Job Market, Office Space, Facebook Scams, Retirement Savings, Sell Gold Buy Platinum, JOLTs Reports, Brain Computers & Gambling

Jobs market remains in a good spot 

Headline nonfarm payrolls increased 139k in the month of May, which was above the estimate of 125k, but below April’s reading of 147k. A big negative in the report was the fact that March and April saw negative revisions that caused payrolls in those month to decline by a combined 95k versus what was previously reported. Even with that, if you zoom out and look at the big picture the economy is still adding jobs at a healthy rate given the fact that the unemployment rate has remained at 4.2%. I would also say it was a big positive that the private sector saw good growth since federal government payrolls declined by 22k in the month of May and are now down by 59k since January.

I still expect losses to accelerate in the coming months for government payrolls since employees on paid leave or receiving ongoing severance pay are still counted as employed. Areas that saw major growth in the month included health care, which added 62k jobs and leisure and hospitality, which added 48k jobs in the month. Many of the other major industries saw little change. Wages were also positive in the month for workers as average hourly earnings grew 3.9% compared to last year. This was above the forecast of 3.7% and last month’s reading of 3.8%. I believe this is a good level for wage growth as it is healthy for workers, but not overly concerning on the inflation front. I would say this jobs report did little to change the narrative on the economy as it showed it remains healthy, but it definitely appears to be slowing. 

Office space may be harder to find in the coming years 

For the first time in at least 25 years, office conversions and demolitions will exceed new construction, which means there will be less space available. CBRE Group found that across the largest 58 U.S. markets, 23.3 million square feet of space will be demolished or converted to other uses by the end of this year while just 12.7 million square feet of space is expected to be completed by developers in those markets.

We do have an office REIT in our portfolio and they recently talked about how leasing has continued to exceed expectations. I continue to believe the office has a valuable place in business and we have continued to see more and more companies implement return to office mandates. With less supply out there and demand remaining strong, we should see owners of office space benefit from stabilizing rents and increasing prices in the coming years. On the other side of coin, I have continued to express concern about the long term dynamics for multifamily housing due to the construction boom in the space and potential oversupply.

It’s not just the new construction though as developers have another 85 million square feet of office space being readied for conversion in the next few years. This comes after office conversations to multifamily residences that have generated roughly 33,000 apartments and condominiums since 2016. It is estimated by CBRE that each conversion on average produces around 170 units. As a contrarian investor I many times like to go against the grain. With that being said I am definitely much more interested in the office space over the residential space at this point in time.  

Facebook scams are out of control 

There’s no way of tracking the exact number of scams or the dollar amount lost from scams on Facebook and Instagram, but JP Morgan Chase said between the summers of 2023 and 2024 they accounted for nearly half of all reported scams on Zelle. An internal analysis from 2022 found that 70% of newly active advertisers on the platform are some forms of scam or low-quality products. Meta, the owner of Facebook and Instagram, does over $160 billion in advertising and is hesitant to put any restrictions that could prevent growth in their ad business.

In 2024, the Wall Street Journal discovered documents that advertisers can be hit with anywhere between eight and 32 automated strikes for financial fraud before their accounts are banned. On top of that, Facebook Marketplace, which is its online secondhand market, has now passed Craigslist as the most heavily used platform for free classified ads and it has become a great place for scams. The scam that most people fall for is the sale of pets. This comes even though Meta bans the peer-to-peer sale of live animals. Meta has as argued in court it is not their legal responsibility to deal with the issue. Section 230 in the US telecommunications law relieves platforms like Facebook and Instagram from liability of users who create their own content. This is currently being tested by an Australian mining billionaire because Facebook failed to remove fraudulent investment advertisements that used his image and AI cloned voice.

Hopefully he wins the case. In the meantime, I would have to recommend that people stay away from using Facebook or Instagram for buying from advertisers on their platforms because you could be dealing with someone from China, Vietnam, or the Philippines, who have stolen pictures of a familiar company that you think you know, even including its address. And once you give them your credit card information or any other financial information, they have you and your problems will begin. 

Financial Planning: Retirement Savings Rate Hits Record High; How Do You Compare? 

The average 401(k) savings rate, including employee contributions and employer matches, has reached a record high of 14.3%, nearing the widely recommended target of 15% for a secure retirement. This milestone reflects growing awareness of the importance of long-term financial planning, especially as traditional pensions continue to disappear. However, the ideal savings rate isn’t one-size-fits-all. Individuals who begin saving in their early 20s may be able to retire comfortably with a lower contribution rate, while those who delay investing until their 30s or 40s often need to save well above 15% to catch up.

