Money Rehab with Nicole Lapin - Predictions For Car Prices and A Game-Changing Tesla Tragedy

Episode Date: August 30, 2023

On today's weekly roundup of the biggest headlines on Wall Street and how they affect your finances: a tragedy at Tesla that might change the trajectory of the company, the bigger picture of car prices and a big precedent in digital currency land. Want to start investing, but don't know where to begin? Go to moneyassistant.com and meet Magnifi, your AI money assistant, designed to help you make a plan for your financial goals. Want one-on-one money coaching from Nicole? Book a meeting with her here: intro.co/moneynewsnetwork 

Money rehabbers, you get it. When you're trying to have it all, you end up doing a lot of juggling. You have to balance your work, your friends, and everything in between. So when it comes to your finances, the last thing you need is more juggling. That's where Bank of America steps in. With Bank of America, you can manage your banking, borrowing, and even investing all in one place. Their digital tools bring everything together under one roof, giving you a clear view of your finances whenever you need it. Plus, with Bank of America's wealth of expert guidance available at any time, you can feel confident that your

money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. It is Wednesday, and that means it is time for the money rehab weekly roundup of the biggest headlines on Wall Street and how they affect your finances. These are the days of summer where I can feel change is coming. Sure, it's blazing hot outside, but Halloween stuff is still popping up

and reminds us that spooky season is right around the corner. Plus, pumpkin spice has already started making an appearance at Starbucks stores, which is a clear sign of fall, even in Los Angeles. But looking forward, the markets and the economy are usually boosted by the holidays. For some industries, they're coming into the biggest season right now. With the labor market already tight, the additional demands for seasonal help could help boost wages and keep the economy running, despite lingering concerns about just how soft a landing the Fed can manage. Last week, the Fed chairman Jerome Powell or Jay Powell spoke at a large meeting of central banks in Jackson Hole, Wyoming,

and said that we're, quote, navigating by the stars under cloudy skies, end quote, which sounds kind of like he's lost. He also said that the Fed is still willing to raise interest rates to combat inflation. Much of the meeting focused on how many of the old economic models no longer work because so much about the very nature of work and the economy has shifted in the last few years. With all of these shifts, there are more variables now than ever before. Once upon a time, there were only a couple of key industries like coal mining, farming, early factories.

Now, models need to account for jobs like AI training engineers. Generally, the sense of the meeting seemed to be that we are moving into a strange new time. Again, there have been so many new normals. I wonder if we should just stop trying to pin down a definition of our times and just accept that it is ever evolving and the only constant is change. But next up, let's talk about a story that ties together a couple of different stories we've been following. Tesla is facing off in court over a death caused by a driver using autopilot. The CEO of Tesla, Elon Musk, who self-identifies as the techno king of Tesla in official investor relations paperwork, has long pushed that self-driving technology is a key part of Tesla's financial success. There has been a

fair amount of litigation over the technology, but this is the first time that Tesla will face off in court over a death caused by the autopilot feature. If self-driving technology truly is the key to Tesla's success, a negative outcome here could have them scrambling to chart a new path. could have them scrambling to chart a new path. Despite the tragedy, Tesla stock has gone up a whopping 120% year to date, while the price of Tesla's has decreased an average of $7,000. The price drop is partially the result of Tesla's sales strategy, but it also follows larger trends in the car market. Land Rover, my personal fave because of all the tax love, also slashed prices by almost $7,000, rounding out the list of the top five cars to cut prices, Lincoln, Volvo, and Mercedes-Benz. This comes as the car market is finally clearing up so many of the supply chain

issues and blocks that have slowed production, and as the market is flooded with far more stock of electric vehicles than it can currently sell. While car prices remain high, it seems like the broader trend is leading toward prices finally coming down a bit. Now, while the supply of electric vehicles remains very strong, the supply of workers for certain fields remains very low. These shortages can have dramatic consequences. A recent investigation by the New York Times found that a spike in near mid-air plane collisions could be traced in large part to a lack of air traffic controllers, which sounds terrifying. But on a daily basis, these labor shortages are turning up in the school system with shortages of teachers and bus drivers. While it's not nearly as scary as the air traffic control issues,

it can potentially create a cycle where people leave the workforce as a result of childcare constraints, which in turn deepens the problem. And of course, fewer workers leads to higher wages, which can be good, or it can contribute to inflation by pushing prices higher. As the recent central bank meeting laid out, it is complex and interconnected out there. We've talked a lot about China recently and its impact on the global economy, but we haven't discussed Russia nearly as much on the show. Since the invasion of Ukraine, Russia has been increasingly operating

in a different sphere from the U.S. and its allies. The economic sanctions have been harsh and cut Russia off from the global banking system. However, much of the world depends on Russian oil, and various countries still buy oil from them, leaving them enmeshed in the global economy. The economic sanctions have had the intended toll on the Russian economy, with the value of the ruble plummeting to about one US cent. While it isn't great when a country needs to import so much stuff, it is working out in their favor with exports because the government gets paid in American dollars, which it then converts into rubles to use domestically. This has enabled them to radically expand their budgets despite the economic pressures of the sanctions.

But it has also led to rampant inflation, which the Russian central bank is attempting to correct using the classic central banking tool, raising interest rates. Currently, the Russian interest rate stands at about 12%. percent. While Russia's role on the global stage has been radically altered by the invasion of Ukraine, as long as it remains a leading global energy supplier, it will have an impact on the price of oil around the world. While the impacts of the Russian issue are very broad, let's take a moment to zoom in on a much more niche issue. The SEC has brought its first legal action against a company for selling NFTs, those digital images that briefly captured the world's attention and millions of dollars without a license. Quick dictionary note here, broadly speaking, a security is a financial asset that has monetary value, so like stocks and bonds. But legally speaking, securities have to pass the Howey test, which has four

qualifiers, but essentially boils down to the idea that you're investing in something so that it can benefit. But also you're expecting to make money off the deal. Like when you buy a stock at an initial public offering, the company uses the money from that offering as funding, and when they expand, you can turn around and sell the stock for a profit. In order to sell a security, you have to be licensed and follow specific disclosure rules. Now, cryptocurrencies have long argued that they are not securities because you aren't investing

in anything. If you have a good enough setup, you can mine Bitcoin and make money essentially out of nothing. No investment has been made. The SEC, though, is not convinced of this argument, especially since sometimes cryptocurrencies are created by a company for funding rounds. That's the issue with a company in this current case. A podcasting company offered a limited run of 20,000 NFTs with different levels of scarcity. Those NFTs could be used to access perks within the company. Here, the government is arguing that an investment in a company was made and that it's a security. The company raised more than

30 million bucks. While the company hasn't confirmed that they sold unlicensed securities, they did buy back the tokens and destroyed them. That wasn't enough, though, for the SEC, and the case is starting to work its way through the legal system. While the impacts of this particular trial are fairly limited, they represent an increased appetite for confronting the regulatory issues with crypto. So as always, invest wisely out there. For today's tip, you can take straight to the bank. If you've been touched by any of the recent natural disasters and feel called to donate, make sure your money is going where it can do the most good. Websites like Charity Navigator and GuideStar can both give you a more in-depth look at

charities' missions and financial statements so that you know exactly where your money is going and where it can matter the most. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me and follow us on instagram at moneynews and tick tock at moneynewsnetwork for exclusive video content and lastly thank you no seriously thank you thank you for listening and for investing in yourself which is the most important investment you can make.