It Girl Identity: Issue 8

It Girl Identity Newsletter

Grab your Chamberlain Iced Coffee and read what's moving markets this week, follow a detailed guide to understanding crypto, and enjoy our curated It Girl Identity recommendations!

What’s Moving Markets

As everyone awaits the Fed’s interest rate decision later this week, the S&P dropped -0.8%, the Nasdaq Composite slipped by 2.1%, and the Dow climbed by 0.8%. The economy grew faster than expected by 2.8%. Bond markets responded positively to equity volatility, growth worries, and 7% oil price decline. Read what moved markets below.

What’s Up

• Enphase Energy (ENPH) surged 12.80% despite missing earnings as investors responded positively to management's upbeat future forecast.

• AT&T (T) gained 5.22% following a stronger-than-expected increase in wireless subscribers, contrasting with competitor Verizon's recent miss.

• Mattel (MAT) rose 9.80% amid ongoing takeover rumors, with potential bids from rival Hasbro driving investor optimism.

• Seagate Technology (STX) jumped 4.02% on the back of a robust earnings report from the hardware manufacturer.

• Top S&P 500 Gainers: Mohawk Industries (MHK) +25%. 3M Company (MMM) +22%. Bristol-Myers Squibb (BMY) +18%. Universal Health Services (UHS) +18%. Molina Healthcare (MOH) +16%.

What’s Down  

• Visa (V) declined 4.01% after falling short of revenue estimates due to sluggish consumer spending.

• AMC Entertainment Holdings (AMC) dropped 7.68% despite releasing preliminary earnings that failed to impress investors.

• Vertiv Holdings (VRT) sank 13.64% despite beating earnings expectations, as concerns over its high valuation weighed on investor sentiment.

• General Dynamics (GD) stumbled 3.32% due to fewer deliveries of its high-end jets last quarter.

• Lamb Weston (LW) plummeted 28.24% after disappointing earnings and a bleak forecast for the rest of the year from the frozen food supplier.

• Alphabet (GOOG, GOOGL) Q2 Earnings Reaction: Shares dropped 2.2% after-hours despite better-than-expected results. Cloud revenues topped $10B for the first time; however, YouTube ads slightly missed expectations. CFO Ruth Porat highlighted increased Q3 investments in technical infrastructure and higher cost of revenues from hardware launches. Alphabet maintains 2024 operating margin expansion expectations.

• Tesla's Shift to AI-Centric Future: Tesla's shares plunged 12.33% after missing Q2 earnings estimates for the fourth straight quarter. Profits dropped 45% due to weaker EV sales, though revenue slightly exceeded expectations at $25.5 billion. Competition and delays in a lower-cost EV model exacerbated market share loss. Amid layoffs and price cuts, Tesla postponed its driverless taxi event to October. Elon Musk focused on AI, proposing a $5 billion xAI investment despite unclear profitability timelines. Analyst views on Tesla's transition vary, reflecting uncertainty over its shift from core EV business to AI.

• Top S&P 500 Losers: DexCom (DXCM) -43%. Edwards Lifesciences (EW) -28%. Lamb Weston Holdings (LW) -27%. Ford Motor (F) -20%. CrowdStrike Holdings (CRWD) -16%.

Markets and Economy

• Lineage with the Largest IPO: The world’s biggest cold-storage, Lineage, raised $4.4 billion at $78 per share after listing its stock on the Nasdaq exchange, raising its value to $18 billion. Lineage’s success shows that “The importance of the supply chain, especially post-Covid, is even more pronounced.”, according to co-founder Adam Forste.

• Bill Ackman’s IPO Release Resumes: The billionaire’s investment fund Pershing Square USA will still go public with a date for pricing yet to be announced. On Thursday, Ackman sent a letter to his hedge-fund firm's existing shareholders urging them to participate in the IPO promptly to enhance its strength. Initially projected to raise up to $25 billion, the IPO was now expected to raise around $2.5 billion to $4 billion. Ackman acknowledged the challenge of generating enthusiasm for his fund’s closed-end structure, which has become less popular with investors.

• CrowdStrike’s Significant Stock Price Drop: CrowdStrike (CRWD) experienced a significant stock price movement on the downside after an outage caused by a defect in a content update to its “Falcon” cybersecurity defense software for Windows hosts. CRWD ended the week by plummeting by 16.0%.

