Internal | August 2nd, 20243

GOOD MORNING

Here's everything you need to know today: U.S. stocks experienced some serious mood swings on Thursday, marking the market's most volatile day since November 2022. The S&P 500 started strong, up 0.8% ahead of a key U.S. manufacturing activity report. However, once the report hinted at economic weakness investors laser-focused on Fed Chair Jay Powell doling out a September rate cut freaked, sending the index plummeting as low as 2%. 

This 2.8% swing—the widest since Powell’s November 2022 speech promising slower rate hikes—had everyone on edge. The S&P 500 eventually closed down 75.62 points, or 1.4%, at 5,446.68, recovering slightly in the last hour of trading.

Adding to the market’s jitters, tensions between Israel and Iran intensified with the IDF claiming responsibility for the death of a Hamas leader in Tehran after the days of airstrikes between Israel and Iranian-backed Hezbollah forces in Lebanon.

So, Happy Friyay?

Let’s dive into more detail below.

BREAKING NEWS
Climate change is no longer a backburner issue; it's front and center. From pushing bills like the Earth Act to ceaselessly covering California's forest fires, the threat is undeniable. Yet, the world still runs on oil, and OPEC predicts a 17% rise in demand by 2045.

Let’s dive into the details and dissect this complex interplay between climate action and fossil fuel dependency.

WHAT HAPPENED
In 2022, oil and gas operations pumped out 5.1 billion tonnes of CO2-equivalent emissions, accounting for about 15% of global energy-related greenhouse gas emissions. Fossil fuels remain the primary culprits, contributing 75% of global greenhouse emissions and 90% of carbon dioxide emissions. Rising temperatures and greenhouse gases act like Earth's unwanted blanket, trapping heat and causing chaos—from melting ice caps to more intense hurricanes and droughts.

The global carbon budget for 2023 showed fossil fuel emissions climbing to 36.8 billion metric tons of CO2, with total emissions hitting 40.9 billion metric tons. This uptick highlights the significant challenge of curbing emissions while meeting energy demands.

According to NASA’s Goddard Institute, Earth’s average global temperature has risen by 0.8 degrees Celsius (1.4 degrees Fahrenheit) since 1880, with readings increasing steadily since the Industrial Revolution. This warming leads to various climate change effects, such as rising sea levels, more severe weather events, and shifts in ecosystems.

Despite these dire warnings, North America is projected to lead in oil usage at 19%, followed by China at 16%, India and the Middle East at 10%, and Europe at 9%. OPEC’s report shows that by 2045, oil production could hit 116 million barrels per day, with jet fuel demand expected to increase by 57% from 7 to 11 million barrels per day. Gasoline and diesel demand show more modest growth, with gasoline expected to plateau at 29 million barrels per day from 2030 onwards, while diesel could increase slightly from 29 to 32 million barrels per day.

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BREAKING NEWS
To anyone not deep into the wild west of Bitcoin and crypto, "tether" might conjure images of ropes or cattle wrangling or a rodeo clown.

But in the crypto world, Tether (USDT) is a heavyweight. It's the most popular stablecoin globally, with over 80% of stablecoin addresses holding USDT. Currently, 35 stablecoins exist, boasting a combined market cap of $157 billion and nearly 100 million holders, with a 15% increase in 2024 alone. Whether you’re on Ethereum, Solana, or Tron, Tether sees billions in daily volume. Their Q2 2024 Attestation Report reflects these significant numbers.

WHAT HAPPENED
Regarding breaking records in history, Bitcoin and crypto have been on a roll, so it shouldn’t be surprising that Tether reported a net profit of $5.2 billion for the first half of 2024, including $1.3 billion in Q2 alone. This marks the highest profit in the company’s history.

As a reminder, Bitcoin broke its all-time high this year of $75,830, with many saying there is plenty more room to run. Plus, it is breaking ground with its Bitcoin ETF. Many experts envision Ethereum reaching a valuation of $40,000 by 2030, with Forbes speculating that the asset could hit $4000 in 2024. While this might seem ambitious, it is only partially implausible, especially when seeing such positive reports from Tether.

One of the most profitable strategies Tether has made to break their records is their high holdings of U.S. Treasury Bills, now surpassing $97.6 billion. This positions Tether as the 18th largest holder of U.S. debt globally, ahead of countries like Germany and Australia, demonstrating its influence, financial stability, and money when it comes to acknowledging that America's debt, recently cracking $25 trillion, isn’t going anywhere. Don’t believe us?

