Rich Habits Podcast Episode Summary

Episode Title: Meta & Microsoft's $150B Shopping Spree, The Fed's Dot Plot, and Tunnels Under Nashville
Hosts: Austin Hankwitz and Robert Croak
Release Date: August 1, 2025

Introduction and Headlines Overview

In this engaging episode of the Rich Habits Podcast, hosts Austin Hankwitz and Robert Croak delve into the most pressing financial headlines impacting listeners' money. Skipping over the advertisements, the duo kicks off the discussion at [00:57] with an overview of the top stories:

1. Meta and Microsoft's Capital Expenditures (CapEx)
2. Second Quarter GDP Results
3. Federal Reserve's Interest Rate Decision

They tease an intriguing conclusion about Elon Musk's underground tunnels in Nashville, setting the stage for a comprehensive analysis of each topic.

Meta and Microsoft's $150 Billion Investment in AI

Robert Kroke initiates the first discussion at [03:12], highlighting Meta and Microsoft's substantial capital expenditures aimed at reinforcing their commitment to artificial intelligence (AI).

• Meta's Growth and Investment: Meta reported a revenue surge to $47 billion, marking a 22% year-over-year increase. Impressively, Meta has raised its 2025 CapEx guidance to $70 billion, a 50% jump from last year's $28 billion. Mark Zuckerberg is heavily investing in "full general intelligence," aiming to enhance their AI-driven tools, which resulted in a 9% boost in ad revenue.

  "They used AI correctly. Back to this idea of reinvesting back into the business that learns how to use AI for their advertising and it made their ad revenue jump by 9%." — Austin Hankwitz [04:24]

• Microsoft's Strategic Investment: Microsoft showcased a revenue of $76 billion, with its Azure cloud business growing by 39% during the quarter. The company plans to allocate $80 billion for CapEx in 2025, up from $56 billion in 2024.

  "Azure's AI services business hit $13 billion in annual recurring revenue. That is up 175% year over year. That is AI specific revenue being generated from Azure's cloud business that didn't exist three years ago." — Austin Hankwitz [05:08]

The combined $150 billion from both companies underscores their dedication to maintaining a competitive edge in the burgeoning AI landscape. They discuss the potential impact on investors, recommending ETFs like the Grid and Pave for exposure to these tech giants' growth.

Second Quarter GDP Growth

Transitioning to the broader economy, Robert Kroke discusses the U.S. GDP growth at an annualized rate of 3% for Q2 2025, surpassing expectations of 2.3% to 2.6% ([05:42]).

• Key Drivers: The growth was propelled by a 30% drop in imports and a 1.4% rise in consumer spending. Austin Hankwitz explains:

  "During the first quarter, all these companies front loaded those imports for the year, which led to an 11% surge. In Q2, with imports contracting by 30%, it positively impacted GDP." [07:19]

• Inflation and Future Projections: The PCE price index edged up to 2.1%, slightly above the Federal Reserve's target. While the economy shows resilience, there's caution ahead with projections indicating possible growth slowdown below 1% in the latter half of the year.

  "The economy is resilient, but not exactly roaring. Averaging together Q1 and Q2, GDP growth was just 1.2%, down from 2.8% in 2024." — Austin Hankwitz [08:08]

Robert emphasizes the distinction between the stock market and the economy, suggesting that low single-digit GDP growth signals healthy consumer behavior and corporate profitability, potentially driving the S&P 500 to new highs.

Federal Reserve's Interest Rate Decision

At [09:18], the hosts dissect the Federal Reserve's decision to maintain the benchmark federal funds rate at 4.25% to 4.5% during their July 30 meeting. This marks the fifth consecutive rate hold this year amid economic uncertainties influenced by President Trump's tariffs.

• Jerome Powell's Stance: Robert Kroke notes Fed Chair Jerome Powell's "wait and see" approach, acknowledging rising core PCE inflation projections to 3.1% for 2025.

  "The Federal Reserve has one job, keep inflation at or below 2% while simultaneously keeping unemployment low." — Austin Hankwitz [09:48]

• Market Implications: Austin discusses how the Fed's dot plot indicates potential rate cuts by September, contingent on tariff-driven inflation trends. However, market sentiment has adjusted to a 50% probability of a September cut, reflecting increased uncertainty.

  "The Fed's dot plot still projects 2 to 2.5 basis point cuts by the end of this year, likely starting in September, if tariff-driven inflation does not spike." — Austin Hankwitz [10:20]

• Consumer Impact: Higher borrowing costs remain a concern for consumers, affecting HELOCs, personal loans, auto loans, and mortgages tied to treasury yields.

  "Uncertainty remains high. The markets now only see a 50% chance of a September cut." — Robert Kroke [10:50]

Both hosts agree that aligning investment strategies with Fed policies is crucial, advocating for low single-digit GDP growth as a favorable condition for market investments.

