What is Wealthfront?
The company Wealthfront has created an Algorithm for investing, and they have now reached 1Billion in Assets. What does that mean for you? If your debating hiring a Broker, you can also consider using an Algorithm to invest.
Wealthfront is an Algorithm Technology for investing they call themselves a “Single-stock diversification service.” It’s a seemingly new company, that just hit the Billion Dollar mark. It has accumulated more than 10 percent of Twitter’s 3,000 employees as investors.
This Algorithm is Smart. I think we can also compare it to another company that many have heard of called Google? Some of the investing techniques are revolved around spending habits. Some of the algorithms are to trade with better interest rates. All of the products Wealthfront has to offer has the individual investor in mind.
How to Get Started
The investments can be as small as counting the change in your pockets, and rounding up, for credit card purchases, mortgage payments and numerous other transactions, that can be managed. Every purchase and transaction can be an opportunity to invest. This is splitting the broker model right down the middle.
Do they have their eyes set on 2 trillion in managing assets?
How do you gather the spare change to reach the goal of 2 trillion? Wealthfront estimates is 90 million people in the U.S. with a net worth of $2 trillion total. “Investment companies in the past have set there eyes on baby bomers, Wealthfront focuses on individuals in their 20’s.” Declares Wealthfront, “We hope that by focusing on Millennials the way Schwab focused on Baby Boomers, we can continue our rapid growth to $10 billion, $100 billion, and beyond.”
Why is this news so big? Wealthfront reached its first $1 billion in assets in less than half the time it took Schwab. It’s not so hard to believe, as investments in technology, key held by intricate statistics and trades, rather than broker or advisor looking into your portfolio.
Numerous journalists, and investors are talking about Wealthfront, Dan Kadlec, Money Titled this article, “This app could help you retire on spare change.” Quiet but extraordinary technology for people that understand how algorithms work, and want to invest more for themselves.
Mnuchin: Next Stimulus Coming By End of Month, No More Extra Unemployment Money
Treasury Secretary Steve Mnuchin said the next stimulus bill will be much more targeted than previous bills. He also said the goal is to get the next bill approved between July 20 and the end of this month. That time is when Congress will return from their holiday break and before they leave for August recess.
On Broad Stimulus Measures
It appears the White House will not support the type of broad stimulus measures of the previous bills. Instead, it will focus on direct payments to Americans. In an interview with CNBC yesterday, Mnuchin said “we do support another round” of stimulus checks to individuals. This mirrors the $1,200 payments that the government sent out as part of the $2 trillion rescue legislation passed in March.
Mnuchin didn’t mention whether he supported the idea of a $40,000 income cap to receive a check that has been floated by GOP lawmakers. The income cap for the first stimulus check was $75,000. He did say that he spoke with Senate Majority Leader Mitch McConnell. He also mentioned the “level and criteria” for checks would be discussed when lawmakers return to Washington.
Any new stimulus bill would likely not include proposals from the Democrats that include hazard pay for essential workers. It likely won’t include a longer extension of strengthened unemployment benefits, mortgage and rent relief, and support for state and local governments, too.
Mnuchin reiterated that the White House isn’t in favor of more relief money for states and municipalities to make up for lost revenue. Some state and local governments are considering trimming essential services as costs balloon and revenues drop. He said the administration does not want to “bail out” states that were “mismanaged” before the virus hit.
On Unemployment Benefits
Another critical topic the lawmakers will tackle the end of the enhanced unemployment benefits on July 30. They will do so when they return to Washington D.C.
Mnuchin said the White House has no interest in extending the enhanced benefits any further. Instead, he said it wants to change how they pay benefits. He did not give details. However, he did hint that unemployed workers shouldn’t be able to earn more money compared to full-time employees
“You can assume that it will be no more than 100%” of a worker’s usual pay, Mnuchin said. This echoes many Republicans who argue the additional benefits are preventing some from returning to work. These workers do this so that they make more at home than they would at their jobs.
While Mnuchin says the White House isn’t in favor of extending unemployment benefits, it is extending the Paycheck Protection Program that provides loans for small businesses. Earlier this week the Trump administration released a list of companies that received loans from the government. With that, backlash ensued as numerous businesses tied to wealthy individuals were found to have requested funds. Of the $130 billion remaining in the program, Mnuchin said he wants new relief to be “much, much more targeted” than past rounds of funding.
Kudlow: Economy Doing Great, Second Shutdown ‘Really Big Mistake’
White House Economic Advisor Larry Kudlow says that the country is squarely in the middle of the “v-shaped” recovery that everyone had hoped for, and despite reports of coronavirus hotspots popping up, shutting down the economy for a second time would make the “solution worse than the disease.”
