🎙️ Alleged Collusion

Not that we all needed another reminder of the power of staying invested in the market through the ups and downs…but here we go anyway:

Missing just a handful of the best days in a given year can significantly erode one’s overall returns.

Whether navigating through bull markets (like now) or weathering downturns (like 2022), staying invested and maintaining a long-term perspective has done wonders for millions of Americans.

Our Chart of the Day shows just that.

— Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the biggest stories in markets:

• Visa and Mastercard agree to reduce fees for swiping your credit card

• Latinos keep starting American businesses

This, and more, in just 5 minutes to read.

Chart of the Day

In The News

💳 Visa and Mastercard Agree to Lower Credit Card Swipe Fees

Having a fancy credit card may cost you. That’s one takeaway from a Visa and Mastercard agreement, allowing merchants to “adjust prices based on the costs associated with accepting different credit cards.”

Thus, premium cards with more perks and points may have to pay higher prices at checkout. Down the road, credit card perks may even be significantly dialed back as merchants revolt against fees that subsidize reward programs in processing customers’ credit card payments

• The looming changes come amid a class action lawsuit on behalf of all U.S. merchants who accepted Visa or Mastercard payments in recent years, of which about 90% are small businesses.

Step back: Payment networks like Visa and Mastercard have long charged “interchange fees” to businesses collecting customer payments, splitting those fees with banks that issue credit cards.

• For years, small businesses have fought this practice, arguing banks and payment networks conspired to keep these fees high, imposing extra costs on them.

What’s happening: After the settlement, interchange fees, which average around 2%, will be forced marginally lower and capped for five years.

• Additionally, merchants can adjust prices for customers based on the card they use and the associated interchange fees. Reports Bloomberg, due to the “higher interchange fee,” Chase Sapphire Reserve users “would be charged more at checkout than a customer using a Chase Freedom Unlimited card (which has fewer rewards.)”
  

• Credit card rewards and cashback aren’t free—they’re earned through interchange fees, which businesses ultimately must bear (hence why many push customers toward cash or have 3% surcharges for using a credit card).
  

• Cards with the most generous rewards typically have the highest interchange fees.

Why it matters:

That all sounds great, doesn’t it? Cutting out middlemen, or at least reducing their monopolistic practices, is almost always good, especially for something as fundamental to the economy as swiping credit cards. Even better if it supports small businesses.

But this isn’t the settlement merchants dreamed up after nearly two decades of litigation (court approval is still pending.)

• Instead, the general counsel for the National Association of Convenience Stores commented, “I would expect there to be a lot of merchant opposition to this settlement,” providing only modest relief while failing to address the core issue: Alleged collusion between Visa and Mastercard with banks.
  

• Still, in aggregate, the agreement is expected to save merchants some $30 billion by 2030. Visa, Mastercard, and several banks already settled part of the suit last year, agreeing to compensate merchants with nearly $6 billion.

Read more

Together With Masterworks

Masterworks is taking on the billionaires at their own game, buying up paintings by world-class artists like Banksy and Picasso, and securitizing them for its investors 🎨

When Masterworks sells a painting – like the 16 it's already sold – investors reap their portion of the net proceeds. Its investors have already received proceeds from more than $47 million in sales, realizing annualized net returns of 17.8%, 21.5%, 35% and more.

💭 Now, Masterworks wants to do the same thing for you. By qualifying every offering with the SEC, Masterworks makes it easy for everyday people to invest in multi-million dollar paintings.

Offerings can sell out in just minutes, but as a trusted partner, We Study Markets readers can skip the waitlist to join here.

📈 Latinos Are Starting U.S. Businesses at a Torrid Rate

America is known as the land of opportunity, especially for starting businesses. For centuries, immigrants have made the U.S. a special place for commerce and innovation: Nearly half of Fortune 500 companies, including Apple, Amazon, AT&T, Google, Pfizer, and Capital One, were founded by immigrants or children of immigrants. 

