Black Swan Street Weekly Stock Market Summary (July 8-July 12 2024)

Welcome to Black Swan Street!

Welcome back to another edition of the only newsletter you look forward to reading - Black Swan Street.

It was an action-packed week, so let’s jump in:

• Nike: A Dying Monopoly📉

• The Swan’s Selections🦢

• In Other News🗞️

• Next Week In The Stock Market🔮

• The Swan’s Story Of The Week🦢

Read time: 6 minutes

Nike: A Dying Monopoly📉

Nike shares have declined -31.64% over the past year, and the bleeding looks to only continue.

During this same period, the S&P 500 has gained +26.32%.

What’s happening?

Nike has lost its edge. Nike started as a running shoe company and used to be the face of running culture. However, lately, it seems as though it has entirely disappeared from the scene.

Below is the Google Trends result for the term “Run Clubs”.

As you can see, run clubs have exploded in popularity over the past few months, and Nike has failed to capitalize.

New players such as New Balance, Hoka, and Asics have been giving Nike a run for its money.

On top of the decline in their running category, other struggles have plagued the company. The cost pressures due to inflation, as well as competition from China and the United States, have intensified the pressure on Nike.

Nike is losing market share across multiple categories at an alarming pace.

And to top it all of, Nike cut its guidance. Nike expects first-quarter 2025 revenue to be down ~10% on a year-over-year basis. This is a significant miss versus previous expectations for a drop of just 3.20%.

The Swan’s Selections🦢

📉India’s falling job growth: India is struggling to create enough jobs to feed its growing workforce. The country will need to create around 12 million jobs a year over the next decade to absorb the number of new entrants to the labor market. Based on a standard growth rate of 7%, India can only generate 8-9 million jobs a year, which is not enough to meet the demand of its workers.

✈️Boeing pleads guilty: The plane manufacturer will now have a felony conviction under its belt in connection to the approval of the 737 Max, killing 346 people in two separate plane crashes. The aerospace giant has likely come to the conclusion that admitting to the crime would be better for their brand in the long term than fighting the charge and enduring a very long public trial.

🏀NBA new broadcasting deal: The NBA and network executives finalized a new deal that would make NBC and Amazon Prime Video their new partners. ABC/ESPN will continue to be the home base for the NBA Finals. This new deal will last for 11 seasons and be worth $76 billion.

💰Cathie Woods defends strategy: The founder and CEO of ARK Investment Management defended her strategy as the firm continues to lose money. She told investors that the funds’ fortunes will reverse when interest rates fall.

In Other News🗞

• Upbeat Q3 earnings expectations set high bar for US firms (WSJ)

• AI made up 47% of U.S. VC funding in Q2 (RT)

• Apple approved Epic Games' marketplace app in Europe (RT)

• Keir Starmer is UK's new prime minister (NYT)

• U.S. judge partially blocked FTCs ban on worker noncompetes (RT)

• Unemployment rose to 4.1% in sign of cooling labor market (WSJ)

• Tesla and shareholders clash over $7B legal fee request (RT)

• China is leading the world in GenAI adoption (RT)

• Shein pledged to invest in UK / Europe ahead of potential IPO (RT)

• Yellen expects inflation to continue to ease over time (RT)

• An NYC penthouse sold for $135M in the priciest deal since 2022 (BBG)

• Costco will hike membership fees for first time in seven years (RT)

• UK is expected to lose the most millionaires by 2028 (FT)

• NFL will allow up to 10% PE ownership of teams (CNBC) 

• Cathie Wood recognizes 'challenged' returns but insists on future profits (FT)

• U.S. consumer goods companies are losing upper hand on pricing (FT)

• a16z is hoarding Nvidia chips in effort to win AI VC deals (TI)

• Growth is stalling at Musk's X (FT)

• Tesla's share of U.S. EV sales fell below 50% for first time (FT)

Next Week in the Stock Market🔮

Earnings Calendar Next Week:

Economic Calendar Next Week:

The Swan’s Story Of The Week🦢

What to do?

Something is happening in the AI chip world that can only be described as a rarity.

Nvidia is earning so much money that they have no idea what to do with it. 

Already hitting all of its investment quotas into experimental projects within research and development for further innovation within the company, Nvidia only has one logical option for what to do with its extra cash. 

They can either store their cash in low-risk investment assets or do the more financially intuitive option: buy back their own stock.

Read further (here) on what Nvidia should do next.

The Wrap-Up🔄

🎊🎉 That’s it for this week 🎉🎊