💰 5 Fact Friday: Long Live The AI Trade

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GOVERNMENT
1. The Fight For Control Of The Federal Reserve ⚖️

President Trump just lobbed a grenade into the Federal Reserve. On Monday, he announced the removal of Fed Governor Lisa Cook, citing “for cause” grounds tied to alleged mortgage fraud.

Cook has denied wrongdoing, filed suit, and vowed to keep serving — setting up an unprecedented legal battle that could end up before the Supreme Court.

The allegation: Cook is accused of signing two mortgage applications, weeks apart, each claiming primary residence status. That designation typically secures lower interest rates.

Cook insists it was a “clerical error,” and so far, no criminal charges have been filed.

Why it’s unprecedented: In the Fed’s 111-year history, no president has ever removed a governor. These 14-year appointments were deliberately designed to outlast election cycles, insulating monetary policy from politics. Trump’s move tests that safeguard for the first time.

The legal wrinkle: Recent Supreme Court rulings have expanded presidential removal powers over many independent agencies. But the Fed is different.

Unlike much of the Executive branch, Trump can only remove a Fed governor “for cause”. What constitutes cause will likely be at the heart of this battle.

The stakes:

• Credibility: The Fed’s real power lies in its reputation and steady hand. If politics, rather than economics, dictate policy, there are risks to inflation, debt service costs, and U.S. dollar supremacy.

• Policy whiplash: Say one administration cuts aggressively, the next slams on the brakes. That begins to look less like global leadership and more like the instability typcially seen in emerging markets.

• Control: This isn’t just any seat — it’s the swing seat. A Cook vacancy, paired with two other upcoming openings, would give Trump a majority on the Board and leverage over regional Fed presidents whose terms expire in February.

• Personal incentives: Trump is undoubtedly after lower interest rates. They would spur growth, help manage the national debt, and likely boost his own fortune. His real estate and crypto holdings both benefit from cheaper financing.

Despite the shock, markets haven’t panicked. Perhaps because the Fed is already poised to cut rates in September.

The bigger concern is medium to long-term Fed decisions, which could be subject to the volatility of the political cycle.

Bottom line: This isn’t just about Lisa Cook’s mortgages.

Fed policy influences everything from day-to-day prices at the grocery store to mortgage and car loan rates, savings account rates, asset prices, and even job creation.

If the Fed is even perceived as losing independence, it’s not just investors who should worry — it’s every American household.

REAL ESTATE
2. Builders Slash Prices, But Buyers Remain Hesitant 🔨

The housing market is beginning to feel like a staring contest — buyers waiting for prices to break, sellers holding firm, and neither side blinking.

Mortgage rates are at their lowest point this year, with the 30-year fixed dipping to 6.56%. That’s a welcome shift as markets anticipate possible Fed cuts.

Still, those rates are a far cry from the 2-3% glory days, keeping many homeowners locked in place with the so-called “golden handcuffs.”

Meanwhile, home prices are cooling — but not collapsing.

The Case-Shiller index showed national prices rose 1.9% year-over-year in June.

Notably, that’s the weakest pace since mid-2023 and slower than inflation. After years of running hot and fueling inflation, housing is now rising slower than overall prices, meaning it’s no longer the main culprit behind high living costs.

Of course, below the headline number, there are significant regional differences.

Broadly speaking, pandemic winners like Florida, Texas, and Arizona are giving back some gains. On the other hand, supply-constrained metros, especially in the Northeast, keep climbing.

Builders are also under pressure. Nearly 40% of builders cut prices in July, while cancellations jumped to their highest July level in at least eight years.

Even flippers are retreating, squeezed by higher labor costs, pricier materials, and longer sale timelines.

Perhaps the biggest headwind of all: homeowners still hold a record $34 trillion in equity. That’s reassuring for owners but discouraging for buyers, since it gives sellers both the cushion and the patience to wait out the market.

And wait they must.

Affordability is stretched, job mobility is near cycle lows, and immigration flows (a key driver of housing demand) may turn negative for the first time in decades.

Bottom line: Buyers want lower prices, sellers are willing to wait, and the gap between the two isn’t closing. Until rates fall further or incomes rise meaningfully, expect more stalled negotiations than sold signs.

