Uncle Sam's Financial Baggage

In this issue of the peel:

• Meet your "typical American"—crazy Uncle Sam. He’s wealthy by global standards, but between mortgage debt and credit cards, he's got some financial baggage. Despite inflation, he's managing to save a little... but just barely.
• Meanwhile, Affirm Holdings is beefing with American Express (kind of), Nvidia keeps soaring on AI hopes, and Super Micro is playing dodgeball with investors over delayed filings. Oh, and Roblox? Apparently, they’ve been exaggerating gameplay stats—Hindenburg’s on the case.
• American consumers are holding strong without maxing out their credit cards (what a twist!). However, auto loan delinquencies are creeping up—so let’s keep an eye on those numbers before the spooky season turns truly scary.

Market Snapshot

Banana Bits

• Woohoo! The U.S. government added $1.8tn in new debt in 2024 .
• In case you didn’t think there was enough macro opacity right now, the NFIB Small Business Uncertainty Index just set a new all-time high .
• Hope all you Floridians are doing okay. Early estimates say damages could total an insane $175bn .
• SpaceX’s next Starship slight could come as early as Sunday .
• Chinese stocks fell faster than the Qing dynasty yesterday on no new stimulus announcements .
• The bull market is about to enter its second year with little signs of stopping .

The Daily Poll

How do you feel about the average American's financial situation?

• Pretty secure
• Somewhat secure, but concerned
• Not secure at all
• I have no idea

Previous Poll:

Which of these companies’ recent moves caught your attention the most?

Petco's earnings success: 11.4% // Nvidia CEO's rockstar moment : 47.7% // GameStop’s continued struggles : 11.4% // Trump Media's share plunge: 29.5%

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Macro Monkey Says

The Typical American Consumer

We hear a lot of stats about the “typical American,” and honestly, I’d be terrified to meet them.?

I’m pretty sure the elusive “average American” eats ~100lbs of cheese every year, would become homeless from a surprise $400 expense, and probably owns a few illegal firearms.

Gotta love the American dream. As crazy as he is, from an economic perspective, this “average American” character is one of the richest people in human history.

Let’s get into it.

The Numbers

There hasn’t been much market-moving macro news this week, so let’s have some fun today.

The average American, who we’ll call your crazy Uncle Sam, is doing alright.

For starters, crazy Uncle Sam is one of the wealthiest people in the modern era. From a real GDP per capita perspective, he’s the 8th richest person in the room and nearly 4x wealthier than the global average.

But “wealth” is a subjective term. Incomes, however, are not.

From an hourly perspective, Uncle Sam isn’t exactly raking it in. The average American earns $28.48/hr, or $1,139 per week, and $59,228 per year. If Uncle Sam gets married, he can expect an average household income of $80,610, a 36% raise.

However, on that respectable salary, Uncle Sam is 66% likely to own a home and has a 61% chance of owning stocks, too.

So, even on a respectable salary, the average American is able to gain exposure to assets like real estate and stocks with the potential to turn his financial position from “respectable” to “damn, how does he afford to go on all these vacations?”

Despite the exorbitant inflation our poor Uncle has experienced in recent years, he’s keeping his expenses low enough to give himself the potential to grow wealth without lifting a finger.

So, how exactly does our dear Uncle spend his money?

Source

According to data from Ritholtz Wealth Management, using the same average income as us, crazy Uncle Sam’s biggest expense is his house.?

Uncle Sam spends 32.9% of his income just to avoid homelessness—that’s $19,486.01 per year. Meanwhile, his other major expenses include just over $10,000 on transportation, $7,640 on food, and $4,740 on not dying (a.k.a. healthcare).

What makes me like crazy Uncle Sam the most is the fact that he spends more money on partying (alcohol and tobacco) than he does on “personal care.” What a legend.

After all those expenses and contributions to avoid homelessness after age 65, crazy Uncle Sam manages to save about 4.8% of his income for emergencies.?

On a $59,228/year salary, that means Sammy boy has $2,842.94 sitting in his Chase account (since roughly half of all American adults have at least one account there).

However, Uncle Sam might want to reconsider some of his monthly expenses. He’s got some issues to work through, including $7,951 in credit card debt, according to his banker at the Federal Reserve Bank of New York.

Only 13% of Americans carry student loans, so Uncle Sam avoids that parasite.?

However, to afford that home of his, Uncle Sam still owes roughly $236,443 on his mortgage. Excluding that mortgage, our boy has $22,713 to pay off in other debts.

At the ripe young age of 38.9 years old, Uncle Sam is in an overall decent position. However, those debts could come back to bite him, so we’d advise asking for a raise or hoping for a war of some kind where he can seek fame and glory.

The Takeaway?

Needless to say, this comes with a million caveats.

Technically, the average American is also 50.5% female and 49.5% male, is 50% married and 50% single (sounds like a sweet deal), and has 40% children and 60% no children (someone called CPS).

Plus, averages themselves tend to be a weak metric. If Elon Musk walks into a bar, the average customer in that bar becomes a billionaire… if anyone sticks around.

Nobody is “the average American.” But it’s interesting to think about and a good context to have in the back of your mind.

Now, get back to creating shareholder value. Uncle Sam needs you!

Career Corner

Question

Yesterday, a banker replied to me asking when I would be available to talk. I gave him times for today, but then it seemed like he forgot about me. How would you recommend following up? He said that he could not talk any time after today. Thank you!

