Macrosynthesis

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TLDR

• U.S. Stock Hit New Highs
• Heat wave drives up natural gas demand
• U.S. economy still growing, per PMI
• Social media officially bad for your health
• Bankruptcies in U.S. surge to 14-year highs
• Gilead's new drug prevents HIV infection
• Barcelona bans AirBnB and VRBO

U.S. Stock Indexes Hit New Highs

The S&P 500 and NASDAQ hit record highs, marking their eighth positive week out of nine. Information technology and communication services led year-to-date returns. U.S. crude oil prices rose, surpassing $80 per barrel. U.S. retail sales and housing showed signs of weakness, while the UK’s central bank held its rate steady. U.S. companies increased share buybacks in Q1 2024.

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Tech and Semiconductor The Biggest Winners Last Week

Electronic Tech and Health Services declined, losing -1.08% and -.97% respectively. In contrast, Technology Services, Retail Services and Consumer Services sectors gained, with 2.22%, 2.05%, and 1.98% increases.

Massive U.S. Heat Wave Drives Up Natural Gas Demand

An East Coast and Midwest heat wave has driven up demand for cooling, powered by natural gas - a source of fuel for power producers. Natural gas used for power generation rose by 4.5% over the past week, according to the EIA, though natural gas prices actually fell for the week.

U.S Economic Output Continues Expansion, According to New Survey

‍The S&P Global US Composite PMI - a survey of 400 companies - rose to 54.6 in June, the highest since April 2022. The survey showed business activity and confidence growing, and increased demand prompted workforce expansion, while slower input cost growth moderated inflationary pressures.

Sales Drop, Prices Hit Record Highs, and Inventory Rises

In May 2024, U.S. existing home sales dropped 0.7% to an annualized rate of 4.11 million units, the lowest in four months. Mortgage payments for typical homes today are more than double those for homes purchased before 2020. Under President Biden, median home prices have doubled, increasing 114.5%.

Inflation Up 896% Since 1963

Comparing today's inflation to the 1970s is misleading because home prices were included in the CPI calculation until 1983. Since 1963, inflation has risen 896%, while housing prices have risen by more than 2,350%. If we reintegrate home prices, current inflation is closer to 6%. Additionally, recently removed from the CPI, coffee has seen a 33% price increase this year, further distorting inflation comparisons.

China-EU Trade Tensions Escalate

China has warned the EU about a potential trade war over electric vehicle tariffs as Germany's economy minister visited Beijing. Amid rising tensions, German exports to China fell while U.S. exports rose. The proposed EU tariffs and China’s countermeasures have strained trade relations, impacting the German automotive industry and highlighting the need for strategic adjustments.

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In response to the EU tariffs on electric cars, China launched an investigation into European Union pork imports. This move targets European farmers rather than German automakers, aiming to create leverage in trade negotiations. The investigation could escalate trade tensions, affecting both European agricultural exports and the broader EU-China economic relationship.

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US Bankruptcies Surging to Levels Not Seen Since 2010

US bankruptcies are rising rapidly. Through May 2024, 275 large companies have declared bankruptcy, the second highest since 2010. In May alone, 62 firms went bankrupt, the third largest monthly number since 2020. Most bankruptcies are in consumer discretionary companies as Americans scale back spending. Notably, Red Lobster recently filed for bankruptcy, indicating more signs of economic weakness.

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Commodity Movers

Gasoline

+4.4% (1W Chg)

+1.8% (1M Chg)

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Crude Oil

+3.25% (1W Chg)

+15.74% (YoY Chg)

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Lithium

-11.37% (1M Chg)

-69.89% (YoY Chg)

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Lumber

-8.68% (1W Chg)

-19.32% (YoY Chg)

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Noteworthy Events    

Sarepta Soars: FDA Greenlights Expanded Use of Breakthrough Gene Therapy

Sarepta Therapeutics' shares jumped 30% on June 21st after FDA expanded approval for its gene therapy Elevidys, treating Duchenne muscular dystrophy in patients 4 years and older.

