💵 The Great Divide

Long weekend on the beach... US air travel over Memorial Day weekend was back to three-quarters of 2019 levels. The US economy is roaring back to life and is expected to grow 6.5% this year, its highest rate since 1984. Other rich countries are also rebounding: China’s economy expanded at a record 18.3% last quarter, and the UK is growing at the fastest rate since WWII. Driving recovery:

• Vaccines: Wealthy countries poured billions into securing vaccines early for their citizens. In 2020, the US spent $12.4B on Operation Warp speed for vaccine development and delivery. Now half of US adults are fully vaxed.
• Stimulus: Rich countries were able to afford stimulus programs to support their economies. The US spent a whopping $5T, more than any other country.

While rich countries rebound... poor nations are falling further behind. Covid is surging, economies and health systems are crumbling, and poverty is increasing. The pandemic caused the first rise in extreme poverty since the '90s. Emerging markets are on track to vaccinate less than one-third of their citizens this year, versus 72% for developed nations. In Africa, just 0.4% of the 1.5B population has been fully vaxed.

• 1.5M: The number of Covid deaths that have already been reported this year will soon surpass the 2020 tally of 1.8M. Latin America, Asia, and Africa account for 72% of deaths.
• 34M people are on the brink of famine because of the pandemic, a record 35% annual increase, compounded by soaring food prices and weak tourism.
• 100M: More than half of children in Latin America are out of school, and many are unlikely to return. Globally, 800M+ students don't have access to computers.

I like big budgets and I cannot lie.... President Biden proposed a ginormous $6T budget for next fiscal year. It would push federal spending to its highest levels since WWII — and create deficits of at least $1.3T/year until 2030. The focus: infrastructure, public health, and education. Biden would nearly double the top capital gains tax rate on millionaires to 43.4%. TBD whether it'll fly in Congress, where Dems have a razor-slim majority.

Like a G6... more like G7. The Group of Seven = the US, UK, Canada, France, Germany, Italy, and Japan. The G7 summit is set for June 11, but the group could greenlight a minimum global corporate tax rate before then. Last week, the US Treasury offered to accept a minimum corporate tax of 15%. A global minimum could allow G7 countries to stay competitive while raising taxes on corporate giants — key to funding Biden's budget proposal.

24/7 legging life... Lululemon reports earnings on Thursday. Lulu found its zen in the WFH era thanks to the flexibility of its fits: athletic enough for a home yoga sesh, stylish enough for Whole Foods, and comfy enough for a Netflix binge. Direct-to-consumer revenue doubled in 2020 as Lulu's online sales dominated. We'll see how Lulu fared last quarter as the US reopened — retailers are seeing "revenge spending" on non-stretchy clothes.

A buzzy report... Canadian pot giant Canopy Growth reports earnings today before markets open. 2020 was a breakout year for cannabis: legal sales across the US hit a record $17.5B, up 46% from 2019. But Canopy's sales have also been growing thanks to "beyond the leaf" initiatives. Think: CBD-infused sparkling water, CBD wrinkle cream, and a Martha Stewart partnership. We'll see how those newer products performed compared to the leaf.

• Crypto: Chia, the "green" alternative to Bitcoin, just doubled its valuation and could IPO soon.
• Confirmed: Amazon is buying MGM for $8.5B, adding thousands of titles to Prime’s streaming library — streamers are (literally) becoming studios.
• Anniversary: One year after George Floyd's murder, we looked at how companies have acted on $50B worth of racial equity pledges.

• Achieve: The mental benefits of being terrible at something.
• Speak: Five common phrases that make people discount what you're saying.
• Work: Five questions that impress hiring managers to have handy for interviews.
• See: Amazon's biggest acquisitions to date, visualized (remember Zappos?).

• Tuesday: Earnings expected from Zoom, Canopy Growth, and HP
• Wednesday: Earnings expected from Splunk, NetApp, Semtech, and Cloudera
• Thursday: Weekly jobless claims. Earnings expected from Lululemon, Broadcom, and DocuSign
• Friday: Unemployment rate released

Authors of this Snacks own: Bitcoin and shares of Amazon

ID: 1668486