• Luxury Market Downturn Hits LVMH Amid Global Economic Pressures: Luxury giant LVMH's stock fell 3% after disappointing Q2 sales, driven by weak demand in China amidst economic challenges and crackdowns on displays of wealth. Despite a 57% sales rise in Japan, fueled by Chinese tourists, global sales of $22.7 billion missed expectations of $23.4 billion. Champagne sales dropped 15%, reflecting subdued celebratory spending. LVMH's stock is down 25% in the past year, mirroring broader struggles in the luxury sector, with Burberry, Prada, and Kering also facing declines under similar market pressures.

• US Home Prices Surge Amid Sluggish Sales and Seller Price Cuts: The US housing market faces notable challenges: home prices have hit a record high of $426,900, yet sales have declined for four straight months due to high prices, mortgage rates, and limited supply. Sellers are responding by cutting prices, with nearly 20% reducing prices in June, but market activity remains slow. Additionally, about 15% of home purchase agreements signed in June were canceled, underscoring the current sluggishness in the housing market. These trends not only affect real estate but also serve as crucial indicators of broader economic health and consumer sentiment, influencing sectors from construction to finance.

• Aviation Orders Surge Amid Supply Chain Challenges: At the Farnborough Airshow, Boeing (BA) secured 118 orders, including 20 777-9s for Qatar Airways. Airbus (OTCPK) followed with 69 orders, highlighting the A321XLR. Despite supply chain hurdles, Boeing aims to stabilize 737 Max production at 38 planes per month by year-end, while Airbus faces ongoing component constraints. The event underscores aerospace industry health, growth, and challenges.

• Tesla (TSLA) Q2 Earnings Update: Tesla's shares fell 7.8% after-hours as Q2 earnings, margins, and cash flow missed expectations. Elon Musk acknowledged EV discounting challenges but sees them as short-term. Tesla targets delivering an affordable model by H1 2025, with a robotaxi event rescheduled to October 10. Plans for a Gigafactory in Mexico are on hold due to potential tariffs if Donald Trump is re-elected. Musk also polled investing $5B in xAI, with nearly 70% in favor.

• Tech Selloff: Last Wednesday, big tech giants including Tesla (TSLA) and Alphabet (GOOG, GOOGL) led a sharp market decline, marking the Nasdaq and S&P 500's largest drops since 2022. The sell-off erased hundreds of billions in market value from the "Magnificent Seven'' stocks, while the Russell 2000 index of smaller companies continued to outperform.

• Global Stock Markets: China’s CSI300 and Hong Kong indices were under pressure. Eurozone business activity contracted unexpectedly according to July surveys. The Canadian dollar (CAD) weakened on expectations of Bank of Canada rate cuts ahead of the Federal Reserve. Potential interest rate hike risk and recent Bank of Japan interventions caused the yen to come under renewed pressure, making it profitable for yen-funded trades.

Mergers and Acquisitions

• T-Mobile to Acquire Metronet for $4.9 Billion in Joint Venture with KKR: T-Mobile (TMUS) has announced a $4.9 billion deal to form a joint venture with KKR, acquiring Metronet's residential fiber operations and two million customers across 17 states. T-Mobile will hold a 50% stake in the venture, aiming to expand its fixed wireless internet service to reach 6.5 million homes and businesses by 2030. Metronet will transition to a wholesale services provider for its retail customers, focusing on network engineering and customer installation. Oak Hill Capital will retain a minority stake in Metronet, with John Cinelli continuing as chairman post-acquisition.

• Wiz Cancels $23 Billion Google Deal, Eyes IPO Instead: Israeli cybersecurity firm Wiz has terminated talks with Google's parent company Alphabet regarding a potential $23 billion acquisition deal, as revealed in an internal memo. Wiz CEO Assaf Rappaport stated that the company will refocus on preparing for an initial public offering (IPO) to achieve an annual recurring revenue target of $1 billion. The decision comes despite what Rappaport described as a "humbling" offer from an undisclosed acquirer, reflecting confidence in Wiz's team and future prospects.

Earnings Calendar

This week is packed with high-profile corporate earnings reports! Keep an eye out for earnings updates from several major bulge bracket banks.

