Silver banana goes to…

In this issue of the peel:

• 📝 Stocks continue to surge to all-time highs as a positive jobs report solidified the standing of the labor market. 

• 📉 Bond prices sank as the dollar rose as a direct result of the jobs report. 

• 💸 The Fed will almost certainly hold rates for July’s FOMC meeting, as the strong labor market could be a sign of impending inflation.

Market Snapshot

Student Spotlight

A+ Equity Research Report 📊

Looking for a stellar example of what makes an equity research report stand out?

One of our WSO Academy students, Colin Baird-Taylor, put together an impressive deep dive on MercadoLibre, covering valuation, catalysts, and key risks with the kind of insight that turns good pitches into great ones. Check out the report here.

Find out more about WSO Academy here.

Banana Bits

• The House passed Trump’s Tax Bill in a vote of 218-214.

• Treasury Secretary Scott Bessent dismisses concerns over the recent decline of the dollar. 

• Canada’s trade deficit narrows with the U.S, helped by gold shipments. 

• Government crackdown on cartel money has Mexican banks stepping back from sanctions.

• Robinhood’s stock price slipped after OpenAI cautioned users about Robinhood’s newly announced “equity tokens.”

• What Trump’s tax bill means for the electric vehicle market due to tax credit cuts for EVs.

The Daily Poll

Previous Poll:

Should the House pass Trump’s $3.3T bill?

Yes: 15.7% // Maybe: 9.3% // Needs changes: 17.9% // No: 57.1%

Tilt the Odds in Your Favor

In the competitive world of high finance, every advantage counts. Our exclusive curriculum, designed by industry experts, sharpens your skills and knowledge, making you a top candidate.

Enjoy personalized coaching, targeted internship opportunities, and a robust network of finance professionals with WSO Academy. 

» Apply Now «

Macro Monkey Says

Stocks Surge to Highs on Labor Data

Despite the shortened trading hours, equities continue to soar to new highs with a better-than-anticipated jobs report, reasserting the strength of the labor market. 

Economists were predicting a somewhat slower pace of hiring due to trade uncertainty and general fiscal policy. According to the U.S Labor Department, 147,000 jobs were added in the month of June, significantly higher than the expected 110,000 added jobs. 

Additionally, the unemployment rate fell from 4.2% to 4.1%.

The majority of jobs added were from the public sector, specifically state and local government, as well as education. Some economists argue that the jobs report was mainly affected by seasonal swings in employment in the education sector. 

Many economists are also continually concerned about the fact that manufacturing employment has fallen for the second straight month. U.S manufacturing activity also fell for the fourth straight month in June. 

Another important thing to note is that the private sector only added 74,000 jobs in June, compared to 137,000 in May, which was the lowest metric since October 2024. According to Henry McVey of KKR, “the headline numbers exaggerate the underlying trend of job growth.” 

The Takeaway?

While this jobs report is undoubtedly a sign of America’s strong labor market, a look behind the numbers could indicate a hint of hyperbole. Regardless, this could be an early sign of inflation, and we will definitely see Jerome Powell and the Fed hold rates in July. 

Career Corner

Question

I was recently asked this question and would appreciate some input on how to answer it: "What are some line items that might be included in the COGS section of the income statement of a tech and/or biotech company?"

Answer

Look up the public financials of a tech company and a biotech company, and you'll see what they include in COGS (directly below revenue, above gross profit). You want to make sure these line items are directly tied to the production of revenue. Then, research each of the line items to learn about their purpose.

Head Mentor, WSO Academy

Check out WSO Academy!

What's Ripe

Bitmine Immersion Technologies Inc. (BMNR) 130.8% 

• Bitmine’s stock soared today after they announced a bold b*tcoin treasury strategy, where they would raise $250 million and use the proceeds to buy and hold Ethereum, a well-known cr*ptocurrency. Investing in BMNR is an extremely high-risk, high-reward play. 

Tripadvisor (TRIP) 16.7% 

• Tripadvisor’s stock surged today after Starboard Value, a hedge fund, announced that they own a 9% stake in the business and that Tripadvisor is significantly undervalued. The announcement also increased the share price of other travel companies like Expedia and Airbnb.

What's Rotten

Lennar Corporation (LEN) 4.1%

• Lennar Corporation, a housing company, saw a substantial decrease in their share price after missing earnings, with EPS coming in below expectations. Additionally, the strong jobs report solidified that the Fed won’t cut rates, impacting interest-rate-sensitive industries like housing.  

Robinhood Markets Inc. (HOOD) 3.7%

• Robinhood’s stock price fell today after OpenAI warned Robinhood users about their “stock tokens.” While not actual equities, Robinhood’s stock tokens allow investors to invest in private companies like OpenAI and SpaceX indirectly.

Thought Banana

No July Cut? Bonds Tank

Prior to the June jobs report, the chances of a July rate cut by the Fed were sitting at ~20%. After the jobs report, the chances of a July rate cut by the Fed are ~5%.

The primary reason the Fed has adopted a “wait and see” mentality for rates is primarily due to tariffs and potential inflation that could come as a result of those tariffs. Therefore, the Fed doesn’t want to cut rates prematurely, thus exacerbating the effects of inflation.

The strong June jobs report indicates growth in employees’ wages, which typically leads to more spending, potentially leading to inflationary pressures, which is exactly what Jerome Powell and the Fed are worried about. 

Additionally, this takes the pressure off the Fed to cut rates, as they will almost certainly hold rates now due to the jobs report, despite the potentially exaggerated statistics because of the lagging private sector. 

Bond prices also sank yesterday as a direct result of the Fed likely holding rates for their July FOMC meeting. 

This is because many bond investors thought there would be a July rate cut, which would have caused yields to fall and the prices of existing bonds to rise above par (post-cut), making them more valuable relative to newly issued bonds. 

Unfortunately for bond investors betting on a rate cut, the jobs report essentially erased any possibility of a July rate cut, causing a massive Treasury selloff and thereby increasing yields and decreasing bond prices. 

The Takeaway?

When the FOMC meets in late July, even if CPI comes in lower than expectations, you can expect them to hold rates. Many economists are predicting that the FOMC won’t cut rates until the September meeting. Regardless, bond prices and yields will undoubtedly normalize over time (barring any other significant economic event), especially as the September FOMC nears. 

The Big Question: With inflation still a question mark, is the Fed being cautious or just plain indecisive?

Banana Brain Teaser

Previous

In a certain game, a large container is filled with red, yellow, green, and blue beads worth, respectively, 7, 5, 3, and 2 points each. A number of beads are then removed from the container. If the product of the point values of the removed beads is 147,000, how many red beads were removed?

Answer: 2

Today

If (1/x) - [1/(x + 1)] = 1/(x + 4), then x could be?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

Happy Investing,
Chris, Vyom, Ankit, Mithun, Colin & Patrick

ADVERTISE // WSO ALPHA // ACADEMY // COURSES // LEGAL