enRICHed: Volume 34
It’s a Love Story…
Vivian’s pod this week tells her own love story and why picking your partner is the biggest financial decision you’ll make. Vivian found love in not one, but two very hopeless places in New York City and it always makes me laugh to hear where it all began. Your Rich BFF did her first years in NYC just like the rest of us, hitting the finance bro hot spots and spending way too much on a tequila soda. Thus, there is hope for us all to eventually find that one person who complements us in every way :) What did I learn in my quest for love that seems to be mirrored in Vivian’s own journey? Never be less of yourself for anyone, keep your standards as high as the sky, and be ready for it when you least expect.
Less Dough for the CEO
Traditionally, executive compensation packages have been heavily composed of company stock. This close tie of comp to company performance is an obvious incentive for executives to push the shareholder’s best interests forward.
However, when companies report pay, they usually state the value of stock when it was received. For the first time ever, the SEC is asking for “compensation actually paid” which calculates gains and losses over time.
The SEC’s new measure changes the way we have ranked CEO pay in the past. The traditional ranking puts Apple and Alphabet CEOs at the top, but when we look at stock fluctuations, Exxon Mobil and Chevron CEOs replaced them. This is because in 2022, as the stock market declined and the median CEO total compensation fell by 12% - Exxon and Chevron stock outperformed.
HYCU; as executive pay practice continues to fall under scrutiny, these measures try to promote transparency and accountability. They also show why we should push for equity as part of our packages, because despite volatility, equity pay gains value over time.
Delinquencies on the Rise
The Fed reported that credit card balances in America reached $986B in 4Q22. But more importantly, that balance has remained unchanged in 1Q of this year.
This report shows that credit card debt is on track to hit $1T in 2023, indicating a looming economic downturn. Americans usually pay down holiday season debt by the first quarter of the following year, but that isn’t happening this year (which is the first time since 2000).
The average interest rate is at a record high, which makes it even more difficult for people to pay down balances they are carrying. Delinquency rates are climbing as a result of all of these economic issues - this is an issue especially for those ages 18-29, a group with delinquency rates of 8.3%.
HYCU; with student loan payments restarting soon, economists are worried about the debt burden many are facing. When trying to pay down debt, remember to focus on the balances with the highest interest rates first, and if you can pay the balance in full for your card, do it!
Vice Files for Chapter 11
Vice is filing Chapter 11 bankruptcy in hopes to restructure its debt and secure new funding. They are planning to continue paying employees during this entire process, though already went through a round of layoffs earlier this month.
HYCU; Vice Media’s bankruptcy filing is a reflection of broader challenges that the digital media industry has been facing. Buzzfeed News also closed its doors, once a go-to site for younger consumers of news. Vice will need to reassess revenue streams and prioritize certain businesses in order to come out stronger on the other side. Evolution is key in the ever-changing landscape of journalism, and this story shows that even the companies who started that evolution are struggling to keep up.
OpenAI in Congress
Sam Altman, the CEO of OpenAI, sat in front of Congress this week about the potential danger on his company’s product. Altman said that he welcomes legislation in the generative AI industry, and offered to help in its creation.
Generative AI has seemingly been evolving at light speed lately, in the news constantly, with new instances popping up everywhere. Because of this, lawmakers cannot keep up.
The technology is complicated and nuanced, and in order to put up guardrails, you have to understand how it works. Because of this, congressmen and women are looking to Altman and other experts to create the rules.
HYCU; this goes beyond people training AI to rap like Drake. Worries about AI include: election misinformation, job disruption, copyright and licensing, impersonation, and more. Congress is working to avoid another social media situation, where regulations are put into place long after the consequences arise.
What We Learned from Earnings
Big Box retailers like Home Depot, Target, and Walmart reported their quarterly earnings and full year outlooks this week. These reports offered insights into the mind of the American shopper - previewing the future health of our economy and what trends we might see through the rest of the year.
One pattern seen across the board was fewer “fun items” in shopping carts. People are shopping because they need to, not because they want to - and at a store like Target, less impulse purchases means people aren’t being drawn off-list during their trips to the store, which is very bad for sales.
Further, Home Depot is seeing fewer sales of big-ticket items like appliances and grills. More than ever, shoppers are also waiting for a sale to purchase these types of household items (smart!)
Seasonal items are also being purchased closer to the start of the season, suggesting there is less planning in advance for something like patio furniture. Could this mean that when the time comes for the purchase, it's only being made if the funds are there?
HYCU; a key theme across these earnings reports is the expectation for discount sales through the end of the year in order to draw in consumers. This is something to keep in mind as you think about buying something new - if you wait long enough, you might just be able to clip a coupon for it.
Rich Tip of the Week: What is Fed Now? (video link w/ sound)
Apparently, the biggest trend in food is snacks
Bravo made it into the New York Times because America is all on the same team: Ariana’s
Some websites are already running Memorial Day Weekend sales
Hot take from Your Rich BFF - Dyson is overpriced and overhyped
