Hey Snackers,
In case you missed Fyre Festival, don't worry — you can still buy the merch. US Marshals are auctioning off sweats, hoodies, and baseball caps from the infamous flopped "festival" that defrauded people out of $26M. Where can we buy the cheese sandwich, though?
Stocks surged last week — the tech-heavy Nasdaq index closed above 11K for the 1st time ever on Thursday.
How the big July jobs report affects the 2nd big coronavirus stimulus package
Fire up the grill... The July jobs report came in hot on Friday. The US eagerly awaited to find out if economic recovery continued or slowed in the face of rising COVID cases. Before we dig in, let's take a walk down memory lane:
- April 2019: The only masks we've ever worn are charcoal face masks, and the unemployment rate is 3.6%.
- April 2020: Lockdowns hit. The US economy loses a record 20.5M jobs, and unemployment hits 14.7% (a post-WWII high).
- May: The US shockingly adds 2.5M jobs and unemployment dips to 13.3%. Customized face masks are in (and finally, in ample supply).
- June: The US adds back 4.8M jobs as lockdowns ease and businesses reopen. Unemployment falls to 11.1%. Then, COVID cases surge again (and some businesses re-close).
- The big July report: US employers added 1.8M jobs and unemployment fell for the 3rd month straight to 10.2%. The economy chugged a celebratory (light) beer.
Which pill, Neo?... Despite positive momentum, the US still hasn't brought back even half of the ~22M jobs lost since March. The extra $600/week unemployment benefit, which has been propping up consumer spending, just ran out. So far, Congress has failed to agree on details of the 2nd Stimulus Package. On Friday, President Trump signed executive orders in an effort to force action:
- #1: Enhance unemployment benefits with an extra $300/week federal booster.
- #2: Suspend payroll taxes for anyone earning $100K/year or less.
- #3: Defer federal student loan payments and temporarily forgive interest.
Everyone's confused, and we can't afford to waste time... Republicans think generous benefits will disincentivize people from returning to work — Democrats believe the jobs aren't there to return to, so $3.5T in aid is needed to support people while containing the virus. Congress controls federal spending, so Trump's executive orders (which are loaded with federal spending) could get sued in court. With all this uncertainty, one thing remains clear: the virus controls the economy, and it's still out of control in the US.
Who's up...
Unlocked Level COVID-19... Nintendo's profits surged an insane 428% last quarter thanks to Animal Crossing fame. Digital game sales soared 230%, and Switch sales jumped 167% on New Horizons hype. Meanwhile, Grand Theft Auto publisher Take Two nearly doubled its profit last quarter, while Microsoft's Xbox gaming sales soared 64%. On the private side, Fortnite-maker Epic Games raised a whopping $1.8B at a $17.3B valuation. TLDR: digital fantasy worlds thrive during a pandemic (when IRL excitement = a trip to the fridge).
Investors chanting "Hakuna Matata"... Disney stock surged 12%, even though sales plunged 42% compared to last year. Disney lost $5B, compared to a $1.4B profit last year — US parks, resorts, and cruises were closed for the entire quarter. Plus, studio sales sank on zero theatrical releases (poor Mulan), and TV dipped on cord-cutting. But streaming sales rose: Disney now has 100M paying subscribers across its streamers (including Hulu and ESPN+). Disney's doubling down on this corona-friendly biz with a new streaming service (ETA 2021).
...and who's down
Getting Elon'd wasn't enough... In July, Tesla passed longtime #1 Toyota to become Earth's most valuable car company. The latest ego hit to the Japanese car giant: Toyota posted its weakest 1st quarter profit in 9 years. Car sales halved and profit plunged a depressing 98% to just $132M. That was still better-than-expected: analysts forecasted a loss on shuttered factories and closed dealerships. Now Toyota says recovery is moving faster than expected in some countries.
A pair of jeans that fit just right... Except, nothing does mid-pandemic. Levi's sales plunged 62% last quarter because you haven't felt a real waistband since March. As stores shut and social outings evaporated, Levi's shifted its retail strategy: it partnered with Uber for same-day delivery and added a virtual concierge so you can chat with a salesperson from your sofa. 2020 retail bankruptcies will likely be the highest in a decade — Levi's is banking on omnichannel "experiential retail" to survive.
What else we’re Snackin’
- Work: Why procrastination is about managing emotions, not time — the same reason you're 7 hours deep into Love Island UK.
- Realize: Why the stock market is soaring even though consumer sentiment is low — thank Big Tech stocks and the Fed's shopping spree.
- Eat: Foods that Americans living abroad miss most from home, from Reese’s Peanut Butter Eggs to Hot Cheetos and $10 diner breakfasts.
- Explore: The 6 best uncrowded beach campsites across the US, including one for "glampers" (fully-stocked yurt).
- Recharge: 7 tips for taking the perfect nap that won't mess with your sleep — #6: cup of joe before pillow.
- Visualize: How the S&P 500 performed during major market crashes, and how the COVID-19 crash compares.
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This Week
- Monday: Earnings expected from Canopy Growth, Marriott, and ZoomInfo
- Tuesday: Earnings expected from BioNTech, Sysco, and Canada Goose
- Wednesday: Earnings expected from Lyft, Vroom, Lemonade, SmileDirectClub, and Macy's
- Thursday: Weekly jobless claims
- Friday: Earnings expected from DraftKings
Disclosure: Authors of this Snacks own shares of Disney and put options of Disney.
ID: 1297542