Marriott | August 13th, 2024

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GOOD MORNING

Here's everything you need to know today: Elon Musk is leaning into chaos like it’s a new business model, or are we stretching the meaning of “new” a bit?  Between his interview with Donald Trump on X provoking hate speech warnings from EU regulators before it even happened, and letting SpaceX pollute Texas waters, Musk seems hell-bent on stirring the pot on both sides of the Atlantic. If his goal was to create maximum Monday mayhem: mission accomplished.

Let’s start with the headline-grabber: Musk interviewing Trump on X. The EU was already fuming going into Monday evening, warning Musk about turning his platform into a hate speech haven. But did Musk care? Probably not. He banked on the attention (controversy sells, after all) and what better way to boost X’s flailing relevance than by giving the world’s most divisive ex-president a stage?

Meanwhile, back in Texas, SpaceX has been busy doing what it does best—pushing boundaries, even if it means repeatedly polluting local waters. The EPA and Texas authorities are not amused, and this environmental mess is just the latest regulatory hurdle Musk is barreling through without looking back. But hey, when you’re aiming for Mars, who has time to worry about a little thing like Earth (especially Europe)?

Let’s Dive Into More Details Below…

BREAKING NEWS
If you’re looking for a canary in the coal mine for the global economy, copper prices might be waving a red flag.

Now, before you dismiss this as another routine dip in the market, consider this: copper is often dubbed “Dr. Copper” for its supposed ability to diagnose the health of the global economy. When copper prices drop, it’s usually a sign that trouble is brewing, and it has been slipping… fast. In fact, with prices dropping more than 6% since the start of the year, it’s not so much a bad day at the metals exchange than a flashing warning sign that the broader economy could be in for some rough times.

WHAT HAPPENED
Copper prices, which peaked at over $10,000 per ton earlier this year, have now dropped to around $8,000 per ton. China, the biggest consumer of copper, is dealing with an economic slowdown that’s cutting into demand faster than an intern deleting unread emails. This isn’t just a China problem, though. Across the board, commodities are taking a hit as fears of a global economic downturn mount.

The entire Bloomberg Commodity Index is down nearly 5% this year, signaling that trouble might be brewing across the board. Oil prices have slid by around 10% this year, while lumber, another key economic indicator, has seen prices drop by nearly 20%. What we’re starting to see is commodities investors dancing to the new tune “Panic on the Trading Floor.”

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BREAKING NEWS
JetBlue Airways just hit some serious turbulence, and no, it’s not the kind a couple of extra drink carts can fix. The Big Three ratings agencies—S&P Global, Moody’s, and Fitch—just downgraded the airline’s credit ratings, which is quite the Even More Bummer.

JetBlue’s stock took a nosedive on the news, firmly planting the airline in negative territory for the year. If you were holding out hope for a smooth recovery, you might want to fasten your seatbelt.

WHAT HAPPENED
The triple-whammy of bad news from S&P, Moody’s, and Fitch, who collectively decided JetBlue’s credit wasn’t worth what it used to be sent the stock dropping 13% to $5.28 in early trading. S&P slashed JetBlue’s issuer credit rating to B- from B, essentially telling us to expect rough skies for the next couple of years. Moody’s followed up by downgrading the airline’s corporate family rating to B3 from B2, forecasting it’ll take “a number of years” for

JetBlue to get its act together and stabilize profits and cash flow. Fitch joined the downgrade fest by cutting the airline’s senior secured debt ratings to BB- from BB, pointing out that margins are going to stay squeezed at least through 2025.

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BREAKING NEWS
Would you like a Wall Street power struggle with your Pumpkin Spice Latte? Starbucks is reportedly on the brink of a boardroom shakeup that has all the makings of a caffeinated game of corporate chicken. After weeks of negotiation, Elliott Management is closing in on a seat on Starbucks’ board, and it couldn’t come at a more critical time.

So, why the rush? Starbucks is no stranger to challenges, from navigating a pandemic to battling labor disputes. But with its stock underperforming and consumer preferences shifting faster than you can say “triple-shot venti,” a deal with Elliott now keeps America’s favorite caffeine dealer safe from the other activist sharks circling its Seattle HQ.

