Good afternoon. In today’s letter we’re covering:
AI is rattling software companies
Wild swings in the gold, silver markets
Why beauty spending is surging
Today’s reading time is 3 minutes.
AI fears are pummelling software stocks
Source: Unsplash.
Software company stocks are tanking as investors panic that AI tools like Claude will make their products obsolete. SAP warned of "slight deceleration" in its cloud business last week, triggering a 15% plunge in its shares. ServiceNow dropped 13%, Salesforce fell 7%, and Workday slid 8%. What’s got investors spooked? AI, of course. The theory is that AI coding tools like Claude Code or OpenAI’s Codex will let companies build custom software themselves, killing demand for off-the-shelf products. Some analysts say the selloff is overdone — many software firms are still gaining customers and reporting solid results, and AI-generated code is often clunky "slopware" that’s not ready for enterprise use. "These are incredibly deeply entrenched software suites," one portfolio manager notes, adding it could take years to replace them.
Gold, silver prices whipsaw after historic crash
Source: Unsplash.
Gold and silver are bouncing around after a brutal Friday that saw silver plunge 28% — its worst day since 1980 — and gold drop nearly 10%. The selloff came after Trump nominated former Fed Governor Kevin Warsh to replace Jerome Powell in May, triggering a dollar rally that makes greenback-priced metals less attractive. The CME Group responded by hiking margin requirements effective Monday: gold futures now need 8% margins (up from 6%) while silver jumped to 15% from 11%. Despite the volatility, both metals remain up year-to-date — silver's still 16% higher and gold's up 8%. Whatever happens next, all the volatility sure doesn’t make you feel great about metals as a conservative store of value.
Beauty spending is surging, and shoppers are getting younger
Source: Unsplash.
Global beauty spending is far outpacing overall retail thanks in part to a flood of new customers to the category. The industry's being reshaped by new customers: men are buying concealer and eyebrow gel, while Generation Alpha kids are starting their beauty routines as young as age 8 (!!!). Some of this is a result of social media marketing, with new brands like Bubble building teenage followings entirely through Instagram and TikTok. Skin care now accounts for two-fifths of spending, with shoppers ditching pink jars for clinical-looking bottles full of retinol and active ingredients they learned about on TikTok. Beauty services added another $150 billion in spending, with non-surgical procedures like Botox up 40% since 2020.
Emergency fund reality check
Quick check:
Could you cover three months of expenses if income stopped tomorrow?
Is your emergency money sitting in an accessible account?
Have you touched it for non-emergencies in the past year?
Why it matters: Most financial advice says six months of expenses, but three months is good enough if you are confident that you have job stability and credit available. Especially if you’re entitled to severance, 3 months should be plenty. The goal is to avoid high-interest debt during a rough patch while you look for new work. And remember: If your emergency fund is locked in GICs or investments, it's not really an emergency fund.
If this is you: Add up your monthly must-pay bills (mortgage, utilities, groceries, insurance). Multiply by three. If you've got that much in a high-interest savings account, you're set. If not, start moving $200 or $500 per month until you hit the number. Don't overthink it.
WHAT ELSE IS ON OUR RADAR
Food delivery is eating people’s budgets. This, from the NYT: “From her roughly $50,000 annual salary as a data processor in San Diego, Ms. Reedy, 34, spends at least $200 to $300 a week on food delivery. Ordering in has eaten away at her savings, she said, and led her to socialize less. She tips generously, but worries that the delivery drivers are poorly paid.” (New York Times, paywalled)
24,000+ federal public servants have received letters warning their job may be cut. (CTV News)
I like this “admin night” idea, where friends get together to tackle tedious paperwork and other tasks they’ve been putting off. (CNN)
The Economist’s Big Mac index implies travelling in Asia is cheap right now: “The latest edition of the Big Mac index shows that Japan is not the only big Asian economy with a cheap currency. China’s Big Macs cost only $3.66, implying the yuan is 40% undervalued. In India, McDonald’s does not serve beef burgers. But its Maharaja Mac, featuring a double chicken patty fortified with jalapeños and habanero sauce, is only $2.51.” (The Economist, paywalled)
