June 2024 Well-th Notes

By VWG Wealth Management on June 4, 2024

Data-driven insights on the markets and economy

1. GDP Slows
Gross domestic product – the broadest measure of economic activity – grew 1.3% y/y in the first quarter of 2024, the Commerce Department reported, down from the estimated 1.6% and notably lower than the 3.4% pace in the final three months of 2023. The first-quarter growth downgrade suggests the Fed’s aim of gradually cooling the economy through high interest rates is having an impact as consumers increasingly balk at higher prices, although it remains uncertain whether the weakening trend in inflation will continue.[i] 

2. Buy Now, Pay Later
The Consumer Financial Protection Bureau declared recently that customers of the burgeoning buy now, pay later (BNPL) industry have the same federal protections as users of credit cards. It unveiled an “interpretive rule” that deemed BNPL lenders essentially the same as traditional credit card providers. This means the industry – currently dominated by fintech firms like Affirm, Klarna and PayPal – must make refunds for returned products or canceled services, must investigate merchant disputes and pause payments during those probes and must provide bills with fee disclosures. The new rule will go into effect in 60 days.[ii] 

3. Maxed Out
According to new research from the Federal Reserve Bank of New York, roughly 15.3% of Gen Z credit card borrowers have maxed out their credit cards. By comparison, just 4.8% of Baby Boomer borrowers and 9.6% of Gen Xers have maxed out their credit cards, which can be a sign of a severely tight cash-flow problem. Credit card delinquencies have surpassed pre-pandemic levels and continue to rise. Severe credit card delinquencies (those 90 days overdue) have now climbed to 10.7% – the highest since 2012. These findings show that pockets of financial stress continue to emerge in the U.S. economy after three years of high inflation.[iii]

4. Bitcoin Flows
BlackRock’s iShares Bitcoin Trust has become the world’s largest fund for the world’s largest cryptocurrency, racking up nearly $20 billion in total assets since listing in the U.S. in January. The ETF held $19.68 billion of tokens on May 28, overtaking Grayscale Bitcoin Trust’s $19.65 billion. Market analysts have been keeping a keen eye on the relative flows into BlackRock’s ETF and out of the Grayscale Bitcoin Trust since U.S. regulators approved the launch of nine new ETFs and the conversion of Grayscale’s publicly-traded trust into an exchange-traded product in January.[iv] 

5. Rookie Ratings
Thanks to sensational rookies Caitlin Clark, Angel Reese and Cameron Brink, the WNBA had a huge first week in terms of attendance, ratings and digital media. The league saw a 14% increase in attendance from last year with both New York and Indiana leading the way with more than 17,000 fans at their home openers. The Liberty became the first team in WNBA history to have more than $2 million in ticket revenue for a single game in its opener. The five games on ESPN networks this year have averaged 1.43 million viewers, up 181% from the same number of games last season. It’s up 226% from last season’s average.[v] 

6. Business Is Booming
Nvidia’s historic rally is being driven by its data center business, which grew at a whopping 427% in the latest quarter as companies keep snapping up its artificial intelligence (AI) processors. Nvidia’s revenue more than tripled in the fiscal first quarter and its shares surpassed $1,000 for the first time on Wednesday. If Nvidia’s chips can provide a strong and sustainable return on investment, that suggests the AI boom may have room to run.[vi] 

7. Alexa Upgrade
Sources say Amazon is upgrading its decade-old Alexa with generative AI to make the voice assistant more conversational and plans to charge a monthly subscription fee to offset the cost of the technology. The upgrades would potentially position it to better compete with new generative AI-powered chatbots from companies including Google and OpenAI. One source estimated the cost of using generative AI in Alexa at 2 cents per query and said a $20 price point was floated internally, comparable to OpenAI’s ChatGPT, which charges $20 per month.[vii] 

8. Apple vs. Android
The rivalry between Apple and Google has been ongoing for years. There are now more than 1 billion active iPhones and over 3 billion active Android devices. As of early 2024, Android has a 70.69% market share worldwide, meanwhile iPhones hold a market share of 60.77% in the U.S. Android smartphones accounted for 56% of all smartphone sales worldwide in Q4 2023.[viii] Which side do you choose? 

[i] Dunsmuir, Lindsay, “Consumers curb US economic growth in first quarter, inflation cools,” Reuters, May 30, 2024, https://www.reuters.com/markets/us/us-economic-growth-revised-lower-first-quarter-2024-05-30/. Accessed May 30, 2024.

[ii] Son, Hugh, “CFPB says buy now, pay later firms must comply with U.S. credit card laws,” CNBC, May 22, 2024, https://www.cnbc.com/2024/05/22/cfpb-buy-now-pay-later-credit-card-laws.html. Accessed May 30, 2024.

[iii] Egan, Matt, “1 in 7 Gen Z credit card users are ‘maxed out’,” CNN, May 17, 2024, https://www.cnn.com/2024/05/17/business/gen-z-credit-card-users/index.html. Accessed May 30, 2024.

[iv] McGee, Suzanne, “BlackRock’s ETF becomes largest bitcoin fund in world, Bloomberg News reports,” Reuters, May 29, 2024, https://www.reuters.com/technology/blackrocks-etf-becomes-largest-bitcoin-fund-world-bloomberg-news-reports-2024-05-29/. Accessed May 30, 2024.

[v] Feinberg, Doug, “Clark, Reese and Brink have already been a huge boon for WNBA with high attendance and ratings,” OPB, May 22, 2024, https://www.opb.org/article/2024/05/22/wnba-ratings-attendance-clark-reese-brink/. Accessed May 30, 2024.

[vi] Leswing, Kif, “Nvidia shows no signs of AI slowdown after over 400% increase in data center business,” CNBC, May 22, 2024, https://www.cnbc.com/2024/05/22/nvidia-no-sign-of-ai-slowdown-after-over-400percent-jump-in-data-center-unit.html. Accessed May 23, 2024.

[vii] Rooney, Kate, “Amazon plans to give Alexa an AI overhaul — and a monthly subscription price,” CNBC, May 22, 2024, https://www.cnbc.com/2024/05/22/amazon-plans-to-give-alexa-an-ai-overhaul-monthly-subscription-price.html. Accessed May 23, 2024.

[viii] “iPhone vs Android Statistics,” Backlinko, March 13, 2024, https://backlinko.com/iphone-vs-android-statistics. Accessed May 23, 2024.

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