This Week's Major U.S. Economic Reports & Fed Speakers

Here is a quick breakdown of this week’s Fed Speaker events and economic indicators, what they mean, and their forecasted results!

Monday, July 29

• Dallas Fed Manufacturing Survey for July: Measures U.S. factory activity. (Previous: 0.7).

Tuesday, July 30

• S&P Case-Shiller Home Price Index for May: Measures changes in residential home prices across 20 major U.S. metropolitan areas. Important for assessing the health of the housing market and consumer wealth. (Previous: 7.2%).

• Consumer Confidence for July: Indicates consumers' optimism about the economy and their financial situations. Higher confidence often correlates with increased consumer spending, which drives economic growth. Forecast: 99.5 (Previous: 100.4).

• Job Openings (JOLTS) for June: Shows the number of unfilled job openings in the U.S., providing insights into labor market dynamics and employers' demand for workers. Forecast: 8.0 million (Previous: 8.1 million).

Wednesday, July 31

Speakers: Fed Chair Jerome Powell

• ADP Employment Report for July: Provides an early indicator of private sector employment trends, helping forecast the official nonfarm payroll figures released later in the week. Forecast: 168,000 (Previous: 150,000).

• Employment Cost Index for Q2: Measures changes in labor costs, including wages and benefits, reflecting inflationary pressures and labor market conditions. Forecast: 1.0% (Previous: 1.2%).

• Chicago Business Barometer (PMI) for July: A regional indicator of manufacturing activity in the Chicago area, offering insights into broader manufacturing trends in the U.S. Forecast: 44.0 (Previous: 47.4).

• FOMC Interest-Rate Decision: Federal Reserve's announcement on changes to the federal funds rate, impacting borrowing costs for consumers and businesses.

Thursday, August 1

• Initial Jobless Claims for the week ending July 27: Indicates the number of individuals filing for unemployment benefits, reflecting layoffs and the overall health of the job market. Forecast: 233,000 (Previous: 235,000).

• U.S. Productivity for Q2: Measures output per hour worked, indicating economic efficiency and potential for long-term economic growth. Forecast: 1.7% (Previous: 0.2%).

• S&P U.S. Manufacturing PMI for July: A gauge of manufacturing sector health based on survey data, influencing investor sentiment and economic forecasts. (Previous: 51.6).

• ISM Manufacturing Index for July: Measures manufacturing activity across various industries, offering insights into economic strength and inflationary pressures. Forecast: 48.8% (Previous: 48.5%).

• Construction Spending for June: Tracks expenditures on construction projects, indicating economic activity in the real estate and infrastructure sectors. Forecast: 0.2% (Previous: -0.1%).

Friday, August 2

• U.S. Employment Report for July (including nonfarm payrolls): Provides comprehensive data on job creation, unemployment rate, and wage growth, crucial for assessing overall economic health and Federal Reserve policy decisions. Forecast: 190,000 (Previous: 206,000).

• U.S. Unemployment Rate for July: Indicates the percentage of the labor force that is unemployed and actively seeking employment. Forecast: 4.1% (Previous: 4.1%).

• U.S. Hourly Wages for July: Shows changes in average hourly earnings, influencing consumer spending and inflation expectations. Forecast: 0.3% (Previous: 0.3%).

• Hourly Wages Year over Year for July: Compares current wage growth rates with the same month in the previous year, offering insights into long-term wage trends. Forecast: 3.7% (Previous: 3.9%).

• Factory Orders for June: Measures new orders placed with domestic manufacturers, reflecting demand for goods and forecasting future production levels. Forecast: -3.1% (Previous: -0.5%).

Sources: Wall Street Journal, MarketWatch, New York Fed, Financial Times, MarketWatch, Business Insider, RTÉ News, Yahoo Finance UK, Forbes, Bloomberg, The Guardian, Reuters, Business of Fashion

Understanding Cryptocurrency

In our last issue, we presented different types of assets with derivatives, and this week we are introducing cryptocurrencies. While crypto has its controversies, we will be talking about it from an educational standpoint so you can understand what it actually is and a little history behind it.

Disclaimer: Information shared here is for educational purposes only. Consult a financial advisor for personalized advice. Cryptocurrency investments carry high risk due to their volatility.

