Hey Snackers,
It’s the fishiest cheating scandal since the college-admissions fiasco: participants in a pro-fishing tournament in Ohio were reportedly caught with lead weights in their catch. People were mad.
The S&P 500 gained 1.5% to round out a choppy trading week. The “good news” from Friday’s healthy jobs report had investors worried the Fed would continue to be aggressive with rate hikes (bad news). Third-quarter-earnings season kicks off this week, and S&P 500 companies are expected to report their lowest annual profit growth since 2020.
Payment problems… As a global recession looms, ecomm giants are launching more affordable payment options — because more shoppers need them. Americans burned through their pandemic savings faster than anticipated this year as prices surged at the fastest pace in four decades. With consumers further tightening their belts, online retailers are trying to make shopping more accessible:
Unwelcome U-turn… Poverty is making a regrettable rebound. US poverty plummeted to record lows during the pandemic thanks to massive government stimulus. Now that federal aid has dried up and many pandemic benefit programs have disappeared, experts predict US poverty could soon hit a 50-year high.
It isn’t just corporate altruism… Companies like Amazon want to keep customers spending, even during hard times. Industry titans can actually boost their market share during recessions by keeping prices low (they can afford to): that’s what McDonald’s did in 2008. Amazon may be next: research suggests Americans are more likely to cut food spending than cancel their Prime subscriptions.
Take it to the bank… Banks kick off earnings season this week, with JPMorgan Chase, Citi, Wells Fargo, and Morgan Stanley dropping Q3 numbers. Last quarter’s theme: soaring interest rates. High rates are good for banks because they earn higher returns off customers’ idle cash and loans. They’re also bad for banks because they discourage borrowing, spending, and investing. Analysts expect banks will (again) report lower earnings than last year. The IPO-and-merger boom of 2021 is over, so lower deal-making revenue’s expected.
Break out the Biscoffs… Delta’s revenue nearly doubled last quarter thanks to strong vacay demand. Airlines are expected to report frothy sales for their latest quarter after summer excursions rebounded to prepandemic levels. But with holiday airfares set to be the priciest in five years, more Americans might just celebrate at home. Airline stocks have lost altitude this year, and the industry’s typical domestic holiday boom could fizzle (even with Europe “on sale”). We’ll see whether inflation cloud’s Delta’s forecast when it reports Thursday.
E.T. phone home… more like UN phone Jerome. Last week, the United Nations called on the US Fed and other central banks to stop their aggressive interest-rate hikes. A UN agency warned that the global economy was “on the edge of a recession” and that further monetary tightening risks pushing it to a prolonged downturn worse than the ’08 financial crisis. As the USD has strengthened on the back of surging rates, debt-laden developing economies are edging closer to default, and could bear the brunt of a worldwide recession.
Elon’s albatross… The Elon vs. Twitter saga has a new plot twist: last week, Elon told the company he'd buy it at his original offer price of $54.20/share, after trying to back out of the deal over what he said were spam-bot issues. Now a Delaware judge has ruled that Elon has until October 28 to seal the deal if he wants to avoid a trial. If key details (like: debt financing) get resolved, both sides could file a motion to end the pricey lawsuit. Twitter’s A.E. (After Elon) era could begin a new chapter for the internet’s “town square.”
Authors of this Snacks own: shares of Amazon, Delta, Google, and Twitter
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