One cohort leading the chart: Latin American immigrants, who are starting businesses at more than twice the rate of the overall U.S. population. 

The share of new businesses in the U.S. owned by immigrants has jumped to 36%, up from 25% in 2019, per Census Bureau data. New business creation by white and native-born Americans has slowed in the past two years after a surge during the pandemic. 

The entrepreneurial spirit: Entrepreneurship of all kinds swelled in 2020 and 2021 as people took up side hustles and dreams they’d postponed. Whether it was that hair-styling business, basketball company or food truck, Americans capitalized on the extra free time afforded by Covid-19 lockdowns.  

• Latin American immigrants emerged as a growing business-owner group because they tend to start businesses in the food sector, which has benefited from heightened demand since 2020.
  

• It’s also an industry with low barriers to entry with, minimal capital investment, flexible hours, and minimal English required. One Venezuelan couple saved up $5,000 to purchase a tent, gas stove, and kitchen equipment, then began selling food at farmers’ markets. Their goal is to open a full-scale restaurant.
  

• As one economist noted, “Those kinds of things (food services) are exactly the kinds of industries or businesses immigrants have done well with in the past. Covid has put us on a different trajectory.” 

Why it matters:

For many immigrants, the hustle and grind of starting a business isn’t much of a choice. Limited proficiency in English can make a typical office job challenging, but entrepreneurship means taking matters into your own hands. 

• Starting a business is also attractive for undocumented immigrants because it doesn’t require work authorization or a Social Security number.
  

• The unemployment rate for Latino and Hispanic workers soared to 18.9% in April 2020, compared with 14.2% for whites. It fell to 5% last month, compared with 3.4% for whites. 

Read more

More Headlines

❌ Florida bans social media accounts for those aged 14 and younger

🏖️ BlackRock’s Larry Fink tackles retirement crisis in annual investor letter

💊 Amazon launches same-day prescription delivery in New York & LA

🍫 Cocoa hits $10,000 per metric ton for the first time ever

🍩 McDonald’s to sell Krispy Kreme doughnuts by late 2026

🚢 Baltimore bridge collapses in one of America’s busiest ports

😵‍💫 Trump media’s stock (ticker: DJT) jumps 50% in trading debut

Together With Sidebar

Too Many Leaders Don’t Get The Support They Need

Built for top senior leaders, Sidebar disrupts the status quo with a program that does leadership development differently. 

Rather than relying on stale training techniques, Sidebar analyzes your professional profile and sorts you into a peer group of growth-minded professionals who get it. Led by expert facilitators, you meet with your group 2x monthly for tactical discussions and raw feedback — it’s like having your own personal board of directors.

With an immersive, tech-enabled platform and customized programming, Sidebar is always on, so you define when and how your development happens.

But heads up: ceilings may be shattered. 

Quick Poll

Yesterday, we asked: Shares in luxury goods companies are [blank] investments.

— On team “unattractive,” a reader said, “Luxury goods are usually the first to be cut in a downturn and the last to come back in an upswing.”

— But most people view them as attractive investments. “Envy is a great business to invest in.”

— One reader wrote, “The top 1% seems to be printing money these days and looking to spend.” Another on the same page: “Oddly, I believe luxury goods are inelastic in demand. They have value in good times and bad. Look at the value of LVMH and Richemont for two examples.”

See you next time!

That's it for today on We Study Markets!

If you’re a sophisticated investor looking for more professional insights, check out We Study Markets Pro.

Enjoy reading this newsletter? Forward it to a friend.

Was this newsletter forwarded to you? Sign up here.

Use the promo code STOCKS15 at checkout for 15% off our popular course “How To Get Started With Stocks.”

Advertise with us.

Follow us on Twitter.

Keep an eye on your inbox for our newsletters on weekdays around 6pm EST and on weekends. If you have any feedback for us, simply respond to this email.

You can also leave your comments/suggestions/feedback anonymously here.