Hey Snackers,
Protests against racial injustice, sparked by the horrific murder of George Floyd, continued through the weekend.
That didn't stop markets from continuing to rally back hard — the Dow surged almost 7% last week and the Nasdaq hit a record high. Investors were already optimistic about the economy reopening... then they unwrapped the May jobs report.
On the pod: Germany just whipped up an electric car stimulus plan that powered Volkwsagen's stock up 2%. Our digestibly 15-minute podcast is looking at why Tesla got left out.
Just when it seemed like 2020 couldn't surprise us anymore... The May jobs report dropped. We were expecting to get hit with a 20% unemployment rate, but were pleasantly surprised (rare 2020 occurrence): unemployment actually fell in May, and 2.5M jobs were added to the US economy — the largest monthly job gain on record.
May the (labor) force be with you... Over half of people laid off during the pandemic may be earning more than they did at their jobs, largely thanks to stimulus checks and extra $600/week in beefed up unemployment pay. Americans' personal incomes actually jumped 10.5% in April. While that might suggest a slower return to work, the latest stats are encouraging:
The economy is still using training wheels... They get taken off on July 31st, when the beefed up unemployment benefits are scheduled to end. The US government has pumped trillions into aid programs for households and businesses — those will start to run out this summer. If we don't get a second COVID-19 outbreak and Americans feel safe enough to return to work, we could see a sharp decline in unemployment. But 2020 has a thing for surprises.
Be my (e)bae... Like dating in the time of coronavirus, eBay thrives on a virtual adrenaline rush. Shares of the OG e-marketplace hit an all-time high after it aggressively raised sales forecasts for next quarter (like outbidding yourself in an e-auction). EBay added 6M buyers in April and May, while small biz sign-ups surged 55%. Plus, there was perfect timing: eBay raked in $4B after selling ticket brand StubHub in February, just before live events disappeared.
Restock the Biscoff cookies... Airline stocks have popped since Warren Buffett sold Berkshire Hathaway's entire airline stake (at a $3.B loss) a month ago. On April 16th, the volume of passengers traveling was 3.6% of last year's — on June 4, it was 15%. And by July, some airlines expect 50% of normal levels. These TSA stats, mixed in with economic reopening, sent stocks of America's 4 biggest airlines soaring: since May 7, American Airlines is up 95%, United is up 86%, Delta is up 58%, and Southwest is up 50% (insert Warren silently sipping Coke).
When you're called a slacker... Because everyone's just comparing you to Zoom. Shares of Slack took a 14% plunge after the work messaging icon reported 50% sales growth for its first quarter (compared with 49% the quarter before). Given the corona-conomy WFH frenzy, investors were expecting jaw-dropping numbers (like Zoom's 169% sales surge). With great hype comes great disappoint-ability.
An apocalypse thriller... AMC Theatres' headline-making quarter. The world's largest movie theater chain's 11K+ screens have been dark since March. In April, AMC suggested it had enough cash to make it until Thanksgiving. Now, it has "substantial doubt" about that — key issue: "We are generating effectively no revenue." AMC expects a $2B+ loss last quarter and even worse in the one we're in now. Its future depends on your choice to show up and studios choosing to make movies.
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Disclosure: Authors of this Snacks own shares of Delta, Lululemon, Stitch Fix and Volkswagen
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