Kudlow spoke on “Fox and Friends” yesterday and said that the White House is monitoring the jump in new coronavirus cases in states like California, Arizona, Texas and Florida, but added that as a country we now know what works to stop the spread, and just need to work together.
“We know the right mitigation, which has worked, and if we use that wholeheartedly and respect each other, I think we’ll get out of this pretty well and it will not stop the V-shaped recovery.”
On A Second Shutdown
He added that a second shut down would be a “really big mistake.”
“Another shutdown, in itself is controversial,” and would “do more harm than good,” said Kudlow before adding, “It would harm everyone. Not just businesses — the V-shaped recovery would give way. It would harm kids, we saw numbers on depression, drinking and so on… that solution would be worse than the disease.”
Kudlow highlighted the job growth in the last two months, and pointed out that jobs are being added back so quickly, workers are now quitting jobs to search for new, higher-paying ones.
He said there existed a “tremendous burst of jobs in May and June” and “tremendous record hiring rates. People are starting to quit their jobs again, which is extraordinary, in order to shop around for better jobs and wages.”
All those workers looking for jobs should bring down the unemployment rate to as low as 7% iby the end of the year, according to St. Louis Federal Reserve President James Bullard.
That would be quite a rollercoaster ride for the job market, which has swung from a 50-year low unemployment rate of 3.5% earlier this year, to a post-WWII high of 14.7% in April.
U.S. Economy Doing “Very Well”
Appearing on “Closing Bell” yesterday, Bullard said “I think we’re tracking very well right now. Seems to me like by the end of the year you can get down certainly to single digits, probably even below 8%, maybe 7% by the end of the year.”
A surge in new cases could slow the re-hiring of workers across the country, but Bullard believes that wearing a mask will become standard and that will help bring back jobs and boost the economy.
“If we get to that situation, we’ll have the disease under control,” he said. “What I like about that scenario is it does not rely on a vaccine coming or a therapeutic coming. We can use simple, easy technology that we have today, get a good situation, get most of the production back to normal.”
Bulls See ‘Once-In-A-Lifetime’ Opportunity, Bears Worried Market Will Drop 10%
The coronavirus continues to be a battleground for stock market bulls and bears. This comes with the bulls pointing to an opportunity and an economy that is slowly recovering. It also comes with the Federal Reserve providing trillions of dollars in stimulus.
One of those bulls in Marc Lasry. He runs a $14-billion Avenue Capital investment firm and co-owns the Milwaukee Bucks NBA team.
He views the coronavirus pandemic as a “once-in-a-lifetime” opportunity to make money.
“I know you’re not supposed to say this, but it’s a once-in-a-lifetime opportunity. You’re not going to see this again: Where you’ve actually got an economy that’s fine, and you’ve got a Fed pumping trillions of dollars in.”
Lasry’s firm specializes in providing funding to distressed businesses. The number of bankruptcies piling up means more business for him. Just today, men’s clothier Brooks Brothers filed for bankruptcy protection.
“You’ve got a lot of companies that are in trouble,” Lasry said, adding that today’s business environment is very similar to what he saw during the Great Recession. “It’s a once-in-a-lifetime, but it happened 10 years ago, also.”
Is the US Better Prepared?
He adds that while the outlook for many forcibly closed businesses as part of the economic shutdown doesn’t look promising, the country as a whole has become better prepared to weather the storm compared to that of the Great Recession.
“Today we all know something,” he said. “We will be fine in two years. People will be back out, there will be a vaccine. The question is: How long will it take to get back to normal?”
If you ask Savita Subramanian, she says she’s not a bear, but does expect the stock market to end the year almost 10% lower than it is today.
Subramanian, the head of equity research at Bank of America, says the economy is facing a litany of headwinds.
“I wouldn’t paint myself as a bear but the risks between here and year end are completely to the downside,” Subramanian said. “We’ve had a reopening frenzy and now we’re seeing payback.”
The Negative Outlook
Unlike Lasry, Subramanian felt “really worried” that the fiscal and monetary stimulus used to boost the economy has pulled forward future growth.
She also points to a historically-expensive stock market. Three things had driven the gains of that market, and all of them might come to a grinding halt soon: globalization, falling interest rates, and tax cuts.
Subramanian says a Democratic victory in November will likely have the effect of reversing those market-friendly policies.
Stocks continue to climb higher despite surges in new coronavirus cases. With this, Subramanian said she doesn’t think the markets are assuming everything will be okay. She notes that “work from home” stocks are still doing very well. Also, she mentions that if investors thought we would be returning to offices and jobs anytime soon, those stocks should suffer.
She advises being overweight consumer staples, industrials, technology, and financial stocks.
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