Internal | August 9th, 2024

GOOD MORNING

Here's everything you need to know today: Today’s stock market is like a dog with a new chew toy. Throw some fresh labor market data its way, and suddenly it's too distracted to remember it was just gnawing on a shoe. Stocks bounced back on Thursday, with the S&P 500 climbing 2.3%, its best day since November 2022. The Dow Jones Industrial Average surged 683.04 points, and the Nasdaq added a cool 2.87%. This latest rally was sparked by initial jobless claims coming in at 233,000, suggesting the labor market might not be as weak as other indicators show. Apparently, 17,000 fewer filings are enough to make the market forget its recent diet of bad news.

There were other happy bulletins too. Eli Lilly saw its stock soar 9.5% thanks to strong earnings and an optimistic outlook driven by high demand for its diabetes and obesity drugs. Meanwhile, stocks that lagged earlier in the week bounced back, with chipmakers Nvidia and Broadcom surging over 6%, Meta Platforms climbing 4.2%, and even Apple ticking up 1.7%. Yes, those 17,000 missing unemployed Americans seemed magical enough to make Wall Street overlook the fact that Big Tech is still dumping billions into the AI furnace.

But let’s not get too comfortable. Sure, the yield on 10-year Treasury bonds hit 4%, and a weaker Japanese yen helped prop up the Forex carry trade that’s been Wall Street’s crutch since the Fed started hiking rates, but the market (like a dog) is still skittish. Major indices are still down for the week, with the S&P 500 off 0.5%, and it’s clear this rally’s sustainability is uncertain. For instance, don’t mention that Fed data released yesterday showed total U.S. consumer credit has now hit $5.08 trillion. Seriously, shh—let the dog enjoy its toy for now.

Let’s dive into more detail below.

BREAKING NEWS
We never thought we'd see some of the most viral and effective campaign messaging for presidential candidate Kamala Harris on the same app the House overwhelmingly voted to restrict with 360-58. Even more ironic, the Senate approved the bill 79-18, and President Biden signed it into law.

If you’re out of the loop, just download TikTok and check out Kamala HQ. Trump has one too, but it’s not nearly as content-heavy. This isn't an endorsement, just an observation on where campaign dollars are flowing. Axios reports that Dems are significantly outspending Trump on ads across all platforms, and it's paying off.

According to Newsweek, Harris leads in four of the seven most competitive swing states, while Trump leads in three. The Electoral College polling map from RaceToTheWhiteHouse shows Harris would snag 276 votes to Trump’s 262 if the election followed current polling.

WHAT HAPPENED
No shocker here: former President Donald Trump's top campaign ad spend is on broadcast. As Mark Twain allegedly said, "Write what you know," or in this case, campaign where you know. From his days hosting "The Apprentice" to popping up on "The Nanny" and WWE Raw, Trump has always been a TV obsessive.

Trump's TV habits are legendary, especially his loyalty to Fox News shows like "Fox & Friends," "Hannity," and "Tucker Carlson Tonight." His real-time tweets reacting to these programs were practically part of the programming. But here's the catch—TV isn't the main stage anymore.

Pew Research shows that more than half of Americans get their news on social media. Younger adults (18-29) are all over platforms like Facebook, YouTube, Instagram, and TikTok. Middle-aged folks (30-49) are also big on digital news sites and apps. Meanwhile, the 50+ crowd sticks to TV and print. Women flock to Facebook, Instagram, and TikTok for news, while men prefer Reddit, X (formerly Twitter), and YouTube.

Trump's voter base is primarily older white men, a demographic that has historically leaned Republican. Kamala Harris, however, has strong support from women, younger voters, Black and Hispanic communities, and college-educated individuals, especially white women—groups that are highly active on social media.

In a world where digital is king, Harris's social media savvy might just outpace Trump's TV-centric strategy. The question is, can Trump adapt, or will he continue to campaign in a medium that's losing its edge?

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BREAKING NEWS
If  “Artistic Investor Disappointment" was an Olympic event, Bumble would be nibbling a gold medal right now

The Austin-based dating app darling just set a new benchmark for earnings flops. Late Wednesday, the company announced that it now projects revenue for 2024 to creep up by about 1% to 2%, which is not great, but even way less so when put in the context that Bumble had previously forecasted 11% growth for the year. 

Thursday’s market reaction was brutal. Bumble’s stock plummeted 38% before the opening bell, its worst intraday decline ever. Its dismal performance also dragged down its arch-nemesis Match Group Inc. by 2.8%, ironic because Match appears to be the one strangling Bumble’s growth to death.

WHAT HAPPENED
Bumble, which went public in 2021, has had a rough year. Shares have been plummeting throughout 2024, and have now hit rock bottom earlier after a weakening sales outlook and a drastic workforce reduction in February, just weeks after the app’s founder, Whitney Wolfe Herd stepped down as CEO in November 2023. Since then, the company has brought in four new C-suite execs and tasked them with making the app more appealing to younger users. It’s not working great.

And it wasn’t just the brutal new revenue forecast, Bumble’s second-quarter results were also a bit of a train wreck all their own. Revenue for the period ending June 30 rose 3.4% to $268.6 million, missing the average analyst estimate of $273.2 million. While the number of paying users did increase by 14.7% to 2.8 million, that was merely in line with expectations which was not enough to make Wall Street swipe right.

