GrowthSchool | July 1st, 2024

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GOOD MORNING

Here's everything you need to know this week: As we enter the first week of July, the markets are poised for significant developments. From crucial U.S. jobs data to global political events, here's a comprehensive look at the top five things to watch in the markets this week.

1. U.S. Jobs Data

This Friday’s nonfarm payrolls report is the highlight of a holiday-shortened week. Investors are keenly watching for clues on when the Federal Reserve might start cutting interest rates. Economists expect the U.S. economy to have added 189,000 jobs in June, following a higher-than-expected 272,000 in May. The resilience of the labor market is a key factor for the Fed, which has delayed rate cuts to possibly December, awaiting more definitive signs of inflation cooling or a weakening labor market. Earlier in the week, job openings data on Tuesday are expected to show a decline, suggesting companies are finding it easier to fill positions.

2. Fed Chair Powell and ECB President Lagarde's Comments; Fed Minutes

Fed Chair Jerome Powell will speak at the European Central Bank’s annual forum in Sintra, Portugal, on Tuesday. Powell and ECB President Christine Lagarde will discuss "monetary policy in an era of transition," providing potential insights into the future path of interest rates. The minutes from the Fed’s June meeting, due on Wednesday, will offer further clues on the central bank's economic outlook and monetary policy considerations.

3. Elections in France and the UK

France’s first round of snap elections on Sunday has stirred market uncertainty, with potential implications for the second round on July 7. The election dynamics, featuring three-way races in 577 constituencies, could lead to a prolonged period of uncertainty. Meanwhile, the UK will hold a general election on Thursday, with polls predicting a landslide victory for the opposition Labour Party. A Labour win is expected to bring stability after years of political turbulence, with potential positive impacts on the pound and UK equities.

4. Eurozone Inflation Data

June inflation data from the Eurozone will be released on Tuesday, following Germany’s report on Monday. Economists anticipate a slight slowdown in both headline and core inflation after May’s uptick. The ECB will publish minutes from its June meeting on Thursday, where it cut interest rates for the first time since 2019. With the Fed still grappling with above-target inflation, the ECB’s actions are particularly noteworthy as they march ahead in lowering rates.

5. China PMIs

China’s manufacturing activity data for June, released on Sunday, showed a decline for the second month, with services activity at a five-month low. The Caixin manufacturing PMI, due Monday, is expected to dip further. Analysts foresee more policy support measures from the Chinese government to boost domestic consumption and economic momentum in the world’s second-largest economy.

Stock Market Wrap-Up

The S&P 500 is tracking toward its strongest election-year performance since 1976, posting its sixth-strongest first-half gain since 1990. Stocks to watch include Meta Platforms (META), Tesla (TSLA), and Constellation Brands (STZ). The June payrolls report on Friday could be a significant market mover. Other stocks showing buy signals include Monday.com (MNDY), JPMorgan (JPM), Cintas (CTAS), and Burlington Stores (BURL).

Economic Calendar: June Data

This week's economic releases will test the strength of the job market. The key focus is Friday's employment report, expected to show a 190,000 payroll gain and stable 4% unemployment rate. Other notable reports include job openings data on Tuesday, ADP employment on Wednesday, and weekly jobless claims on Thursday. Additionally, ISM manufacturing data on Monday and services data on Wednesday will provide insights into sector-specific activities.

Global Economic Events

In Europe, investors will focus on political developments and economic data, including Germany's bond auction and Eurozone inflation figures. In Asia, Japan will release revised GDP data and the Bank of Japan’s Tankan survey. South Korea will report trade and inflation data, while Australia’s economic activities will be closely monitored for hints on future monetary policy.

Outlook for the Week

With significant political and economic events lined up, markets are expected to be volatile. The focus will be on how these developments influence central bank policies and the broader economic outlook. Investors should stay alert to potential shifts and opportunities arising from this dynamic environment.

Let’s dive into more detail below.

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ELECTION 2024

Biden’s Odds Fall After Debate with Trump, Democratic Concerns

Biden and Trump are struggling with negative favorability ratings, complicating their paths to the White House

BREAKING NEWS
After Thursday’s interesting debate, in which former President Trump and President Joe Biden took the stage, the odds of Biden winning a second White House term in November took a hit.

The dump in the numbers was likely due to fresh concerns among Democrats about the 81-year-old’s mental fitness to serve another four years in office.

Democrats now face a critical decision: stand behind Biden or find a replacement candidate to go into the 2024 election.

WHAT HAPPENED
On Thursday, before the debate, Bet365 gave Biden a 13/8 (38.1 percent) chance of winning November’s election, but this slumped to 10/3 (23.1 percent) as of 3 a.m. ET on Friday, according to betting website Oddschecker.

Over the same period, Biden’s odds of victory also fell from 13/8 (38.1 percent) to 3/1 (25 percent) with Sky Bet, 15/8 (34.8 percent) to 3/1 (25 percent) with William Hill, and 13/8 (38.1 percent) to 7/2 (22.2 percent).

Biden’s age and mental ability are now major talking points, with legacy news media platforms like the New York Times publishing a March survey finding that 61 percent of those who voted for him in 2020 think he is now “just too old” for another term.

