Here’s a link to the Q&A episode that was posted this morning.

We answered questions from Alok, Rachel, Lupe, Amy, Ethan, Jadon, and Adiyta

Be sure to watch the video version of our podcast on Spotify — or simply listen on Apple Podcasts, or wherever you listen to podcasts.

Robert’s Callout

Warren Buffett sold -49% of his Apple position.

13-F Filings were just released — meaning that we get to find out what hedge funds and major money managers have been buying and selling over the last three months.

It’s no surprise to see Warren Buffet’s recently-reported selling of Apple (AAPL) — but he increased his position in Sirius XM (SIRI) by +262% … Wow! That’s $376M worth of the stock.

Here are my two takeaways:

First — Buffett is being rather defensive. There’s a lot more selling than buying going on here.

Second — paying attention to what the ‘smart money’ is doing will be something that serves you well over the long-term. However, that doesn’t mean that you need to try and ‘copy trade’ these famous investors… considering we get their activity in a delayed fashion.

The point is to make sure to keep your eyes peeled and keep your head on straight! Markets go up and markets go down, but positioning yourself based on your goals will always be a great idea!!

Austin’s Callout

This might be the craziest data table I’ve seen all year.

Whenever we experience immense volatility in the markets, CNBC likes to host a “Markets in Turmoil” segment on their station. Our friend Charlie Bilello decided to track the performance of the S&P 500 for the following 12-months from that specific day — the results?

+40% average 12-month return, with a 100% track record of 1-year positive returns.

The last time CNBC did this was 2022. He hasn’t updated the table yet, but the returns since then have been about +31.5% for the S&P 500. Keep your eyes peeled for more “Markets in Turmoil” as we experience continued volatility.

The past can’t always be a predictor of the future… but I can say confidently what I’m doing the next time CNBC airs this segment! BUYING!

The Rich Habits Radar

• 👉 Starbucks poached Chipotle’s CEO, and the stock rose +25%.

• 👉 Trump / Musk X convo could be the most viewed interviews ever.

• 👉 Warner Bros. Discovery stock hit a 15-year low. Ouch.

• 👉 Mars will acquire Kallanova for a whopping $36 billion in cash.

• 👉 Google unveiled new Pixel lineup ahead of AAPL’s iPhone 16 release.

• 👉 Home Depot expects sales to slow as consumers are cautious.

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• Frec — Use direct indexing to invest & save on taxes

• Grifin — Automatically buy stock where you shop

• Acorns — Get $35 free when you subscribe

• Suriance — Protect your family with term life insurance

• Video Course — Use code “Newsletter” for 15% off

• Seeking Alpha — Optimize your portfolio

• Credit Card Matrix — Find your next favorite card to swipe

• Roi — Use code “Habits” and start tracking your net worth

• Dynasty — Protect your home in a trust

Disclaimer: This is not financial advice or a recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.