Internal | July 25th, 2024

GOOD MORNING

Here's everything you need to know this week: Oh, Chipotle, the fast-casual darling that’s made guacamole an aspirational lifestyle choice. 

It looks like the American eater was doing their inflation-impacted belt-tightening elsewhere as Chipotle foil wrapped another stellar quarter. Wall Street’s favorite burrito purveyor reported adjusted earnings per share of 34 cents, beating the expected 32 cents, and revenue of $2.97 billion, surpassing the anticipated $2.94 billion. And net income soared to $455.7 million from last year’s $341.8 million. 

It turns out that even sky-high avocado prices can't guac-block Chipotle’s profit parade

Intriguingly, foot traffic was up 8.7% Despite social media uproar over allegedly shrinking burrito bowls. CEO Brian Niccol keeps insisting that Chipotle’s portion sizes are as generous as ever, despite rising food costs.

Is Chipotle putting the gas in gaslighting?

Let’s dive into more detail below.

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POLITICS

Senators Say Enough Is Enough, Advancing the Stock Trading Ban

If passed by the Senate and House of Representatives as well as the President, the bill will ban insider trading by banning trades for lawmakers and their families by 2027

BREAKING NEWS
Rick Scott, Nancy Pelosi, and other high-net-worth members of Congress on the Hill may have punched a hole in their monitor this morning when the Senate Governmental Affairs Committee voted to advance a ban on congressional stock trading on Wednesday.

Congressional stock trading has been a hot and controversial topic as of late, catching the eyes of everyone from fiery and questionable Senator Josh Hawley to famed aging quarterback Aaron Rodgers.

“You can track Nancy Pelosi’s [stocks],” quipped the part-time Jets QB and full-time mid-provocateur. “She’s a hell of a stock trader. She’s got it down. It’s embarrassing, though. It’s embarrassing for our country.”

It is wild to see how a heavy dose of Ayahuasca and a torn Achilles tendon can turn one into an acolyte of Mario Savio while simultaneously working for the NFL.

WHAT HAPPENED
Fed up with the murky operations of Capitol Hill's stock trading machine, Senators Jon Ossoff (GA), Tim Scott (AZ), and Gary Peters (MI) are leading the bipartisan charge among 11 senators who voted to advance a bill banning congressional stock trading.

For some background, the committee, which announced its plans last week, has approved a bill to prevent conflicts of interest and the misuse of insider information by prohibiting members of Congress, their spouses, and dependent children from trading individual stocks. As we’ve covered here at Moby in the past, analyzing trades from the likes of Nancy Pelosi, Josh Gottheimer, and others, many members of Congress are stellar equities traders with near-perfect timing, or… something else.

Despite some senators, like Mitt Romney, acting clueless about the issue, the bill proposes immediate restrictions on stock purchases and a 90-day window to sell off existing holdings. By 2027, spouses and dependent children of members, and even the President and Vice President must divest all covered investments, with violations incurring hefty fines.

Romney eventually voted against the bill, appearing clueless that politicians were trading, asking with the kind of wide eyes naivete that can only glisten in the pupils of a former senior executive at Bain Capital, "Do we have politicians trading off of inside information?”

Why don’t you ask Tommy Tuberville and Tina Smith, Mittens?

Some other Senators who voted against the bill were Rand Paul (KY), Ron Johnson (WI), and James Lankford (OK).

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BREAKING NEWS
Investors threw Tesla shares a beating Wednesday morning after the company’s second-quarter earnings report failed to… let’s go with “meet expectations.“

Elon Musk’s EV empire revealed profits were almost cut in half year-over-year, with adjusted earnings margins also falling. Slashed prices, global discounts, and fierce competition, especially in China, have dented sales.

Despite still dominating (but not as hard) the U.S. EV market, even the most devout Musk fanatic has to be noticing Tesla’s aging lineup and Musk’s multiple companies/controversial antics are costing it market share.

WHAT HAPPENED
Thanks at least in part to a 7% annual drop in automotive revenue, Tesla’s profits plunged 45% year on year in the second quarter. The company’s operating margin fell to 6.3% from 9.6% a year ago, despite Tesla cutting costs and laying off more than 10% of its global workforce.

