Internal | July 30th, 2024

GOOD MORNING

Here's everything you need to know today: Apple has just unveiled "Apple Intelligence," its long-awaited foray into the AI world, because apparently, making Siri less clueless took a deal with OpenAI. This update promises your iPhone will finally get you—like, really get you. 

Apple's AI upgrades include a predictive text feature so sharp, it might respond to your mom before you do. The new software, part of the developer beta of iOS 18.1, is also available for iPad and Mac. Apple’s developer program, which costs $99 a year, gives registered developers early access to these features. 

“Coincidentally,” Apple reports its latest earnings on Wednesday, smack dab in the middle of a week that is key for tech stocks looking to prove their AI bona fides.

Let’s dive into more detail below.

BREAKING NEWS
The Golden Arches are looking a little droopy this morning. McDonald's just reported its first drop in sales since 2020 as economic pressures are making it harder for Big Macs to fly off the grills like they’re accustomed to.

Mickey D’s sales dipped by a not-so-whopping 1.5%, a gut punch for the fast-food giant that's been coasting on post-pandemic comfort food cravings. It’s also something of a canary (clown?) in the coal mine for the spending habits of the American Eater, meaning that inflation and persistently higher borrowing rates have trickled down to even the least restrained of us resisting a spontaneous spin around the drive-thru to grab a McFlurry or chicken tendies.

And don’t think that Jay Powell isn’t seeing this as he prepares to chair a Federal Reserve meeting on Tuesday and Wednesday.

WHAT HAPPENED
McDonald’s CEO Chris Kempczinski tried to put a positive spin on the results, blaming "a challenging global economic environment." Translation: people are tightening their belts, both literally and figuratively, and maybe realizing that a homemade salad might be a better choice than a Quarter Pounder with Cheese.

Despite a 14% bump in global same-store sales, driven by higher menu prices, it wasn’t enough to offset the overall drop. Profits did rise to $2.3 billion from $1.9 billion a year earlier, thanks to those price hikes and cost-cutting measures. But that’s also part of the larger problem for Mickey D’s and its customers.

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BREAKING NEWS
The U.S. national debt has ballooned to a jaw-dropping $35 trillion, putting the debt-to-GDP ratio at a staggering 121.31%.

And, despite solid economic growth, Uncle Sam's spending spree continues unabated, leaving deficit hawks crying in their spreadsheets. Treasury Secretary Janet Yellen’s fiscal responsibility sermons seem to be falling on deaf ears in Washington.

Adding insult to injury, the national debt is rising by $1 trillion every 100 days, per CNBC. Republicans are trying to make debt reduction a key part of their platform, but good luck with that.

WHAT HAPPENED
Well, It all started back in 1933 when FDR ditched the gold standard for real by outlawing Americans from owning actual gold. Then Nixon took it further in 1971, ending the Bretton Woods system and giving the green light for unlimited money printing. Thanks, Dick!

Fast forward to the Reagan era, and the national debt started its meteoric rise, tripling due to tax cuts and increased military spending. The 2001 and 2003 Bush tax cuts, coupled with wars in Afghanistan and Iraq, didn’t help. And who could forget the 2008 financial crisis? The massive government bailouts and stimulus packages, including Obama’s $831 billion American Recovery and Reinvestment Act of 2009, further inflated the debt.

COVID-19 was the cherry on top, with the U.S. money supply growing by $3.8 trillion in 2020 alone. This brings us to now, where we have no debt ceiling, which has allowed the government to add a cool $1.2 trillion almost overnight.

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BREAKING NEWS
Over the last five years, Bitcoin, the creation of the infamous and mysterious Satoshi Nakamoto, has seen a wide range of things said and done about the once-fringe asset, most of which have been negative in the eyes of politicians in the United States.

78th Secretary of the Treasury Janet Yellen has had issues with the monetary systems' inefficiency, quoting, “Bitcoin is an extremely inefficient way of conducting transactions, and the amount of energy consumed in processing those transactions are staggering.” It’s hard for us to take Aunt Yellen seriously when talking about anything inefficient, as the national debt recently crossed $35 trillion, but we digress.

Then there's President Biden, who in May 2024 vetoed legislation that would have permitted highly regulated financial institutions to act as custodians for Bitcoin and other cryptocurrencies. This decision reflected concerns about potential financial stability and consumer protection risks and sent the Bitcoin community into an uproar.

Naturally, this pushed most Bitcoin maxis to Republican nominee and former President Trump, who attended the Bitcoin conference in Nashville this weekend and dropped some “alpha” along with Senator Cynthia Lummis, a Republican politician from Wyoming.

