The crypto industry is plotting its political future this week at the Bitcoin Conference in Nashville, Tennessee.

Once upon a time, cryptocurrency was an asset class that politicians across the political spectrum avoided touching with a ten-foot pole—but Republicans have changed their tune this election cycle, tapping into a lucrative base of pro-digital asset voters.

Republican presidential nominee Donald Trump will be taking the stage on Saturday, illustrating just how dramatically the former president has reversed his prior stance and embraced cryptocurrency. He made a splash back in April by launching his own token collection, along with formally making crypto a part of his election platform.

Trump has raised over $4 million in bitcoin and other digital coins for this 2024 campaign, according to CNBC. And Trump isn’t the only Republican politician making an appearance at the conference—former Republican candidate Vivek Ramaswamy is also speaking, along with Senator Bill Hagerty of Tennessee and Senator Cynthia Lummis of Wyoming.

How many voters actually care about crypto?

While crypto has a—let’s say—enthusiastic base, this could be a situation where a loud minority is making most of the noise. According to a recent Gallup survey, Americans consistently say that the most important economic issues to them are the high cost of living, inflation, and growing wealth inequality.

But that doesn’t mean bitcoin is a non-issue. A recent Harris Poll found that about a third of voters say that digital assets are a factor they’re thinking about when voting in the presidential election.

Even if bitcoin specifically might not be the most important single issue for Trump voters, a classic pro-business tax agenda and promises of less regulation have pushed more Silicon Valley and Wall Street titans to embrace him like never before. For example, venture capital giant Andreessen Horowitz founders Ben Horowitz and Marc Andreeseen endorsed Trump in a podcast last week, citing a “pro tech” agenda that included Trump’s digital asset platform.

Can Democrats convince voters they’re bitcoin-friendly?

Not all Democrats have shown outright hostility to crypto, and in fact, Democratic representative Ro Khanna is also speaking at this week’s conference in Tennessee. And Kamala Harris has a relatively blank slate when it comes to digital assets, so she could argue she’s more friendly to the asset class compared to President Biden.

And ironically, despite the crypto industry’s inclination to bash Democratic SEC Chair Gary Gensler on his pro-crypto regulation stance, he has overseen the approval and launch of spot bitcoin and spot ethereum ETFs—two truly monumental milestones for the industry.
So as always when it comes to crypto, expect the unexpected.—LB

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With GDP rising unexpectedly higher today, investors may be feeling pretty good about the US economy. But as Peter Berezin of BCA Research noted, one thing investors should be keeping an eye on is layoffs.

Earlier in July, the latest JOLTS report revealed that layoffs across the country increased 112,000, bringing the total to 1.654 million. That’s not historically high by any means, and the rate of layoffs was unchanged from the previous month. But considering an increase in layoffs like the one we’re seeing now has precipitated each of the previous six recessions, investors may want to prepare for the worst.

🟢 What’s up

• IBM popped 4.36% after it crushed earnings expectations thanks to high AI bookings.
• Tesla recovered 1.97% after yesterday’s terrible day as investors continue to digest a mixed earnings report.
• ServiceNow soared 13.19% thanks to a strong earnings report that solidified the software company’s position as beneficiary of the AI trade.
• Viking Therapeutics exploded 28.31% today due to the pharma company moving its weight-loss drug into Phase 3 clinical trials.
• Airline stocks flew higher today thanks to good news from two big players. Southwest Airlines ascended 5.64% on better-than-expected earnings, while American Airlines rose 4.23% in spite of issuing a profit warning for the coming quarter.

What’s down

• Universal Music Group tumbled 23.54% after subscription and streaming revenues fell well short of analyst expectations.
• Ford plummeted 18.40% for the automaker’s worst day of trading since 2009 after it missed profit expectations and provided no positive forecast for the quarters ahead.
• Lululemon slid 9.09% thanks to a downgrade from Citi analysts from “buy” to “neutral” predicated on a sales slowdown.
• Royal Caribbean sank 7.61% after the company indicated that it's facing a slowdown in demand.
• Edwards Lifesciences crashed 31.27% thanks to a mixed earnings report, as well as management’s guidance that sales for its key heart valve replacement therapy will sink next quarter.

What goes up must come down.

Turns out that applies to the tech stocks that pushed every major equity index to an all-time high this year, and now are leading the way down as the market sells off this week.

Tesla and Alphabet reported disappointing earnings after the bell on Tuesday, spurring a selloff across the market on Wednesday that saw both the Nasdaq and S&P 500 suffer their worst day of trading since 2022. The pain continued on Thursday as a major tech selloff gained steam—according to Semafor, tech stocks lost $1.2 trillion in market value in just the last 48 hours.

Nvidia is down 6.65% in the previous 5 trading sessions, while Alphabet has fallen 6.14%, and Tesla dropped 11.07%.