In June 2024, the US Treasury spent $140 billion on interest on the public debt, 14% more than in June 2023. The Congressional Budget Office (CBO) estimates that the US will spend $870 billion on interest payments in 2024, which could reach record levels. This amount represents 3.1% of GDP.

Tether's consolidated net equity reached $11.9 billion, with a $520 million increase in Q2 despite Bitcoin price fluctuations and volatility. The decrease in Bitcoin prices led to an unrealized loss of $653 million in Q2 2024. The company reinvested part of its Q2 profits while maintaining $5.3 billion in excess reserves, supporting ecosystem growth, and ensuring token stability and security. Overall, its Consolidated Financials Figures and Reserves Report confirms its strong financial position, showing assets of $118.4 billion against $113.1 billion in liabilities, demonstrating a commitment to transparency (this is crypto, after all!) and risk management.

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BREAKING NEWS
As we’ve been hammering home over and over lately, consumers are fed up with higher food prices. But we hope that they’re not looking to comfort themselves with chocolate.

Hershey had bad news for consumers and Wall Street on Tuesday after disclosing that it will keep raising candy prices further to offset rising cocoa costs. CEO Michele Buck acknowledged that while Hershey has absorbed a lot of inflation, it now needs to pass some of it on to consumers, and she’s fully aware of how popular that will be with the American Chocolate Eater.

WHAT HAPPENED
Hershey's Q2 wasn't exactly sweet. Comparable sales plunged 17% as budget-conscious consumers cut back on grocery store visits. The candy giant also slashed its annual profit and sales forecasts, spotlighting its belief that tight consumer spending will persist. Net sales dropped to $2.07 billion, missing the $2.31 billion target. North American confectionery sales nosedived to $1.58 billion from $1.99 billion. Earnings? A measly $1.27 per share versus the expected $1.43.

That sound you hear is those creepy anthropomorphized M&M’s getting their headshots and resumes together.

So what’s making America’s favorite chocolate giant? Sky-high cocoa prices, thanks to lousy weather and supply chain chaos, are forcing Hershey to hike prices. Making things excruciatingly worse, the price bump hits just when consumers are pinching pennies, likely pushing them to cheaper alternatives.

It’s finally your day in the sun, Whitman’s Sampler.

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1. Shareholders Sue CrowdStrike Over IT Outage

A group of shareholders has filed a securities class-action lawsuit against CrowdStrike, alleging the company misled investors about the robustness of its cybersecurity technology, which led to a massive global outage affecting over eight million computers last month.

2. Meta Beats Forecasts on Strong Ad Sales

Meta Platforms exceeded second-quarter forecasts with a 22% revenue jump to over $39 billion, driven by strong advertising sales. The company reassured investors about AI-related costs and provided a positive outlook for the coming months.

3. Boar’s Head Recall Impacts New York Bodegas

Bodegas in New York City are facing business downturns as cold cuts linked to a nationwide listeria outbreak have vanished from their counters. The recall affects various deli meats, including liverwurst.

4. BYD and Uber Partner for EV Rollout

Chinese automaker BYD and ride-hailing firm Uber have announced a partnership to introduce 100,000 BYD electric vehicles on Uber’s platform across Europe and Latin America, offering financial incentives to drivers to switch to EVs.

5. Pershing Square Withdraws IPO

Billionaire investor Bill Ackman has withdrawn the IPO for his hedge fund Pershing Square, which was intended to be accessible to ordinary investors. The decision comes amid market volatility.

6. Japan’s Nissan, Honda to Collaborate on Software Platform

Nissan and Honda are set to collaborate on developing a next-generation software platform for electric vehicles (EVs) by 2028, as part of an alliance with Mitsubishi. This collaboration aims to enhance their competitiveness in the global EV market.

7. Bank of England Cuts Interest Rates

The Bank of England has cut interest rates to 5% for the first time since 2020, in a bid to ease pressure on households and businesses. However, future rate cuts are expected to be slow and incremental.

8. Eli Lilly’s Zepbound Shows Heart Failure Benefits

Eli Lilly's weight loss drug Zepbound has shown significant benefits in reducing symptoms and hospitalization risks for heart failure patients in a late-stage study, adding to the drug’s known benefits beyond weight loss.

9. Biden Administration Proposes Family Seating Rule

The Biden administration has proposed a rule requiring airlines to seat parents next to their young children without additional fees. This new regulation aims to eliminate "junk fees" and could save families up to $200 per round trip.

10. Meta Shares Soar on AI Investments

Meta Platforms' stock surged following better-than-expected Q2 earnings, driven by strong ad revenues and significant investments in AI technology. The company’s aggressive AI spending is beginning to show returns.

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