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Good morning investors! The market tried to recover yesterday but failed to mount a full rally.
Today we cover:
Consumers are borrowing less
Disney and Shopify earnings
Staying in your budget
📊 Economy and News
Consumers are borrowing less
US consumers racked up less spending on credit cards in June at a time when many are worried about a slowdown in the economy. However, overall U.S. consumers collectively owe a record $1.14 trillion in credit card.
Total consumer credit jumped $8.93 billion in June, slowing from a $13.95B gain seen in the prior month, the Federal Reserve said Wednesday, missing economists' estimates for a $9.8B gain.
The rise in June took the annual rate to 2.1%, weaker than the 1.5% rise in the prior month.
Revolving credit including credit cards, declined by nearly $1.7B, or 1.5%, in June after a 6.3% jump in the prior month.
Nonrevolving credit such as student loans, rose by a 3.4% rate after a 2.4% rise in the prior month.
Global hits:
Egyptian inflation expected to fall for fifth month in July.
China’s exports miss expectations in July, while imports pick up with growth of 7.2%.
Jamie Dimon says he still sees a recession on the horizon, as the CEO of shipping giant Maersk reminds investors he sees no sign of recession in freight demand.
Musk in controversy: Musk stirs UK divisions and sparks calls for faster rollout of online safety laws as with the ‘civil war is inevitable’ comment. Furthermore, Elon Musk’s X is suing ad industry group over alleged advertising ‘boycott’.
Good to know: Warren Buffett now owns more T-bills than the Federal Reserve.
📈 Stocks
S&P 500 5,199.50 (-0.77%)
DJIA 38,763.45 (-0.60%)
NASDAQ 16,195.81 (-1.05%)
BRENT CRUDE 78.34 (+2.42%)
* Prices as of Aug 8th, 12:20 AM UTC
Disney and Shopify announce earnings
Disney reported earnings before the bell, topping analyst estimates for revenue and earnings.
The company’s combined streaming businesses, comprised of Disney+, Hulu and ESPN+, turned a profit for the first time, and beat Disney’s earlier guidance that this would happen in its fourth quarter. The segment made $47 million. That’s a significant improvement from losing $512 million in the same quarter a year ago.
Iger referenced a planned crackdown on password sharing, which will begin “in earnest” in September, as a tool that will help generate new subscribers and added revenue for the company. A similar effort from Netflix has helped the world’s largest streamer add new customers during the past year.
New prices: Plus, the company is hiking price for Disney+, Hulu and ESPN+ subscription services.
Beginning on October 17, US subscribers to Disney+ will have to pay $2 more per month for its plans: Disney+ with ads will cost $9.99, up from $7.99. Its ad-free plan will cost $15.99, up from $13.99.
Hulu’s ad-supported plan will also increase to $9.99 per month, from $7.99, and its ad-free plan will rise by one dollar to $18.99. ESPN+, the company’s sports streaming service, will also rise by $1 to $11.99 per month.
New features: The company said it would also add new features to Disney+, along with the price hikes: Ahead of the 2024 Presidential Election, all Disney+ subscribers will have access to ABC News Live and a continuous playlist of content aimed at preschool-aged children.
Box office: Disney’s “Inside Out 2” and “Deadpool & Wolverine” have led the studio to become the first to top $3 billion in worldwide ticket sales in 2024. Also, the studio has some other big movies in store such as ‘Fantastic Four,’ ‘Zootopia,’ ‘Avatar,’ ‘Avengers,’ ‘Mandalorian’ and ‘Toy Story’.
Parks: On the other hand, Disney’s parks and experiences segment felt pressure due to lower consumer demand and inflation.
Revenue for the overall experiences unit, which includes domestic and international parks and experiences, as well as consumer products, was up 2% to $8.386 billion.
Operating income for U.S. parks was down 6%, while international parks operating income was up 2%. The company attributed the decrease in operating income at the domestic parks to higher costs driven by inflation, as well as increased technology spending and new guest offerings.
Sony earnings: Sony reported operating profit of 279.11 billion yen ($1.9 billion) in the fiscal first quarter, up 10% year-over-year and beating analyst expectations.
Gaming, for which Sony is well-known thanks to its popular PlayStation consoles, banked revenues of 864.9 billion yen in the quarter, up 12% from 771.9 billion yen a year ago.
Also, Sony has ruled out renewing offer for Paramount, saying it wouldn’t fit strategy.
Shopify
Shopify beat expectations for the second quarter and gave an upbeat forecast for the current period. The report send the company up +22%.
The company said gross merchandise volume, or the total volume of merchandise sold on the platform, jumped 22% during the quarter to $67.2 billion. That easily topped consensus estimates of $65.8 billion, according to FactSet.
The company said it saw strong demand for its services, which include software for online merchants, despite “a mixed consumer spend environment.”
E-commerce peers Amazon, Etsy and Wayfair have said in earnings reports in recent weeks that consumers remain cautious.
Shopify executives said its merchants have been able to navigate the consumer slowdown, a factor it attributed to the “very diverse set” of businesses that use its platform.
For the third quarter, Shopify said it expects revenue to grow at a low-to-mid-20s percentage rate year over year. Analysts surveyed by FactSet expect sales to grow 21% year over year to $2.07 billion.
💵 Personal Finance
Take Control of Your Spending
Building good financial habits takes time and patience. If you're ready to commit to a budget, you're off to a great start. However, common mistakes can derail your efforts. Here are a few to watch out for and how to avoid them.
Not Saving for Emergencies
Many Americans lack sufficient emergency savings. With economic uncertainties, it's crucial to have funds set aside for unexpected expenses.
Aim to save 3-6 months' living expenses, but start with smaller goals like $500 or even $20 a month.
Add "emergency savings" to your budget and cut other costs or find extra income to meet this goal.
Automate savings by setting up a separate account with recurring deposits.
Overestimating Your Spending Money
Overestimating available spending money is common, especially if you're not tracking expenses or basing your budget on pre-tax income.
To avoid shortfalls, ensure all bills are covered before adjusting your spending.
Reset your budget based on a lower-than-average income month and track expenses to identify overspending areas.
Utilize budgeting tools, like You Need A Budget (YNAB) to make the job easier.
Ignoring Fun Money
Allocating money for leisure activities, even if you're living paycheck to paycheck, is important for building good financial habits. Fun money prevents guilty overspending and provides an outlet to enjoy life.
Consider budgeting strategies like the zero-based budget or the 50/30/20 rule to ensure you always have funds for personal enjoyment.
Failing to Adjust Your Budget Over Time
Life changes, such as having a baby, buying a house, or paying off debt, necessitate budget adjustments. Sticking to a rigid budget can be detrimental.
Regularly review your financial needs and expenditures, and adjust your budget accordingly. Check in with your budget a few times a year to ensure it still fits your current situation.
Apps like YNAB give users the option make changes to the budget and can even warn you when you go over budget.
💰 Be a Better Investor
“Stay committed to your decisions, but stay flexible in your approach.”
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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.