In Blow to AirBnB ($ABNB), Barcelona Bans Apartment Rentals to Tourists

In an effort to reign in the costs of living and expand access to rental units, the city of Barcelona - a top global tourist destination - banned apartment rentals to foreigners. The ban goes into effect in 2028. With the ban, Barcelona joins New York City, Paris, San Francisco and Berlin that have imposed complete or partial bans of AirBnB. With a global housing affordability crisis draining savings rates, we're likely to see this trend continue. Perhaps this is why AirBnB is pushing its new experiences platform so much.

Gilead Stock Jumps After Trial Shows 100% Effectiveness Preventing HIV

Gilead Sciences' stock surged 8.46% on June 20th after announcing that a phase 3 trial of its HIV drug, lenacapavir, demonstrated 100% efficacy for prevention in women. In 2022, 1.3 million people acquired HIV in 2022, while an estimated 39 million people were living with HIV in 2022, according to the WHO. While treatment regimens have proven effective in managing the disease, the Gilead drug marks the first medical intervention to prevent transmission since the epidemic began 43 years ago.

Trump's Stock Continues Downward Slide

Trump Media & Technology Group's stock dropped 14.56% on Thursday, the 20th, after the company announced that the SEC declared its registration of additional shares effective. The stock is down -37% over the past month.

Why Was La-Z-Boy Stock Up?

La-Z-Boy's stock soared over +19% on the 18th after surpassing Wall Street expectations for the fiscal fourth quarter. The company reported adjusted earnings of 95 cents per share on $554 million revenue, beating estimates of 70 cents per share on $516 million.

What Happened to Asana Stock?

Asana surged from $11.69 to $12.95 on June 21st following a stock buyback announcement, alerted to Levelfields users at 4:40pm the day prior, resulting in a one-day return of over 15.30%.

Social Media is Officially Bad for Your Health, Says U.S. Surgeon General

‍U.S. Surgeon General Vivek Murthy has called for social media platforms like Snapchat (SNAP) and Instagram (META) to carry warning labels, akin to the health warnings introduced for cigarettes six decades ago. In a New York Times op-ed, he highlighted the risks for adolescents, noting that those who spend more than three hours a day on social media are twice as likely to experience symptoms of anxiety and depression. As of the summer of 2023, the average daily usage among teens was 4.8 hours. The number of suicides in females aged 15-24 increased 87 percent over the past 20 years, following the launch of Facebook. And among males aged 15-24, the number of suicides rose by 30 percent over that same time period.

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CASE STUDY

MindMed Stock up 100% in 30 days.
Is MindMed a Good Stock to Buy?

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Who? MindMed is pioneering the development of drugs from magic mushrooms for the treatment of a variety of mental health illnesses such as depression, PTSD and anxiety.

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What? In March 2024, the U.S. FDA gave a breakthrough therapy designation to the company, fast tracking approval of one of its drugs for commercial use. Following the designation, the stock rose 51% immediately and another 50% over the next 30 days.

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LevelFields users were sent an alert shortly after the company announced this news, enabling users to obtain huge profits from the trade.

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Why? MNMD was only valued around $400M prior to this announcement. Should the drug become available and successfully used, MindMed could be scaling sales to a billion dollars a year in the future. Such an increase would drive the company's valuation into the billions. Investors knowing this scooped up shares of MindMed, doubling the price in a mere month.

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Takeaway - there are many ways to trade LevelFields alerts. The breakthrough therapy designation event is a useful short and long-term signal of potential increases in share prices and company valuations. For young companies with no other drugs on the market, the possibility of a fast approval and drug rollout is a breakthrough catalyst for the company. This is unlike the designations for large pharma companies that already have many drugs earning revenues. For them, these designations amount to the potential for incremental revenue gains, typically.

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EARNINGS

Tuesday

• TD Synnex (SNX)
• FedEx (FDX) --> important indicator of economic health

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Wednesday

• AeroVironment (AVAV)

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Thursday

• General Mills (GIS)
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Friday

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• Simply Good Foods (SMPL)
• Walgreens Boots Alliance (WBA)

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The LevelFields Team