The Rundown - JPMorgan Sees 35% Odds of Recession, Eli Lilly Stock Leaps on Strong Demand for Weight-Loss Drugs

Episode Date: August 8, 2024

Stock market update for August 8, 2024. Check out our Leading Indicator podcast for interviews with leaders in business and tech. Subscribe to the Halftime Report, our weekly newsletter breaking down the most important stories investors need to know.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Thursday, August 8th. In today's episode, we tell you why big banks on Wall Street are projecting a higher chance of a recession, including Jamie Diamond, the CEO of J.P. Morgan. Then we recap earnings from Eli Lilly, Warner Brothers, Zillow, and Bumble. One of these companies is having a historically bad day. Then stick around to the end of the show to find out how much interest Warren Buffett is making from all here. His cash. It's honestly insane. All right, let's go. Stocks got off to a great start yesterday. At one point, the S&P and NASDAQ were up close to 2%.

And I thought the markets might finally start building some positive momentum. But no, stocks gave up all the gains in the afternoon and finished the day in the red, with the S&P and NASDAQ dropping around 1%. It was a pretty brutal way to end the day. AI stocks were some of the biggest losers like Super Micro, Nvidia, and Broadcom. And overall, I think investors are still pretty cautious right now after how the week started off. Like sure, the sky isn't falling, even though it felt that way for a bit on Monday, but there are still some uncertainties about the health of the economy. In fact, J.P. Morgan now sees a 35% chance of a recession by the end of this year, pointing to a sharper than expected weakening in labor demand. And J.P. Morgan's

CEO, Jamie Diamond, said in the CNBC interview yesterday that he thinks the odds of a soft landing for the U.S. economy is only around 35 to 40%. And he thinks a recession is a more likely scenario. So yeah, we're going to see the R word thrown around a lot over the next few weeks. Now you got banks on Wall Street projecting a recession, you got weaker economic data, there's increased volatility. All of this is leading to investors just being cautious moving forward, at least until we get some more economic data. But despite all this chatter of recession, the S&B and NASDAQ are both up more than 9% for the year. Second half of the year is gearing up to be very interesting. Let's run through some headlines. Let's start with Eli

Lilly because the pharma company just reported earnings and oh my god shares are flying right now. Eli Lilly's revenues were up 36% to $11.3 billion last quarter. And the company made $2.97 billion in profit last quarter. Their profits are up by more than a billion dollars compared to the same quarter last year. And it's in large part thanks to the demand for their weight loss drugs, Manjaro and Zepbound. For example, the sales of Zepbound were $1.2 billion in the quarter. The estimates had called for sales of around $800 million. So that's an insane beat right there.

And right now, the biggest issue that Eli Lilly is facing is making enough supply to meet the crazy demand. The company did say they have solutions that will improve the production in the second half of the year. So they should be able to increase their supply. And investors could not be more hyped. Eli's stock is up more than 11% in the pre-market at the time of this recording. People just can't get enough of these weight loss drugs. Now, speaking of losses, let's talk about Warner Brothers. they reported their earnings last night and posted nearly a $10 billion loss for the quarter.

Warner Brothers is a media giant. They owned cable brands including CNN, TNT, and the Food Network. The company wrote down the value of its traditional television networks by $9 billion, acknowledging the ongoing struggle to combat the shift to streaming. The company's revenues were down 6% last quarter, which was softer than what Wall Street was expecting. Now, one bright spot for Warner Brothers was Max. It's direct-to-consumer streaming platform that used to be called HBO Max.

They changed the name to Max. Terrible decision, but the platform is growing. Max has now over 103 million subscribers globally. It's an increase of 3.6 million subs last quarter. But Warner Brothers still has a lot of problems right now. They have a ton of debt. They might lose rights to the NBA. They're suing the NBA in hopes of keeping those rights. I mean, there's a lot of problems. Not surprisingly, the stock is down more than 12% in the pre-market in reaction to these earnings. Let's talk about some stocks making moves today. Zillow stock is up big this morning after they reported earnings and also announced a new CEO. Their C-O-O-O-Jeremy Waxman has been appointed as the new CEO moving forward.

Now, as for Zillow's business, Zillow's revenues were up 13% and losses narrow to $35 million last quarter. Both those numbers beat Wall Street estimates. Now look, it's been a tough home-buying environment right now. Interest rates are high. Housing supply is super low, so not a lot of activity happening in the housing market. But interest rates are starting to come down. We mentioned on yesterday's episode that the rate for a 30-year mortgage in the U.S. dropped to 6.5%, the lowest level in 15 months. So with interest rates coming down, the housing activity should pick up, and that should be good for Zillow's business moving forward. But Zillow also wants to expand beyond just being a housing search and daydreaming app for

millennials. Zillow's vision is to become the housing super app with tools for real estate agents and buyers. That's definitely catching the attention of investors. Zillow stock is up more than 10% in pre-market trading at the time of this recording. If only Zillow was able to monetize all the daydreaming that I've done on Zillow looking at houses in San Diego in Hawaii, that I know I'll never be able to afford. I mean, they'd be a trillion dollar company. Speaking of apps for millennials,

Bumble stock is down big this morning after the dating app reported earnings. And while the earnings were a mixed bag, the most notable thing was that Bumble significantly cut their revenue growth projections for 2024 to just 1 to 2%. That's down from the 8 to 11% the company previously, forecasted. So that's a huge cut and that has investors panicking with Bumble stock trading down 40% in the pre-market. If the stock ends up trading that low for the entire day, it will be the worst trading day in the company's history. I mean, things have been pretty chaotic at Bumble.

The app has gone through a redesign, which hasn't really resulted in increased revenue. And the company also shook up the C-suite with the founder of the app Whitney Wolf Hurd, stepping down from the CEO role last year. And all those moves hasn't helped the stock at all. The stock has been struggling big since the company went public back in 20. Like the company had a valuation of $7 billion after its IPO with a stock trading around $75, but since then, the stock has dropped close to 90% as of market closed yesterday, and it just continues to get worse. Let's wrap the show with a fun fact.

Warren Buffett now owns more T-bills than the Federal Reserve. According to the latest earnings report from Berkshire Hathaway, Warren Buffett owns nearly $235 million in T-bills, which is debt that. the U.S. government sells that matures between four to 52 weeks. The Federal Reserve, on the other hand, owns around $195 billion in T-bills. I mean, Warren Buffett has been selling a ton of stock recently. We've talked about that on Monday's episode, so go check that out if you missed it. And I guess he's using that cash to buy T-bills. And it's hard to blame them because T-bills pay around 5% interest right now. So 200 plus billion dollars invested in T-bills would generate more than

$10 billion a year in interest alone. They call Warren Buffett the goat for a reason. All right, guys. That's the rundown for today. I hope you guys enjoyed today's episode. I want to give a quick shout out to the other podcast from public.com. It's called Leading Indicator. And in the newest episode, they interviewed the CEO of Hymns. Hymns recently reported earnings, and their stock has been on fire this year up more than 60%. In the podcast, they talk about how Hymns is getting into the weight loss drug game

and how the company is expanding into women's health. It was a great conversation, highly recommended. We'll put a link to that episode in the description, so go check that out. As for us, we got one more episode coming out tomorrow. and with the way this week has been going, you never know what to expect. Hopefully we can close the week out pretty strong. Thank you guys so much for listening. Shout out to Connor and Mike for all the help behind the scenes,

and we'll see you guys back here tomorrow. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Run-down guests are not financial advisors and are not affiliated with public holdings or its subsidiaries. You should make your own financial and investment decisions or consult. Respective professionals. Learn more at public.com disclosures.

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