Good Morning!
Happy Wednesday! We’re halfway there.
👉 Federal Reserve decision today
👉 Real Estate verdict impacts commission structures
👉 WeWork files for bankruptcy
Off we go! 🏃
FED: Pending Interest Rate Decision
The Federal Reserve will decide on interest rates at 2:00 EST today. Fed officials have raised interest rates from 5.25% to 5.5%, the highest level in 22 years. The Federal Reserve's favored measure of inflation, the Personal Consumption Expenditures price index, saw a modest decrease in September. Excluding the volatile food and energy prices, the core index increased by 3.7% over the 12-month period ending in September, a slight drop from the 3.8% growth observed in August. There's a possibility for the Fed to curb inflation without significantly boosting unemployment, a situation often referred to as a soft landing.
Last week, the economy experienced an unforeseen boost, with the gross domestic product – a comprehensive indicator of the nation's produced goods and services – growing at an annualized rate of 4.9% from July to September. This represents the most significant increase since 2021.
Surprisingly, the labor market remains robust. The demand for workers consistently surpasses job availability, layoffs are minimal, and the rate of job additions in the economy remains strong.
Currently, the central bank is navigating a tightrope, weighing the potential of inflation to surge again against the possibility that its measures might inadvertently harm the economy.
🎯 GRIT TAKE:
We believe that the Federal Reserve will…upgrade to VIP to read the full GRIT take. Click below!
VERDICT: Real Estate Giants Liable for Commission Inflation
In a major verdict, a Missouri jury delivered a significant judgment against the real estate sector, determining that the National Association of Realtors had conspired to keep brokerage commissions elevated. The jury's decision resulted in almost $1.8 billion in damages, shedding light on the broader debates over real estate agent compensation. Traditionally, home sellers are typically charged a commission of 5% to 6% of the sale price, which is then divided between their agent and the buyer's representative. Although this recent ruling doesn't immediately impact the Justice Department's position, it's noteworthy that the DOJ has also recently intervened in a related Massachusetts case, indicating its active interest in the traditional commission structure.
Source: Dailymail
On Tuesday, Zillow's shares experienced a 6.9% decrease, marking the most significant slump since June 2022. Although the company doesn't directly derive its income from commissions, its primary operation involves offering marketing services to agents representing buyers. From its high in February 2021, during the height of the pandemic-driven housing surge, the stock has plummeted over 80%.
WEBROKE: Filing for Bankruptcy
WeWork is filing for bankruptcy as early as next week. Their financial journey is nothing short of a roller coaster. Established in New York in 2010 during a significant uptick in startup ventures, its valuation skyrocketed to a staggering $47 billion. However, the company faced headwinds, notably from a botched IPO endeavor and the pandemic's strain on its co-working business model. With Adam Neumann at its helm, WeWork saw impressive financial growth, often doubling its revenue annually. At its pinnacle, it was amongst the nation's highest-valued startups, boasting office locations globally.
Source: Vox
On Monday, the firm reached a forbearance understanding with its lenders, set to conclude in seven days.
This agreement allows the firm additional "time to continue in the positive conversations with our key financial stakeholders and engage with them to implement our ongoing strategic efforts to enhance our capital structure," stated a WeWork representative.
Headlines You Need To Know: 🎙
LinkedIn’s new chatbot wants to help you get a job
Microsoft starts selling its copilot software
Druckenmiller has a massive bullish bet
Private sector payrolls rose 113,000
World’s safest market becomes a magnet for big investors
Aston Martin shares sink after lackluster quarter
Microsoft begins selling AI tool, Copilot
AMD beat earnings and issued weaker guidance
Toyota raises profit forecast driven by weak currency
PETS.COM: Bezo’s Famous Mistake
Jeff Bezos is one of the most outstanding entrepreneurs ever and has built an empire with Amazon. But he made one big investing mistake that almost ruined everything. During the internet craze of the early 2000s, pets.com was founded. It was coined as the Amazon of pet products. The company had a horrible business model but a genius marketing team along with a great domain name. They were one of five companies that sold pet products online. Jeff Bezos ended up taking notice, and Amazon made a massive investment into the company and eventually owned more than 50% of the company. Pets.com made an initial public offering in 2001 and was traded on the stock market. The IPO was hyped up, and people bought the stock like crazy.
