July 25, 2022

Markets Await Earnings & Fed Decision

It was a mellow Monday in the markets — here’s what you missed.

Earnings are the focus this week as more than half the Nasdaq 100 and most $FAANGM stocks report. We discuss today’s earnings below. 👇

We’re all watching Wednesday’s Federal Reserve decision and the Q2 GDP print, especially after the White House’s “recession” take over the weekend. We recap that below. 👀

Here’s today’s heat map.

8/11 sectors closed green, with energy (+3.67%) leading and consumer discretionary (-0.86%) and technology (-0.63%) lagging. 🟢

In economic news, the Dallas Fed Manufacturing and Chicago Fed National Activity Index showed decreased business activity and optimism. 👎

In electric vehicle news, Redwood Materials plans to spend $3.5 billion on making EV battery essentials. Additionally, the U.S. Energy Department is loaning General Motors’ joint venture with LG Energy Solution $2.5 billion to help finance construction and new lithium-ion battery cell manufacturing facilities. ⚡

In Elon Musk news, Tesla received a second SEC subpoena over his 2018 ‘go-private’ tweet. Also, the Musk rumor mill continues to churn, with outlets reporting that he had an affair with Google co-founder Sergey Brin’s wife. 😮

$SIGA (+29.03%) was trending and hit new highs as the U.S. weighs declaring monkeypox a health emergency. This news came after the World Health Organization (WHO) declared a global health emergency last week. ⚠️

Crypto’s rally has stalled after a sharp move to the upside. Meanwhile, failed lender Voyager has rejected FTX’s proposed buyout saying it only benefits FTX and does not make its customers whole. And the bad news continues for Terra and Celsius, with the firms named in another class action lawsuit in the U.S. ₿

Other symbols active on the streams included: $KOSS (+42.67%), $FAZE (+29.64%), $TBLT (-26.32%), $XELA (-30.82%), $SNAP (-0.10%), and $CODX (+5.76%). 🔥

Here are the closing prices:

S&P 500	3,967	+0.13%
Nasdaq	11,783	-0.43%
Russell 2000	1,818	+0.60%
Dow Jones	31,990	+0.28%

Economy

What Is A Recession Anyway?

Well, the White House was criticized over the weekend as many accused them of “changing the rules” on the economic data. 👀

Here’s how the brief blog post hosted on the White House website, “How Do Economists Determine Whether the Economy Is in a Recession?” began.

“What is a recession? While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle…”

Just that part alone was enough to send the internet into a tailspin. 💫

Given the recent weakening of economic data, most expect this week’s first look at the country’s Q2 GDP rate to come in below zero, which would be the second straight quarter of economic contraction (aka a recession).

But, given the midterm elections are coming up and the administration’s approval ratings aren’t where they’d like them to be, some have hypothesized that this is part of them doing damage control ahead of the official data release. Essentially, by adjusting the definition of recession, they’re “changing the rules” just in time to spin the narrative to something slightly more optimistic.

On the other side of the argument are people saying that the “holistic view” of the data is a more accurate measure of the economy’s health than the GDP report, particularly given the extenuating circumstances over the last few years.

That’s in line with what President Biden and Treasury Secretary Janet Yellen have suggested in their recent media appearances, focusing on the strength of the labor market and consumers instead of the weaker data segments in other areas.

What’s clear is that many professionals on Wall Street and beyond do not share the view that a recession will be short and shallow. 🤷‍♂️

We’ll just have to wait for Thursday’s preliminary GDP data to be announced and draw our own conclusions. Until then, this is an excellent excuse for both sides to blow off some steam and generate online engagement…so have at it! 😤

Earnings

Earnings Recap

Walmart shares are suffering again today, down nearly 10% after hours following the company’s negative pre-announcement. The retailer cut its profit outlook again as inflation and aggressive markdowns on overstocked inventory continue to pressure margins. The news hit other retailers, from Target to Amazon, in extended trading. 🛍️

Weber shares were smoked (-12.65%) after the grill maker pre-announced earnings well below expectations and noted that its CEO is departing, with Chief Technology Officer Alan Matula stepping in as interim CEO. 🔥

Newmont Mining fell 13.23% after the company reported earnings below expectations, driven by higher mining costs. 👎

Keep track of all the upcoming releases with the Stocktwits’ earnings calendar! 📅

Expect more recaps in the days ahead as earnings season trends/themes develop and the market’s biggest names report.

Bullets

Bullets From The Day:

🛑 Former GOP Rep. Stephen Buyer charged with insider trading. Apparently, one government official forgot that insider trading is only legal if you’re still part of Congress. Prosecutors have accused him of buying more than $1.5 million of stock in Sprint and Navigant Consulting based on nonpublic information he obtained as a consultant after leaving office. He allegedly used seven different accounts to hide his purchase, netting several hundred thousand dollars. CNBC has more.

🚀 Meta is shutting down Tuned, its social app for couples. A little more than two years after launching, Meta’s app “Tuned” woke up to messages that the app would be shutting down on September 19th. The app’s design created a shared scrapbook for memorable moments that romantic partners could easily scroll through and reminisce on. That said, the app has only been downloaded around 900,000 times and clearly did not catch on as well as Meta had hoped. More from TechCrunch.

💸 Solar-powered mobile disaster units are now a thing. A Michigan-based startup, Sesame Solar, sells highly portable solar-powered units that use solar panels or clean hydrogen to be up and ready for use within 15 minutes. The systems sell for $100,000-$300,000 and can be used for anything from mobile communications and command centers to medical units, kitchens, and temporary housing. CNBC has more.

🗳️ Chicken producers pay $85 million in DOJ settlement. Several chicken product makers are settling a case brought about by the justice department, which alleges they violated antitrust laws by improperly communicating about worker wages and benefits. The entire industry is under scrutiny, and the DOJ has announced it will look further into its labor practices. More from Bloomberg Law.