🎙 Harness the Power

The Netflix runaway train is back. Shares in the streaming giant hit a fresh all-time high Tuesday, its first new high in nearly three years.

The stock has rallied 48% this year, adding ~$90 billion in market cap. After a 51% haircut in 2022, Netflix is thriving on all cylinders, even as streaming competition has intensified.

Credit its lower-priced subscription plan (with ads), crackdowns on password sharing, and successful investments in shows like Bridgerton.

— Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the biggest stories in markets:

• The Fed’s confrontation with the job market

• How AI is helping small businesses

This, and more, in just 5 minutes to read.

Chart(s) of the Day

Secure Your Future: The FNRP Edge

Tired of volatile investments or meager returns? Dive into the world of commercial real estate with First National Realty Partners. Our curated, high-yield opportunities offer:

• Steady, passive income streams

• Robust portfolio diversification

• Tax-advantaged growth potential

Join savvy investors nationwide. Let FNRP's expert team navigate the complexities while you reap the rewards.

In The News

💼 Fed Confronts Nearly a Million U.S. Jobs Vanishing in Revision

Does the Federal Reserve need to catch up on cutting interest rates?

It turns out that U.S. job growth in the year through March was far less robust than initially estimated, a sign that cracks in the labor market are more severe than once believed. 

On Wednesday, the Labor Department said job additions were revised lower by 818,000, the largest revision since 2009. 

As The New York Times reports: “More recent data suggests job growth slowed further in the spring and summer, and the unemployment rate, though still relatively low, has been gradually rising.”

One direction: Indeed, the U.S. unemployment rate is up to 4.3%, its highest level in three years. Five of the last six job reports have been revised lower. 

• Meanwhile, a record number of Americans are working multiple jobs (largely because the U.S. Dollar has lost about 25% of its purchasing power in four years). And 11% of credit card balances in the U.S. are delinquent, the highest in over a decade.
  

• “We’ve known that things on net were probably moving gradually in the wrong direction,” said one economist. “This just largely confirms what a holistic view of the labor market data was saying before today.”

Why it matters:

Federal Reserve Chair Jerome Powell and Co. are in Jackson Hole, Wyoming, for the annual Economic Symposium.

One Fed official this week highlighted “risks that the labor market has not been as strong as the payroll data have been indicating,” though she noted that the rising unemployment rate could be “overstating the extent of the slowdown.”

Generally, investors want to understand the central bank’s timeline for interest rate cuts as inflation and the job market continue cooling. 

Thanks to employers scaling back hiring, markets sold off after the mid-July peak. The unemployment rate rose for a fourth consecutive month, helping drive an S&P 500 selloff. (Stocks have fully recovered, and Wednesday’s market reaction to the revised jobs numbers was muted.) 

Final thoughts: One strategist at Goldman Sachs suggests that the QCEW figures might overstate the moderation in employment growth, since they may exclude up to half a million unauthorized immigrants included in initial estimates.

• The final revised numbers are expected to be released early next year, providing a clearer picture of the U.S. labor market's state.
  

• What’s the big picture in a few lines? Job growth is cooling but not falling apart. Inflation has been dropping. The unemployment rate is rising, yet layoffs remain low. Earnings and economic growth have held steady.

Read more

More Headlines

🚢 Top banker, lawyer among missing in yacht sinking off Sicily

💸 Alex Cooper, podcast host, signs $125 million deal with Sirius

💰 A gold bar is now worth $1 million

✂️ Target slashed prices, and it paid off for the retailer

💭 Humans age dramatically at two key points in their life, study finds

🏦 Wells Fargo is selling off billions of dollars in commercial mortgages

💊 Eli Lilly shares rise after study shows its drug cuts diabetes risk

🤖 How AI Can Help Start Small Businesses

We might not be far from a day when virtually everyone has an AI assistant at work. Need a tedious or monotonous series of tasks done by noon? No problem. AI is ideal for that, freeing up the human worker to focus on creative work, problem-solving, and decision-making. 

