Is All Heck About To Break Loose?

Earnings and debt data that don’t seem to make sense [View in browser]( BROUGHT TO YOU BY: Proprietary Data Insights Top Technology Stock Searches This Month Rank Name Searches #1 Exela Technologies 751,919 #2 Apple 431,247 #3 Amazon 368,569 #4 Advanced Micro Devices 221,897 #5 Nvidia 217,330 #ad [How We Make Money On 85% Of Our Trades]( What Do These Earnings Numbers Say About The Economy? Here we go, trying to make sense amid considerable confusion: - Robinhood (HOOD) lays off 23% of its workforce and loses $295 million in Q2. Probably not a broad economic indicator. Just a company imploding beyond its five minutes of fame. - Airbnb (ABND) missed analyst estimates on bookings, but did well everywhere else. Revenue grew 58% year-over-year to $2.11 billion, a hair below expectations. EPS of $0.56 crushed estimates of $0.43. About that bookings miss - Airbnb blames it on flight cancellations. The Juice agrees. This company has been [on a roll](. We bet bookings rebound in Q3. Airbnb’s results do tell us something about the economy. They reinforce [The Juice’s thesis]( that two main groups of consumers exist today - one doing well and spending on things they don’t need, such as travel. And another struggling to make ends meet. - Uber’s (UBER) results can lead you to the same conclusion. Rideshare bookings up 57% year-over-year. Delivery up 12%. Revenue of $8.07 billion crushed estimates. Maybe paycheck-to-paycheck consumers think spending on Uber is better than spending on gas. Maybe the relatively comfortable consumer is out and about letting somebody else do the driving. And the delivering when they stay at home. - Starbucks (SBUX) beat on profits and sales thanks to, interestingly, strong domestic demand despite inflation. If you’re hurting, maybe coffee’s the one splurge you refuse to remove from your budget. If you’re crushing it with money, you don’t think twice about dropping $5 for a latte. So far, we feel pretty good about how the numbers line up with our increasingly attractive tale of two consumers hypothesis. But, not so fast, the latest debt data from the New York Fed throws a wrench in our thinking. Or does it? Scroll with us. [Brought to you by Investing Daily]( [How We Make Money On 85% Of Our Trades]( There’s no denying that 2022 has taken its toll on investors… If you’re tired of taking it on the chin in the markets… This message is for YOU. Most investors swing for the fences…only to end up striking out time and time again. But with 25 years of trading every market imaginable under our belt, we’ve learned a thing or two about navigating choppy markets…What’s our secret? Discover the simple 9-minute method that could hand you an extra $67,548 per year. [Click here to see it in action now.]( Debt Is All Heck About To Break Loose? Key Takeaways: - US households, across categories, are taking on increasing, if not record amounts of debt. - Scary situation, however, to this point, they’re doing a pretty good job paying it back. - As an investor, look to relatively high-end, stable stocks if you think the bottom’s going to fall out on debt. Here’s where it gets really confusing. On debt. Something seems like it’s gotta give. If all hell does break loose, The Juice has a super straightforward idea for you. But first, the seemingly contradictory numbers, via the New York Fed’s Q2 report on household debt and credit released the other day. Source: [NY Fed]( - Total household debt hit a record $16.15 trillion in Q2, up $312 billion (2%) from Q1. - Credit card debt increased $46 billion between Q1 and Q2. It’s up 13% year-over-year, the most dramatic increase in 20 years. - Mortgage balances are up $207 billion and home equity lines of credit by $2 billion, quarter-over-quarter. - Other debt balances, primarily retail cards and other consumer loans, increased by what The Fed calls “a robust” $25 billion. The Fed attributed the increasing debt loads to the increased cost of pretty much everything. Makes sense. And suggests we could be headed for trouble. However, other data from the same report enters confusion into the conversation: - Credit scores on new mortgage lending remain high, at a median of 773. So, banks appear to be acting responsibly on that front. This isn’t 2008. - Across timeframes, delinquency rates were unchanged between Q1 and Q2. - The share of debt balances that were severely derogatory declined to 1.1% in Q2. - 2.7% of all outstanding debt was at some stage of delinquency in Q2, which is two percentage points lower than it was in Q1, 2019. All sounds good. The only kernel of concern - debt balances that are 30 days late increased in Q2. Maybe this is the writing on the wall. Maybe not. Too soon to tell. It could be that the struggling cohort of consumers are cutting back on discretionary purchases and using debt responsibly to get by. And they’ll pay it all back - over time - without much issue. Or the bottom’s about to fall out. You made your minimum credit card payment in June, but missed in July or you’re not so sure about August. Time will tell. The Bottom Line: In the meantime, what to do, as an investor, if all economic hell breaks loose thanks, in part, to a debt implosion? This is the relatively easy part. If you’re concerned and want to play it safe, stay away from relatively unpredictable names such as Uber and Airbnb. While they’re not necessarily bad long-term investments, particularly Airbnb, they bring another layer of uncertainty into an already uncertain economic situation. Stick with names that have proven they can weather the storm. Starbucks might be one, thanks to its loyal consumer base. Apple’s (AAPL) [definitely another](. The company’s recent earnings report drives this point home. If you’re a long-term investor, Apple could be a portfolio staple. However, as our sister newsletter, The Spill,[notes](, Apple's growth trajectory at the moment might not be impressive enough. Then there’s Costco (COST). Since The Juice [suggested looking at the stock in early June](, it’s up roughly 11.5%. You can attribute this strength, in part, to Costco’s relatively affluent and resilient customer. In fact, Costco has outperformed Target (TGT) and Walmart (WMT) over the last six months. The retailers that have crushed Costco stock during this time - Dollar General (DG) and Dollar Tree (DLTR). The Juice [put both of these stocks on your radar]( in late May. Source: [Google Finance]( What a way to play this dichotomous economy whose bottom might be about to fall out - AAPL and COST on the high end. DG and DLTR on the low end. News & Insights Freshly Squeezed - [Is Apple Headed To $173 Next? What To Expect As The Stock Breaks Bullishly From This Pattern]( - [Do not buy bitcoin or any crypto before seeing this (Ad)]( - [Pinterest’s Next 20% Won’t Be Easily Obtained But It’s A Buy Nonetheless]( - [Strong Dollar Is Crushing These 10 Stocks]( [We want to hear from you! Let us know your thoughts by clicking here]( # [submit to reddit]( [submit to reddit]( [submit to reddit]( [submit to reddit]( To ensure delivery of all emails, [allow us on your list](. Update your email preferences or unsubscribe [here](. View our privacy policy [here](. Copyright ©2022 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. 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