💰 5 Fact Friday: Meme Stock Mania Is Back

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ECONOMY
1. Why The Fed Is Ignoring Trump’s Demands 🙅

Yesterday, Trump became the first president in almost two decades to visit the Federal Reserve.

The timing is no coincidence. The Fed meets Wednesday, and Trump wants to make his case for rate cuts before the decision is made.

He and Fed Chair Jerome Powell are locked in a tug-of-war with two competing visions for the economy.

Why Is Trump Frustrated?

Trump wants lower rates. His case:

• Affordability: Lower rates make mortgages, business loans, and other credit cheaper.

• Debt relief: Lower rates cut the government’s massive interest bill, saving taxpayers money. With nearly $10T of debt being refinanced this year, a 1% cut could save $100B in interest costs annually.

• Fed history: He argues Powell has been too slow before. Inflation continued throughout 2022 after the Fed delayed hiking rates in 2021. Trump says the Fed should cut quickly and, if needed, raise rates back later.

Why Is Powell Holding Firm?

Powell’s focus: Don’t reignite inflation.

• Inflation is still 2.6%, above the Fed’s 2% target.

• Tariffs could be inflationary, even if they haven’t spiked prices yet.

• The economy is holding up. Unemployment is low and markets are hot, so there’s no urgent need to cut.

The Bigger Picture

Trump prioritizes growth and debt relief, even if it risks slightly higher inflation. Powell wants to avoid another inflation surge at all costs, especially after being late to act last time.

It’s also worth noting: the Fed only controls short-term rates. Long-term borrowing costs, which matter most for financing the national debt, are set by the market.

Usually, long-term rates follow the Fed’s lead. But not always. After a small Fed cut last year, long-term rates actually rose.

Powell’s Future

Trump has launched a steady stream of insults at Powell, calling him “very dumb,” “hardheaded,” “a major loser,” “numbskull,” “low IQ,” “political guy,” and “one of my worst appointments,” perhaps to sway public perception.

Still, Powell’s job appears safe.

The Supreme Court limits firing a Fed chair without cause, and Trump recently signaled Powell will likely stay on until his term ends next summer:

Markets currently assign only a 4% chance of a rate cut next week. If the Fed holds its ground, expect Trump to keep the pressure on.

STOCKS
2. Opendoor Reignites The Meme Stock Craze 🚀

Opendoor Technologies $OPEN ( ▲ 4.28% ), the instant homebuyer platform that lets users sell houses directly to the company, is up more than 3x in the last two weeks.

Why? It all started with activist investor Eric Jackson’s moonshot vision for the stock:

• Raise sales to $12B

• Reduce net debt to $0

• Get a premium valuation (5x enterprise value to sales)

Do all that, and Jackson says the stock “could be a 100-bagger over the next few years.”

Simple! Now excuse me as I grow a foot taller, heal my Achilles, and develop a 40” vertical… so I can play in the NBA in a few years.

Jokes aside, Reddit’s r/WallStreetBets crowd is clearly feeling more “optimistic” than I am. Opendoor got another 43% lift on Monday after last week’s 188% move.

Then on Tuesday, the hype spread:

• GoPro $GPRO ( ▲ 3.05% ) soared as much as 73% and closed up 41%.

• Kohl’s $KSS ( ▼ 4.77% ) nearly doubled in the first five minutes before cooling to a 37% gain.

• Petco $WOOF ( ▼ 2.34% ) climbed 29%.

• Krispy Kreme $DNUT ( ▼ 0.57% ) popped 27%.

All of this with little to no news. In short, the meme stock craze is back.

But what exactly is a meme stock?

Here’s the cheat sheet:

• What they are: Stocks that blow up on hype, not news or fundamentals.

• Why they pop: A mix of Reddit buzz, options-driven squeezes, and a good old-fashioned “stick it to Wall Street” attitude.

Bloomberg data highlights other potential targets like Beeline Holdings, NeoVolta, and Skillz. These are all small, thinly traded stocks with high short interest that are especially susceptible to big price swings.

But here’s what that misses: nostalgia.

Meme stocks tend to have big name recognition. GameStop, AMC, Kohl’s—people know these companies (or at least think they do), which makes them easier to bet on.

Maniac Take:

This kind of action is a red flag. When meme stocks start ripping, it usually means traders feel flush, fearless, and ready to gamble—all signs of loose, bubbly market conditions.

The last time we saw this was 2021. And while the market didn’t peak for another year, it was a warning that speculation was running hot.

So enjoy the spectacle, but don’t confuse it for investing. These rallies can vanish as quickly as they appear, leaving latecomers holding the bag.

ECONOMY
3. Three New Deals, One New Pattern 🌏

This week, the Trump administration locked in three more trade deals ahead of next Friday’s deadline. The agreements are with Japan, Indonesia, and the Philippines—our 5th, 23rd, and 29th largest trading partners.

Here’s the quick rundown:

1. Japan

• Tariffs: Japan agreed to a 15% blanket tariff on exports to the U.S. The only exceptions are steel and aluminum, which stay at 50%.

• Investment: Japan pledged a $550 billion U.S. investment, with 90% of the profits flowing back to America.

• Market access: Japan will reduce regulatory hurdles and increase agricultural imports, further opening its markets to U.S. goods.

• Why it matters: This deal eases concerns that tariffs could push Japan, the world’s 4th-largest economy, into a recession. It also gives relief to Japan’s auto sector, where U.S. shipments fell 27% year-over-year in June.

