This Week In Markets ⚡️ 07/15 - 07/19

Good Afternoon, market movers! Let’s take a look back at what happened over the last seven days:

• Former President Trump narrowly survived an assassination attempt.

• Joe Biden got Covid, setting off a frenzy of speculation about his candidacy.

• In Miami, ticketless fans turned into amateur Spidermen, climbing vents to sneak into the Copa América final.

• Ken Griffin decided $45 million for a stegosaurus skeleton was a reasonable investment.

• An intoxicated country singer delivered what might be the worst national anthem rendition in history and said she's checking into rehab after performance

• And just when you thought it couldn’t get crazier, yesterday saw the largest IT outage ever, leaving everyone feeling like they were back in the Stone Age.

MARKETS

• Markets: The S&P 500 experienced its worst week since April as investors pulled back from Big Tech stocks. CrowdStrike saw a significant drop due to a global IT outage, which, unsurprisingly, didn't sit well with investors

NEWS
Biden Bows Out: The 2024 Race Gets a Shake-Up

In a twist that has left the political world buzzing, President Joe Biden announced that he’s stepping out of the 2024 presidential race. After five decades in politics, Biden decided to call it quits amid growing concerns about his age and ability to beat Donald Trump in November.

What’s Next for the Democrats?

Biden’s exit less than a month before the Democratic National Convention has thrown the party into a frenzy. With Vice President Kamala Harris, Michigan Governor Gretchen Whitmer, and California Governor Gavin Newsom all eyeing the top spot, the race is now wide open. Harris, while a historic figure as the first female and first woman of color Vice President, only holds a 32% approval rating, making the next few months a chaotic scramble for the nomination.

Uncharted Waters

• This unexpected move is unprecedented in modern times. The last sitting president to abandon a re-election bid was Lyndon Johnson in 1968. As Barbara Perry from the University of Virginia’s Miller Center puts it, "We’re in uncharted waters."

• Biden’s decision follows a rocky debate performance against Trump in June and a subsequent plunge in his poll numbers. His struggles were magnified by a bout of COVID-19, which sidelined him just as Trump survived an assassination attempt and delivered a triumphant speech.

With Biden stepping aside, the Democratic party faces an intense scramble to rally behind a new candidate. The logistical challenges of getting a new name on the ballot add another layer of complexity. Meanwhile, Trump continues to gain momentum, making the 2024 race one of the most unpredictable in recent history.

PAST WEEK
Market Movements

• BlackRock ($BLK), the world's largest asset manager, has reached a record $10.6 trillion in assets, driven largely by ETFs, according to CEO Larry Fink

• Elon Musk has announced plans to relocate the headquarters of both X and SpaceX from California to Texas

• Google’s parent company Alphabet ($GOOGL) in talks to buy cybersecurity startup Wiz for $23 billion

• The telecom giant AT&T ($T) announced that hackers stole 6 months worth of 2022 calls and text records affecting 115 million accounts

• Phillip Morris International ($PM), producer of Zyn, is investing $600 million in a new Colorado plant to meet the growing demand for its nicotine pouches

• Trump is considering JPMorgan ($JPM) CEO Jamie Dimon for the position of Treasury Secretary

• EssilorLuxottica, the parent company of Ray-Ban, is venturing outside the eyewear industry by acquiring Supreme for $1.5 billion. Meta Platforms ($META) is also consider taking a 5% stake in EssilorLuxottica

• Netflix ($NFLX) adds 8 million subscribers, disappoints on revenue outlook

• OpenAI introduces GPT-4-o Mini, a smaller model set to replace GPT-3.5 Turbo

• Starbucks ($SBUX) shares jumped 6.9% following reports that Elliott Investment Management has taken a significant activist stake in the company

• Warner Bros. Discovery ($WBD) is reportedly considering splitting the company in two, aiming to boost its share price

  
  

STOCK
CrowdStrike: What Do They Do Exactly?

CrowdStrike ($CRWD), a cybersecurity firm based in Austin, Texas, found itself at the center of the storm when a Microsoft outage disrupted airlines, banks, and businesses worldwide on Friday.

Who is CrowdStrike?

