 | | |  Good morning. After a three-year hiatus, student loan payments are kicking in again. The move impacts 28 million U.S. borrowers. This could lead to a number of problems. Thanks to the pause in payments, which started during the pandemic, many loan servicers have had to lay off staff. So repayments could be a mess for several months.
But once that kink is worked out, there could still be some big issues for the economy. According to a study from Morgan Stanley, 47 percent of those making less than $50,000 per year will be unable to make their full loan payments. Even 14 percent of those making over $100,000 per year won't be able to either.
Given the size of the student loan population and the high ratio of those unable to make full payments, we'll likely see some restructuring take place. But before that happens, we may first see a big pullback in consumer spending. Given other recent events like the U.S. credit downgrade, it may be time to reduce a position in consumer-focused stocks.
Now here's the rest of the news: | | | | | |
| | |  | DOW 35,215.89 | -0.19% | | | | | S&P 4,501.89 | -0.25% | | | | | NASDAQ 13,959.71 | -0.10% | | | | | *As of market close | | | • | Markets moved lower on Thursday, extending Wednesday's decline. | | | • | Oil rallied 2.8 percent, closing at $81.73 per barrel. | | | • | Gold slid 0.3 percent, last going for $1,970 per ounce. | | | • | Cryptocurrencies generally rose, with bitcoin at $29,277 at the stock market close. | | | | | | | |
| | | Brands Are Down but Not Out as Inflation Declines | | | | The past few months have shown a big slowdown in inflation. It's also shown that consumers are willing to ditch their favorite brands to find less expensive substitutes. However, that trend likely won't last forever.
As prices in general rise, even substitute brands may not entice consumers as they once did. That could bode well for companies that have a strong basket of brands, even if their profitability has been hit in the short-term.
» FULL STORY | | | | |
| | Insider Activity Report: Crocs (CROX) | | | | Thomas Smach, a director at Crocs (CROX), recently added 1,435 shares. The buy increased his holdings by 1 percent, and came to a total cost of $150,001.
The director was the last buyer of shares with a 3,000 share pickup in March at a slightly higher price. Since then, company insiders, including the Crocs' CEO and the company president, have sold off shares, albeit at higher prices.
» FULL STORY | | | | |
| | Unusual Options Activity: Peabody Energy Corporation (BTU) | | | | Coal producer Peabody Energy Corporation (BTU) has traded in a narrow range over the past year. While shares hit a low in May and have trended higher, one trader sees shares declining going into next year.
That's based on the January 2024 $16 puts. With 168 days until expiration, 14,242 contracts traded compared to a prior open interest of 122, for a massive 117-fold increase in volume on the trade. The buyer of the puts paid $0.59.
» FULL STORY | | | | |
| | • | Dimon Calls U.S. Credit Rating Downgrade "Ridiculous"
JPMorgan Chase (JPM) CEO Jamie Dimon sees the U.S. credit rating downgrade as "ridiculous." Fitch Ratings downgraded the credit rating of the country on Monday, citing the high debt level and rising costs to finance that debt. Dimon also added that markets determine borrowing costs, not ratings agencies, so "it doesn't really matter that much." | | | | • | Starbucks Sees Strong Sales in China
Coffee chain Starbucks (SBUX) has reported strong sales in China, with locations seeing traffic up 46 percent year-over-year. Quarterly, Chinese revenues grew by 51 percent year-over-year. Sales had plunged when China was in lockdown, impacting the company's 6,500 locations there. | | | | • | PG&E Ends Tree Trimming Program
California utility PG&E (PCG) is ending its efforts to trim trees near power lines. The company has spent $2 billion on the effort over the years, thought to reduce the risk of wildfires. Instead, the company will focus on improving its power line settings, which could mitigate the fire risk from downed lines during high winds or other perils. | | | | • | Amazon Increases Fresh Grocery Options
Amazon (AMZN) is increasing its Fresh grocery delivery service in select U.S. cities. The expansion will now include non-Prime members as well, although they will have to pay shipping fees that vary with the amount spent. Customers can select two-to-six-hour delivery windows for the groceries, and they expect to expand the service nationwide by the end of the year. | | | | • | BYD Sales Catching Up with Tesla
Chinese electric vehicle manufacturer BYD is increasing its sales, and is catching up with industry sales leader Tesla Motors (TSLA). BYD delivered 262,161 units for the month of July, a 3.6 percent increase and a new sales record for the company. EV demand has been weak so far this year, but a series of price cuts may be encouraging buyers now. | | |
| | | | TOP | | | MELI | 12.818% | | | | CLX | 8.625% | | | | CTSH | 8.31% | | | | CDAY | 6.836% | | | | WRK | 6.653% | | | | BOTTOM | | | DXC | 30.144% | | | | EXPE | 16.246% | | | | ETSY | 13.678% | | | | PYPL | 11.947% | | | | QCOM | 8.382% | | | | |
| | |  | | Investors may use this Fitch downgrade as a reason to take some profits, but we think that was probably a natural part of the market cycle anyway, after such a strong run, very little volatility. Broadly speaking, this hasn't deterred our fundamental view of the economy or markets. | | - Mona Mahajan, senior investment strategist at Edward Jones, on why the market's drop on Wednesday shouldn't be a huge concern for investors, given the market's strength and performance so far this year. | |
| | "Amazon Loophole" Could Hand You $28,544 in "Royalty" Payouts | | | | 
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