Already, AI is helping people with something else: starting businesses. One Carnegie Mellon professor profiled this week by The New York Times said he encourages students to view AI as a “co-founder” that helps them advance with startup projects. Students used AI tools like ChatGPT, GitHub Copilot, and FlowiseAI for various tasks, including marketing, coding, product development, recruiting customers, 

He’s not alone as the impact of generative AI on entrepreneurship picks up speed. 

Harness the power: Skittenz, a company producing colorful mittens covers, uses ChatGPT to do everything from marketing products to deciphering legal documents. AI gave its founder the confidence to launch his venture without relying on costly experts. 

• Said one founder: “It’s scary when you’re taking your savings and putting it into a new idea when you have no footing. But to be able to harness the whole power of the internet into a bit of a conversation gives you some reassurance.”
  

• Said another, who raised $700,000 from angel investors: “Would I have been able to have done that had I not had access to those tools? Probably not.”

Other startups use AI to conduct market research and expedite code writing, which can help them grow faster and raise more money to hire more employees. 

The integration of AI in start-ups isn’t limited to tech. The founder of My Money Story, a financial coaching company for lower-income people of color, implemented AI to automate user matching for his program. That innovation saved time and resources.

Why it matters:

We hear a lot about AI this, and AI that, but investors and onlookers alike are still looking for more tangible, specific use cases. 

Broadly, could newer, cash-strapped businesses be more inclined to experiment with AI tech? Apparently so. A working paper from the National Bureau of Economic Research found higher AI adoption rates among young firms.

Intelligence multiplier: Gusto, a small-business platform, reported that about 20% of businesses created in the previous year were using generative AI for tasks such as market research and contract reviews.

• One analyst said if nothing else, AI offers start-up founders a chance to increase productivity and “multiply their intelligence cheaply” without hiring a bunch of people.
  

• “Entrepreneurs never have enough resources,” he said. “You could look at this as a bootstrapping technology — do more with less.”

Full circle: As for the Carnegie Mellon professor, his 29 students have made “unprecedented progress” using AI in their startups. "In 14 years, I've never seen students make the kind of progress that they made this year,” he said. 

By the end of last semester, venture capitalists were on campus to see the students’ projects. The professor compared generative AI’s impact on his students' ability to create businesses to the introduction of cloud and mobile tech 20 years ago. 

Like those technologies, he says AI has already changed his entrepreneurs' innovation “by an order of magnitude.”

As the MIT Sloan School of Management pointed out in a recent blog post: “A third of Americans have a business idea that they haven’t acted on because they don’t know what to do next. The AI can tell you what to do next, help you write the emails, [and] help you build the product.”

Read more

Together With Betterment

We put your money to work

Betterment’s financial experts and automated investing technology are working behind the scenes to make your money hustle while you do whatever you want.

Learn more

Quick Poll

On Monday, we asked: Have you or someone you know ever been a victim of financial fraud?

— Roughly two-thirds of respondents have been the victim of financial fraud or know someone who has been. “I got 40,000 out of my business account through an ACH. Truist Bank refused to return the money,” one investor said.

— Said another: “Had a 70ish relative about to withdraw 20K from her bank in a scam when alert teller talked her out of it. These people are soulless and relentless. There is nothing they won't say or do to dispossess even the most vulnerable.”

— One respondent was able to avoid being frauded. “There was an attempt to defraud my grandmother (now 97!!) a couple of years back. The con was that ‘her grandson’ was in jail and immediately needed $30,000 for bail. By sheer dumb luck, she called my parents' house while I was there and very clearly not in prison. So we were able to nip that one in the bud. My dad & his sister now manage her money. ;-)”

See you next time!

That's it for today on We Study Markets!

Enjoy reading this newsletter? Forward it to a friend.

Was this newsletter forwarded to you? Sign up here.

Use the promo code STOCKS15 at checkout for 15% off our popular course “How To Get Started With Stocks.”

Advertise with us.

Follow us on Twitter.

Keep an eye on your inbox for our newsletters on weekdays around 6pm EST and on weekends. If you have any feedback for us, simply respond to this email.

You can also leave your comments/suggestions/feedback anonymously here.