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  • Monday's Scoop: Untethered🌤️

Monday's Scoop: Untethered🌤️

Uber agrees to minimum wage & Lilly sues fakes

 
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Here’s what you need to know today to inform your work, spending, and investments…

 

🌎 Big picture

  1. Spending increased in May as income rose, but Americans still struggle to save.

  2. The cost of living stopped rising last month, and some things are getting cheaper.

  3. Government agencies lost a lot of their power to regulate big business.

How are you feeling about the economy?

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 💼 Work trends

Unemployment Rate: 4.0%
Still near the lowest rate in 50+ years

Government agencies won’t have as much power to regulate big businesses moving forward. On Friday, the Supreme Court overturned the Chevron deference, a 40-year-old doctrine that protected the government's ability to enforce consumer and environmental protections. Congress makes the laws, the executive branch implements them, and the judicial branch settles any debates about the proper application of the laws. There is always a grey area since Congress rarely writes a perfectly detailed law accounting for every future conditional situation. For the past four decades, judges deferred to government agencies, like the Environmental Protection Agency or National Labor Relations Board, as experts in their field to enforce the details of the broad instructions from Congress. The Supreme Court’s new ruling requires courts to independently decide the proper application of any ambiguous laws from Congress. This change makes it harder for agencies like the EPA to enforce regulations on pollution and for the SEC to implement certain disclosure rules. The decision shifts more responsibility to Congress to create detailed laws and more power to individual federal judges to decide how policy should be implemented across various issues, from healthcare to pollution, labor rights, artificial intelligence, and finance.

 

 👜 Cost of living trends

Inflation Rate: +3.3% (YoY), 0% (MoM)
Policymakers aim for 2% YoY inflation (May CPI)

The cost of living stopped rising last month, and some things are getting cheaper. Policymakers’ preferred inflation gauge, the personal consumption expenditures (PCE) price index, showed no change last month, thanks to a significant drop in goods prices, especially for recreational items and gasoline. Excluding volatile food and gas prices, the so-called core PCE rose only 0.1% in May. Overall, the cost of living is only 2.6% higher than a year ago. Policymakers have been restricting spending and investment with higher borrowing costs, trying to get inflation closer to a more normal 2% annual price increase.

Spending increased in May as income rose, but Americans still struggle to save. The Commerce Department reported that even adjusted for inflation, consumers spent 0.4% more in May than in April. That’s thanks to wages starting to regain ground on the cost of living. Disposable personal income rose 0.5% in the month. However, not much is going into savings. The personal saving rate, what’s left of our disposable income after taxes and expenses, rose slightly to 3.9% but remains far from the 7.7% rate before the pandemic.

 

 🤓 Inside Scoop: What is the difference between the PCE and CPI?

Economists track inflation using the PCE (Personal Consumption Expenditures) price index and the CPI (Consumer Price Index), but they differ in scope and method.

The PCE covers all goods and services consumed by households, adjusting for changes in consumer behavior, while CPI focuses on a fixed basket of goods and services. The PCE may often show lower inflation because it accounts for consumers switching to cheaper alternatives, like beef to chicken, as beef prices rise. The PCE also includes a broader scope of costs. For instance, while the CPI tracks only out-of-pocket medical expenses, the PCE tracks medical costs paid on consumers’ behalf. The weightings of the underlying categories also differ. The PCE has a smaller weight for shelter.

Investors pay the most attention to the CPI because it usually comes out a couple of weeks before the PCE. Policymakers at the Federal Reserve prefer the PCE, particularly the core PCE that strips out volatile food and energy prices.

 📈 Investment trends

The Market: ⬆️ +0.3%
S&P 500: 5,475.09
1Mo: +4% | 1Yr: +23% | 5Yr: +83%

The market drifted higher to start the month as investors welcomed the recent Supreme Court rulings and growing support for a second Trump term. Political and judicial trends point toward less regulation and lower taxes for big businesses.

 

🏭 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)

Uber

New Work Structure

Ride-hailing companies agreed to a $32.50 minimum hourly pay rate for Massachusetts drivers in a new settlement that addresses wage law violations.

Uber and Lyft will now allow drivers to access some employee-like benefits, like paid sick leave and health insurance stipends, while still using them as independent contractors.

Tell Uber's CEO how you feel

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Deere & Co

Cutting Back

Deere is laying off nearly 600 workers across two Iowa factories and one in Moline, Illinois, representing about 14% of the workforce at these facilities.

The farm equipment manufacturer aims to slow production after reporting a 15% drop in sales as farmers tighten budgets.

Tell Deere's CEO how you feel

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Nike

Rough Patch Continues

Nike's sales have slumped over the past year as the sneaker giant lost ground to new upstart competitors and wasted too much effort trying to build its direct-to-consumer business.

The sportswear giant plans to cut costs and refocus on performance innovations.

Tell Nike's CEO how you feel

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 💭 Broader perspectives… (+2pts)

Has Nike lost its cool?

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Boeing

Back Together

Boeing is buying Spirit AeroSystems, the manufacturer of the parts involved in the door that blew off a Boeing plane mid-flight in January, for $4.7B.

Spirit was initially formed as a spinoff from Boeing, and the planemaker hopes the deal will enhance safety and quality control.

Tell Boeing's CEO how you feel

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Eli Lilly

More Fakes

Eli Lilly filed more lawsuits against medical spas and wellness centers selling products falsely claiming to contain the active ingredient in its diabetes drug Mounjaro and weight loss drug Zepbound.

The drugmaker hasn't been able to keep up with surging demand for the new drugs.

Tell Eli Lilly's CEO how you feel

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