Market News 7/17

Markets

Stocks are experiencing positive momentum after a week that indicated the potential resolution of our inflation concerns, and major banks continue to generate significant profits. There is a real chance that the Federal Reserve's desired outcome of a "soft landing" is achievable, wherein inflation is brought under control without triggering an economic downturn. However, it remains crucial for corporate financial performance not to unexpectedly deteriorate during this earnings season.

Finance

Big Banks’ Earnings Have Some Bad News for Smaller Banks

Despite the surge in profits observed at major banks, it is essential not to overlook the banking crisis that occurred earlier this year. As regional banks prepare to release their financial reports this week, reminders of the crisis may come into focus and potentially overshadow the positive developments.

Last Friday, JPMorgan Chase and Wells Fargo reported year-over-year net income growth of 67% and 57%, respectively. Such robust figures would typically be seen as positive and reassuring. However, on that same day, the KBW Nasdaq Bank Index experienced a decline of over 2%, while State Street, a trust bank that also reported its earnings, saw its shares drop by 12%. These contrasting market reactions indicate that there are underlying concerns and factors that may be influencing investor sentiment beyond the headline profit numbers.

Politics

DeSantis campaign burning through cash

The latest financial disclosures for the 2024 presidential candidates reveal a significant concern regarding Ron DeSantis' campaign. DeSantis, who is currently trailing former President Trump in the Republican nomination polls, has been spending money at an alarming rate, necessitating a replenishment of his finances.

During the second quarter, DeSantis managed to raise an impressive $20 million; however, he has already spent approximately 40% of that amount. One of the primary factors contributing to this cash burn is the substantial size of his campaign staff, resembling that of a tech company that anticipated the COVID-19 pandemic lasting indefinitely. Prior to recently letting go of around a dozen employees to reduce expenses, DeSantis had a payroll consisting of 92 full-time staff members, the largest among GOP candidates.

Replenishing revenue could prove challenging for DeSantis as many of his donors have already reached their limit. Over two-thirds of the funds he currently has on hand originate from supporters who have contributed the maximum allowed amount of $3,300 for primary elections.

Comparatively, the front-runner, Donald Trump, raised less than DeSantis in the previous quarter ($17.7 million); however, he still possesses twice the amount available for expenditure. On the other hand, President Biden's reelection campaign appears to be operating on a modest scale, having spent just $1.1 million in the second quarter and employing only four full-time staff members. This minimal spending, combined with a lack of substantial donations from smaller contributors, is causing some concern within Democratic circles.

Meanwhile, lesser-known candidates are employing innovative strategies to raise funds. Republican contender Vivek Ramaswamy, a biotech entrepreneur, is offering commissions to his supporters, granting them a 10% cut of the money they raise for his campaign. Miami Mayor Francis Suarez, another GOP candidate, is leveraging the popularity of Lionel Messi's debut game at Inter Miami by raffling off front-row tickets to his financial backers. Lastly, North Dakota Governor Doug Burgum is directly giving cash in the form of $20 gift cards to anyone who donates as little as $1 to his campaign. However, the legality of this scheme remains uncertain, even though Burgum needs to achieve a 40,000-donor target to qualify for the first GOP debate next month.

Sports

Wimbledon champion

In an extraordinary five-set match, 20-year-old Carlos Alcaraz, widely seen as the future star of men's tennis, achieved a remarkable feat by defeating Novak Djokovic and claiming his first Wimbledon title. This victory not only prevented Djokovic from securing a fifth consecutive Wimbledon trophy but also halted his quest for a 24th major championship. Djokovic acknowledged Alcaraz's exceptional skills, stating that he had never encountered a player quite like him before. On the women's side, Marketa Vondrousova created history by becoming the first unseeded woman to win the Wimbledon title.

Continued..

Messi moves to florida

Last week, a remarkable moment unfolded at a Publix grocery store in South Florida when soccer legend Lionel Messi was spotted picking up everyday household items. The sighting quickly became viral on social media, intensifying the already heightened excitement surrounding Messi's forthcoming debut for his new team, Inter Miami, which was scheduled for Friday.

To provide some context, Lionel Messi is widely regarded as one of the greatest soccer players of all time. He recently made a historic move from his long-standing career in Europe to join Major League Soccer (MLS) in the United States, in a groundbreaking deal that includes lucrative incentives from prominent brands like Apple and Adidas. The finalization of this deal over the weekend has the potential to significantly impact MLS.

With Messi having now settled into his new home in South Beach and having completed his grocery shopping at Publix, the city of Miami is warmly embracing its newest resident, treating him as a hero and eagerly anticipating his contributions to the local soccer scene.

Tech

Tesla made its first Cybertruck

Tesla has achieved a significant milestone as the first Cybertruck has finally been produced. This event comes after almost four years since Elon Musk initially unveiled the electric pickup truck in a memorable presentation that included a window-shattering demonstration. Despite facing delays that pushed back its original production date by two years, the inaugural Cybertruck has now been manufactured at Tesla's plant in Texas. While pricing details are yet to be disclosed, Elon Musk has expressed his goal of producing 250,000 of these futuristic-looking pickups annually.