What to Expect in the Stock Market June 27-July 1
False Bottom
For some reason, the markets took pity on our souls this week and went the opposite way of down. This was very unexpected for me, as I was expecting stocks to keep declining for the foreseeable future. Especially after Jerome Powell testified to Congress on Tuesday and Wednesday. He eluded to the potential of the economy going into a recession as the Fed continues to raise rates.
Seems investors did not care at all.
They shrugged off the news and chose to be like the temperatures down in the A, EVER RISING!
Market Last Week Results:
Its gonna be a short one for the week. However, catch the podcast for more news during the week on Tuesdays and Thursdays.
Tale of the Tape
Economy
Inflation Forgotten
Consumer Sentiment Survey was released for June and it continued its journey to the center of the Earth
It is now lower than during the 2008 Recession which was the previous lowest point since the survey began.
But an interesting part of the survey was the fact that consumers are now expecting inflation not to be as bad anymore.
Previous people thought inflation would be around 3.3% moving forward but new survey results are showing consumers believing inflation to be closer to 3.1% over a 5-year period
Maybe Joe Biden spoke some magic into the atmosphere with his gas tax holiday
Here is the reality, gas is going to get more expensive because it is simple economics of Supply and Demand
The gas tax holiday will provide a short relief but then if Demand does not slow down or Supply increases (which unfortunately cannot increase see Russia for that). Prices will rebound like Andrew Wiggins in the Finals
This means everything else will stay expensive
FedEx
FedEx reported 2nd Quarter Earnings on Thursday last week and it was lackluster.
Although revenues saw slight growth as margins improved from 7% to 10%. Overall revenues were lower than expected.
All this is with FedEx adding a fuel surcharge to boost revenues and increase their margins.
Why is this important?
Companies like FedEx and UPS are seen as a bellwether for the global economy. Because they basically have a hand in the transportation of most goods.
If FedEx is reporting difficulty increasing revenues and difficulty improving earnings. It shows there is a global slowdown in spending and trade.
This is not a good sign for economic growth as a whole
Random Interesting Facts
Mars owner of M&M, Snickers, Twix Milky Way, Dove, Skittles, and basically every other chocolate and candy bar you love. Reported an annual revenue of $45 billion
This is a big deal because this is more than Coca-Cola, Nestle, and Unilever did in the same time period
What was their secret? Nope it was not the candy
It was the growth of their pet and snack unit
Unfortunately, because this is a private business and they really love to stay that way. We do not know the specific breakdown of how much each grew
This is in line with the industry, Snacking is growing massively since the pandemic
Recently Kellogg, your favorite cereal maker, announced it was breaking up the company into three parts to unlock shareholder value
One focused on snacks, another on cereal, and another on plant-based foods
In 2021, Kellogg's snack division brought in $11.4 billion in revenue. Total revenue for the company was $14.2 billion.
80% of the revenue came from just snacks
It might be a similar story for Mar's
Don't use the word "The" in a business cause you might just get sued
Ohio State University successfully registered a trademark for "THE" and was approved by "The" U.S Patent and Trademark Office
However, the trademark only applies to clothes. The school has been previously denied the trademark but persistence is powerful apparently
But it is still very interesting and kinda dumb because "THE" is the most used word in the English language. Just look at how many times I've used it just writing about this story
The number of Americans who believe most abortions should be illegal
Research has shown that making abortions illegal does not reduce the number of abortions. It only makes it more difficult and more dangerous
Typically, it is those on the lower end of the income spectrum that faces the negative circumstances of making abortions illegal.
Looking Ahead
Next week will be an economist's wet dream. A ton of economic indicators for the US will be released which can be used to have an idea of what state the economy is currently in.
The final report on First-Quarter GDP will be released on Wednesday, this can tell us if we are already in a recession or if the economy is doing okay
Within this report, we will get corporate profits and consumer spending
Consumer Spending is very important because it is 67% of the GDP
On Thursday, we get more color surrounding inflation
The PCE or Personal Consumption Expenditure, the inflation data the Fed pays more attention to because it strips a lot of the volatile data out will be released
Also on Thursday, we get PMI or Purchases Manufacturing Index which tells us how well the manufacturing industry is doing.
If there is a slowdown, this can be a bad thing as it will show businesses are beginning to throttle down manufacturing with the expectation of lowered demand
A slowdown in manufacturing can lead to layoffs which can lead to lower demand
Basically leading to a self-fulling prophecy of the recession everyone is predicting
All that sounds fun but this week will also mark the end of the 2nd Quarter of 2022.
DAYUM!! Time Flies
So we begin the gauntlet of Q2 Earnings reports. Starting with one big hitter: Nike
The Rest:
Sports I Care About Update
Cause there is nothing of note to talk about anymore
We should be watching the World Cup right now but Qatar bribed Fifa and got it. So now we are stuck waiting until November to watch the glory of World Champs
Guess I have a reason to be social again
Thank you for Rocking With ME
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Remember GENEROSITY > greed
God bless Each and Everyone of y’all
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