“There’s going to be an insane amount of catalysts” — Art Hogan, chief market strategist with Wunderlich Securities, referring to the week ahead. Big-name earnings reports, a Fed meeting, the kick-off of the DNC and an important Bank of Japan meeting are all happening this week. Get ready, folks.
MARKET SNAPSHOT
Big Picture
- The S&P hit another record high and U.S. stocks finished in the green for the fourth straight week Friday, buoyed by a solid manufacturing report
Alternatives to Watch
- Oil prices dropped 2% as the number of active rigs in the U.S. rose for a fourth consecutive week, along with potentially higher export numbers from Iraq
Market Movers
- Shares of Chipotle climbed nearly 6% on Friday, despite posting disappointing earnings the day before, as well as analysts telling investors not to buy. Go figure
CORPORATE PRIMER
It’s Hard Out There
…For an industrial giant. GE posted not-so-hot quarterly earnings, but was still able to top Wall Street estimates. General Electric had a lot of geopolitical exposure on its plate this quarter, courtesy of Brexit, upheaval in the Middle East and currency shifts. To add insult to injury, falling oil prices led oil producers to slash capital expenditures, leading profits for GE’s oil and gas division to plummet 48%. CEO Jeff Immelt admits it’s been a “tough cycle” for the oil business, but still believes 85% of the company is in great shape. At least he’s honest.
Changes at the Chocolate Factory
…Hershey reforms its governance. A loyal Brewer might recall that last month Hershey rejected a $23 billion bid from the maker of Oreo cookies, Mondelez International. Last Friday, the Hershey Trust, a charity that controls Hershey, reached a tentative deal with the Pennsylvania attorney general to reform its governance practices. Why? The trust has been under fire lately, facing allegations of lavish spending. So, who cares? Well, Mondelez for one. Upheaval and a potentially all-new board could give Mondelez a second shot at buying the struggling chocolate maker. Keep your eyes peeled.
Good for Travelers
…Bad for investors. American Airlines posted net income that was 44% lower than last year…and still managed to beat Wall Street estimates. Why the drag in the first place? On the supply side, American continues to add flights and push prices down. On the demand side, investors are concerned about falling international revenue, as the strengthening dollar makes flights less affordable. The extra $500M in taxes this year definitely didn’t help fatten the bottom line, either.
WORLD MACRO
Another Day
…Another important meeting about Brexit. The countries with the 20 largest economies by GDP met this past weekend in China to assess the global economy, and it was quite the productive weekend. The highlight? Leaders emphasized that the U.K. and European Union should remain close trading partners and vowed to use “all policy tools” to boost growth. Unlike previous G20 meetings, which focused on monetary policy, this meeting was geared more towards growth, due to Brexit. Overall, the G20 feels confident that it is able to mitigate the consequences of the historic referendum result. Go get ‘em, G20.
OTHER STORIES
- Yahoo to announce Verizon deal by Tuesday
- Apple may be planning an iPhone 7 release in early September
- Tesla and SolarCity in final round of merger talks
- Audi plans three electric car models by 2020
ECONOMIC CALENDAR
- Monday: Sprint, Gilead Sciences Earnings
- Tuesday: Apple, Caterpillar, JetBlue, McDonald’s, Twitter, Under Armour, Verizon Earnings; FOMC Meeting Begins; New Home Sales; Consumer Confidence
- Wednesday: Boeing, Coca-Cola, Comcast, Deutsche Bank, Facebook, Hilton Earnings; FOMC Meeting Announcement
- Thursday: Alphabet, Amazon, Expedia, Ford, Hershey, Mastercard Earnings; International Trade in Goods; Weekly Jobless Claims
- Friday: Anheuser-Busch, Chevron, Exxon Mobil Earnings; Second Quarter GDP
WHAT A WASTE
It’s 6 AM. You’ve just made yourself a fresh cup of joe, and what’s coffee without a splash of milk? Drat—you find that the milk expired yesterday. Do you go for it or throw it away? If you’re like 70% of Americans, you’ll chuck it in the trash. Every year, 130 billion pounds of food is wasted by America. The worst part? Most Americans already know.
- In dollar terms, Americans waste $160 billion in food per year. Perhaps surprisingly, over half of the respondents in a recent survey said they knew about this issue.
- But despite the fact that 80% of Americans feel guilty about wasting food, 51% said they don’t see any way to reduce waste, and 42% said they just don’t have enough time to care.
- But there’s hope: one of the authors of the study believes that Americans perceive food waste now the same way they perceived recycling in the eighties (and we’ve gotten better at recycling, no doubt). To boot, the Department of Agriculture has launched a campaign with the EPA to cut food waste in half by 2030. Bottom line: go for the milk—you’ll survive.
INTERVIEW QUESTION OF THE DAY
What is the difference between the rule of 70 and the rule of 72? (Answer)
BUSINESS TERM OF THE DAY
Dove — A dove is an economic policy advisor who promotes monetary policies that involve low interest rates, based on the belief that low interest rates increase employment. The term is the opposite of “hawk.”
FOOD FOR THOUGHT
According to CNBC, Utah is the best state to do business in, with Texas coming in at a close second. At the bottom of the rankings is Hawaii, scoring poorly in almost every category except quality of life. Aloha.
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