The Olympics may have wrapped up, but now investors are the ones eyeing the gold.

The commodity is up about 20% so far this year, making gold bars worth over $1 million for the first time ever after the commodity’s price crossed $2,500 per ounce this week.

What’s driving gold’s winning run? The precious metal is getting a boost from investors betting big on the Federal Reserve slashing interest rates in September, an event that will likely continue to drive up gold’s price. Gold is often used as a hedge to the US dollar, and when the Fed lowers interest, the dollar tends to weaken—making gold more valuable to investors.

Gold’s role as a building block for tools used in the AI revolution, including semiconductors, has also been a huge driver in demand.

Plus, China, India and other nations have been increasing their strategic gold holdings. Geopolitical tension tends to contribute to gold’s rise, as investors see the asset as a more stable hedge compared to currencies and equities.

Is this a golden opportunity? The good times for the yellow commodity are likely to continue, analysts and economists say.

“We expect the yellow metal to reach $2,600/oz by the end of the year and $2,700/oz by mid-2025,” wrote UBS’s Solita Marcelli in a recent note.

But if you missed out on gold’s run so far this year, you aren’t the only one.

Money parked in gold exchange-traded funds, which is the easiest way for retail investors to get exposure, peaked in 2020 and has declined ever since.

In fact, gold ETFs have net outflows this year. Investors have drained $3.2 billion from these funds so far in 2024, indicating that central banks have had more to do with driving the price than retail investors, according to etf.com analyst Sumit Roy.

But that dynamic will likely change, as more investors hop on the golden bandwagon and likely push the price even higher. Chief Investment Officer at Bleakley Group Peter Boockvar wrote in a note today that despite many missing out on this year’s rally, investors will “be back and will kick start the next leg higher in gold.”—LB

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Last week was the best week for equities this year, the S&P 500 just wrapped an 8-day win streak (its first since November 2023), and a bullish wind is sweeping through markets.

The crazy part is that all this optimism is coming just a few short weeks after a poor jobs report spooked markets so badly that some started to believe the sky was falling and a recession was imminent. Down days like those make everyone sprint to sell, but if you were one of those investors who bailed, you’re likely missing out on all these gains now.

The point, as Carson Group Chief Market Strategist Ryan Detrick notes in the tweet above, is that successful investors take the bad with the good and remain in markets through thick and thin. If you focus on the long term, utilize dollar-cost averaging to mediate volatility, and stay calm, you’ll see much better returns than the investor who bailed when things got tough.

🟢 What’s up

• Netflix popped 1.48% to a new all-time high after the streamer announced impressive upfront ad sales.
• Palo Alto Networks climbed 7.13% thanks to far stronger than expected earnings from the cybersecurity company and an upbeat forecast.
• Eli Lilly gained 2.97% after the pharma giant announced that its weight-loss drug cuts the risk of Type 2 diabetes by 94% in obese or overweight adults.
• Fabrinet rocketed 15.68% higher thanks to the electronics manufacturer’s earnings destroying analyst estimates.

What’s down

• Lowe’s sank 1.18% after beating earnings expectations but missing on sales and, more importantly, announcing weaker sales lie ahead.
• Paramount Global stumbled 1.08% after a new $4.3 billion bid to acquire the company came out of left field.
• Boeing fell 4.24% on the announcement that the company is grounding its test fleet of the new 777X airplane due to, what else, maintenance issues.

What do airplanes, candy bars, and semiconductors have in common?

They’re all star players in the 2024 mergers & acquisitions renaissance.

Much ink has been spilled about the slowdown in M&A activity in 2023 as high interest rates and regulatory scrutiny left companies hoping to pair up all by their lonesome.

But now, it feels like the tide is turning. On Monday, the Justice Department cleared Alaska Airlines’s acquisition of Hawaiian Airlines after reviewing the $1.9 billion deal. The approval from the DOJ was a huge win, considering the regulator’s recent hostility to other airline deals. Back in March, JetBlue Airways and Spirit Airlines were forced to call off their attempted merger after the department won a suit to stop the deal.

The news came on the heels of Mars announcing a deal to acquire Kellonova last week, as well as AMD unveiling its plans to purchase ZT Systems yesterday. And on top of that, the grocery chain Kroger filed to stop the Federal Trade Commission (FTC) from blocking its merger with Albertsons.

