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- Tuesday's Scoop: Waiting🌤️
Tuesday's Scoop: Waiting🌤️
United's wheels fall off & Disney ramps up cruises
Scoops Team
July 09, 2024
Hey friend - welcome back to your daily scoops on the economy and companies impacting your life.
Here’s what you need to know today to inform your work, spending, and investments…
🌎 Big picture
Small business owners are still struggling, but things have improved.
Americans aren't as worried about inflation.
Policymakers might finally be ready to bring borrowing costs down.
How are you feeling about the economy? |
💼 Work trends
Unemployment Rate: 4.1%
Not far from 50-year lows.
Small business owners are still struggling, but things have improved. According to the National Federation of Independent Business (NFIB), small business confidence in the US rose to a six-month high in June. The NFIB's Small Business Optimism Index climbed but remained below the 50-year average for the 30th straight month. Business owners are still concerned with rising supply costs, higher wage demands, and higher borrowing costs impacting their ability to invest and expand. Despite declining job openings across the economy, small businesses are still finding it challenging to fill vacancies in sectors like construction and retail.
👜 Cost of living trends
Inflation Rate: +3.3% (YoY), +0.0% (MoM)
Policymakers aim for 2% YoY inflation. (May CPI)
Policymakers might finally be ready to bring borrowing costs down. The Federal Reserve is considering interest rate cuts as the economy shows signs of cooling, according to Chair Jerome Powell's testimony to Congress. The Fed has maintained baseline interest rates in the 5.25% to 5.5% range since July 2023. Still, Powell's remarks suggested confidence that inflation is coming under control, returning to their target of a 2% annual increase in the cost of living. Powell expressed a growing concern for a potential rise in unemployment as businesses and individuals continue to cut back their spending, hinting that it may soon be time to stop restricting business activity with high borrowing costs. The Fed may pivot to rate cuts as early as September.
Americans aren’t as worried about inflation. According to the New York Fed’s latest survey, consumers expect the cost of living to rise only 3% over the next year, down from 3.2% in May, while three-year expectations slightly increased to 2.9% and five-year expectations dropped to a 2.8% annual increase. That’s much closer to normal after years of surging prices. Despite this improvement, people are still concerned about the inflated cost of living, especially for essential goods and services like food and rent. Americans gained some confidence about their income growing, which aligns with the recent trend higher in wage growth. We’re still not back to normal, but things are normalizing.
📈 Investment trends
The Market: ⬆️ +0.1%
S&P 500: 5,576.98
1Mo: +4% | 1Yr: +27% | 5Yr: +85%
The market inched to another record high on Tuesday as investors waited for the upcoming flood of economic data. Remarks from the Fed Chairman inspired optimism that policymakers may start lowering borrowing costs soon.
🤓 Inside Scoop: How does the Federal Reserve control the economy?
The Federal Reserve, aka the Central Bank, aka The Fed, is in charge of our whole money system. When the economy is struggling, the Fed lowers baseline interest rates to make it cheaper for consumers and businesses to borrow and spend (lower rates on business loans, mortgages, credit cards, car leases, etc.)
The Fed also pumps more money into the system by buying bonds with new dollars that it essentially speaks into existence. The additional cash keeps the pipes flowing as the borrowing and spending heat up, stimulating economic activity.
Once the economy is strong enough to stand on its own, the Fed starts raising interest rates and pulling back some of that money to ensure the economy doesn't overheat. Inflation is the Fed's heat gauge. The gauge was reading very hot after the pandemic, so the Fed started raising interest rates to cool things down.
🏭 Companies worth watching
👍👎 APPROVAL RATINGS
How are these companies doing? Judge their decisions. Investing starts with an opinion. (+2 pts)
 United Airlines | Losing Wheels United Airlines lost another wheel on a Boeing jet from Los Angeles to Denver, mirroring a similar occurrence in March. A series of malfunctions and issues at United has prompted a broader review from air safety regulators.
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 Stellantis | Hybrid Expansion Stellantis plans to increase its lineup to 36 hybrid models in Europe by 2026, responding to a 41% rise in hybrid sales this year. The American-French-Italian automaker aims to meet the increasing demand for affordable hybrid options as an alternative to petrol and electric vehicles.
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 Lucid Motors | Escape Velocity Lucid Motors delivered a record 2,394 electric vehicles in the second quarter after making its Air sedan more affordable. The luxury EV startup aims to boost sales further with the upcoming Gravity SUV, which will start production by year-end.
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 Eli Lilly | Pipeline Boost Eli Lilly will acquire Morphic Holding for $3.2B to enhance its immunology pipeline, which focuses on serious chronic diseases like digestive tract inflammation. The drugmaker recently earned regulatory approval for its ulcerative colitis treatment.
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 Disney | More Cruises Disney is adding a new cruise ship in Tokyo, launching in 2028 as part of a $60B expansion of its parks and experiences business, which drives a third of its overall sales. The entertainment giant aims to cater to families and offset any slowing sales in its theme parks.
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💭 Broader perspectives… (+2pts)
Have you ever been on a cruise? |
🛠️ Recommended resources (+2pts)
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