Among the troubles bedeviling the company are sluggish consumer demand and a price war with competitors that has dented profits. Simply put, Tesla is no longer the only debutante at the ball.

And Musk shared more bad news about investors’ biggest hope for Tesla. The company will delay the reveal of its long-awaited driverless taxi from August to October. Musk has said that the robotaxi business could propel the carmaker’s market value to $5 trillion, from its current $785 billion, but that waiting for that growth has Tesla investors feeling like they’re waiting for Godot.

Making the situation a little hotter for Musk, ongoing hitches in the robotaxi business come as Alphabet said it would invest an additional $5 billion in Waymo, its autonomous vehicle unit. Oh, and General Motors has restarted real-world testing for its Cruise automated taxi division.

Musk spent much of the earnings call talking about AI and his “Optimus” humanoid robot project, but did tell investors that the Tesla Roadster would be coming next year. Analysts were left feeling what looked like ennui with all of the big names covering TSLA’s results maintaining their guidance on the stock.

One of those analysts, Morgan Stanley’s Adam Jonas left his outlook unchanged and even titled his report: “2Q Reaction: It’s Okay.”

CONTINUE READING ➔

BREAKING NEWS
In a nation where politics are as divided as a Thanksgiving dinner and culture wars rage hotter than your uncle after 5 scotches, there's one thing we can all agree on: inflation is squeezing us harder than the skinny jeans your aunt decided to wear to a holiday family dinner.

According to a recent Data for Progress survey of 1,216 likely voters, 27% of them said the economy, jobs, and inflation are top of mind when choosing which politician to grace with their dubious "confidence."

With the 2024 election speeding toward us faster than your fantasy football team’s inevitable implosion (how is it already Fall?), let’s break down CNBC’s annual America’s Top States for Business rankings. Because, let’s be real, the economy’s performance is probably more predictable than your fantasy draft picks (yeah, we went there).

WHAT HAPPENED
CNBC’s “Economy category” accounts for 14% of a state's total score, weighting how frequently economic factors appear in states' marketing efforts to attract businesses.

The study assesses various economic indicators, including monetary and job growth rates, state financial health (fiscal reserves, pension obligations, credit ratings), housing market conditions, presence of primary corporate headquarters, new business formation rates, and foreign direct investment (both in absolute terms and as a percentage of GDP).

These factors are combined to create a picture of each state's economic landscape, reflecting current conditions and potential for growth into 2024 and beyond. Analyzing their breakdown, we found their approach balanced and a relevant assessment of states' economic competitiveness, and timely given the economy’s ongoing pressure of inflation and ever-increasing house prices.

In the spirit of unity (and maybe a touch of naïve optimism), we’re spotlighting the common strengths among the top 10 states, to show that, despite our differences, our economies share some winning traits. But first, let’s rank these states from best to “WTF are we even doing here?”

Let’s with Delaware at number 10, the First State boasts a high rate of entrepreneurship, adding 55,000 new businesses last year (thank you, incredibly low taxes). Idaho, at number 9, shows solid economic growth and a stable housing market. Nevada, ranking 8th, enjoyed strong job growth and a robust housing market driven by population growth (thank you, legalized everything).

Georgia, sitting peachy at number 7, is a magnet for foreign direct investment, with a cool $9.7 billion in 2022. Utah, holding 6th place, flexed strong job growth across the board. Arizona, ranked 5th, is riding a chip sector wave that’s boosting jobs and keeping the housing market healthy.

North Carolina, at number 4, boasts a fiscal picture so stable it could double as a yoga instructor, with healthy credit and budget balances. Tennessee, claiming the 3rd spot, saw its GDP shoot up faster than a meme stock post-pandemic. Texas, the runner-up, is America’s second-fastest growing economy, proving everything is indeed bigger there.

Florida takes the top spot, adding over 240,000 new jobs last year. With an economy this hot, it’s no wonder retirees and job-seekers alike are flocking to the Sunshine State. Well, it’s still Florida, so we do wonder a little.

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