📈 Layoffs Surged by +160,000

Together with Moby

Good morning,

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

1. ⭐ The stock market historically loves predictable elections.

2. ⭐ We broke down financial literacy stats from the Capital One Insights Center.

3. ⭐ U.S. job layoffs have reached their second-highest level in four years.

4. ⭐ Google Cloud revenue rose +35% in a year, bolstered by AI development.

5. ⭐ MicroStrategy announced a plan to raise $42 billion to buy more Bitcoin.

6. ⭐ Join 490 other podcast listeners inside the Rich Habits Network!

Market Overview

Charts of the Week

Predictable Presidential elections have historically been “non-events” for the stock market — allowing equities to trend up uninterrupted.

For that reason… we had to double-up on the Chart of the Week!

There are two key observations we’ve made:

1) The stock market is trading as if the election has already been decided, historically speaking, considering the complete lack of volatility we’ve experienced lately.

This confidence might be coming from online betting platforms like Polymarket and Kalshi sharing real-time betting odds of either Kamala Harris or Donald Trump to win the presidency — with Donald Trump leading by +31%.

Which brings us to observation number two…

2) The stock market continues to trend higher, now up +22% year-to-date with very little volatility taking place over the last two months.

Let’s now dive into what might be causing the stock market’s lack of volatility and renewed momentum in Q3. Below is an analysis published by Bank of America that, in aggregate, breaks down the difference in earnings per share for the 500 largest and most profitable companies in the United States (S&P 500).

According to Bank of America, a corporate tax hike to 28% under Vice President Harris is estimated to result in a -5% earnings decrease for all S&P 500 companies. Essentially saying “under a Harris administration, companies will report -5% less profits — causing their stocks to lose value.”

On the other hand, a corporate tax cut to 15% under Former President Trump is estimated to result in a +4% earnings increase for all S&P 500 companies. In other words, “under a Trump administration, companies will report +4% more profits — causing their stocks to go up in value.”

There’s of course MANY more factors to consider, but we believe that both of the above callouts are having an impact on what’s moving the stock market right now. The combination of election odds and earnings implications is making the market happy.

But if we experience a nail-biter, will the market throw a fit?

Together with Moby

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In Case You Missed It…

👉 Episode 88: Bridging the Gap in Financial Literacy

In this week’s episode of the Rich Habits podcast (linked here) — Robert and Austin welcomed the President of the Capital One Insights Center, Shena Ashley. They had an insightful conversation about the most important statistics from their recent report.

Here are some important takeaways:

1. Only 55% of Americans are digitally financially literate — Whether it’s banking, payments, investment accounts, taxes, bookkeeping, credit cards, or anything else that’s related to your money — they are all online and there’s unfortunately an education gap for millions of Americans. The Capital One Insights Center has a primary goal of bridging that gap and shared countless resources during the episode if you don’t identify as part of the 55%.

2. 59% of consumers trust finance tips from social media — Robert and Austin took this point very seriously, considering there are so many bad actors online. It’s never been easier to access financial information on social media, but it’s also never been more important to properly vet what you’re reading and watching. Always be on the look out for the fake gurus!

3. 42M Capital One customers with bad credit scores achieve prime scores — The entire credit system can be frustrating, but the nice thing is that it’s quite simple. If you have your honest budget, make your regular payments, and understand the components of a credit score — you have the ability to improve it over time. As you continue to build your credit score, you will set yourself up for loan approvals, better mortgage rates, and more. Tens of millions of Capital One customers have gone from “zero to hero” with their credit. There’s no reason why you can’t too if you’re disciplined!

👉 Q&A: UPRO vs. VOO, Short-Term Rental Arbitrage, & Covered Calls in an Emergency Fund

Here’s a link to the Q&A episode that was posted this morning. As of late, you all have begun to listen to our Q&A episodes nearly as much as our Monday episodes — thank you! Keep the awesome questions coming.

You can submit questions for these episodes by asking them inside of the Rich Habits Network, replying to this email, or sending us a DM on Instagram.

We answered questions from the following people: Brock P, Victoria F, Esperanza M, Charles J, Hasina X, Curt B, Mike G, and Carson D

The Rich Habits Podcast is available on Spotify, Apple, iHeart, YouTube, and wherever else you get your content!

Robert’s Callout

U.S. job layoffs have reached their second-highest level in four years.

Layoffs surged by +160,000 in September, reaching a total of 1.83 million. Over the past three years, monthly layoffs have risen by +540,000 (+42%), as the labor market has materially slowed down since its post-pandemic pop.

The layoff rate — which measures the number of layoffs as a percentage of total employment — has climbed to +1.2%, the highest it has been since December 2020.

Private sector layoffs jumped to 1.78 million, also marking the highest figure in nearly four years.

Here’s two points for you to consider:

1) We’ve been saying it a lot and we’re going to keep saying it… the labor market is going to get a TON more attention over the coming quarters. If we get through this earnings season with a majority of strong reports — the state of employment will then be the only blockade that might keep the stock market from moving higher as we enter 2025.

2) The faster the labor market deteriorates, the faster the Federal Reserve will cut interest rates. Remember, the Fed’s entire mission is to balance low inflation with strong employment — because you can’t have both. We’ve tamed inflation (for now), which means it’s time to ensure strong employment is here to stay.

Austin’s Callout

Over 25% of all new code at Google is being written by AI.

Alphabet (Google) reported their quarterly earnings this week and they absolutely crushed it. Earnings per share of $2.12 and revenue of $88.27 billion both exceeded Wall Street’s expectations. A standout performance came from the cloud segment, generating $11.35 billion, which reflects a +35% increase from the previous year.

Google’s advertising revenue reached $65.85 billion — and YouTube-specific ad revenue slightly surpassed analysts' predictions at $8.92 billion.

The numbers were all solid, but what really got me excited were Google’s massive AI developments.

The company is investing significantly in AI to bolster its Search capabilities and expand its cloud services, including plans for new data centers globally. The goal is to differentiate itself from competitors like Azure and AWS — and the market thinks they are on the right track.

Google has integrated its generative AI chatbot, Gemini, into its cloud offerings — providing features such as AI-driven code generation and cybersecurity intelligence. These efforts have led to increased customer spending on AI services.

I’m most certainly bullish!

The Rich Habits Radar

• 👉 U.S. GDP grew +2.8% in the first Q3 estimate, missing 3.1% forecast.

• 👉 Meta fell -3.2% after earnings due to poor user growth & AI spending.

• 👉 Microsoft fell -3.6% after earnings due to weaker-than-expected guidance.

• 👉 AMD stock fell -10% after earnings due to weaker-than-expected guidance.

• 👉 SMCI shares collapsed -33% after EY declined to complete their audit.

• 👉 MicroStrategy announced a plan to raise $42 billion for more Bitcoin buys.

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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.