What the heck is happening?

The tech selloff has been driven by a combination of faltering faith in AI returns, along with shifting macroeconomic conditions that have made other corners of the market suddenly look more appealing.

After new data earlier this month showed that inflation was decelerating, analysts and investors are growing more confident that the Federal Reserve will finally cut interest rates in September. The optimism about rate cuts has driven investors to other parts of the market beyond tech that could get a boost, particularly small caps.

Tech stocks have also risen so high this year that their valuations are starting to look stretched, leading investors to take profits and search for value elsewhere. Plus, earnings have been a referendum on whether or not AI companies can actually monetize artificial intelligence after making insanely large bets on the nascent technology—suddenly investors are worried tech companies aren’t going to get enough bang for their buck.

The good news

Tech comprises such a large part of the S&P 500 that its selloff is driving the entire index down—but under the surface, other sectors are actually faring pretty well.

Deutsche Bank’s Jim Reid pointed out that while investors have rotated out of tech since July 11, sectors like utilities and healthcare are up over the same period.

“Even a small rotation out of tech could mean a big rotation into other sectors,” he wrote.

Investors who are bullish on AI argue that this selloff is a breather, not a break, on AI returns. “We believe this tech sell-off will be short lived as the Street better digests results and commentary from the broader tech sector over the coming weeks during earnings season,” wrote Wedbush analyst Dan Ives. “This is the start....not the end of this tech bull run in our view fueled by this AI tidal wave of spending on the doorstep.”

The takeaway from all this volatility is as old as time: stay diversified.—LB

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• Q2 GDP was shockingly strong, with today’s reading of 2.8% growth outpacing the 2.1% economists expected.
• The Japanese yen is rising while US tech stocks are falling. Coincidence? Maybe not.
• You’re in my seat: Southwest Airlines is getting rid of its open seating arrangement and shifting to assigned seats in what will be remembered as a historic day for the airline industry.
• 32 charts that tell you everything you need to know about markets midway through 2024 at a glance.
• The Fed needs to cut interest rates at next week’s meeting, according to the former president of the Federal Reserve Bank of New York.
• Bill Ackman is trying to turn social media stardom into profit. We’ll find out if it works next week.

Tomorrow’s the big day: The June personal income and expenditures report, or the PCE reading, will give Fed officials and investors alike insight into how the battle against inflation is unfolding.

PCE came in flat in May, while core PCE, which removes energy and food costs from the equation, rose a mere 0.08%. Economists expect this report will reveal a 0.08% increase in PCE and a 0.10% increase in core PCE, spurred on by disinflation in goods and slower inflation in rent prices.

If the econ nerds get what they want, then Wall Street will have plenty of reason to celebrate. Jerome Powell has already noted that the Fed won’t wait until inflation gets all the way to its target 2% before cutting interest rates, and a second serious slowdown in a row will go a long way to convincing the Fed that cuts should come sooner rather than later.

Before the open

• Bristol-Myers Squibb (BMY) reported solid earnings last quarter, but the stock has sold off all year on the fear that the company is facing a slew of patent expirations for key products. Shareholders will want to hear more about the pharma giant’s plans to shore up its pipeline, and how it will utilize its recent $14 billion acquisition of KarXT. Consensus: $1.53 EPS, $10.56 billion in revenue.
• Colgate (CL) shares are up a respectable 21% year to date as the company continues to shrug off consumer spending concerns. Investors will want to see strong returns from the pet nutrition segment of the business, a key area of growth, as well as justification for such a high valuation for a consumer goods company. Consensus: $0.79 EPS, $4.59 billion in revenue.
• 3M (MMM) sold off big time after its previous earnings report thanks to a pessimistic 2024 outlook by management. Shares have crept back up slowly but steadily since then, and shareholders will want to see vindication for their faith in the industrial conglomerate, particularly after sticking with the stock even after it reduced its dividend. Consensus: $1.68 EPS, $5.86 billion in revenue.

Watching the daily market moves of real companies is fascinating and all, but have you ever sat back from a computer screen full of stock charts and daydreamed about investing in fictional companies?

Movies, TV, and video games are full of made-up companies, like Dunder Mifflin, Los Pollos Hermanos, and Wonka Industries. The question is, are any of them worth investing in?

In your own words, pitch us a fictional company that you believe is worth investing in as though it were a real stock. Is The Bluth Company, a home builder whose CEO is in prison, an undervalued investment? Is the Grand Budapest Hotel a hot buy with consumer services spending up post-pandemic? Should you add a defense contractor like Stark Industries to your portfolio in light of recent geopolitical conflict? Is Duff Beer recession-proof?

Click here to let us know what fake company you’d want to make a real investment in. Our favorite responses will be featured in tomorrow’s edition!—MR