Rapid Fire Headlines

1. Trade Deals

Austin introduces significant trade agreements announced by President Trump:

• European Union: The EU will purchase $750 billion in U.S. energy and make new $600 billion investments in the United States by 2028.
• South Korea: Agreed to invest $350 billion in U.S. projects, including $150 billion for shipbuilding and $200 billion for chips, nuclear power, batteries, and biotechnology.

"These trade deals are getting announced, something I'm sure we've all had our eyes on." — Austin Hankwitz [12:00]

2. Figma's IPO

Austin expresses frustration over Figma's IPO performance:

• Current Trading Price: $103, significantly higher than the institutional pricing of $33.

• Revenue Multiple Concerns: The company is trading at a forward revenue multiple of over 50 times, which Austin deems absurd.

  "Figma, at a hundred dollars a share here is now assuming a revenue multiple, a forward revenue multiple of over 50 times. That is absurd." — Austin Hankwitz [13:00]

He advises caution, highlighting the need to wait for the stock to stabilize before considering investment.

3. The Boring Company’s Nashville Tunnels

Austin shares exciting developments from Elon Musk's Boring Company:

• Project Details: Plans to dig 10 miles of underground tunnels in Nashville, Tennessee, connecting downtown and the international airport with an 8-minute transit time.

  "If I can jump in one of those little robo taxis, go through a tunnel and get from downtown to the airport in 8 minutes, I'm a happy camper." — Austin Hankwitz [14:24]

Robert expresses skepticism about the feasibility but appreciates the innovative ambition.

Q&A Segment

The hosts address listener-submitted questions, offering practical financial and entrepreneurial advice.

1. Partnering to Open a New Business Location

Question from Nicholas:
A 23-year-old professional with a stable income and personal training side hustle seeks advice on partnering with his boss to open a new location.

• Robert's Advice:
  Emphasizes timing, suggesting that Nicholas complete his master's degree before approaching his boss to ensure he's not overwhelmed.

  "You should probably finish school before you approach the boss about being a personal trainer, partnering up, things like that." — Austin Hankwitz [21:01]

• Robert's Additional Suggestions:
  Recommends early communication with the boss to start preparing, raising capital, and learning the business intricacies beforehand.

  "Have the conversation now to figure it out, so you have time to learn and prepare." — Robert Kroke [21:55]

2. Leveraging Depreciation Against W2 Income

Question from Alex S.:
Partners in rental properties struggle to offset passive losses against active W2 income due to LLC structure.

• Robert's Response:
  Advises becoming a real estate professional to qualify for tax benefits, emphasizing that there's no "magic hack" to bypass the IRS rules.

  "You really have to consider becoming a real estate professional. It's not easy, but it's doable." — Robert Kroke [23:31]

• Austin's Insights:
  Suggests focusing on wealth building rather than solely on tax optimization and considering portfolio restructuring for better tax efficiency.

  "Focus on building wealth and keeping that cash flow coming, rather than trying to perfectly optimize your tax situation." — Austin Hankwitz [24:14]

3. Seller Financing in Business Sales

Question from Dan F.:
Vendor with three businesses plans to sell them individually and seeks advice on seller financing terms.

• Robert's Guidance:
  Recommends offering competitive interest rates (around 8%) and ensuring legal safeguards to mitigate risks of default. Highlights the dual benefits of seller financing, allowing for flexible terms and potential re-selling if necessary.

  "I would ask for 8% given the conditions of the market right now and what I know." — Robert Kroke [28:07]

• Austin's Additions:
  Connects the interest rate decision to treasury yields and suggests using Xena cards for better financial tracking and risk management.

  "Make sure they're using a Xena card to better understand their spending and ensure business growth." — Austin Hankwitz [28:24]

Conclusion and Future Episodes

Wrapping up at [30:54], Austin encourages listeners to engage by leaving comments and submitting questions for future episodes. He teases an upcoming interview with Reid Hoffman, co-founder of LinkedIn, promising invaluable insights from his $26 billion Microsoft acquisition experience.

"It's the best conversation I think that I've ever had and you guys are going absolutely to love it." — Austin Hankwitz [31:23]

Robert reiterates the value of listener questions, emphasizing their commitment to aiding entrepreneurs and side hustlers in overcoming financial challenges.

Key Takeaways:

• Tech Giants' AI Investment: Meta and Microsoft's massive CapEx indicate a robust commitment to AI, potentially influencing market dynamics and investment opportunities.

• Economic Indicators: A 3% GDP growth showcases economic resilience, while the Fed's steady interest rate signals cautious optimism amidst inflation and tariff uncertainties.

• Innovative Ventures: Elon Musk's tunnel project exemplifies ambitious infrastructure innovations that could reshape urban transit.

• Practical Financial Advice: The Q&A segment underscores the importance of strategic planning in business partnerships, tax optimization, and entrepreneurial financing.

For those looking to take control of their finances and implement successful habits, this episode offers a wealth of knowledge, actionable insights, and forward-thinking discussions to navigate the complex financial landscape.