The Trump Card ♦️

Good afternoon! A new Bankrate survey reveals that 36% of American adults are cashing in on a side hustle, and they're not just making pocket change. The average side hustler rakes in a cool $891 in extra monthly income. From dog walking to digital marketing, side gigs are now a major economic force. This isn’t just chips and guac money; it's rent, bills, and vacation funds. Turns out, the gig economy isn’t just surviving—it’s thriving, and everyone from your barista to your boss is getting in on the action.

MARKETS

• The Nasdaq is riding a 6-week win streak and eyeing a seventh, the Dow wrapped up the day with a record close, the S&P 500 touched a new all-time intraday high, and even the Russell 2000 kept its momentum as a broad rally swept the markets today.

• Bond yields edged up as investors processed Jerome Powell's remarks that the Fed won’t wait for inflation to hit 2% before lowering interest rates.

• Amid increased political uncertainty following an attempt on Donald Trump's life, investors flocked to the safe haven of gold, driving the commodity toward monthly highs.

STOCKS
Winners & Losers

What’s up 📈

• Stelco Holdings ($STLC) skyrocketed 73.98% on the news that the Canadian steelmaker will be acquired by Cleveland Cliffs ($CLF) for $2.8 billion.

• Bitcoin-related stocks surged with the crypto rally today, with Coinbase ($COIN) up 11.39% and Microstrategy ($MSTR) climbing 15.36%.

• Gun manufacturers typically rise after a major shooting incident, and the assassination attempt on Donald Trump certainly fits the bill. Sturm Ruger & Company ($RGR) jumped 5.44%, and Smith & Wesson ($SWBI) rose 11.38%.

• AutoNation ($AN) popped 2.01% on the news that it’s cutting $1.50 off its EPS for the latest quarter due to the CDK cyberattack. Seems like getting ahead of bad news can be good news after all.

What’s down 📉

• Burberry ($BURBY) nosedived 16.08% after delivering a dismal quarterly report, issuing a profit warning, and ousting its CEO.

• SolarEdge Technologies ($SEDG) tumbled 15.36% after announcing it will lay off 400 employees to boost profitability. This move sent ripples through the solar sector, with First Solar ($FSLR) dropping 8.50%, Sunrun ($RUN) sinking 8.95%, and Sunnova Energy ($NOVA) falling 9.96%.

• Macy’s ($M) slid 11.76% after the department store’s board decided to end acquisition talks with activist investors Arkhouse and Brigade.

• AES ($AES) plunged 10.01% as a storm left thousands of the utility company’s customers in Ohio without power.

STOCKS
The Trump Card

Before Jerome Powell became the star of every financial news channel and the Federal Reserve's actions were scrutinized like the final minutes of a Super Bowl, politics and investing rarely mingled.

But two days after the attempt on former President Donald Trump’s life, the Venn diagram between Capitol Hill and Wall Street has almost completely overlapped. Investors everywhere are still assessing the fallout from the failed assassination, but the instant reaction today has seen the prices of several specific assets surge.

Trump Stocks and Crypto Soar

• The clear winner today is Trump Media & Technology Group ($DJT), whose shares rocketed 31.37%.

• Shares of Truth Social’s parent company plummeted post-IPO in late March, sliding from about $70 to a low of $13 by late June. But the stock has enjoyed a recovery lately, seemingly due to the stumbles of President Joe Biden during recent debates and press conferences.

In short, the better Trump’s chances of becoming president, the better this stock performs — and today’s news of a Florida judge dismissing Trump’s classified documents case has only fueled its recent surge.

Tesla ($TSLA) has also had its share of turbulence this year, with falling EV sales dragging the company down until a positive deliveries report two weeks ago helped it rebound. Shares ticked up 1.78% today after Elon Musk publicly endorsed Donald Trump for president on X, possibly as a strategy to shield Tesla from potential Chinese tariffs and EV credit cuts that might follow a Trump victory.

Meanwhile, both Bitcoin and Ethereum saw gains after weeks of decline due to increased supply from Mt. Gox and the German government. Trump’s pro-crypto stance, highlighted by his upcoming speech at the Bitcoin Conference in Nashville, has boosted investor confidence in a more favorable regulatory landscape for cryptocurrencies under a Trump presidency.

Long-Term Vision Over Short-Term Hype

With the Republican National Convention in full swing in Milwaukee, expect these headlines to dominate. But don’t let the short-term excitement fool you into thinking these stocks are guaranteed long-term winners.

Today’s market jumps are reactive, not driven by fundamental improvements. While the assassination attempt has boosted Trump’s election odds, savvy investors should prioritize a stock’s inherent value over its media presence.

NEWS
Market Movements

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

• Amazon ($AMZN) Prime Day is officially here July 16-17

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

• Elon Musk says Tesla ($TSLA) robotaxi unveiling delayed over design changes

• The EU accused X of misleading users by letting anyone buy a blue check and thus flooding the platform with impersonators

• Macy’s ($M) terminates active buyout discussions with potential investor groups

• In the first half of 2024, 346 companies went bankrupt, surpassing the previous record of 467 total in 2010, with most failures occurring in the consumer discretionary sector

• A new AI bill in California aims to regulate the booming industry, potentially safeguarding users or hindering creativity

• The USPS has hiked the price of first-class postage by five cents, bringing it to $0.73

CRYPTO
Spot-Light on Ethereum ETFs

Ethereum ETFs backed by the actual cryptocurrency (not just futures contracts) are set to debut any day now, thanks to a surprising green light from the SEC last month.