Answer

Hi [NAME],

I hope you’re doing well! Given the upcoming holiday, I wanted to check if it might be more convenient for you to schedule our chat after the holiday period. Since my schedule is flexible, I could talk from 9 am to 9 pm ET throughout the rest of the summer. Please let me know what works best for you.

Looking forward to our conversation!

Best,

[NAME]

Head Mentor, WSO Academy

Check out WSO Academy

What's Ripe

Affirm Holdings (AFRM) 6.61%

• Much like my dog and gusts of wind, a very one-sided beef is forming. Affirm shares are rising as the BNPL provider wants to be the new American Express.
• Analysts at BTIG upgraded Affirm from Neutral to Buy on an optimistic view of the firm’s 2025 operating margin and increasing market share in POS financing.
• The analysts noted that margin expansion is “positioning it favorably against Amex.” Amex couldn’t be reached for comment, but I’m sure their response would be, “Who are you, again?”

Nvidia (NVDA) 4.05%

• What's that old saying? “Death, taxes, and Nvidia shares rising”? Something like that, but I think I need to go back to Finance 101 class because I have no clue how this is good news.?
• Shares in the AI kingmaker surged after the chairman of Foxconn, one of the world’s largest electronics makers, said the AI boom “still has some time to go.”?
• Wasn’t the runup in AI stocks based on no end in sight? The above comments indicate an end is in sight, but traders must’ve cared more about this AI factory the firms announced.

What's Rotten

Super Micro Computer (SMCI) 5.01%

• Pivoting their business model to specialize in gaslighting, Super Micro thought announcing some bullsh*t about GPU shipments would help.
• Thankfully, markets shot that down real quick. Investors are still waiting for Super Micro’s 10-K filing, which has now been delayed for 40 days (and 40 nights).
• Shares were ripped Monday when the shipment of 100k GPUs was announced. But, it’s clear investor focus is still on the delayed 10-K and Hindenburg’s month-old short report .

Roblox (RBLX) 2.13%

• Hindenburg’s been working overtime as it chose another victim on Tuesday, alleging children’s video game maker Roblox has been a bad boy.
• The financial allegations against Roblox center on intentionally misleading language used to inflate user and engagement numbers reported to investors.
• For example, the stock serial killer alleges Roblox’s claim that users average 2.4hrs of gameplay per day is wildly overstated, more like 22mins/day.
• Other allegations include enabling the worst, most vile acts humanity is capable of. Unfortunately for Roblox, the only solution to this allegation is bullets.?

Thought Banana

Don’t Need No Credit

Much like a generous benefactor going by “anonymous” after a large donation, U.S. consumers didn’t need any credit for their economic donations in August.

It was an all-guts, no-glory kind of month, as spending held up well while credit card balances actually declined.

I didn’t know that was possible in the U.S. Let’s dive in.

The Numbers

According to the attest PCE report, nominal consumer spending increased 0.2% monthly and a big 5.2% annually in August.

With income growth and personal savings rates declining coming into the summer, analysts had chalked up healthy spending levels to presumed growth in credit card balances.

Nope. Wrong. At least, that seems to be the case in August.

Total consumer credit grew by 2.1% for the month, 1/3rd of the 6.3% growth in July.

Nonrevolving credit facilities—things like mortgages, auto loans, student loans, etc.—grew by 3.3% while revolving credit—mostly credit cards, but also things like business and personal loans—decreased by 1.2%.

It’s constructive to see that consumers didn’t rely on credit to maintain healthy levels of spending in August.

Meanwhile, delinquency rates continued to “plateau” on a monthly basis after spooking markets earlier this year.?

According to Equifax, credit card delinquencies clocked in at 4.46%, a 2.2% monthly decline and a 3.5% increase from a year ago. Although growing on an annual basis, August’s acceleration was the lowest since 2021.

Housing-related delinquency rates followed a similar trend. Home equity lines of credit (HELOCs) posted a delinquency rate of 0.53%, down 0.2% monthly and up 14.3% annually, the slowest annual growth since October 2023.

If you’re looking for trouble, look no further than auto loans. Delinquency rates grew to 1.59%, up 3.3% monthly and 8.8% annually, but again, slower than seen in recent months.

The Takeaway?

We’re entering peak spooky season, so it’s understandable for analysts to think they’re seeing ghosts.

But luckily, we’ll pull the mask off these concerns like Fred and Scooby.?

There is reason for concern given the spike in interest rates, which increased universally in August. However, I think I heard that the Fed might be cutting rates or something. So, don’t expect a similar trend next month.

Let’s just hope all these generous consumers can keep up their donations without increases in credit going forward. How nice of you apes.

The Big Question: Should we be concerned over auto loan delinquencies? Will lower rates encourage borrowing to an unhealthy degree?

Banana Brain Teaser

Previous

If ? the result obtained when 2 is subtracted from 5x is equal to the sum of 10 and 3x, what is the value of x?

Answer: -22

Today

List S consists of the positive integers that are multiples of 9 and are less than 100. What is the median of the integers in S?

Send your guesses to [email protected]

?

Rather go to bed without dinner than to rise in debt.

Benjamin Franklin

How Would You Rate Today's Peel?

?? All the bananas

?? Meh

?? Rotten AF

Happy Investing,

David, Vyom, Ankit & Patrick