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- # 727 -đ Cartelâs favorite bank
# 727 -đ Cartelâs favorite bank
Good morning. Money launderers love banking with Citi ($C). A recent indictment revealed that members of the Sinaloa cartel preferred Citigroup ATMs, believing the bank had weaker fraud controls. These savvy criminals made a series of smaller deposits to fly under the $10K reporting threshold per transaction. Some couriers allegedly deposited $16K through 24 back-to-back transactions. DEA officials slammed the bank, insisting that the pattern of rapid deposits should have raised suspicion. It appears Citiâs âKnow Your Customerâ policy doesnât apply to the cartel.
PORTFOLIO STRATEGY
The Year Is Halfway Over, But the S&P 500 Has Already Delivered More Than Investors Expected
Time flies when youâre having fun⊠and it really flies when the S&P 500 keeps climbing month after month. Believe it or not, weâre halfway through 2024 â and it has exceeded investor expectations in many ways. The S&P 500 is up 15% year-to-date, already enough to put past yearsâ returns to shame.
Bull or bust? The S&P 500 has surpassed Wall Street analystsâ price targets, setting 32 all-time highs this year. Nvidia ($NVDA) led the charge, contributing nearly a third of the S&P 500âs returns. With 302 of the indexâs 503 components up so far this year, investors are on cloud nine heading into the year's second half (or rather, floating on the S&Pâs 5.4K).
In our latest Bear and Bull survey, 66% of readers were bullish heading into July, the highest since Feb. 2024.
Recently, institutional investors raised their original targets, reflecting strong first-quarter earnings and economic data.
A Brief Intermission
With conflicting economic data, an upcoming US election, and a Fed that canât seem to decide the direction of interest rates, predicting the S&P 500âs movement in the second half of the year is tough. AI stocks have stumbled in recent weeks, causing concern that their record run might be ending.
In a June Bloomberg Pulse survey, nearly half of respondents expected the S&P 500 to drop at least 10% this year, while 35% forecast the decline in 2025.
Valuations are also a concern, with 52% of Bloomberg survey respondents calling the S&P 500 the âmost overpricedâ asset over US credit and gold.
Thereâs always something to worry about⊠But even then, the S&P 500 knows itâs a Hot Stock Summer â and investors canât seem to take their eyes off the market or their hands off the buy button. If youâre worried about a dot-com-style market crash, data shows todayâs markets are healthier and less expensive than in 1999. For those skeptical about consecutive triple-digit market increases, history proves otherwise. But to keep the party going, companies will need to deliver strong earnings, kicking off late next week.
PARTNERED WITH MASTERWORKS
Billionaires Wanted It... 65,665 Everyday Investors Got It First
When incredibly valuable assets come up for sale, it's typically the wealthiest people that end up taking home an amazing investment. But not alwaysâŠ
One platform is taking on the billionaires at their own game, buying up some of historyâs most prized blue-chip artworks. Its investors have already realized annualized net returns of 17.6%, 17.8%, 21.5% and more.
It's called Masterworks. Their nearly $1B collection includes artists like Banksy, Picasso, and Basquiat. So far, every one of Masterworksâ 23 exits has returned a profit to investors, totaling more than $57M in payouts.
Offerings can sell out in minutes, but The Average Joe readers can skip the waitlist to join with this exclusive link.
LARGECAP RECAP
âïž Boeing Is Reuniting With an Old Friend to Address Safety Issues
Boeingâs ($BA) nearly 20-year outsourcing experiment is finally coming to an end â and it only took several fatal crashes, impending criminal charges, and a blown-out door for them to realize a change was needed. After spinning off Spirit AeroSystems ($SPR) in 2005, the two companies are coming back together in a $4.7B all-stock acquisition â which comes at a trying time for Boeing.
Boeingâs stock is down nearly 25% this year amid its 737 MAX controversies, which have spawned the departure of CEO Dave Calhoun and criminal charges stemming from the planesâ fatal crashes.
Jefferies analyst Sheila Kahyaogl said the benefits for Boeing âare priceless,â and the deal will provide much-needed operational improvements.
Getting off the ground: The deal will reunite thousands of employees, many of whom have decades of experience at Boeing. After all, 70% of Spiritâs revenue came from Boeing last year. Spiritâs CEO Pat Shanahan, a long-time Boeing exec credited with turning around the 787 Dreamlinerâs early problems, is also a contender to replace Calhoun. An analyst from Third Bridge told Barronâs that this wouldnât be a âquick fix,â but at this point, investors will settle for any solution.
đȘ Wall Street Giants Tease Higher Dividends After Passing Fed Stress Test
Americaâs banking elite is once again proving that âthe house always wins.â Despite commercial real estate (CRE) anxieties, Wall Street juggernauts flexed their financial muscles in the Fedâs annual stress tests. All 31 mega-banks passed with flying colors, setting the stage for dividend hikes and share buyback plans.
