🏦 Warren Buffett Hold More Treasuries Than The Federal Reserve!

Good afternoon! Airbnb's founders just took a financial hit that’s hard to ignore. In a single day, their collective wealth plunged by $3.2 billion after the company’s stock tumbled 13%—the steepest drop since November 2022. The reason? A weaker-than-expected demand in the U.S. that has investors skittish about the future.

Brian Chesky, Nathan Blecharczyk, and Joe Gebbia, the trio behind Airbnb, saw their net worths shrink by 12% following the selloff. For Chesky, this means his fortune has dipped to $9.2 billion, marking its lowest point this year. The disappointing earnings report, coupled with a lackluster forecast, has investors questioning whether Airbnb can sustain its growth amid a cooling travel market. But Chesky remains optimistic, tweeting that now might be "a good time to buy."

MARKETS

• Markets kicked off strong this morning, hinting at a continuation of their rally, but the momentum fizzled out as the session wore on, pulling all three major indexes into the red by the close. The ongoing volatility left investors feeling dizzy once again.

• Treasury yields saw a jump as bondholders rushed to sell (a quick reminder: when bond prices drop, yields climb).

• Oil prices surged sharply, driven by concerns that rising tensions between Israel and Iran could disrupt supply.

STOCKS
Winners & Losers

What’s up 📈

• Upstart Holdings ($UPST) skyrocketed by 39.51%, fueled by stronger-than-expected earnings.

• Lumen Technologies ($LUMN) continued its surge, jumping 32.60% as investors flocked to the telecom giant amidst an AI-driven business boom.

• Fortinet ($FTNT) soared 25.30% after delivering impressive second-quarter earnings, reinforcing its potential as a strong alternative to CrowdStrike.

• Shopify ($SHOP) climbed 17.83%, buoyed by a beat-and-raise earnings report that showcased robust demand despite sluggish consumer spending.

• Sunrun ($RUN) spiked 11.04% after its CEO revealed that the company is in talks to absorb some customers from its bankrupt competitor, SunPower.

What’s down 📉

• Super Micro Computer ($SMCI) plummeted 20.14% following an earnings miss and the announcement of a 10-for-1 stock split.

• TripAdvisor ($TRIP) plunged 16.61% after releasing a mixed earnings report and issuing warnings of lower revenue in the upcoming quarter.

• Lyft ($LYFT) dropped 17.23% despite strong ridership in the second quarter, as investors reacted negatively to the company's bleak financial outlook for the third quarter.

• AirBnB ($ABNB) tumbled 13.38% after missing analyst estimates last quarter and forecasting slowing demand in the coming months.

• Amgen ($AMGN) slipped 5% after the biotech firm failed to meet Wall Street's expectations in the second quarter.

• CVS Health ($CVS) edged down 3.21% after cutting its profit guidance for the year, even as it announced a new cost-cutting initiative.

NEWS
Buffett's Treasury Holdings Surpass the Federal Reserve

Buffett’s New Side Gig: Competing with the Fed

Warren Buffett’s latest power move? Outdoing the Federal Reserve at its own game. Berkshire Hathaway ($BRK) has now amassed more short-term U.S. Treasurys than the Fed itself, holding a whopping $234.6 billion in T-bills by the end of June. That’s an 81% leap from the $130 billion they had stashed away at the end of last year. Meanwhile, the Fed is lagging behind with a mere $195.3 billion in these government-backed IOUs.

So, why is Buffett—normally the stock market's biggest cheerleader—piling into Treasurys? The short answer: guaranteed returns. With yields hovering over 5%, Berkshire is set to pocket a cool $12 billion in annual interest, all while dodging state and local taxes. It's the ultimate “risk-free” investment for a guy who’s seen it all.

The Oracle Goes All-In on Safety

But this isn’t just about earning some easy cash. Buffett’s massive T-bill stash suggests he’s not seeing many juicy opportunities in the stock market right now. In fact, Berkshire has been offloading stocks for seven straight quarters, including a big slice of its Apple ($AAPL) holdings. This has some Buffett-watchers wondering: Is the Oracle of Omaha turning bearish on the U.S. economy?

