💳 America’s credit-score downgrade

…and Starbucks grows with cold drinks and China   A World War I-era poster advertising US gov’t bonds (Pierce Archive LLC/Getty Images)   Yesterday’s Market Moves   Dow Jones 35,283 (-0.98%) S&P 500 4,513 (-1.38%) Nasdaq 13,973 (-2.17%) Bitcoin $29,161 (-1.80%) Dow Jones 35,283 (-0.98%) S&P 500 4,513 (-1.38%) Nasdaq 13,973 (-2.17%) Bitcoin $29,161 (-1.80%) Hey Snackers, [Mattel]( looking to [hire]( a Chief Uno Player to play and promote the card game on social media. The temp job will pay $4.4K/week. Time commitment: four hours/day for four days/week for four weeks… Draw Four, we get it. Guess uno million dollars was too much. Yesterday, the S&P 500 and the Nasdaq had their worst days in months after a US credit downgrade (more on that in a sec). The private sector added an expectation-beating 324K jobs last month, mostly in hospitality. [Amazon]( [Apple]( and other big names report today. IOU The US gets a rare credit-rating downgrade after the debt-ceiling drama Worse than an Amex rejection… The US got its first [downgrade]( from a major credit-rating agency in over a decade. Refresher: The gov’t has three big credit agencies: S&P, [Moody’s]( and Fitch. On Tuesday, Fitch made a surprise cut to the nation's credit rating from AAA (perfect) to AA+ (nearly perfect). Fitch pegged the downgrade to “debt-limit political standoffs” and “last-minute resolutions.” Like us regular folks, lower credit ratings can raise a country’s borrowing cost (the interest it owes on debt). Downgrades can make buying US debt (like: Treasury bonds) appear riskier. - Flashback: In May, Fitch cautioned of a possible US downgrade as lawmakers barely avoided a default at the 11th hour (by suspending the debt limit till 2025). - Backlash: Stock markets in the US, Asia, and Europe fell sharply on Wednesday after the downgrade. When the straight-A student gets an A-minus… bummer. The US is known for consistently paying its debts on time, which is why its Treasury bonds have a “safe haven” reputation. But Fitch’s unease over America’s IOUs grew as the country’s debt ballooned to a record $31.4T and lawmakers argued over raising the ceiling (as they tend to do). In 2011, S&P became the first major rating agency to downgrade the US to AA+, citing political beef. THE TAKEAWAY Trustworthiness is in the eye of the beholder… Fitch’s downgrade might reflect worries that the US has trouble agreeing on how to manage its ginormous debt. But not everyone agrees that debt drama = less creditworthiness. Treasury Secretary Janet Yellen said she “strongly” disagrees with the downgrade, and [JPMorgan]( CEO Jamie Dimon said Fitch’s decision didn’t matter and was “ridiculous.” Iced Starbucks grows with iced drinks, tasty add-ons, and a roaring China rebound Cold Foam Cold Brew… and throw in a turkey-bacon sandwich. [Starbucks]( sales grew 12% to a record $9.2B last quarter (slightly less than Wall Street expected) as java thirst stayed strong and US traffic ticked up. Highlights from the coffee colossus: - Iced everything: Cold drinks dominated, accounting for 75% of US beverage orders. From iced lattes to frozen frappes, consumers are shifting away from hot drinks. - Tasty extras: Customers tacked on fancy add-ons like cold foam to their beverages, and added more breakfast sammies with their coffee orders. - The real star of Starbucks’ earnings wasn’t spinach-feta wraps — it was China. Starbs’ same-store sales in China soared by 46%. Beijing’s back… China is Starbucks’ second-largest market after the US, with 6.5K stores. Starbs’ China sales plunged during the zero-Covid era, when China’s lockdowns and safety policies kept people from cafés. Things started looking up in May when Starbucks experienced its first China sales growth since 2021. Now it seems that Beijing’s fully back… but not to coffee beans. - Low joe: Starbucks CEO Laxman Narasimhan [said]( that the average person in China drinks only about 12 cups of coffee a year — versus 380 cups in the