Source: Museum of Failure
However, after a few months, investors started to realize that pets.com had a horrible business model, couldn’t ship their products, and was making no money. The stock started to crash, and eventually, the company went bankrupt. Amazon lost its entire investment, and its shareholders heavily criticized Jeff Bezos. At the time, Amazon was still not profitable, and investors thought Bezos was being reckless with Amazon’s money. Today, if you search pets.com, you will get redirected to Pet Smart.
Chart of the Day
Net worth by family structure
Double-income families with no kids have the highest net worth.
Source: Bureau of Economic Analysis
GRIT Meme of the Day 😂
Tag GRIT Capital on social media for a chance to be featured in our meme or Tweet of the day in our GRIT daily newsletter! 👇
Source: @wallstmemes
Have feedback to share? Click HERE. Good or bad, we are always eager to improve our newsletter.
The author, publisher or insiders of the publisher may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.
Grit is a publisher of financial information, not an investment advisor. Grit does not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient. Grit does not guarantee the accuracy or completeness of the information provided in this page. All statements and expressions herein are the sole opinion of the author or paid advertiser.
THE INFORMATION CONTAINED ON THIS WEBSITE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF ANY COMPANY MAY TRADE AT ANY TIME. THE INFORMATION AND OPINIONS PROVIDED HEREIN SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND DECISIONS REGARDING THE PROSPECTS OF ANY COMPANY DISCUSSED HEREIN BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED HEREIN. INVESTORS SHOULD OBTAIN INDIVIDUAL INVESTMENT ADVICE BASED ON THEIR OWN CIRCUMSTANCES BEFORE MAKING AN INVESTMENT DECISION
No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned.
The author, publisher or insiders of the publisher may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.
Any projections, market outlooks or estimates herein are forward looking statements and are inherently unreliable. They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur. Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein. The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and Grit undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material.
Grit does not accept any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.
By using the Site or any related social media account, you are indicating your consent and agreement to this disclaimer and our terms of use. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.
Grit publishes content through Beehiiv, an email newsletter platform and operates the websites Gritcap.io and Get-versed.io and and social media accounts (including but not limited to): Instagram, Twitter, Linkedin, TikTok, YouTube, SnapChat, Facebook and Threads. By accessing Grit’s content, you agree to be bound by the Terms of Use and Privacy Policy, in effect at the time you access this website or any page thereof or any of Grit’s content. The Terms of Use and Privacy Policy may be amended from time to time. Nothing on this website or Grit constitute an offer to sell, or a solicitation of an offer to buy or subscribe for, any securities to any person in any jurisdiction where such an offer or solicitation is against the law or to anyone to whom it is unlawful to make such offer or solicitation. Grit is not an underwriter, broker-dealer, Title III crowdfunding portal or a valuation service and does not engage in any activities requiring any such registration. Grit does not provide advice on investments or structure transactions. Offerings made under Regulation A under the U.S. Securities Act of 1933, as amended (the "Securities Act") are available to U.S. investors ONLY who are “accredited investors” as defined by Rule 501 of Regulation D under the Securities Act well as non-accredited investors, who are subject to certain investment limitations as set forth in Regulation A under the Securities Act. In order to invest in Regulation A offerings, investors may be asked to fill out a certification and provide necessary documentation as proof of your income and/or net worth to verify that you are qualified to invest in offerings posted on this website. All securities listed on this site are being offered by, and all information included on this site is the responsibility of, the applicable issuer of such securities. Grit does not verify the adequacy, accuracy or completeness of any information. Neither Grit nor any of its officers, directors, agents and employees makes any warranty, express or implied, of any kind whatsoever related to the adequacy, accuracy, valuations of securities or completeness of any information on this site or the use of information on this site. Neither Grit nor any of its directors, officers, employees, representatives, affiliates or agents shall have any liability whatsoever arising from any error or incompleteness of fact, or lack of care in the preparation of, any of the materials posted on this website. Investing in securities, especially those issued by start-up companies, involves substantial risk. investors should be able to bear the loss of their entire investment and should make their own determination of whether or not to make any investment based on their own independent evaluation and analysis.
Please read: Terms of Use, Privacy Policy, Disclosure Policy, State Disclosure Policy, and Disclaimer Policy
If you have any questions please contact us at [email protected]