Internal | July 19th, 2024

GOOD MORNING

Here's everything you need to know today: Investors indulged in a good old-fashioned sell-off on Thursday, sending giants like Apple and Amazon into a tailspin and handing the Dow Jones Industrial Average a 522-point loss. Meanwhile, bond yields spiked, adding more to the drama as stockholders prepare themselves for the September rate cut that they now see as etched in stone.

In simpler terms, Wall Street’s profit-taking traders lost their cool and started grabbing with both hands at Big Tech names, spooking the wider market and absolutely face-ripping small-cap stocks that looked to be on the verge of a nice little breakout. Only a final-hour report of a deal between OpenAI and Broadcom to develop a chip saved the NASDAQ from a truly ugly finish.

Meanwhile, Citadel's billionaire big boss Ken Griffin, casually just dropped $44.6 million on a Jurassic stegosaurus skeleton. Are we still baking in that September cut?

Let’s dive into more detail below.

BREAKING NEWS
M&A is back, baby!

A profusion of mergers across several sectors in 2024 is giving good vibes to the economy after high rates pushed companies to seek efficiency and cost savings to offset higher borrowing costs, while readjusting their workforce with industry-shifting technology like A.I.

Only a few weeks ago, we saw Paramount Global merge with Skydance Media, valued at approximately $28 billion, and Diamondback Energy's acquisition of Endeavor as a standout deal in the oil and gas sector.

Not content to be left out of the consolidation party, Capital One is still trying to consummate its $35 billion merger with Discover Financial and is now offering regulators a small cherry of $265 billion earmarked or investment in its lending, investing, and philanthropy projects.

WHAT HAPPENED
In something of a bold move, Richard Fairbank, the chairman and CEO of Capital One, is framing the deal that would bring together two of the nation's credit card companies as a tale of David and Goliath.

"Our acquisition of Discover is a singular opportunity to bring together two very successful companies with complementary capabilities and franchises and to build a payments network that can compete with the largest payments networks and payments companies," Fairbanks said in early 2024.

Those bigger fish that Fairbank is referring to are none other than Visa, Mastercard, and American Express. Visa's revenue for the 12 months ending March 31st, 2024, hit more than $34 billion, a 10.19% increase year-over-year. Following suit, about one out of four Mastercard credit cards issued worldwide were found within the United States as of the first quarter of 2024.

In Q1, Capitol One saw total net revenue decrease by 1% to $9.4 billion compared to their previous quarter. Not to fear, Mr. Fairbank's average credit card loans increased $1.0 billion, or 1%, to $150 billion. In comparison, their domestic card average loans increased $775 million, or 1%, to $143 billion.

The cornerstone for the hefty $265 billion five-year cherry on top for regulators is a $200 billion lending program targeting low-and-middle-income consumers.

Additionally, the plan allocates $44 billion for community development projects. The remaining funds, amounting to hundreds of millions of dollars, will be distributed among nonprofits, small businesses, and minority-owned financial institutions.

Capital One said the plan was developed with the National Association for Latino Community Asset Builders, NeighborWorks America, the Opportunity Finance Network, and the Woodstock Institute.

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BREAKING NEWS
Michelob Ultra, the beer for fitness buffs who like to hydrate after a marathon with a beverage that almost tastes like beer, has officially passed Bud Light in sales volume to become the second-best-selling beer in the U.S.

Yes, the beer that's more about counting calories than flavor has leapfrogged the former King of Beers. So why are Americans turning on a brew that was once the platonic ideal of American beer for a beverage that combines the taste of Natty Lite with the efficacy of Gatorade?

It couldn’t be the partisan cultural war spreading into seemingly every aspect of American life. Wait, yeah, that’s totally the reason.

WHAT HAPPENED
In a turn of events that will please your crypto-conservative, new research from Bump Williams Consulting reveals that Bud Light now commands a mere 6.5% of beer dollar sales in U.S. stores, compared to Michelob Ultra’s 7.3%. This fall from grace began with a boycott back in April 2023 in reaction to a transgender influencer posting an Instagram video about a personalized Bud Light can sent as a gift. The political right pounced, and Bud Light’s top spot was history.

Who’s #1, you might ask? Modelo Especial now commands 9.7% of the U.S. market meaning that the MAGA takedown of Bud Light put a Mexican-branded beer in the top spot. Define irony.

And things aren’t looking up for a proud brand once marketed by American icon Spuds MacKenzie. Bump Williams data shows that Bud Light is now careening down towards the #4 spot held by Coors Light.

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BREAKING NEWS
Former President Trump has always been a volatile figure. We won't count the ways now, but most recently, after a shooter's bullets nearly changed the course of the 2024 U.S. election and Trump's life, he did something few, if any, past presidents would do: he stayed on stage, thrust his single fist in the air, and bellowed, Fight! Fight! Fight!

