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When JPow speaks, markets listen 🧏🏻‍♂️

plus CEO presidential donations examined...

July 09, 2024

Good afternoon! Today marks "the “secret summer camp for billionaires”, an exclusive annual gathering in Sun Valley, Idaho, hosted by New York investment bank Allen & Company. Private jets fill the tarmac as the world's richest and most powerful leaders in business, media, and politics, dressed in Patagonia vests, meet to network and forge historic deals. Notable attendees include AI pioneer Sam Altman, Disney CEO Bob Iger, and tech titans like Tim Cook and Mark Zuckerberg, while the absence of figures like Warren Buffett and Elon Musk sparks speculation.

MARKETS

  • The S&P 500 and Nasdaq are both enjoying a 6-day winning streak, marking the S&P 500’s longest streak since January. Both indexes reached new all-time highs again in the afternoon. Meanwhile, the less tech-heavy Dow lagged behind as semiconductor stocks propelled its younger peers higher.

  • Bond yields fluctuated throughout the afternoon as investors analyzed Jerome Powell’s congressional testimony, ultimately ending the day in positive territory.

  • Oil prices declined for the third consecutive day as traders continued to assess the impact of damage to multiple oil export terminals in the Gulf of Mexico caused by Hurricane Beryl.

  • Gold remained stable throughout the day as investors awaited this week’s CPI reading.

STOCK
Winners & Losers

What’s up 📈

  • Jumia Technologies soared 29.79% after Benchmark analysts initiated coverage of the African e-commerce company with a “buy” rating.

  • Kymera Therapeutics shot 23.40% higher after its partner Sanofi gave the go-ahead for further studies of its experimental skin disease treatment.

  • Sony rose 4.46% on the news that it has nothing to do with the merger of Paramount and Skydance as shareholders celebrate dodging a Paramount-shaped bullet.

  • Corning rose yet another 3.76%, extending the glassmaker’s gains as it quickly becomes the new hot AI stock du jour.

  • Tesla rose 3.71%, putting the company squarely in the green year to date as investors continue to celebrate the automaker’s strong delivery numbers.

What’s down 📉

  • Helen of Troy plummeted 27.73% after the Hydro Flask maker announced terrible earnings and lowered its fiscal year outlook.

  • Helios Technologies fell 10.94% on the news that the CEO of the industrial manufacturer had been placed on paid leave for potentially violating the company’s code of ethics.

  • Albemarle dropped 8.76% after Baird analysts warned that lower lithium demand will translate to lower profits for the miner in its upcoming second quarter.

  • UiPath fell 6.90% on the announcement that the software company will cut 10% of its workforce.

  • BP sank 4.80% after management warned of lower-than-expected profits and a writedown of its German refining facility to the tune of up to $2 billion.

FED
Jerome Powell Faces the Music on Capitol Hill

Every boss has to justify their performance, but Jerome Powell has hundreds of people to answer to. The Federal Reserve Chairman kicked off his two-day testimony before the Committee on Banking, Housing, and Urban Affairs, presenting his semiannual Monetary Policy Report to Congress.

Key topics included Powell's roadmap for Fed's monetary policy and strategies to tackle the remaining inflation. Powell highlighted that the economy and labor market remain strong, although the job market has cooled slightly. He stressed the delicate balance the Fed is trying to achieve.

“Despite the progress in reducing inflation and cooling the labor market over the past two years, elevated inflation isn’t our only risk,” Powell said. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.”

The Fed's overnight borrowing rate remains at a 23-year high, and while investors initially anticipated multiple rate cuts in 2024, expectations have shifted to just one in September, with possibly another by year-end. Powell's comments today boosted investor confidence that rates will decrease this fall.

EY Chief Economist Gregory Daco commented, “Powell’s forward-looking stance is welcome, though a bit late. We believe easing in July or June would have been optimal and remain cautious about hawkish policymakers pushing back against a September cut.”

Powell avoided making definitive statements but will face more scrutiny from lawmakers tomorrow.

NEWS
Market Movements

BUSINESS
CE-Oh No! Top Execs Ditch Presidential Politics for 2024

In 2024, the heads of America’s largest companies are largely keeping their money out of the presidential race. A Yahoo Finance analysis reveals that 98 out of the top 100 CEOs have not financially supported either Donald Trump or Joe Biden so far.

Despite managing companies worth nearly $26 trillion and overseeing more than 16 million employees, these executives have collectively contributed only about $88,000 to presidential candidates, with most donations going to Trump’s primary rivals who have since dropped out. Not a single one has donated to Trump, and only two CEOs—Sarah London of Centene (CNC) and Timothy Sweeney of Liberty Mutual Insurance Group—have given to Biden.

Instead, these corporate leaders are focusing their financial support on congressional candidates. By a margin of 19 to 1, they are backing a range of candidates for Congress, directing around $1.7 million to these races. This trend marks a continuation of declining CEO engagement in presidential politics, a shift that began with Trump's rise. Back in 2012, 27 Fortune 100 CEOs donated to Mitt Romney, while five supported Barack Obama. By 2020, only six gave to presidential candidates—four to Biden and two to Trump.

This cycle, prominent business figures like Blackstone CEO Steve Schwarzman support Trump, while LinkedIn co-founder Reid Hoffman backs Biden. However, most top CEOs, including those from Apple (AAPL), Walmart (WMT), Citigroup (C), and Disney (DIS), are staying away from the presidential race altogether, opting to influence politics through other means or not at all.

CEOs also have other avenues for political engagement, such as donating to “dark money” groups or their companies’ political action committees. Tesla’s Elon Musk, for example, frequently comments on political matters without making financial contributions. The data shows Musk has not donated to any 2024 federal political candidates so far.

In summary, while the biggest names in corporate America are stepping back from the presidential race, they remain actively involved in congressional races and other political efforts.

Calendar
On The Horizon

Tomorrow

No official economic reports are coming out tomorrow, but investors will still be tuned in as Federal Reserve Chairman Jerome Powell continues his congressional testimony, this time before the House Financial Services Committee.

Earnings season kicks off on Friday with the big banks, but a few companies are releasing their reports early—kind of like those early Christmas decorations in stores by September (or July if you’re at a craft store). Here are two reports worth watching.

Before the open

Manchester United (MANU) is one of the most valuable sports franchises globally, but its on-field performance significantly impacts its stock. Shares took a dive in March with new ownership and haven't bounced back, especially after a disappointing Champions League run. Consensus: -$0.27 EPS, $162.92 million in revenue.

After the close

WD-40 (WDFC) might only make one product, but it’s a staple in households everywhere. The company enjoys strong brand loyalty, pricing power, and a 14-year streak of dividend growth. It may not be a growth dynamo, but it’s reliable. Consensus: $1.41 EPS, $148.14 million in revenue.