What is Cryptocurrency? Cryptocurrency is a digital currency that operates on networks stored on blockchain technology, which is a decentralized public ledger that records all transactions in blocks linked together on a chain. Crypto can be used to purchase goods and services, but many people also use crypto as an alternative investment outside of stocks and bonds and treat it like a commodity investment like gold through crypto exchanges or regular brokerage platforms. Major cryptocurrencies include:

• Bitcoin (BTC) - $68,644.40 USD

• Ethereum (ETH) - $3,264.34 USD

• Binance Coin (BNB) -$583.79 USD

• Solana (SOL) - $185.84 USD

How Did Crypto Become Popular?  

• Origins: Cryptocurrency began with Bitcoin in 2009 by an anonymous user who created it as a decentralized virtual dollar to operate between peers without the need for banks or governments as middlemen, as the blockchain allowed for secure and verified transactions.

• First Transaction: Bitcoin attracted the tech sector and investors for its financial privacy and freedom of financial control, and early users began using it for transactions. The first real purchase in 2010, two pizzas for 10,000 BTC, created a tangible foundation for Bitcoin’s value.

• Bull Run: As more people recognize crypto’s currency for a medium of exchange, many companies began accepting it as payment and lending it more legitimacy. In 2017, Bitcoin’s popularity spiked and the price rose to $20,000, attracting media attention, along with different cryptocurrency exchange launches and Initial Coin Offerings (ICOs) that introduced more cryptocurrencies onto the exchanges. The 2020 pandemic also increased crypto’s user base, as investors leaned towards alternative assets during the period of uneasiness.

How Does Crypto Work? The value of crypto “coins,” unlike traditional currencies, is not backed by governments or tangible assets. Ultimately, the primary drivers of crypto’s value are supply and demand dynamics that also establish high volatility. Many coins have a capped supply that creates scarcity, while increasing interest and trends can drive up prices, as well as speculative assumptions based on future potential. Bitcoin especially is growing in popularity as a store of value or hedge against economic uncertainty, as it operates separate from the US economy. Costs of mining, or the creation of new crypto, can also affect the price, as they require large amounts of energy to mine. However, these value drivers can also lead to significant volatility, as the crypto market is still maturing and sensitive to rapid changes in sentiment and technology advancements. 

Why is Crypto Relevant? We chose to mention cryptocurrency this week as Ethereum ETFs began trading on US exchanges on last week, July 23. Just as the SEC approved spot Bitcoin ETFs this January, this milestone marks a greater normalization of crypto, as everyday investors can buy the two largest coins from any brokerage account. Eight management firms, including BlackRock, Fidelity, and Grayscale began offering Ethereum ETFs, and on their first day, all nine total hit $1.1bn in trading volume. While we maintain a neutral stance on crypto due to its high uncertainty and controversy, it is important to understand cryptocurrencies as a whole as they become further integrated into traditional markets. 

Vocabulary:

• Blockchain: An open, distributed ledger recording transactions in code, and each transaction is recorded in a block and linked on a chain of previous crypto transactions. “Imagine a book where you write down everything you spend money on each day... each page is similar to a block, and the entire book, a group of pages, is a blockchain” (Forbes) 

• Mining: The process of how new units of cryptocurrency are released in exchange for validating transactions 

• Exchange-traded funds (ETFs): An investment fund that tracks a specific index, sector, commodity, or other asset, and can be bought like a common stock on an exchange

Sources: Forbes, Bankrate, Bloomberg Intelligence

It Girl Recommendations

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Bala Bangles:

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Mango Sorbet Recipe:

Ingredients

• 4 cups frozen mango

• ¼ cup maple syrup

• 2 tbsp fresh lime juice

Instructions

• Place mango in a food processor until small shreds achieved.

• Add maple syrup and lime juice to mixture.

• Mix again until smooth.

• Enjoy immediately or place in freezer for 2-3 hours for a firmer sorbet.

• Enjoy this vegan and gluten-free mango sorbet and read this week’s It Girl’s Identity issue!

Source: Minimalist Baker

Financial Fashion

To round off this week’s edition of IGI, we’ll show you jumpsuit/two-piece styles that will have you looking effortlessly chic! Shop these looks below:

• Top Left (Revolve)

• Top Right (Karen Millen)

• Bottom Left (New Look)

• Bottom Right (Odd Muse)

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See you next Monday, It Girls!

With Love,

It Girl Identity