Wells Fargo ($WFC), Bank of America ($BAC), and Citigroup ($C) raised their dividends by 14%, 8%, and 5.7%, respectively â while JPMorgan Chase ($JPM) hiked its dividend and announced a share buyback.
The Financial Select Sector SPDR Fund ($XLF) now has a 1.59% dividend yield, and further hikes could attract more investors as earnings season approaches.
A tale of two banks: While Wall Street thrives, regional banks struggle, highlighting a growing sector divide. This is emphasized by their stock returns, with $XLF returning 10% over the past six months, eclipsing the â7% return of the SPDR S&P Regional Banking ETF ($KRE) during the same time. David doesnât seem to be beating the goliath, and all eyes will be on these financial powerhouses as we enter earnings season.
JOEâS MARKET PULSE
![](https://media.beehiiv.com/cdn-cgi/image/fit=scale-down,format=auto,onerror=redirect,quality=80/uploads/asset/file/25551270-892c-4693-be90-ead813764cb0/Moving_Stocks_Banner__2_.png?t=1719876464)
A sharper mind (and career boost) starts here: If you want to learn stuff that will impact your mind and increase your confidence, but youâre not interested in grueling coursework, well⊠Thereâs an app for that. Brilliant delivers powerful lessons in subjects like finance, data science, machine learning, and more, with engaging problem-solving experiences. Try it for free (then get 20% off)*
Markets & Economy
Lumber prices tumble into building season: High borrowing costs are slowing residential construction and home improvement, pushing framing-lumber composite prices to their lowest since May 2020. [Read]
Student loan payments halted for millions: Under the SAVE plan, the Biden administration paused payments for 3M borrowers, defending the program in court. Eligible borrowers wonât owe monthly payments for the time being. [Read]
Redbox owner bankrupt after buyout: Chicken Soup for the Soul Entertainment struggles with massive debt and unpaid bills following its 2022 acquisition of the DVD rental company. [Read]
Business & Wealth
Consultants cash in on AI boom: Firms like Boston Consulting Group and McKinsey see surging demand from businesses seeking guidance on adopting generative artificial intelligence. [Read]
Warren Buffett pledges $100B to new charity: Upon his death, this pledge will create the worldâs largest charitable trust, managed by Buffettâs three children, who must unanimously agree on expenditures. [Read]
US employers favor part-time workers: While full-time job postings remain flat on jobs site Indeed, part-time gigs have increased by ~10% since Jan. 2022, reflecting companiesâ need for flexibility amid economic uncertainty. [Read]
*Thanks to our sponsors for keeping the newsletter free.
CHART
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DIGIT OF THE DAY
6% Is The New 3% When It Comes To 401(k) Auto Enrollments
You might reach your retirement goals sooner â and you can thank the law for that. In 2022, the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 was passed, mandating most companies to automatically enroll eligible employees into company retirement plans, starting at a contribution rate of at least 3% by 2025. Surprisingly, nearly one-third of companies already exceed this requirement by starting contributions at 6% or higher.
In 2023, participants in auto-enrollment plans saved 12.7% of their annual income, compared to an average of 10.3% in plans requiring manual sign-ups.
Vanguard found that 60% of companies now automatically enroll new hires, boosting 401(k) participation rates to 82% from 66% in 2007.
Retirement matchmaker: Many plans raise contributions by 1% annually until reaching ~10% of an employeeâs pay. This approach ensures employees maximize matching contributions, aiming for a total savings rate of up to 15% of annual income. However, studies have found that higher default contributions may lead some workers to take on debt to meet their financial needs.
EXTRA JOE
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Masterworks Ad Disclosure: The content is not intended to provide legal, tax, or investment advice. No money is being solicited or will be accepted until the offering statement for a particular offering has been qualified by the SEC. Offers may be revoked at any time. Contacting Masterworks involves no commitment or obligation.
âNet Annualized Returnâ refers to the annualized internal rate of return net of all fees and expenses, calculated from the offering closing date to the date the sale is consummated. IRR may not be indicative of Masterworks paintings not yet sold and past performance is not indicative of future results. For additional information regarding the calculation of IRR for a particular investment in an artwork that has been sold, a reconciliation will be filed as an exhibit to Form 1-U and will be available on the SECâs website. Masterworks has realized illustrative annualized net returns of 17.6% (1067 days held), 17.8% (672 days held), and 21.5% (638 days held) on 13 works held longer than one year (not inclusive of works held less than one year and unsold works).
Past performance is not indicative of future returns. Investing involves risk. See Important disclosures at www.masterworks.com/cd.
All content provided by The Average Joe is for informational and educational purposes only and should not be taken as trading or investment recommendations.