Starting early allows compound interest to do more of the heavy lifting, highlighting the value of consistent, proactive saving from a young age. For example, someone who starts at the beginning of their career might be okay saving as little as 7% of their income and still retire on time. This means if they save the minimum necessary to receive the full company match (5% contribution + 4% match = 9%) they likely will be fine. However, waiting until their 40’s may require a savings rate of 25% or more to produce the same retirement income. 

Sell gold and buy platinum 

I thought you might be thinking you’ve done so well buying gold and you may think it’s still going higher so just stay the course, but platinum has been left behind for the last 11 years. Back in 2014, platinum was at $1500 an ounce compared with gold at $1300 per ounce. Fast forward to today and gold is around $3300 per ounce and platinum has gone down in value to about $1000. Platinum actually has real demand as about 40% of the demand comes from catalytic converters which are a hot commodity, we just recently wrote about how April car sales were up 10%.

Platinum supply is about 7 million ounces on an annual basis, but it is predicted by the world platinum investment council that in 2025 it may only be 5.4 million ounces. Compare that with gold which will have about 100 million ounces mined this year. Perhaps platinum could be the next shiny metal that performs well. There is even talk that Chinese buyers who are priced out of gold are now starting to invest in platinum. If you like precious metals, you may want to do some research on platinum. It could be on sale for now. To be clear I don’t buy these precious metals, but given the choice between gold and platinum, platinum definitely seems more interesting at these levels.  

Job openings report shows there is still plenty of work out there 

The Job Openings and Labor Turnover Survey, also known as the JOLTs report, showed job openings remained strong as they increased 191,000 from the month of March and totaled 7.4 million. This also beat the expectation of 7.1 million and provides further evidence that the labor market remains healthy. Job openings did decline by 228,000 or about 3% compared to last year, but there are still 1.03 available jobs for every unemployed worker.

As we have discussed, we are looking for the labor market and economy to continue to soften, but that does not mean it is weak, it just means we could be progressing at a slower rate. As with other hard economic data, the next few months will be more telling about how the tariffs are impacting business decisions. This JOLTs report was from the month of April, when tariffs were just beginning. I still believe the data will hold up alright in the coming months even in the face of these trade negotiations that are occurring across the world.  

Computers in our brain may not be that far away 

It’s a scary thought, but there are already people with brain computers and interfaces that have been installed. It is currently less than 100 people to date and it is estimated that will double within the next year. Businesses in this field are called neurotech companies. It is projected in the next 15 years or so this will be a $1 billion a year market. Some of the designs are an implant of a tubular mesh of electrons that will run through a major blood vessel in the brain like a stent. There are different designs by different companies and some have over 1000 electrodes spread across 1.5 centimeters. The benefits of having these installed in your brain will be figuring out which medication works best for that particular brain chemistry.

Going beyond that are thoughts to control vehicles, limbs, and exoskeletons along with generating speech directly from thought. There are about 12 small companies now working on this and I believe most will go probably go broke before they make it big. I’m sure some will be acquired by big medical technology companies or device makers that will take it to the next level. Don’t let the future scare you as it’s going to come anyways, but I do wonder with all the positives of this technology what negatives will there be as well? Will cybercriminals be able to hack into your brain? Or on the bright side will your spouse really know what you’re thinking. I think that’s a good thing, right? 

The growth in gambling might become a problem 

Gambling has been around forever, but you always had to go to a casino or have your own bookie to take your bets. This mostly occurred in person. Now with companies like DraftKings and FanDuel it is far too easy for people to get addicted to gambling on their phone. In 2024 the revenue from gambling was $71.9 billion. Now with the ease of cell phones, 48% of American men under 50 have an online gambling account and wager about $150 billion a year on sports alone.

It’s now been seven years since the Supreme Court ruled that nationwide sports betting is legal. It’s no surprise the problem of gambling addiction is starting to appear and the journal of behavioral addictions says smartphone apps carry higher addiction risk than traditional gambling at casinos and horse tracks. That’s no surprise to me because of the ease of holding in your hand this gambling tool. For someone that has a gambling problem, it takes about seven years for them to start to realize they have a problem. The numbers now show this explosive growth as companies like FanDuel saw its revenue jump from $2.8 billion in 2019 to nearly $17 billion today.

DraftKings is also seeing huge growth as revenue was $432 million in 2019 and now it is at $6.3 billion. I had a feeling the stocks would do well but would not invest in them because of the nature of their business and also, they had no earnings at the time. For those that did gamble with the stocks, DraftKings shares are up 156% over the last three years because of the massive growth in this industry.

Unfortunately, in the next few years, problems could start showing up in the healthcare industry. This belief is based on an 11-year study that ended in 2016 from the National Council on Problem Gambling that showed 20% of gamblers with this disorder attempted suicide. According to the Journal of Gambling Business and Economics just under 6% of those who gamble on US sports generate 80% of the betting revenue. As the growth of gamblers grows, more people will be betting and that 6% number will likely rise.