WHAT HAPPENED
It should be noted that former President Trump, to no one’s surprise, has flip-flopped on the general topic of Bitcoin. Listening to his speech over the weekend (and reading viewers' comments and opinions on X) suggests that he may still be a little rusty on the asset of the future’s mechanics.

In 2019, Trump tweeted, “I am not a fan of Bitcoin and another cryptocurrency, which are not money and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity...”

In 2021, Trump continued his bearish remarks on none other than Fox News, stating, “Bitcoin just seems like a scam. I don’t like it because it’s another currency competing against the dollar.”

But then something changed.

Maybe it was when he saw a young man in pit vipers surrounded by other young men in pit vipers and asked what Trump was going to do to stop crypto companies from moving out of the U.S., to which he answered, “If we’re going to embrace it, we have to let it be here.” Maybe it was when he started taking donations in Bitcoin and crypto on May 21st and has since raised (he claims) $25 million. Perhaps it was when Trump realized, after seeing support from tech elites like Elon Musk, Marc Andreessen and Ben Horowitz (A16z), Cameron and Tyler Winklevoss (Gemini Crypto Exchange), David Sacks and others, that he could have a share of the pro-crypto super PACs like Fairshake, which has raised more than 200 million dollars to elect pro-crypto candidates up and down the ballot.

Whatever the reason, since that shift, Trump has been saying all the right things, most notably and vocally in Nashville, saying that if he returned to the White House, he would ensure that the federal government never sells off its Bitcoin holdings.

“For too long, our government has violated the cardinal rule that every Bitcoiner knows by heart: Never sell your Bitcoin,” Trump said during his keynote speech.

Trump also made promises that he would fire Chairman Gary Gensler (the president does not have the power to do that), pledged to create a Bitcoin presidential advisory council, and promised to deconstruct the Trump-coined “anti-crypto crusade” of President Joe Biden and Vice President Kamala Harris.

After Trump’s speech, Cynthia Lummis read her legislative proposal to amass an official U.S. federal reserve of 1 million Bitcoin over five years.

“It will be held for a minimum of 20 years and can be used for one purpose: Reduce our debt,” Lummis said.

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1. AMD Set to Report Earnings Amid High Expectations for AI Growth

Advanced Micro Devices (AMD) is scheduled to report its earnings, with analysts anticipating strong performance driven by growth in AI-related segments. The company’s recent investments in AI technology are expected to play a significant role in its financial results.

2. Fed Expected to Signal September Rate Cut

Goldman Sachs analysts predict the Federal Reserve will indicate a potential rate cut in September. This comes amid a backdrop of slowed US inflation and economic uncertainty, which could influence the Fed’s monetary policy decisions in the upcoming meetings.

3. Asian Stocks Rebound as Central Bank Meetings Loom

Asian markets started the week with gains, tracking Wall Street’s positive movement. Investors are focused on the upcoming central bank meetings in the US and Japan, which are expected to provide more clarity on future monetary policies.

4. Bitcoin Nears $70,000 Following Trump’s Endorsement

Bitcoin prices surged towards $70,000 after former President Donald Trump endorsed cryptocurrency. Trump’s promise to end the persecution of the crypto industry if elected has boosted investor confidence and driven market activity.

5. Singapore’s Temasek Plans $30 Billion US Investment

Singapore’s state-owned investment company Temasek plans to invest up to $30 billion in the US over the next five years. The focus will be on sectors like healthcare and financial services, reflecting a cautious approach to investments in China.

6. Loews Corp Names New CEO Amid Strong Q2 Earnings

Loews Corp announced a 2.5% increase in quarterly profit, driven by strong insurance premiums and investment income. The company also named a new CEO, signaling a strategic focus on sustained growth and leadership stability.

7. Nvidia Faces Market Volatility as AI Stock Fears Grow

Nvidia’s stock has seen significant volatility amid fears of a potential AI bubble burst. The market’s reaction underscores concerns about the sustainability of high valuations in the tech and AI sectors.

8. Microsoft to Report Q4 Earnings with Focus on AI Revenue

Microsoft is set to report its Q4 earnings, with analysts closely watching the company’s AI revenue and spending. The results will provide insight into Microsoft’s strategy and performance in the rapidly growing AI sector.

9. US Markets Rise Ahead of Major Earnings and Fed Meeting

US stock indexes edged higher in anticipation of a busy week of earnings reports from major tech companies and a crucial Federal Reserve meeting. Investors are preparing for potential market-moving announcements.

10. Big Business Pressures Fed for Rate Cuts to Avoid Job Cuts

During the current earnings season, large companies have signaled to the Federal Reserve that lower borrowing costs are essential to maintaining headcounts. This adds pressure on the Fed to consider rate cuts to support economic stability.

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