What’s driving this surge in dealmaking?

2023 was the worst year for dealmaking in nearly two decades, with global M&A volume dropping 35% year over year. But that slowdown led to a build-up in private capital that had nowhere to go. Back in March, Morgan Stanley Research projected an up to 50% increase in M&A deals this year due to the $8.1 trillion in unallocated capital pent up from private investors and non-financial companies.

This summer, that prediction has proven apt. “Deal momentum appears to be continuing into the third quarter, as the overall M&A market improves and private equity firms continue to spend record amounts of dry powder—capital raised but not yet invested,” S&P Global analysts recently wrote.

In addition, the slowdown in the IPO market means that there are a ton of unicorns—private companies worth over $1 billion, not the magical creatures featured prominently in Mark’s dream journal—that need somewhere to go. And if they aren’t going public, being acquired is another great option to give investors some bang for their buck.

But regulators will keep the antitrust scrutiny high. The FTC and DOJ brought a total of 50 enforcement actions against companies trying to merge in 2022, the highest number since 1976, and they haven’t slowed down since. Microsoft & Activision, Amazon & iRobot, and Tempur Sealy & Mattress Firm are just a few of the deals that regulators have opposed recently, and they’ll likely block even more in the future.

Mergers can make investing not only more lucrative, but more exciting. So, hold on to your hats as we get ready to see M&A battles ahead.—LB

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• One in every 10 homes in the United States is worth $1 million or more.
• Elon Musk’s Twitter acquisition will go down in history for a number of reasons, but banks will remember it as their worst buyout since the Global Financial Crisis.
• Gigantic food companies have made billions from selling snacks and junk foods, but a tipping point is approaching as Americans choose healthier alternatives.
• The Lipstick Index measures lipstick sales, with the idea being that lower sales means an economic downturn ahead. The bad news: Makeup sales are sinking.
• Wall Street banks like Goldman Sachs and JPMorgan are embracing AI, utilizing the new technology to innovate their businesses.
• These 20 pandemic darlings saw enormous demand during lockdowns, but shares have since flatlined.

Tomorrow, investors will get to pore over the minutes from the Federal Open Markets Committee’s (FOMC) July meeting. The FOMC is the governing body of the Federal Reserve—these are the folks setting monetary policy and deciding when to cut interest rates, so gleaning any insight into their thinking is important for investors. Although the FOMC chose not to cut interest rates at their last meeting, these minutes could reveal if they believe cuts are coming, what data they’re paying particular attention to, and more.

Before the open

• Target (TGT) was the first retailer to sound the alarm on the state of consumers when it lowered prices on 5,000 items to attract more customers. But since then, the state of consumer spending has seemingly improved, with many of the company’s retail rivals posting strong earnings. Shareholders will want to see if the same is true for Target, or if the company is falling behind the competition. Consensus: $2.19 EPS, $25.22 billion in revenue.
• Analog Devices (ADI) has seen its stock soar on the back of AI hype, with the semiconductor manufacturer reaping the rewards. But now, shareholders are beginning to wonder if the stock has risen too high, too fast. They’ll want to be reassured that management can keep the impressive revenue growth of last quarter rolling in order to make sure that the stock’s high valuation is warranted. Consensus: $1.50 EPS, $2.27 billion in revenue.

After the close

• Snowflake (SNOW) is in the business of cloud computing, and thanks to AI, business is booming—for everyone but Snowflake, that is. The company has fallen behind its competition as of late, and now it’s in catch-up mode, burning money in order to close the gap. Shareholders didn’t like that the company was trailing the rest of the industry, they don’t like that it’s giving up profits in exchange for high operating costs, and they won’t like it if management doesn’t come to this meeting with a plan to turn things around. Consensus: $0.16 EPS, $851.16 million in revenue.
• Zoom (ZM), like many pandemic darlings, has sunk since lockdowns ended. Ironically, that means the growth-heavy company is now something of a value investment, and if investors believe that the multi-year selloff is over, they could be getting a company in the midst of a multi-year transformation at a bargain price. Consensus: $1.21 EPS, $1.15 billion in revenue.