Market Munch 🍔 | July 13 2022
Pepsi warns us of more expensive soda, the Euro falls to it's lowest level in 20 years, and stocks take a scooter to the ankle before inflation data pops up.
Good morning Munchers!
Here is your daily dose of the news that’ll help you impress grandma at the dinner table - in 4 minutes and 5 seconds.
Let’s dive in.
What’s hot, what’s not?
Market Commentary
US stocks continued wobbling their way through. Stock market was mainly flat then dropped quickly toward the end of the session.
Oil and bond yields fell, being dragged down by fears of a recession stoked by an energy crisis.
Crypto got lazy again - Bitcoin fell back below $20k and Ethereum hung around the $1000 mark.
IMPORTANT 🚨 - US Inflation numbers clock in tomorrow. This sets the tone for quite a decent chunk of the world and especially emerging markets - which have a lot of US Dollar denominated debt. Story Roundup
1 - Pepsi tells us that inflation is “in the teens”. 🔥🥤
PepsiCo just reported their earnings for the last quarter.
The numbers came in fantastic - top line revenue at $20.2bn, beating analyst estimates and growing 5.2% from this time last year.
The problem?
As with most companies today, the biggest frustration is inflation. PepsiCo hiked their prices by about 12% earlier this year - and their CFO confirmed it.
According to PepsiCo, inflation will “persist” and is “well in the teens”.
No place to be than inflation nation!
2 - Heathrow tells planes to cut their sales. ✂️
Airlines haven’t had the best COVID season. A lot of havoc has been wreaked by operational problems, staffing crises, and a cash crunch.
And now, the UK’s busiest airport is throwing a passenger cap into the mix.
Heathrow CEO asked “airline partners to stop selling summer tickets”. 💀
Airline companies predicted stronger demand than Heathrow did - so they matched their supply accordingly. Heathrow definitely didn’t.
I guess it’s important to remember - don’t bite the hand that feeds you.
Vacation season isn’t taking off for Heathrow anytime soon. ✈️
3 - Parity! 1 EUR = 1 USD = 1 CHF. 💵💶💷
Parity is when two things are equal.
And that’s what the US Dollar and the Euro are.
The Euro slid to it’s lowest level in almost 20 years. And investors are concerned that the EU is slower in playing catch-up.
It’s lost almost 10% of it’s value against the dollar since the start of the year on fears that if a recession were to hit, the EU would be hurt more than America since their interest rates are lower.
And the woes aren’t over - a Russian gas cutoff will definitely throw the region into recession - even worsened by the fact that winter is coming soon too, and gas is desperately needed for the EU’s barely-full coffers.
It’s gonna be a long, long winter.
4 - Stocks slide ahead of inflation data 📉
As said a million times by a billion people (probably), we’re in a giant inflation nation.
And our monthly reminder comes in tomorrow - US CPI inflation numbers are scheduled.
Investors are bracing for higher inflation than expected.
Headline inflation in the world’s largest economy is important for every single other market since policy decisions in the US have a direct affect on the debt that most countries pay.
The recent slide in commodities however, could be a sign that inflation has peaked - which will ease the environment for everyone.
You can find the live update tomorrow at this link at 8:30 AM US time.
At least the memes are funny.
5 - Bill Ackman shuts down $4bn SPAC as demand wanes 😔
Hedge fund billionaire Bill Ackman got to the front pages with an insane trade - turning $26m into over $2bn over a span of a few months.
Yesterday, he returned all his money to investors and announced the termination of his record-breaking SPAC.
Over the last few months, investments like SPACs have fallen out of favor with investors due to poor performance.
A few months back, a former commissioner from the US SEC called it an “illegal investment company”. 😬
Looks like “hell is coming”, alright. 🙏
Aaaand that’s a wrap.
Thanks a ton for reading. Any feedback is open - positive or negative. Hit my line at aryaansh.rathore@gmail.com or https://www.linkedin.com/in/aryaansh/.