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STOCKS
3. Nvidia Says No China, No Problem 👑

Nvidia delivered earnings, and the stock slipped -0.8% on Thursday. In any other world, that wouldn’t be a story. But when you’re the biggest stock on Earth, it is.

At nearly $4.4 trillion, Nvidia is now 3% of global equity value and 8% of the S&P 500. For context, that’s more than Amazon and Meta combined.

Nvidia is also the poster child of the AI trade. You know, the one that’s fueled markets for the last 24 months. A pullback in chip demand wouldn’t just ding $NVDA ( ▼ 0.79% ), it could sink tech-wide optimism.

This quarter? Nvidia passed the test, but didn’t ace it.

The good:

• Revenue of $46.7B beat estimates and set a record

• Earnings per share of $1.05 narrowly topped expectations

• Margins rose to 72.3%

• Q3 guidance of $54B was solid

The not-so-good:

• Data center sales missed, at $41.1B vs $41.3B expected

• China sales? A literal goose egg, due to U.S. chip restrictions

• Investor hype had priced in dreams of $60B+ guidance

Still, CEO Jensen Huang remained optimistic: “We had a record quarter without China, and we just guided another record quarter without China.”

Analyst Adam Kobeissi noted: “If you are bullish on US-China relations improving OR any level of chip sales to China resuming, the stock is cheap.”

The math: Nvidia trades at 40x forward earnings. That’s nearly 2x the S&P 500’s valuation… but it does deliver far more than 2x the growth.

So if AI is all hype, that’s pricey. But if AI demand is here to say, it’s arguably still a steal.

Bottom line: Nvidia didn’t blow the roof off, but it didn’t blow up the AI trade either. With no red flags and rate cuts likely ahead, the party’s still on.

PERSONAL FINANCE
4. Last Call For That $7,500 EV Credit 🚗

The federal Clean Vehicle Credit, which offers up to $7,500 on new EVs and $4,000 on used ones, is set to expire on September 30, 2025.

But here's the latest: new IRS guidance lets buyers lock in their eligibility today, even if delivery happens later. This ruling cushions against delivery delays and gives buyers more breathing room for any last-minute decisions.

How Qualification Works

To qualify ahead of the deadline, you now only need a signed binding purchase agreement and a payment (down payment, deposit, or trade-in value) before September 30th.

In other words, “$0 down” financing deals likely won’t qualify unless some form of payment is made before the cutoff date.

Delivery can happen anytime after that — a huge win for buyers worried about backlogs or scheduling issues.

Credit Details Recap

• New EVs: Up to $7,500

  • Income limits: $300K (joint) / $150K (single)

  • Price caps: $80K for SUVs, vans, pickups; $55K for cars

• Used EVs: Up to $4,000

  • Income limits: $150K (joint) / $75K (single)

  • Price cap: $25K, and must be at least two model years old

• Assembly requirement: Must be assembled in North America

• Battery sourcing rules: Apply for full credit

Since January 2024, buyers have also had the option to apply the credit at the point of sale, cutting the price instantly. But this new ruling adds another layer of flexibility, especially if you're waiting on a vehicle still being built.

Loophole Alert

Leased EVs are exempt from income and sourcing restrictions. That means even high-end models can qualify for the full credit when leased, since the dealer claims it and passes on the savings.

Bottom line: If you're thinking about going electric, keep this deadline in mind. Even a refundable deposit today could mean the difference between $7,500 off or missing the boat entirely.

STOCKS
5. Guess That Stock 🕵️‍♂️

This app became a household name during the retail trading boom. Now, it offers everything from crypto to football prediction markets, blurring the line between investing and entertainment.

Can you guess the stock?

1. After helping fuel the meme stock mania of 2021, this trading platform is now leaning into crypto, tokenized stocks, and AI-powered investing tools.

2. But it’s not just about stocks anymore. This company recently launched prediction markets for NFL and college football games, letting users bet on everything from touchdowns to turnovers.

3. It just posted back-to-back quarters of blockbuster growth. In Q2, it pulled in nearly $1 billion in revenue with ~40% profit margins.

4. Despite its success, it got snubbed from the S&P 500 again this week. Instead, a rival broker took the coveted index spot it’s been eyeing.

5. Its flashy new Gold Card offers 3% cash back on all purchases, 5% on travel, and a solid steel design. Refer enough friends? You might even get a 10-karat gold version.

Got a guess? Tap here for the answer → 

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