No one will likely ever know if Trump knew how close he was to meeting his end that day, those split seconds churning with shouts, cheering, and screams, but what's notable is the defiance amidst the chaos.

After the figurative dust settled and the news media went to work, this pandemonium continued to vibrate on social media - specifically X - striking a chord with a particular group of "maxis," the Bitcoin crowd.

"Fight! Fight! Fight!" translated perfectly to their chant, "Hodl! Hodl! Hodl!" As Bitcoin enters Q3 back above $65k, it becomes more of a deciding vote for voters as we head into November.

WHAT HAPPENED
Bitcoiners and the rest of the crypto market watched in frenzied validation as Bitcoin spiked in price after the assassination attempt

Posts like "Trump survives assassination attempt…bullish af for #Bitcoin" and "The Boomer's response to Trump's assassination attempt has been to absolutely hammer the buy button on the #Bitcoin ETFs" flooded X's timeline. Naturally, there were the more tin-foil hat takes from influencers like Joshua Jake, who created a post titled "The Assassination Attempt on Donald J Trump was to protect the U.S. Dollar."

Disregarding the Alex Jones rhetoric, the energy in that moment was undeniable. It was terrifying and electric, appearing to many who doubted Bitcoin's political future in the United States as a bullish breakout from regulatory resistance.

And Bitcoin's momentum appears to be continuing. On Wednesday afternoon, former President Trump stated, "If I throw it (Bitcoin) aside, another country, most likely China, will pick it up—they're pretty advanced in that sphere. It's a baby, an infant right now. But I don't want to be responsible for allowing another country to take over this sphere."

Trump hasn't quite finished the Bitcoin Standard yet, but he appears to be a student of famed Bitcoin bull like Michael Saylor, who said in early 2024, "Civilizations rise and fall based on channeling of power. It's all about firepower, naval power, airpower, nuclear power. Bitcoin is digital power."

Naturally, Trump will want to be seen speaking about this newfound talking point for voters who see Bitcoin and crypto as a deciding factor for the 2024 election. He'll attend the Bitcoin Conference in Nashville soon, where major media platforms like Yahoo Finance believe "He's seen a good opportunity, and Bitcoin is the greatest opportunity for this country."

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1. Oil prices rise on bigger-than-expected drop in US crude stocks

Oil prices saw a significant increase after a larger-than-anticipated decline in U.S. crude oil inventories. This unexpected drop has spurred market optimism, supporting higher prices.

2. TSMC second-quarter profit beats expectations as AI chip boom continues

Taiwan Semiconductor Manufacturing Co. (TSMC) reported better-than-expected revenue and profit for Q2, driven by strong demand for AI chips. This highlights TSMC’s leading role in the semiconductor industry amid the growing AI market.

3. Ford pivots from EV plans to heavy-duty trucks at Canada facility

Ford announced a shift in strategy by repurposing a Canadian plant initially designated for electric vehicle production to instead manufacture larger, gasoline-powered F-Series trucks. This move is part of Ford’s response to fluctuating EV demand.

4. Netflix stock falls as revenue guidance disappoints

Despite reporting strong second-quarter earnings, Netflix’s stock declined due to disappointing revenue guidance for the upcoming quarters. Investors are wary of the company’s future growth prospects amid increasing competition in the streaming industry.

5. Warner Bros Discovery considering a break-up

Warner Bros. Discovery is reportedly evaluating a split of its streaming and studio businesses from its traditional TV networks. This restructuring aims to address operational challenges and boost stock performance amid competitive pressures in media.

6. US weekly jobless claims increase more than expected

The number of Americans filing new unemployment claims rose unexpectedly last week, adding to concerns about a potential slowdown in the labor market. This data point highlights ongoing volatility in employment figures.

7. Nokia shares slide 8% after posting lowest quarterly net sales figure since 2015

Nokia’s stock dropped sharply after the company reported its lowest quarterly net sales in nearly a decade, signaling ongoing challenges in the telecom equipment market. The disappointing financial results have raised concerns about Nokia’s growth strategy.

8. Tesla secures multi-billion Megapack contract

Tesla has secured a significant contract to supply over 15 GWh of Megapack battery storage systems to Intersect Power. This deal underscores Tesla’s expanding footprint in the renewable energy storage market.

9. Abbott Reports Second-Quarter 2024 Results and Raises Full-Year Guidance

Abbott Laboratories announced its Q2 2024 results, showing a 4% increase in sales driven by strong performance across its base business. The company also raised its full-year profit forecast, reflecting optimism in its growth outlook.

10. Meta won’t offer future multimodal AI models in EU

Meta has decided not to launch its future multimodal AI models in the European Union, citing unclear regulatory guidance. This decision highlights the growing tension between tech companies and EU regulators over AI development and deployment.

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