US. - High tea: He added that Starbs won over China’s historically tea-sipping consumers with “locally relevant innovation.” About that… THE TAKEAWAY Localization is make or break… Coffee king Starbucks made China its second-largest market by molding its menu to cater to cultural preferences (picture: a wider variety of iced and hot tea drinks). Often chains need to localize to win international love ([McDonald’s]( is known for having different menus for different countries). Failure to fit into the cultural context likely accounted for [Domino’s]( [closure]( of all its restaurants in Italy last year. SQUINT Worldcoin hits roadblocks as regulators eye the iris-scanning crypto biz That new-orb shine… may be starting to wear off. Worldcoin, the head-turning crypto project from OpenAI CEO Sam Altman, is facing pushback just a week after [launching]( its WLD token. Yesterday, Kenya’s Interior Ministry [ordered]( the company to suspend user enrollment in the country over privacy concerns. Worldcoin says it helps confirm that a person online is actually a person IRL (think: captcha 2.0) by associating eye scans with World IDs, and it found early success in the east African country. - Buy for an eye: 350K+ Kenyans have had their irises scanned by Worldcoin’s metallic orbs in exchange for 25 WLD each — worth about $50. Scanning for a warm welcome… but finding a cold shoulder. Kenyan officials aren’t the only ones giving Worldcoin the side-eye. France’s data-protection authority said the project’s legality “seems questionable,” and UK officials are looking into the orb (not in the iris-scanning way). Germany’s data-protection watchdog has been investigating the project since last year. The concern: Worldcoin’s handling of biometric data could put users at risk. THE TAKEAWAY Flash only gets you so far… Worldcoin made waves with sci-fi-looking tech and an out-there pitch — at one point verifying a new user every eight seconds, Altman said. But now the “revolutionary” rubber’s meeting the regulatory road. Still, the biz developing Worldcoin said the project is moving ahead in Europe, Latin America, and Africa, and hinted that it could one day charge companies to use its verification services. What else we're Snackin' - [Glossy]( [E.l.f. Beauty]( stock jumped 14% after the drugstore makeup biz reported a 76% spike in sales. The budget brand has thrived in the dupe economy, and raised its annual sales outlook by nearly $100M. - [AIsOn]( [Disney]( and [NBCUniversal]( are watching a proposed NY law that would block them from state tax breaks if they replace human actors with AI. NBCU has received $97M in NY tax credits since last year. - [Pickup]( [Ford]( US sales rose ~6% in July despite a slowdown in its EV biz. The automaker expects its electric unit to lose $4.5B this year as sales stall out while factories close for upgrades. - [Lobbed]( Amazon, [Google]( [Microsoft]( and [Meta]( are facing pressure to leave the US Chamber of Commerce over the lobbying group’s climate record. A report argued that the chamber deterred climate policy for 20 years. - [Pharm]( [CVS]( beat quarterly estimates as its healthcare services fueled 10% sales growth. The retailer has been slashing costs, and this week announced plans to lay off 5K employees. 🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up [here](. Snack Fact Of the Day The only time the US was completely debt-free was in 1835 [Read more]( Thursday - Jobless claims - Earnings expected from AB InBev, Adidas, Airbnb, Amazon, Apple, Bally’s, Block, BMW, Cigna, Coinbase, ConocoPhillips, Dolby, DraftKings, Dropbox, Eventbrite, Expedia, Hasbro, Hyatt, Kellogg, Moderna, Nintendo, Papa John’s, Shake Shack, Symantec, Warner Bros. Discovery, Wayfair, and Yelp Authors of this Snacks own shares of: AB InBev, Apple, Amazon, Block, Comcast, CVS, Disney, Google, Kraft Foods, Mattel, Microsoft, Moderna, and Starbucks Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate... 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