POLITICS

Kamala Harris’s Unexpected Entrance Into the 2024 Presidential Race Is Shaking Up Markets — And Volatility

The last few weeks have shown that America didn’t just fall out of a coconut tree but exists in the context of all in which it lives and what came before it. Because of that, prediction markets and Wall Street were positioning for a second Donald Trump presidency — with President Joe Biden viewed as a long shot after several high-profile missteps. But this weekend, everything changed.

Kamala-mentum: On Sunday, Joe Biden announced he would not seek reelection — and endorsed Vice President Kamala Harris to run in his place. With dozens of high-profile endorsements and over $100M raised, Harris secured the delegates needed to clinch the nomination. Although it’s still early, this surprising shift is making many investors reconsider the Trump trade, which was already en vogue before Biden’s withdrawal.

• The first crop of Trump vs. Harris political polls have shown Trump’s popular margin evaporating, with recent polls putting the candidates in a virtual tie.

• Harris’s appeal among women, Black voters, and young people benefits her campaign — but her differing views from Biden on key issues are also significant.

Coconut-Pilled

For now, investors seem to be staying aboard the Trump Train, with Ritholtz’s Callie Cox noting that “either there’s too much uncertainty or markets don’t think this changes the outcome very much.” With a new Democrat on the ticket, the real problem for investors is calculating what priorities would be top-of-mind in a Harris presidency.

• A Democrat victory would be seen as positive for renewables, EVs, and international stocks — while pharmaceuticals, oil and gas, and banks might suffer.

• Harris is expected to embrace many successful policies from her VP term — including reshoring industries, promoting sustainable energy, and advancing chipmaking.

Volatility advisory: With only 103 days until the presidential election, investors have little time to predict the future. Despite prediction markets like Polymarket still favoring Trump, the path to Election Day may be rocky. Bloomberg suggests that the Democrats’ late change is likely to bring volatility to the markets — with safe-havens like treasuries, gold, and Bitcoin all rising as Harris enters the race.

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LARGECAP RECAP

📉 Cigarettes, Railroads, and Aerospace Land Among Top-Performing S&P 500 Stocks Since 1925

Does stealth lead to wealth? History suggests it does. Analyzing stocks since Dec. 1925 shows that while the median stock has returned a compounded annual growth rate (CAGR) of -7.4%, the average return is an astonishing 22,840%. For those who slept through Stats: 101, more than half of stocks delivered negative returns, with a few outperformers driving most of the market’s gains.

• Stocks with the highest cumulative returns: Altria ($MO) with 265,528,901%, Vulcan Materials ($VMC) at 39,349,084%, Kansas City Southern (acquired) achieving 36,175,578%, General Dynamics ($GD) reaching 22,084,880%, and Boeing ($BA) with 21,220,526%.

• Stocks with the highest annualized compound returns: Nvidia ($NVDA) leads with 33.4%, followed by Plenum Publishing (acquired) and Netflix ($NFLX), both at 32.1%, Amazon ($AMZN) at 31.8%, and Axon Enterprise ($AXON) with 31.1%.

What’s their secret? The most impressive success stories often come from companies initially seen as unattractive or underperforming. Long-term investors who reinvest dividends and hold their shares for extended periods have reaped the benefits of these stellar performances. A prime instance of this phenomenon is the microchip sector, where strategic leadership changes, innovative business models, and timely pivots have dramatically transformed many of these “ugly ducklings” into industry leaders.

Join their journey to $100M: Simpler software design is a global industry worth $3.6T. And you can now invest in the world-leader with 50 Fortune 500 clients and counting. They’ve already doubled revenue in three years. Invest in EvonSys as they work towards their five-year goal of $100M.*

Markets & Economy

Biden’s withdrawal shows media divergence: President Biden’s withdrawal from the presidential race highlights contrasting coverage between left and right. Unlike Trump’s unwavering support from conservative outlets, Biden faced scrutiny from liberal media, which may have contributed to his decision. [Read]

UPS misses Q2 expectations: UPS ($UPS) reported lower-than-expected Q2 earnings, prompting one of its worst trading days. They cut 2024 revenue guidance to $93B from $94.5B, citing weak freight demand amid a “global freight recession.” [Read]

Coca-Cola raises outlook: Coca-Cola ($KO) beat Q2 estimates and raised its 2024 forecast, projecting 9% to 10% organic revenue growth. Unit case volume rose 2%, though North American volume dipped 1%. Prices increased 9% due to inflation. [Read]

Business & Wealth

Harris’ investment portfolio revealed: Vice President Kamala Harris and her husband, Doug Emhoff, maintain a predominantly low-risk portfolio with estimated assets between $3.6M and $7.4M plus real estate. They favor index funds and cash, with half in stocks, one-third in cash, and the remainder in bonds. [Read]

Lyme disease vaccine progress: Pfizer ($PFE) and Valneva’s ($VALN) experimental Lyme disease vaccine, VLA15, completed its primary three-dose trial. If successful, it could be the first new vaccine for the disease in over two decades, potentially hitting the market by 2026. [Read]

Boeing secures major orders: At the Farnborough Airshow, Boeing received orders for up to 70 airplanes from Korean Air and Japan Airlines, boosting confidence despite production challenges and regulatory scrutiny. [Read]

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DIGIT OF THE DAY

Wiz Walks Away from Google’s $23B Acquisition And Plans To Go The IPO Route

Breakups might be tough, but rejections are even harder — just ask Google ($GOOG). Wiz CEO Assaf Rappaport revealed that the firm turned down Alphabet’s $23B acquisition proposal, calling it a “humbling offer.” But the startup has higher aspirations: the stock market. Wiz plans to pursue an initial public offering (IPO), aiming to establish itself as a major player in cybersecurity — especially in the aftermath of the CrowdStrike crisis.

• In 2022, Wiz reportedly became the fastest-growing software company, generating $100M in annual revenue within 18 months of its founding.

• Wiz says that it serves 40% of Fortune 100 companies and has a current Annual Recurring Revenue (ARR) of $350M, with a target of $1B in ARR by next year.

The dealbreaker: The Wiz acquisition would’ve given Google a leg up in the competitive cybersecurity industry, where Microsoft ($MSFT) and Amazon ($AMZN) have dominated. Google has tried to catch up through acquisitions like its $500M purchase of Siemplify and the $5.4B acquisition of Mandiant in 2022, both meant to beef up its security capabilities. However, its strategic efforts have faced increased scrutiny from regulators — concerned about Google’s size and monopoly in different businesses, potentially leading to more regulatory challenges. While this takeover would have been the largest acquisition in Google’s history, Bloomberg reports that Wiz reportedly abandoned the deal over antitrust and investor concerns.