That’s not to say former President Trump is a star student. At a recent rally in Nevada, the GOP nominee claimed that "they" are pursuing a policy mandating electric engines for boat manufacturers. Trump recounted a conversation with a South Carolina boat company official, who allegedly said, “It’s a problem, sir. They want us to make all-electric boats.” He then digressed into an unrelated tangent about increased shark attacks, sharing a bizarre narrative about sharks and their motivations. This incident exemplifies Trump’s tendency to share unverified and fantastical stories, aligning with the numerous blatant falsehoods (over 30, according to CNN) he mentioned during Thursday’s debate.

Overall, the debate itself left many wondering what was next.

CONTINUE READING ➔

CANNABUSINESS

Cannabis Industry to Expand by $100 Billion by 2028 as Legalization Spreads

As cannabis becomes more accessible and accepted legally, these sectors will see growth driven by consumer demand and therapeutic applications

BREAKING NEWS
Currently, 79% of Americans live in a county with at least one dispensary, and adult-use cannabis is legal in 24 states.

Technavio’s latest report shows that the global legal cannabis market is projected to grow by USD 100.61 billion from 2024 to 2028.

The market is anticipated to expand at a compound annual growth rate (CAGR) of 28.85% over the forecast period.

WHAT HAPPENED
One of the main reasons for growth is likely due to the increasing number of countries decriminalizing and legalizing cannabis, coupled with advancements in cultivation techniques aimed at producing high-CBD, low-THC strains for therapeutic use. The legal market encompasses a broad range of products derived from the Cannabis plant, which includes both marijuana and hemp, offering various forms such as flowers, edibles, concentrates, and topicals. The market’s growth is supported by strict regulatory frameworks that ensure quality control and compliance with taxation laws, further driving investment and economic development within the industry.

Now consider what sectors are likely to benefit. Multiple sectors, including healthcare, pharmaceuticals, and retail, will see increased accessibility and legal acceptance of cannabis, driving consumer demand and contributing to economic growth in regions where it is legalized. Medical cannabis is being increasingly prescribed for conditions such as epilepsy, multiple sclerosis, and chronic pain, highlighting the therapeutic potential of cannabis products.

Advanced technologies in cultivation and production enhance the quality and efficacy of these products, promoting their broader adoption.

As the market evolves, regulatory clarity and compliance will be crucial for sustaining growth and investor confidence, ensuring the industry can meet the growing consumer demand while adhering to legal standards.

CONTINUE READING ➔

1. Infinera stock soars on $2.3 billion Nokia acquisition

Infinera, a network provider, saw a significant increase in its stock price after agreeing to a $2.3 billion acquisition by Nokia. This move is seen as Nokia's strategy to enhance its involvement in the artificial intelligence sector.

2. Nike stock plunges on surprise forecast of drop in sales

Nike experienced a substantial drop in its stock price, erasing $28.4 billion from its market valuation, due to an unexpected forecast of declining sales. The company faces growing competition and market challenges.

3. IRS reveals final regulations for crypto broker rules

The IRS has finalized regulations for cryptocurrency brokers, requiring them to report transactions for tax compliance. This move aims to enhance transparency and prevent tax evasion in the rapidly growing crypto market.

4. JPMorgan and Morgan Stanley boost buybacks and dividend

Following the annual stress test administered by the Federal Reserve, JPMorgan and Morgan Stanley announced plans to increase their capital returns to shareholders through enhanced stock buybacks and dividends.

5. State Farm requests massive rate hikes amid financial woes

State Farm has requested significant rate hikes in California due to financial challenges. This move comes amid a broader insurance crisis in the state, creating additional stress for homeowners.

6. Nvidia Is Up 750% in 2 Years, But History Suggests a Potential Crash

Nvidia's stock has surged by 750% over the past two years. However, historical patterns indicate that such rapid growth might precede a significant downturn, raising caution among investors.

7. John Deere announces mass layoffs amid production shift to Mexico

John Deere is laying off around 610 employees at its Illinois and Iowa plants as the company shifts production to Mexico. This decision is part of a broader strategy to optimize operations and reduce costs.

8. Chicken Soup for the Soul Entertainment files for bankruptcy

Chicken Soup for the Soul Entertainment, the parent company of Redbox, has filed for Chapter 11 bankruptcy protection. The company has been struggling financially, leading to significant debt and operational challenges.

9. Boeing agrees to buy Spirit Aero for $4.3 billion

Boeing has agreed to acquire Spirit AeroSystems for $4.3 billion in an all-stock deal. This acquisition is expected to enhance Boeing's supply chain and strengthen its position in the aerospace market.

10. Visa, Mastercard could handle larger swipe-fee settlement

A judge indicated that Visa and Mastercard could manage a larger settlement than the proposed $30 billion in a swipe-fee lawsuit. This ruling could impact future negotiations and financial obligations for the companies.

CONTINUE READING ➔

Today's insights are courtesy of GrowthSchool, whether it is Product, Growth, Design, Management, Tech & Data, Business, GrowthSchool is the place to learn from top experts in the field.

Learn More ➔