The SEC’s approval for spot Ethereum exchange-traded funds follows the historic greenlighting of ten spot Bitcoin ETFs back in mid-January. Big names like the Winklevoss twins had been battling regulatory hurdles for a decade to get spot Bitcoin ETFs approved before finally winning over the SEC.

Since their January launch, these Bitcoin ETFs, including those from Wall Street giants like BlackRock and Fidelity, and crypto-focused firms like Grayscale, have amassed nearly $60 billion in assets, making it the most successful ETF launch ever. The iShares Bitcoin Trust ETF (IBIT) alone holds around $18 billion in assets.

Now, firms behind these Bitcoin ETFs, such as BlackRock, Grayscale, Bitwise, and Invesco, are lining up to launch Ethereum funds. Although the SEC has approved a crucial rule change, each fund’s individual prospectus still needs the final nod to start trading.

Will these funds be as popular?

• The blockbuster launch of the spot Bitcoin ETFs was a win for the bulls, proving these products could be a popular and safer alternative to crypto exchanges. But as the second-largest cryptocurrency, Ethereum might not attract as much investment as its more famous sibling.

• “Bitcoin is the big dog in the room,” said Ryan Rasmussen, senior crypto research analyst at Bitwise Asset Management,“Institutional investors are still getting up to speed with crypto and are focused on Bitcoin. Introducing Ethereum might be a tough sell initially.”

Bitwise’s research team forecasts $15 billion in inflows over nine months for an Ethereum ETF, while Grayscale’s team anticipates demand for Ethereum ETFs to be around 25% to 35% of that for Bitcoin ETFs.

EARNINGS
Goldman Strikes Gold with Fixed Income

Goldman Sachs has done it again, topping earnings and revenue expectations thanks to stellar fixed income trading and lower loan loss provisions.

By the Numbers:

• Earnings: $8.62 per share vs. $8.34 (LSEG estimate)

• Revenue: $12.73 billion vs. $12.46 billion (estimate)

Goldman’s Q2 profit soared 150% from a year ago to $3.04 billion, or $8.62 per share, bouncing back from last year's real estate write-downs and consumer business sale. Companywide revenue rose 17% to $12.73 billion, boosted by core trading, advisory, and asset and wealth management.

Fixed Income Shines: Fixed income revenue jumped 17% to $3.18 billion, beating estimates by $220 million, driven by active interest rate, currency, and mortgage trading.

Other Highlights:

• Provision for credit losses dropped 54% to $282 million, well below the $435.4 million estimate.

• Equities trading revenue climbed 7% to $3.17 billion, matching estimates, helped by derivatives activity.

• Asset and wealth management revenue surged 27% to $3.88 billion, driven by equity investments and rising management fees.

• Platform solutions revenue rose 2% to $669 million, beating the $652.1 million estimate due to higher credit card balances and deposits.

Investment Banking:

• Investment banking fees increased 21% to $1.73 billion, slightly below the $1.8 billion estimate due to lower-than-expected advisory fees of $688 million (vs. $757.3 million estimate).

Despite the miss, Goldman CFO Denis Coleman emphasized the bank’s top market share in mergers, attributing the comparison to last year's stronger performance. Goldman shares rose over 1% in midday trading, reflecting investor optimism.

With Wall Street rebounding from a tough 2023, all eyes are on Bank of America and Morgan Stanley, who report results on Tuesday. Stay tuned for more financial fireworks.

Calendar
On The Horizon

Tomorrow

This week, earnings season takes center stage, with major stocks spilling the beans on their quarterly numbers. Keep an eye out tomorrow for the US Retail Sales report, which will give us the lowdown on the American consumer’s spending habits in the face of slowing inflation.

Before the Open

• UnitedHealth Group ($UNH): UnitedHealth’s shares hiccuped in May after the CEO hinted at lower Medicaid payment premiums ahead. Analysts are on the edge of their seats to decipher the implications for this health insurance heavyweight. Consensus: $6.71 EPS, $98.83 billion in revenue.

• Bank of America ($BAC): Following last week’s NII-induced panic, all eyes are on BofA’s net interest income. Despite last quarter’s year-over-year dip, analysts are confident the bank’s balance sheet will flex some serious muscle. Consensus: $0.81 EPS, $25.29 billion in revenue.

After the Close

• J.B. Hunt ($JBHT): This transportation titan might not be a household name, but it’s a key player in the economy. With shares down over 12% year-to-date, tomorrow's earnings could either stop the bleeding or pour salt on the wound. Consensus: $1.52 EPS, $3.06 billion in revenue.

• Interactive Brokers ($IBKR): Riding the retail investing wave, Interactive Brokers is making moves with initiatives like its predictions market. Analysts are bullish, with price targets 14% above current levels. Consensus: $1.65 EPS, $1.21 billion in revenue.

Buckle up as these reports roll in, setting the pace for the market’s next moves.