Or maybe, just maybe, Buffett’s biding his time for something big. The man has a history of pouncing on market dips with massive acquisitions, and with a cash reserve like this, he’s ready to strike when the iron's hot. 

Sitting on a Pile of Cash

Whether he’s waiting for the next big buying opportunity or simply playing it safe, one thing’s clear: Buffett’s in no rush. With T-bills offering over 5% returns, he’s making money while he waits. And given the current economic jitters and stock market rollercoaster, who can blame him?

So, while the Fed might be scaling back its holdings, Buffett’s cash fortress is growing. And as usual, when Buffett makes a move, the rest of us can’t help but wonder what’s coming next.

NEWS
Market Movements

• Warner Bros. Discovery ($WBD) stock dropped as the company wrote down $9.1 billion and missed earnings estimates.

• Rivian ($RIVN) reported mixed Q2 results but maintained its outlook, still expecting a modest gross profit by year-end.

• Uber ($UBER) announced its advertising business hit $1 billion in revenue. Uber Ads, which launched in 2022, sells ad spots across the Uber and Uber Eats apps, emails, in-car tablets, and cartops.

• Disney ($DIS) turned a profit in its streaming business for the first time.

• Nvidia ($NVDA) has been scraping large amounts of copyrighted YouTube videos to train its AI models, according to leaked documents.

• Elon Musk declared "war" on advertisers and sued an ad industry group and its members, which include CVS Health ($CVS) and Unilever ($UL).

• Google ($GOOGL) launched its new $100 set-top box TV streamer and announced it is discontinuing the smaller, cheaper Chromecast. It also released an updated version of its Nest Learning Thermostat for the first time in nine years.

• Microsoft ($MSFT) joined CrowdStrike ($CRWD) in firing back at Delta ($DAL), saying the airline turned down its offers to help with the fallout from last month’s massive IT outage.

• The U.S. Consumer Watchdog is probing major U.S. banks over Zelle scam concerns.

EARNINGS
Earnings Highlights

Reddit Rides the AI Wave

Reddit is cashing in big time. In just its second earnings report since going public in March, the social media forum crushed Wall Street’s expectations. Q2 revenue soared 54% year-over-year, hitting $281 million and easily outpacing the predicted $254 million. The star of the show? Reddit’s AI data licensing business, which catapulted its “other revenue” segment up a staggering 691% to $28.1 million. Not bad for a company that’s still getting its sea legs as a public entity.

Robinhood Rides the Meme-Stock Wave

Robinhood is riding high on the latest meme-stock mania. The trading platform smashed Wall Street’s expectations in its Q2 earnings report, with revenue hitting $682 million—well above the anticipated $643 million. The big driver? A surge in meme-stock and crypto trading, which pushed transaction-based revenue up by 69% to $327 million. Not bad for a company that’s been navigating choppy waters since its IPO.

Novo Nordisk’s Weighty Problem

Novo Nordisk had a rough day. The Danish pharma powerhouse saw its stock tumble 8.27% after missing the mark on earnings from its blockbuster weight-loss drugs, Ozempic and Wegovy. While the company posted a Q2 net profit of $1.86 billion—a 3% year-over-year increase—both drug sales came in below analyst expectations. Wegovy raked in $1.7 billion, falling short of the $2 billion forecast, and Ozempic sales also missed by $0.2 billion. Investors weren’t thrilled with the slimmer-than-expected numbers.

EARNINGS
Disney’s Streaming Magic Soars, but the Parks Hit a Speed Bump

By the Numbers: Disney's Q3

• $23.16 billion: Total revenue, beating the $23.07 billion estimate.

• $1.39: Earnings per share, topping the expected $1.19.

• $47 million: Profit from combined streaming services (Disney+, Hulu, ESPN+).

• 6%: Decline in U.S. parks’ operating income.

• 4%: Overall revenue growth year-over-year.

