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Researcher (Analyst): Seungyun Nam, Stony Brook University
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Research Assistant: Daoqi Fang, Stony Brook University
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PepsiCo's stock price has dropped due to stagnant growth in the second quarter of 2024, impacting all product sectors in both the U.S. and global markets. Investment firms like Morgan Stanley, Goldman Sachs, and Jefferies have lowered their target prices. The slowdown is linked to "snack-flation," where rising product prices have driven away customers. Although PepsiCo initially maintained stable revenue growth by raising prices, inflationary pressures have caused snack prices to hit historic highs, particularly in the U.S. potato chip market, leading to a revenue decline. In response, PepsiCo plans to lower prices to regain customers, echoing strategies used during previous recessions. Consequently, its price-to-earnings ratio has fallen below its nine-year average.
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U.S. stock futures were relatively flat after record closes for the S&P 500 and Dow. Futures for the Dow, S&P 500, and Nasdaq 100 fell slightly. Modest gains on Monday continued last week's rally following the Federal Reserve's half-point rate cut. Rate-sensitive sectors like utilities and financials have outperformed. However, experts caution that the market could face volatility, especially if economic data weakens. Traders await consumer confidence and manufacturing reports on Tuesday, along with earnings from AutoZone and KB Home.
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The article explores how Federal Reserve policies, particularly interest rate changes, influence commodity prices. A key focus is likely the impact of lower rates on demand for commodities like oil, metals, and agricultural products, and whether this could lead to a significant price surge (or "turbocharging") across global markets. The analysis might also touch on the role of inflation and global economic factors in driving commodity price fluctuations.
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According to crypto analyst Benjamin Cowen, Ethereum (ETH) is in the final stages of capitulation against Bitcoin (BTC), suggesting that ETH is nearing its cycle bottom. He notes that Bitcoin’s dominance is still increasing, which could push ETH/BTC lower. Cowen also explains that while Ethereum could bottom out before other altcoins, the market could remain volatile. A possible worst-case scenario involves a brief rebound followed by another decline later in the year.
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Investment managers are optimistic about the U.S. debut of options on spot Bitcoin ETFs, which could lead to significant price gains for Bitcoin. The SEC recently approved Nasdaq's listing of options tied to BlackRock's iShares Bitcoin Trust ETF. This development is seen as a major step for institutional investors, as it reduces counterparty risks and offers new investment strategies. Analysts expect this could drive Bitcoin's price higher while also reducing volatility over time.
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Thanks to our members and volunteers (Seungyun Nam, Rishi Jain and Daoqi Fang) for contributions to this newsletter. To share information or research with the community, submit it through "Share" below. We will include it if the content is deemed appropriate. Support our efforts to make free and useful financial education content by donating to @stonyfinlab via Venmo!
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Stony Finance Lab is a community-based finance network that aims to promote personal financial responsibility and helps the community to achieve financial confidence and financial independence through life-long learning. The emails are to distribute news and information on finance research, events, jobs related to personal finance, investments of financial and digital assets, academic finance, and entrepreneurship. All emails are for information sharing only and shall not be deemed as financial advice. The Lab is not liable for the consequence of using any information contained in the emails.
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