WHAT HAPPENED
Elliott Management, led by Paul Singer (a guy who can make corporate execs sweat just by dialing into a Zoom call) has been pushing hard for a board seat at Starbucks after snapping up a significant stake in the company earlier this year. The details of the stake are a bit murky (Elliott is perhaps the most opaque outfit in the activist game), but it’s clear they have Starbucks’ attention.

Negotiations between Starbucks and Elliott have been ongoing for weeks, with Elliott pushing for that coveted board seat—a spot public companies don’t offer up easily to activists looking to shake up boardrooms and C-Suites. But the timing of a possible deal here is crucial. Just last week, Starboard Value, another activist investor, decided to buy into Starbucks. Starboard has its own storied history of pushing companies to make changes (Google “Starboard and Olive Garden breadsticks”), and their recent move likely pushed Starbucks to the negotiating table faster. With both Elliott and Starboard now involved, Starbucks is under serious pressure to avoid a messy, two-front battle.

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1. Bank of America CEO says recession no longer predicted

Bank of America CEO Brian Moynihan stated that the bank no longer expects a recession in the U.S., reflecting confidence in the current economic policies and the Federal Reserve's actions. This change in outlook marks a significant shift in sentiment among major financial institutions.

2. Scotiabank buys 15% stake in KeyCorp for $2.8 billion

Scotiabank announced its acquisition of a 14.9% stake in U.S. regional lender KeyCorp for $2.8 billion. This strategic investment highlights the Canadian bank's efforts to expand in the U.S. market, particularly in the struggling regional banking sector.

3. Adani Group shares plunge amid Hindenburg allegations against SEBI

Adani Group's shares fell sharply, losing up to $19 billion in market value after Hindenburg Research accused India's market regulator SEBI of conflicts of interest. These allegations have intensified scrutiny on both Adani and SEBI, impacting investor confidence.

4. Blink Fitness files for Chapter 11 bankruptcy

Blink Fitness, the low-cost gym chain owned by Equinox, filed for Chapter 11 bankruptcy. The company plans to close around 10% of its 100+ locations, citing challenges in regaining customers post-pandemic as a key factor in its financial troubles.

5. B. Riley Financial stock plummets after dividend suspension

B. Riley Financial's stock dropped 28% after the company suspended its dividend and warned of a wider quarterly loss. The company is also under a broader federal probe regarding its financial disclosures, adding to investor concerns.

6. JetBlue launches $2.75 billion debt sale, shares fall

JetBlue announced a $2.75 billion debt offering backed by its loyalty program, causing shares to drop by 8%. The airline aims to bolster its reserves amidst challenging market conditions, but the move has raised concerns about its debt levels.

7. Nvidia stock rebounds as analysts predict AI demand surge

Nvidia shares surged as analysts forecast a significant boost in demand for AI chips, anticipating a strong earnings report. The company is expected to benefit from the ongoing AI boom, with investors eagerly awaiting its performance outlook.

8. Trump Media stock drops after $16 million Q2 loss

Trump Media & Technology Group reported a $16 million loss for the second quarter, with revenue declining 30% year-over-year. The company's stock dropped 7% following the announcement, as it struggles to gain traction in the competitive social media space.

9. LL Flooring files for bankruptcy, plans to close 94 stores

LL Flooring, formerly Lumber Liquidators, filed for Chapter 11 bankruptcy and announced plans to close 94 stores as part of its restructuring. The home improvement retailer is seeking a buyer while attempting to stabilize its business.

10. Americans' spending habits slow inflation, boosting economic outlook

Recent reports indicate that American consumers' refusal to keep paying higher prices has contributed to slowing inflation. This consumer behavior is credited with stabilizing the economy and preventing a potential downturn.

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Today's insights are provided by Homes & Villas by Marriott Bonvoy. Book your next getaway by August 31, 2024 and receive 24K Bonus Points Plus 10% off.

Learn More Now ➔