Streaming Triumph

Disney ($DIS) just scored a major win, beating Wall Street’s expectations for its third-quarter earnings. The highlight? Disney’s combined streaming services—Disney+, Hulu, and ESPN+—finally turned a profit, hitting this milestone a quarter earlier than predicted. With a $47 million operating profit compared to a $512 million loss last year, the entertainment giant’s pivot towards streaming is paying off big time.

CEO Bob Iger was quick to celebrate this success, especially since Disney's entertainment division has been weighed down by streaming losses for years. The turnaround is also thanks to hits like Pixar’s Inside Out 2, which helped Disney’s film studio break a losing streak.

Parks Cool Down

But it’s not all sunshine and rainbows. Disney’s theme parks, long the company’s profit engines, are facing some headwinds. Inflation and flat attendance at U.S. parks put a damper on earnings, leading to a 6% dip in operating income for domestic parks. The company isn’t expecting a quick rebound, forecasting a mid-single-digit profit drop in the upcoming quarter.

Despite the parks’ slowdown, Disney’s overall revenue still grew by 4% to $23.2 billion, topping the $23.1 billion analysts expected. And while the parks might be struggling, Disney is banking on its entertainment and streaming divisions to carry the load moving forward.

Looking Ahead

To keep the streaming momentum going, Disney is hiking subscription prices, with increases up to 25% for its online video services. As for the parks, the company remains optimistic about long-term growth, despite the current slump. Disney is also navigating a potential $5 billion bill to acquire Comcast’s stake in Hulu, with a final decision expected in 2025.

Overall, it’s a mixed bag for Disney: streaming is shining bright, while the parks could use a little magic.

Calendar
On The Horizon

Tomorrow

Every Thursday, the US Department of Labor drops its initial jobless claims report, a snapshot of how many folks filed for unemployment benefits the week before. Normally, it’s a routine release that doesn’t cause much of a stir. But in today’s jittery market, it’s taken on new significance. Last Friday, a disappointing jobs report triggered a stock market sell-off, with investors fearing the labor market is cooling off quicker than the Fed anticipated. Tomorrow’s report could either fan those flames or bring some much-needed relief to nervous traders.

Thursday: Eli Lilly ($LLY), Brookfield ($BAM), US Foods ($USFD), Six Flags Entertainment ($SIX), Yeti ($YETI), Under Armour ($UA), Warby Parker ($WRBY), Krispy Kreme ($DNUT), Paramount Global ($PARA), Sweetgreen ($SG)

Before Market Open:

• Eli Lilly ($LLY): Riding high on the success of Mounjaro and Zepbound, Eli Lilly is the toast of the obesity drug market right now. The stock’s sky-high valuations reflect investor confidence, but they’ll need to see the company deliver the goods with a solid profit boost to justify the optimism. Wall Street is mostly bullish—15 out of 18 analysts say buy—but it’s all eyes on earnings. Consensus: $2.70 EPS, $9.95 billion in revenue.

• Yeti ($YETI): Remember when Yeti coolers were the must-have post-pandemic accessory? Those days may be fading, but the brand isn’t backing down. After a tough year of slipping shares, Yeti is shifting its focus to international markets. Investors are looking for proof that this strategy will pay off, especially with stronger margins translating to better profits. Consensus: $0.63 EPS, $452.29 million in revenue.

After Market Close:

• Sweetgreen ($SG): Sweetgreen is surfing multiple waves right now—value-conscious consumers tired of fast food and a broader shift towards healthier eating. The stock has surged over 144% in 2024, with analysts predicting even more upside. But that optimism hinges on Sweetgreen’s ability to keep delivering strong results, especially with the company’s push into automated restaurants. Consensus: -$0.10 EPS, $180.91 million in revenue.

• e.l.f. Beauty ($ELF): Since its 2016 IPO, e.l.f. Beauty has built a loyal following with its affordable, high-quality cosmetics and savvy social media game. But with inflation pressuring consumer wallets, the big question is whether e.l.f. can sustain its growth. Investors are watching closely to see if the company can continue to thrive in a tougher economic climate. Consensus: $0.85 EPS, $301.44 million in revenue.