Thursday Jul.15, 2021

💰 The secret stimulus

_Back-to-school is about to be lit [Lorado/E+ via GettyImages]_

Hey Snackers,

It's always sunny in Philadelphia, but it's never 69 and sunny anywhere. According to The Verge, Apple's weather app refuses to display the chuckle-worthy number.

Stocks ticked up after Fed Chairman Jerome Powell told Congress that the central bank plans to continue its relaxed monetary policy, and that inflation will likely cool down.

Piggy

$300 monthly checks to parents start today, but the real winners could be retailers

Crank out the piggy bank... If you're still signing field trip forms, a $300 check could be on its way. Today, the US government starts sending US parents $300 per month for each child they have (your 25-year-old who lives at home doesn't count). This temporary increase in the child tax credit was passed as part of Biden’s $1.9T stimulus rescue package in March.

39M households will receive payments, covering 88% of US children. Each month for the rest of 2021, eligible parents can expect $250 or $300 per kid, depending on age.
$105B: How much the boost will cost Uncle Sam. Last year, the credit was $2K/child per year. Now it could be up to $3.6K each year. Buut: it expires in December.
$150K: The full credit starts getting smaller for married couples who earn more than $150K/year, and individuals who make more than $75K.

Give the kid some credit... Since 1997, the child tax credit has reduced income liability for people with children. With the old child tax credit, parents saved on taxes owed when they went to file. With this new credit, parents are straight-up getting paid, even if they have no income. It's less like a tax break, more like a monthly allowance.

Dems tout the payments as a way to reduce child poverty and change lump-sum refunds into a reliable income stream. And Biden hopes to extend it for years.

Prepare for the "secret stimulus"... that could benefit big retailers. Pandemic stimulus checks boosted consumer spending, helping out go-to chains like Walmart, Costco, and Target. This monthly "credit" could have a similar effect on the family-favorite retailers. Target and Dollar General mentioned the sales-boosting potential in their earnings calls, and Walmart, American Eagle, and TJ Maxx are prepping for strong back-to-school sales. And it's not just binders and diapers — that spending could spill into adult categories like alcohol, restaurants, and travel.

Juicy

LG invests $5.2B in batteries, but it's juicing up for more than just electric cars

From toothpaste to smartphones… Korean conglomerate LG makes just about everything. It also owns one of the world’s largest manufacturers of car batteries: LG Energy. LG Chem, its parent company, brought in $27.1B in revenue last year, and has sealed car battery deals with GM, Tesla, and Volkswagen. Now, it's juicing up with a $5.2B investment in its battery materials biz.

Not just Tesla juice… Thanks to government subsidies and clean energy concerns, demand for EV batteries is soaring. But battery behemoths like LG have their eyes set on more than just EVs. They want to service the entire renewable energy industry by fixing its storage problem.

The Problem: "Intermittency." That's when solar panels stop generating electricity on cloudy days, or wind turbines slow down in less-gusty weather.
The Solution: Gigantic, factory-sized batteries that save up energy to use on a (literal) rainy day. LG has already installed utility-scale batteries across the US, including at the world’s largest battery storage complex in CA.

Big batteries = big potential… EV batteries are top of mind for consumers, but utility-scale batteries are a massive opportunity for renewable energy infrastructure. They solve the "intermittency problem" for companies and governments that are setting ambitious carbon-reduction goals. Bigger batteries could also mean bigger business: the global market for energy storage is expected to hit $426B in the next decade.

What else we’re Snackin’

Collab: The EU and China jointly announced plans to limit greenhouse gas emissions from both consumers and industries.
Biscoff: Delta reported its first profit since 2019 thanks to a resurgence of domestic leisure travel.
Beef: Facebook followed Amazon's lead and asked for FTC chief and Big Tech critic Lina Khan to be removed from its federal court case.
BNPL: Apple is working on a "buy now, pay later" service to rival Affirm, PayPal, and Klarna.
ZuckBucks: Facebook said it will pay out $1B through 2022 to reward creators who post on Insta and FB. Read: lure them away from TikTok.
Carma: Toyota just bought HD mapping startup Carmera to level up its self-driving game (looks like GTA).

Thursday

Weekly jobless claims
Earnings expected from UnitedHealth and Morgan Stanley

Authors of this Snacks own shares of: Delta and Apple

ID: 1722725

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Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?

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Chipotle posted much better-than-expected results on Wednesday, with sales rising 14% to a record $2.70B in the first quarter, which is like a billion additions of guac.

Profits jumped 23% to $359M.

Chipotle has quietly cruised higher over the last year. It’s up 63%, compared to the 24.5% gain for the S&P 500 over the 12 months through Wednesday’s close. Not bad for a rice-and-beans based business model.

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Despite terrible earnings numbers last night — declining vehicle sales, disappointing revenue and profit, enormous spending — Tesla stock is up more than 10% as of midday. That’s a welcome move for the car company, that’s been among the worst performers this year in the S&P 500.

Why the about face?

While Reuters reported earlier this month that Tesla is no longer making its long-awaited $25,000 mass-market car — news sent the stock, already suffering from headwinds across the EV industry, down even further— Tesla reported during its earnings that it’s going to make cheaper cars than it currently has.

Before the second half of next year, Tesla said it will release “more affordable models” that “will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”

So rather than release the $25,000 Model 2, Tesla is incorporating some of that technology into its existing models. UBS called it the Franken-3Y2.