🚪 One Chinese app door closes, another opens - Duolingo has seen a 216% increase in users trying to learn Chinese as the US ban on TikTok takes effect today. With TikTok shutting down, over 700,000 users have swarmed the Chinese social media app Rednote. Rednote is primarily in Chinese, and the dedication to dance videos is real, as users are trying to learn Mandarin through Duolingo to aid in the switch.

🙄 We get it - Inflation this, inflation that. It seems you cannot escape mentions of inflation either in the news or in sarcastic conversations with your friends as you gripe over the cost of an orange mocha frappuccino from Starbucks. The number for inflation is one of two key metrics to unlocking the economy through interest rate cuts from the Fed, so hearing it rose 0.4% from November to December, or 2.9% year-over-year didn’t exactly provide much confidence that those sarcastic gripes won’t continue. While the top line number was discouraging, the core inflation metric cooled from three straight months of 3.3% to 3.2%. A mixed bag of a report, and definitely means the interest rate cuts will slow down for the time being.  

💳 Wonder if they paid the fine using a black card - American Express has been fined $230 million for deceptive sales practices targeting small businesses. The deceptive practices included claiming wire products could help businesses avoid taxes and entering “dummy” employee identification numbers to boost sign-ups. Amex launched these aggressive campaigns after its fallout with Costco. But hey, don’t blame Costco.

This past week, several major banks, such as Goldman Sachs, JPMorgan, Bank of America, and more, announced earnings, and…they crushed 2024.

What happened?

Three stats from this past week’s earnings reports:

1. Morgan Stanley’s quarterly profit more than doubled from a year ago
2. Goldman Sachs’s 2024 profit rose 68% from 2023
3. JPMorgan investment banking revenue rose 46%

Why is this important?

The earnings of the major banks are typically a gauge for major economic activity (whether good or bad). When times are hard and the economy is stagnant, the banks get hit especially hard as investment banking suffers. When times are good, and capital markets are “unlocked”, the banks benefit tremendously from dealmaking activity.

When you think of how a large bank like Goldman Sachs make money, it is across three separate divisions:

1. Global Banking & Markets - the sources of revenue are investment banking fees, such as underwriting, advisory, and relationship lending
2. Asset & Wealth Management - includes management fees, private banking, lending, and equity & debt investments
3. Platform Solutions - includes Transaction Banking, which provides electronic payment, foreign exchange, and liquidity services

As the economy prospers:

1. Mergers & acquisitions increase, capital markets transactions increase (so, debt & equity raises), and Global Banking & Markets revenue / profit increases
2. People are more likely to invest, which boosts Asset & Wealth Management revenues / profits
3. More transactions occur, which directly ties to Platform Solutions

I will caveat this with big swings can also mean negative impacts, depending on the transactions occurring out of abundance or necessity, but in this case, they were out of abundance. Also, 2023 was a particularly tough year for big banks, so the 2024 increase signifies a more of a return to normal or better than normal than anything else.

What does it mean for the economy ahead?

David Solomon, CEO of Goldman Sachs, put it best when he said, “While no one has a crystal ball, there are a number of catalysts that we believe will continue to drive activity. There has been a meaningful shift in CEO confidence, particularly following the results of the U.S. election.”

Conclusion

Every week we take a deep dive on more complex topics as a way to educate what indicators we look for when investing. In our opinion, the swing in banking profits and commentary from earnings reports are strong signs for the economy in 2024 and beyond.

Mortgage rates have risen above 7% for the first time since mid-2024.

In 2020 and 2021, it seemed like everyone and their mothers was buying real estate. Money was “cheap”, which means the cost to borrow was incredibly low because of the low interest rate environment.

What happened next?

As inflation began ramping up, the Fed used one of its primary tools at its disposal to fight inflation, interest rates. The Fed sets the benchmark interest rate. Higher interest rates “cool” down the economy, and lower interest rates “heat” the economy up.

The Fed began raising interest rates, and because people had locked in extremely low interest rates when buying homes in 2020 and 2021, the market froze. Homeowners didn’t want to leave because they couldn’t afford elsewhere, and homebuyers couldn’t afford the new high prices with the new high interest rates.

What does this mean going forward?

As we settle into an economic mindset where interest rates will remain higher for longer, the only way to purchase homes will come through fractional real estate investing. Which, yes is a plug for us, but it also means the world’s largest wealth generator, real estate, will remain out of reach for quite some time. This could lead to an exacerbation of the wealth inequality in America as real estate prices continue to rise alongside rents.

Unfortunately and somewhat fortunately, the current market position means the real estate market will continue to outperform other sectors and is poised for strong growth in the coming years.

We are back! After seeing so many of you join us for our last webinar, we knew we had to do it again. Joey and I are excited to invite you to our next live webinar on Tuesday, January 28, at 7PM EST.

During this session, we will dive into how mogul is transforming real estate investing, share our perspective on where the market is headed in 2025, and showcase real-world case studies of investors building wealth with mogul.

We will also be answering your questions live during an interactive Q&A.

Whether you’re new to investing or a seasoned pro, this is a great opportunity to connect with us directly. Joey and I bring decades of experience, and over $10 billion in transactional volume from our time at Goldman Sachs, to every conversation, and we can’t wait to share what we’ve learned.

Spots are limited, so be sure to reserve yours today.

Secure my spot

• While the exact figure may vary, it’s directionally accurate to say the wealth in the DC area this Monday is sure to be north of $1 trillion as the inauguration takes place on Monday. In typical Trump fashion, it will be a non-traditional inauguration, as it will be inside due to extreme cold weather.
• On Friday, The International Monetary Fund increased their forecast for US economic growth from 2.2% to 2.7% on the heels of the election results. Their last forecast took place in October, so the change is very reliant on Trump administration policy changes. Stay tuned.
• Remember learning about what a short was during the Gamestop surge in 2021? Well, the person who was one of the GOATs of calling out corrupt companies and shorting them just announced his retirement from the game. Hindenburg Research, founded by Nate Anderson, brought fraud to light. In 2020, he famously called out electric truck company, Nikola, for rolling a prototype down a hill in a demo video of its capabilities.

I know most of you have already read this one, and there is a reason for that; the book is a classic that should be required reading before you enter the real world. Steve Jobs was a complicated individual who blended art and technology in a way that had never been done before. After reading this book, It is hard to imagine the world pre and post Steve Jobs.

What really stood out to me about Steve Jobs was his ability to distort your reality to his own views, and to flip his opinion on a dime. While there are definitely situations that could have been handled better by Jobs, the book explores his genius and role in society in an unbiased manner. I love biographies, and Walter Isaacson’s novel is my favorite so far.

⭐ 4.88 / 5.0 in my book (no pun intended)

1. "So I got that going for me, which is nice."
2. "Come on Murph! Murph, come on! What's he saying?"
3. "I'm sure Hansel's heard of styling gel. He's a male model."

LEGO is the world’s largest tire manufacturer! While they don’t make tires for cars, LEGO produces around 700 million tiny rubber tires each year for their toy vehicles, outpacing any traditional tire company like Michelin or Bridgestone.

1. Caddyshack (Bill Murray)
2. Interstellar (Matthew McConaughey)
3. Zoolander (Brent or Meekus)