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- Monday's Scoop: Clarity🌤️
Monday's Scoop: Clarity🌤️
Meta clears Trump & Lulu's sustainability gets challenged
Scoops Team
July 15, 2024
Hey friend - it seems to get wilder every day in America. We’ll try to keep you informed. Catch up with the Weekly Scoop.
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
People are still struggling with the high cost of living.
Businesses’ costs aren’t climbing like they were earlier in the year.
China’s economy isn’t booming like it used to.
How are you feeling about the economy? |
💼 Work trends
Unemployment Rate: 4.1%
Not far from historic lows
The world’s second-largest economy isn’t doing as well as hoped. China reported only 4.7% economic growth in the second quarter, falling short of expectations and marking the slowest growth since early 2023. This slowdown is largely due to a prolonged property downturn and job insecurity discouraging spending. Retail sales transactions hit an 18-month low, with businesses slashing prices to entice buyers. Despite the disappointing data, China's government still aims for 5% growth for 2024, a target that many believe will require significant stimulus.
👜 Cost of living trends
Inflation Rate: +3.0% (YoY), -0.1% (MoM)
Policymakers aim for 2% YoY inflation (June CPI)
Americans are still angry about the cost of living. The University of Michigan's Consumer Sentiment Index fell to its lowest point in eight months in June as most respondents cited struggles making ends meet. Even though current price levels are still causing pain, Americans aren’t as worried about additional inflation, expecting the cost of living to rise less moving forward than it has over the past year. Inflation expectations for the next five to ten years edged down to 2.9%. Inflation expectations are important to watch because they can often be self-fulfilling, as businesses hike prices in anticipation of higher costs.
Businesses’ costs aren’t climbing like they were earlier in the year. The Labor Department reported that June's Producer Price Index (PPI) rose by 0.2%, slightly more than expected. Over the past year, the PPI has increased by 2.6%. The rise was mainly due to higher service costs, as goods prices declined, especially energy and food. These trends suggest that the pressure on companies’ cost of doing business is easing, providing less pressure to increase prices for consumers and perpetuate inflation.
📈 Investment trends
The Market: ⬆️ +0.3%
S&P 500: 5,631.22
1Mo: +3% | 1Yr: +25% | 5Yr: +89%
The market approached its record high on Monday as investors assumed the unsuccessful assassination attempt on former President Trump solidified the chances of a Republican government with less regulation and lower taxes. Corporate second-quarter financial reports have been off to a decent start.
🏭 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)
 Meta Platforms | Political Expression Meta is easing some restrictions on former President Donald Trump's Facebook and Instagram accounts, which were initially suspended after the Capitol riot. The social media giant believes Americans should hear from presidential candidates equally, thus ending Trump's additional monitoring as he runs against President Biden.
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💭 Broader perspectives… (+2pts)
Was banning former President Trump from social media justified? |
 JPMorgan Chase | Profit Pressure America's biggest bank reported another quarter of declining profits as heightened competition forced it to pay higher interest on deposits while managing increasing loan defaults. JPMorgan's investment banking revenue surged amid a comeback in corporate dealmaking.
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🤓 Inside Scoop: Can you explain the different bank business models?
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).
The investing arm of the bank is called asset or wealth management. These divisions earn fees to oversee clients’ money, provide advice, and invest on their behalf.
 Citigroup | Restructuring Boost America's third-largest bank reported rising profits driven by surging fee revenue in its investment banking division despite increased credit card losses across its retail business. Citigroup is halfway through its plan for 20,000 layoffs by 2026, which is intended to streamline the massive corporation and improve profitability.
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 PayPal | Transparency Demands Poland's antitrust watchdog has fined PayPal $27.3M for unclear contractual clauses about prohibited activities and potential penalties that give PayPal open-ended power to assign fees and freeze accounts. The payments giant will likely appeal in court.
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 Lululemon | Not So Green Lululemon faces a class action lawsuit alleging that it has been misleading shoppers about reducing its environmental impact to justify premium product pricing. The athleisure giant has reportedly doubled its fossil fuel emissions since it began promoting its sustainability commitments in 2020.
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🛠️ Recommended resources (+2 pts)
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