2. Indonesia

• Tariffs: Indonesia agreed to a 19% tariff rate, down from 32% on Liberation Day.

• Concessions: Indonesia agreed to supply critical minerals, buy billions in Boeing jets, and increase purchases of U.S. farm and energy products.

• U.S. access: The deal eliminates tariffs on 99% of American exports and removes key regulatory and licensing barriers for U.S. goods.

3. Philippines

• Tariffs: The Philippines also agreed to a 19% tariff rate, paired with zero tariffs for U.S. goods.

• Extras: The agreement also includes undisclosed military cooperation measures.

These deals, paired with Trump’s comments about a “simple tariff of anywhere between 15 and 50%,” make one thing clear. 15% is emerging as the new pattern for U.S. trade deals.

It’s higher than before, but for businesses, any certainty is better than the guessing game.

Next up (hopefully): Europe and India. They’re the big ones to watch ahead of the August 1 deadline.

STOCKS
4. Most Important Earnings Of The Week 🔍

Here’s what you need to know from this week’s biggest reports:

Alphabet $GOOG ( ▲ 0.54% ): Google’s parent beat revenue and profit estimates. Cloud sales jumped 32% and search grew 12%, proving Google’s ad machine is holding up even as AI transforms search. But a surprise $10B capex hike (to $85B for 2025) shows just how much it’s spending to keep pace in the AI arms race.

Tesla $TSLA ( ▼ 1.5% ): Sales and earnings fell short, with auto revenue down 16% and margins sliding. Musk warned of “rough quarters ahead” but teased a cheaper EV and “hyper-exponential” robo-taxi rollout to reignite growth.

Intel $INTC ( ▲ 2.93% ): Announced a 15% workforce cut and scrapped overseas projects as it fights to regain ground against AMD and Nvidia. Still, an upbeat Q3 forecast suggests its restructuring plan is starting to take hold.

IBM $IBM ( ▲ 1.1% ): Raised its free cash flow forecast as hybrid cloud (up 16%) drove growth, though software revenue came in just shy of expectations.

GE Vernova $GEV ( ▼ 0.54% ): Lifted guidance after a 27% profit boost in its Power segment, driven by booming demand from AI and crypto-linked data centers.

GM $GM ( ▼ 0.2% ): Profit beat thanks to strong truck and SUV demand, but a $1.1B tariff hit dented margins and management warned the pain will deepen in Q3.

Honeywell $HON ( ▼ 0.14% ): Delivered a beat-and-raise as it preps to split into three companies (aerospace, automation, and materials). However, the improved outlook was driven by non-core factors like M&A and foreign exchange rates.

Union Pacific $UNP ( ▼ 0.33% ): Delivered $6.2 billion in revenue and beat earnings estimates, but shares slid after confirming merger talks with Norfolk Southern.

Northrop Grumman $NOC ( ▲ 0.04% ): Raised sales and cash flow guidance as mission and international systems pushed quarterly results well above expectations.

General Dynamics $GD ( ▼ 0.68% ): A record $28B in new orders expanded its already massive backlog, signaling continued strength in defense spending.

Raytheon $RTX ( ▼ 0.2% ): Beat on profit and revenue with strong commercial aerospace growth and raised its full-year sales forecast by nearly $2B. However, management cut earnings guidance as tariffs and taxes are expected to weigh on margins.

Lockheed Martin $LMT ( ▲ 0.06% ): Missed on both revenue and profit thanks to $1.6B in charges from program delay and cost overruns, highlighting ongoing execution challenges.

Chipotle $CMG ( ▲ 2.02% ): Same-store sales fell 4% as traffic slowed, forcing a guidance cut and raising concerns about consumer pullback at premium fast food.

Domino’s $DPZ ( ▲ 0.15% ): U.S. same-store sales rebounded as aggressive promotions brought customers back. However, profits stayed under pressure from higher taxes and a one-time loss related to its China franchise.

T-Mobile $TMUS ( ▲ 1.73% ): Added a record number of new postpaid phone subscribers and raised its full-year outlook. Its 5G and broadband offerings continue to pull customers away from competitors.

Verizon $VZ ( ▲ 1.7% ): Posted $20.9B in wireless revenue and boosted guidance for earnings. Free cash flow improved, though churn remains high.

AT&T $T ( ▲ 0.42% ): Delivered a big subscriber beat with 401,000 postpaid phone net adds, well above expectations, and topped revenue, profit, and cash flow estimates.

Blackstone $BX ( ▼ 1.75% ): Crushed estimates with 25% earnings growth and increased its dividend to $1.03 per share. Its record $1.21T in assets under management shows the firm’s continued ability to raise capital even in a tough market.

STOCKS
5. Guess That Stock 🕵️‍♂️

This company dominates its category, has been a Warren Buffett favorite for decades, and just made a big change to its ingredient list.

Can you guess the stock?

1. It controls 48% of the U.S. carbonated soft drink market, double that of its closest competitor, Pepsi.

2. The company just announced plans to introduce a new U.S. version of its flagship drink made with cane sugar instead of corn syrup.

3. In its latest quarter, U.S. unit case volume slipped 1%, but operating income rose 18% thanks to higher prices and cost controls.

4. Its portfolio spans 500+ brands across 200 countries, including Sprite, Vitaminwater, Dasani, Fairlife, and Gold Peak Tea.

5. With 63 consecutive years of dividend hikes, it stands among the most reliable income stocks in history.

Got a guess? Tap here for the answer → 

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