Especially since Match Group’s results released last week showed some real arousal, pulling $864 million in sales, smashing estimates, and a solid 4.15% increase from last year. And while Tinder’s revenue crept up a modest 1%, Hinge stole the spotlight with a 48% surge.

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BREAKING NEWS
The U.S. has always had a complicated relationship with alcohol. While a cold beer at the game or a fancy cocktail at a swanky lounge still has its appeal, history shows a different story. In the early 19th century, American drinking habits were off the charts. By 1830, the average adult was downing about 7 gallons of pure ethanol a year, which is triple today's average.

Back then, alcohol was a daily staple, consumed from morning to night. Whiskey, hard cider, and other spirits were popular, with whiskey being particularly beloved for its low cost and accessibility. This era marked the peak of American drinking culture, and though consumption has declined since 2002, new party alternatives have emerged to fill the gap.

WHAT HAPPENED
People stop drinking for a variety of reasons: brutal hangovers, genetic factors like familial alcoholism, really brutal hangovers, or simply not liking the taste (yes, especially IPA haters). The shift from the "Mad Men" era of after-work martinis to today's scene is notable, particularly among younger generations.

According to NC Solutions, 61% of Gen Z and Millennials are drinking less, with 42% of Gen Z feeling they're leading this change. Mental health concerns are a big factor, given the relentless nature of social media and news. While having a drink to unwind might make sense, the constant pressure can make it seem less appealing.

This trend isn’t groundbreaking. People are cutting back due to costs and health reasons, and weight loss goals also play a part. Despite brands like White Claw and Topo Chico promoting themselves as “healthy” alternatives, they’re still just variations on the same theme.

Data from Statista shows that binge drinking among U.S. adults aged 18-25 has significantly declined over the past two decades. The peak for male binge drinking was in 2005 at 51.7%, and for females in 2015 at 37.4%. By 2022, binge drinking rates for both genders had dropped to around 30%, with the gender gap narrowing considerably.

This decline aligns with broader trends, but it also highlights a growing curiosity among low-volume drinkers and non-drinkers about alternative beverages. According to Susie Goldspink of IWSR Drinks Market Analysis, younger consumers are exploring options like adaptogen drinks, which claim to offer mood-enhancing benefits, rather than just seeking direct replacements for alcohol.

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1. Eli Lilly Reports Strong Q2 Earnings, Raises 2024 Outlook

Eli Lilly surpassed Wall Street estimates for the second quarter, driven by robust sales of its weight-loss and diabetes drugs, Zepbound and Mounjaro. The pharmaceutical giant also raised its full-year revenue guidance by $3 billion, reflecting continued strong demand for these treatments.

2. Warner Bros. Discovery Stock Falls After $9.1 Billion Write-Down

Warner Bros. Discovery's stock dropped significantly after the company reported a $9.1 billion write-down, reflecting challenges in its traditional TV networks. This, coupled with a second-quarter revenue miss, has raised concerns about the company's future profitability in the face of a declining cable TV market.

3. Nvidia Experiences $900 Billion Market Value Loss Amid AI Chip Demand

Nvidia has lost $900 billion in market value since its peak in June, even as AI spending by major tech companies remains strong. The decline raises questions about investor sentiment despite the company's leadership in AI chip manufacturing and ongoing demand from industry giants like Amazon, Google, and Microsoft.

4. Bumble Stock Plummets 25% After Revenue Outlook Cut

Shares of Bumble Inc. fell by 25% after the company slashed its annual revenue outlook, citing challenges in increasing the number of paying users. The disappointing forecast underscores the ongoing difficulties in the competitive dating app market.

5. Paramount Global to Lay Off 15% of Workforce Amid $6 Billion Write-Down

Paramount Global announced plans to lay off 15% of its U.S. workforce following a $6 billion write-down on its cable TV networks. Despite posting its first profitable quarter in streaming, the media giant faces significant headwinds in its traditional TV business.

6. Delta Reports $380 Million Revenue Loss Due to Tech Outage

Delta Air Lines reported a $380 million revenue loss following a significant technology outage caused by CrowdStrike's software failure. The incident led to thousands of flight cancellations, and the airline is seeking compensation from the cybersecurity firm.

7. JPMorgan Increases US Recession Odds to 35%

JPMorgan Chase raised its forecast for the likelihood of a U.S. recession this year to 35%, citing recent signs of economic slowdown and easing labor market pressures. This updated outlook reflects growing concerns among investors about the potential for a broader economic downturn.

8. Boeing Welcomes New CEO Amidst Company Turbulence

Boeing appointed Kelly Ortberg as its new CEO, who has pledged to rebuild trust and address the company's ongoing challenges, including safety and quality control issues. Ortberg's first move as CEO included visiting the factory floor to emphasize a renewed focus on transparency and employee engagement.

9. Warner Bros. Discovery Warns of Further TV Business Decline

Warner Bros. Discovery cautioned investors about the rapid deterioration of its traditional TV business, which has led to significant financial losses. The company’s CEO, David Zaslav, is under mounting pressure to turn around its struggling operations as the media landscape continues to shift towards streaming.

10. US Jobless Claims Fall, Easing Recession Fears

The number of Americans filing for unemployment benefits fell more than expected last week, a positive sign for the labor market. This data has helped to ease some recession fears, contributing to a rebound in U.S. stocks after recent market volatility.

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