Daily Scoop 22-7-18

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Today's Scoop:Fading

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Big Picture

1. Consumers are still spending a lot.

2. Consumer confidence has increased as gas prices have come down.

3. Homebuilders are getting less confident as homes grow less affordable.

The Market: 

⬇️

-0.8%

S&P 500: 3,830.85

1Mo:

+2%

| 1Yr:

-10%

| 5Yr:

+55%

Markets drifted lower today after a positive day on Friday. Investors are still working through the mixed economic data.

Consumers are still spending and getting more optimistic about the economy

. The University of Michigan reported US Consumer Sentiment ticked up in July as falling gas prices tempered consumers' expectations of how much prices will continue to rise.

Inflation expectations for the next few years inched lower

. Expectations are essential because the anticipation of higher prices can influence businesses to raise prices preemptively and consumers to purchase more hastily, perpetuating the upward price pressure.

The Commerce Department reported retail sales rose more than economists expected in June, a good sign of spending momentum. Consumers power the economy.

Homebuilders are getting worried.

The National Association of Home Builders reported the biggest single-month drop in confidence since April 2020.

High mortgage rates and record home prices have made homes unaffordable

for large market segments.

Company Scoops ❤🌎💰

(Click to dig in & vote your reaction, see how others feel)

Meta

accused of minimizing its role in Indian violence

-

Bank of America

is reaping the rewards of higher rates

-

Goldman Sachs

keeps trading

-

Citigroup

starts getting cautious

-

Ford

tries to capitalize on high price market

(These links only work for 24 hours while the story is live)

🤓 Inside Scoop...

Wall Street bank business models

can be opaque and confusing. They mainly earn revenue from lending, managing investments, executing trades, and brokering corporate deals. The

traditional banking

business model entails taking

deposits

, paying some interest to the depositor, then

lending

that money to someone else at some higher interest rate. Banks profit from the spread between the rate they pay the depositor and what they earn from their loans.

Investment banking

isn't actually the investing arm of the bank. Investment banks assist companies with large transactions, earning fees for their advice. In the same way that a real estate broker earns a commission for helping sell your house. Investment banks earn a hefty commission for helping you value and sell your company to other companies or the public (IPO).

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