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- Monday's Scoop: Bounce🌤️
Hey friend - hope you had a nice weekend. Living through a new historic event every week means taking a little time for yourself. Don’t feel bad unplugging a bit early today and taking a break from your feeds.
Catch up with the Weekly Scoop and don’t miss our new series, Demystifying Financial Advice.
Don’t forget to sign up for our sustainability competition with Future to win $500!
Here’s what you need to know today to inform your work, spending, and investments…
🌎 Big picture
President Biden’s campaign withdrawal introduces new uncertainty to the US elections.
American factory activity seems to be rebounding from a long recession.
Corporate profits are looking good so far.
How are you feeling about the economy? |
💼 Work trends
Unemployment Rate: 4.1%
Not far from historic lows
American factory activity seems to be rebounding from a long recession. The Federal Reserve reported US manufacturing output increased more than expected in June, with factory production rising 0.4% last month after a 1.0% increase in May. This marks a solid rebound for the second quarter, with manufacturing output increasing at an annualized rate of 3.4%, recovering from a 1.3% decline in the first quarter. While manufacturing only accounts for about 10% of the US economy, this uptick is a promising sign, especially given the challenges of higher borrowing costs.
📈 Investment trends
The Market: ⬆️ +1.1%
S&P 500: 5,564.41
1Mo: +2% | 1Yr: +22% | 5Yr: +84%
The market jumped higher on Monday, reversing last week's negative trend. Major events in politics, tech, and corporate financial reports shook up the prevailing narrative and forced investors to reset their expectations. With President Biden's decision to drop out of the race and the emerging anti-big-business rhetoric from the Republican party, investors have lost clarity on the path forward for economic policy.
President Joe Biden has exited the 2024 presidential race, a historic move introducing more uncertainty to the US elections. Biden's decision to withdraw comes after months of pressure from within the Democratic Party, culminating in a weak debate performance and a bout with COVID-19. Biden has endorsed Vice President Kamala Harris to take his place in the race as the Democratic candidate. This unexpected change has brought uncertainty but also potential renewed energy to the Democratic campaign. Harris, younger and seen as more dynamic, aims to consolidate support across key demographics. There are still several open questions regarding the process for making Harris the official Democratic nominee and transferring delegates and political donations from Biden.
🤓 Inside Scoop: How do politics affect the markets?
Government policy changes can move markets, particularly spending, regulation, or tax policy. However, most significant policy changes have an extended lead time with multiple revisions, and most proposed policies may never come to fruition, so markets rarely react to general political discourse.
Uncertainty has the most considerable influence on markets. Investors hate too much variability in their projections. So election years typically have above-average volatility in the first three quarters but a positive average return in the fourth quarter, regardless of the outcome, simply because there's more clarity on potential policy.
Corporate profits are looking pretty good so far. We’re only a week into second-quarter corporate financial updates, but more than 80% have reported higher profits than investors expected, according to FactSet. That’s better than usual. S&P 500 companies, which power the stock market, are on track to report 9.3% earnings growth this year, the highest year-over-year increase since the first quarter of 2022. Corporate profit growth drives the underlying growth of the stock market, so it’s crucial to monitor. Investors buy stock in a company to get a share of its profits.
🏭 Companies worth watching
👍👎 APPROVAL RATINGS
Act like a boardmember and judge how companies behave. Engaging helps build your financial confidence and hold corporations accountable. (+2pts)
 CrowdStrike | Global Meltdown CrowdStrike is focused on damage control after causing a worldwide software outage across multiple industries with a faulty update that crashed millions of Microsoft Windows machines. The cybersecurity giant serves half the 1,000 largest companies, including eight of the 10 biggest banks and most of the largest healthcare and manufacturing companies.
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💭 Broader perspectives… (+2pts)
Were you affected by the Microsoft/CrowdStrike outage? |
 Microsoft | Blue Screen Chaos Microsoft estimates that only 8.5 million Windows devices, less than 1% of its global user base, were affected by the outage caused by cybersecurity firm CrowdStrike's faulty update despite widespread disruption across critical sectors like healthcare and air travel. The tech giant faced criticism for its security measures, but due to regulatory agreements, it isn't able to wall off its core software from external developers.
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 Delta Air Lines | Continued Cancelations Delta Air Lines has struggled more than any airline to recover from the global software outage caused by CrowdStrike, still canceling over 20% of its mainland flights on Monday. The airline is expected to lose over $160M after canceling more than 4,600 flights from Friday through Sunday.
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 Verizon | Slow Growth Verizon reported weak profit growth last quarter as fewer people upgraded their phones, a trend that could shift with the upcoming release of new AI-powered iPhones later this year. The biggest US mobile carrier focused on bundling services to counterbalance declining broadband subscribers after a government subsidy program ended.
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 American Airlines | Avoiding a Strike American Airlines and its 28,000 flight attendants reached a tentative agreement after over three years of negotiations addressing concerns on compensation, work rules, and retroactive pay. If approved, the agreement will prevent a potential strike during the peak travel season and offer flight attendants their first salary increase in five years.
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🛠️ Recommended resources (+2 pts)
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