European Central Bank raises rates by 75 basis points to tackle soaring inflation (4 min read)
The ECB raised the key interest rate to 0.75% on Thursday and it’s the first time above 0% since 2014. They expect to continue to increase interest rates as inflation remains high and still far above their 2% target. The inflation forecast is an average of 8.1% in 2022, 5.5% in 2023, and 2.3% in 2024. Inflation has been rising for nine consecutive months with soaring energy prices as the main driver. Although GDP across the eurozone increased by 0.8% in the second quarter, most analysts agree that recession is inevitable as prices remain high while consumer spending power goes down. The Stoxx Europe 600 was only slightly down by 0.42% after the news.
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Fed Chair Powell vows to raise rates to fight inflation ‘until the job is done’ (3 min read)
Jeremy Powell reiterated the importance of bringing inflation down in his last speech until the next Fed meeting. He warned people not to get used to high prices because that was the major reason for persistent inflation in the 70s. The Fed’s responsibility is to bring price stability and that means keeping inflation at the 2% range. The longer it stays above the target, the more risk it imposes and harder to bring it back down. The US interest rate had gone up four times this year and currently in a range between 2.25% - 2.50%. Markets are widely expecting the rate to increase by another 0.75% later this month. The US 2 year treasury, which is the most sensitive to rate hikes, moved up to 3.5% while major indexes made little changes after the news.
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GM Courts Mainstream Buyers with $30,000 Electric Chevy Equinox (4 min read)
General Motors revealed their plan to release an electric SUV priced at $30,000 and is expected to go on sale in fall next year. With most electric vehicles on the market above $35,000, GM’s new SUV will be one of the cheapest options. The full price range was not disclosed, higher versions of this model can potentially be $40,000 or more. As not all the information is available, it’s hard to determine whether it will qualify for the full EV tax credit under the Inflation Reduction Act that was recently passed. GM believes this new vehicle release can drive sales volume by appealing to EV buyers in the compact SUV market and help achieve its goal of selling a million EVs in North America by 2025.
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Going Metal: ETF Mining Opportunities in EV Materials (2 min read)
The Invesco Electric Vehicles Metals Commodity (EVMT) is an ETF that provides an indirect exposure to the growth of electric vehicles if you want to avoid investing in typical names like Tesla or Ford. Creating electric vehicles involve certain metals and as the demand for electric vehicles increases, so will these metals. EVMT is an ETF that holds these commodities. Although it has not been performing well, it may take off when China, the world’s biggest electric vehicle user and commodities buyer, reopens their market and sparks surging demands.
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JPMorgan Launches 3 Socially Conscious ETFs (2 min read)
JPMorgan launched three new ETFs on Thursday that focuses on sustainable and socially conscious investing. They are the Sustainable Consumption ETF (CIRC), the Social Advancement ETF (UPWD), and the Sustainable Infrastructure ETF (BLLD). What makes them different is that they are all actively managed while most sustainable ETFs on the market are passively managed. They are listed on the Nasdaq and have a management fee of 0.49%. However, ESG investing has fallen this year with only $4 billion inflows compared to $36 billion last year, making it a less appealing and appropriate timing to launch sustainable themed funds.
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How to Fight Inflation: 6 Money-Saving Tips for 2022 (7 min read)
There are several ways you can save money during high inflation. Traveling - staying at hotels a bit further are usually cheaper, pack lightly to avoid paying baggage fees, and eat outside of hotels and airports for cheaper meals. Groceries - have a list prepared and use receipts with overlapping ingredients and go to stores with a reward program or discount offers. Gas - find the fastest routes and carpool if possible. Utilities - look for better offers from other providers and pay attention to which appliances consume most energy. Insurance - review your premiums and see if bundling or removing services can lower the bill. Entertainment - cut back on things by dining with friends at cheaper restaurants or cancel memberships you don’t use often.
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That's it for today! You can reply to this email if you have any comments or feedback.
Thanks,
Thomas
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