This isn’t a B-list action flick; CrowdStrike is a heavyweight in cybersecurity. Founded in 2011, it now operates in over 170 countries with around 29,000 customers, including more than half of the Fortune 500. The firm’s antivirus software is a staple for Microsoft’s Windows devices, keeping threats at bay across industries from banking to healthcare.

CrowdStrike provides more than just antivirus software. It offers a suite of cybersecurity solutions designed to prevent breaches through advanced, cloud-delivered technologies. Their flagship product, Falcon, uses AI and machine learning to detect threats and stop attacks in real-time. Additionally, CrowdStrike is known for its incident response services, where they investigate and remediate cyberattacks, helping organizations understand and recover from breaches. This dual approach of proactive protection and reactive investigation solidifies their position as a leader in the cybersecurity industry.

What happened?

• Friday’s chaos, marked by the notorious "blue screen of death," stemmed from a flawed update for Windows hosts. CrowdStrike CEO George Kurtz assured it wasn’t a cyberattack but a defect in a single content update. Mac and Linux users? Unscathed. Kurtz promised a swift fix, with efforts already underway to restore systems.

• In a social media update, Kurtz apologized for the disruption and vowed transparency about the mishap and future prevention measures. However, opportunistic threat actors jumped on the crisis, sending phishing emails and making bogus calls, pretending to be CrowdStrike support. The firm urged organizations to verify communications through official channels.

CrowdStrike’s resume is impressive, investigating major hacks like the 2016 Democratic National Committee breach and the 2014 Sony Pictures hack. Despite the Friday fiasco, its reputation for thwarting cyber threats remains strong.

The incident caused CrowdStrike’s stock to drop over 12%, falling to just over $300. But with a market cap of $74.2 billion, it’s still a behemoth in IT security, second only to Palo Alto Networks. Equity analyst Dan Ives of Wedbush noted that while the outage hit hard, CrowdStrike's robust brand and global presence should help it recover.

Big Picture

CrowdStrike is deploying fixes and working with customers to get systems back online. The glitch was linked to a content update, not a code change, causing specific issues within the Microsoft environment. With systems rebooting and fixes rolling out, CrowdStrike is focused on mitigating fallout and reinforcing its cybersecurity fortress.

Despite the setback, CrowdStrike’s extensive client base and industry reputation position it well for recovery. The outage highlights the interconnected fragility of global tech infrastructure and the critical role of cybersecurity in keeping the digital world spinning.

Calendar
On The Horizon

This Week

Housing Market: Tuesday kicks off with the Existing Home Sales report, followed by New Home Sales on Wednesday.

Economic Activity: Wednesday features the PMI reading. Thursday brings updates on Durable Goods Orders, Wholesale Inventories, and a preview of Q2 GDP.

Inflation Watch: Friday wraps up the week with the Personal Consumption Expenditures Price Index (PCE), which, along with Wednesday’s PMI, could influence the Fed's rate cut decision for July or September.

Earnings Season Bonanza

Monday: Verizon ($VZ), Truist Financial ($TFC), SAP ($SAP), and NXP Semiconductors ($NXPI) kick things off.

Tuesday: Heavy hitters like Alphabet ($GOOGL), Tesla ($TSLA), Coca-Cola ($KO), Visa ($V), GE ($GE), UPS($UPS), Comcast ($CMCSA), Spotify ($SPOT), Paccar ($PCAR), GM ($GM), and Capital One ($COF) step up.

Wednesday: AT&T ($T), IBM ($IBM), Chipotle ($CMG), Ford ($F), Thermo-Fisher Scientific ($TMO), Waste Management ($WM), and General Dynamics ($GD) announce their results.

Thursday: Expect reports from a mix of sectors, including AstraZeneca ($AZN), AbbVie ($ABBV) (healthcare), Deckers Outdoor ($DECK), Skechers ($SKX) (footwear), Union Pacific ($UNP), Unilever ($UL), Honeywell($HON), and Valero ($VLO).

Friday: The week wraps up with earnings from Bristol-Myers Squibb ($BMY), Colgate ($CL), and 3M ($MMM).

With a combination of economic data and corporate earnings, next week is set to provide vital insights and potential market movers. Stay tuned!