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Carry Trade
Sean H. & Jocelin A.
August 06, 2024 • Estimated Reading Time: 9 minutes
TLDR
MARKET RECAP → On Tuesday, stocks surged, rebounding from losses sustained over the previous three trading days as investors momentarily set aside recession concerns and Japanese equities experienced a rally.
RATE CUTS AND CARRY TRADE CONCERNS → 📉 Economists warned that rapid Fed rate cuts might jolt markets by unwinding profitable carry trades, potentially leading to market chaos and leaving investors scrambling.
UBER Q2 2024 EARNINGS SOAR → 🚀 Uber crushed Q2 with a 16% revenue spike to $10.7B, a 47-cent EPS beat, and record-high bookings and driver activity.
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TODAY’S TOP NEWS
Rate Cuts and Carry Trade Concerns
📉 Carry Trade Unwind: Economists warned that rapid Fed rate cuts could exacerbate the unwind of the global carry trade. Investors previously benefited from borrowing cheaply in low-rate countries to invest in higher-yielding assets, but a swift change could lead to significant market turbulence.
🔄 Rate Cut Predictions: The Federal Reserve was anticipated to start cutting interest rates in 2024, with projections ranging from three to six cuts. Market experts believed this was necessary to stimulate spending and borrowing, although high inflation and economic data might alter these plans.
📊 Stock Market Implications: While lower interest rates typically boosted stock prices by encouraging investment, the overvalued state of the equity market posed challenges. Analysts recommended a balanced investment approach, focusing on value stocks and diversifying beyond the top tech giants.
TODAY’S TOP NEWS
Uber Q2 2024 Earnings Soar
Revenue and EPS Beat: 📈 Uber's revenue climbed 16% to $10.7 billion, smashing analyst predictions. The GAAP EPS hit 47 cents, significantly higher than the 31-cent consensus, which sent the stock soaring.
Growth in Mobility and Delivery: 🚖 Mobility led the charge with $6.13 billion, a 25% jump, while Delivery reached $3.29 billion, an 8% increase. Freight, however, remained flat at $1.27 billion, mirroring last year's performance.
Record Bookings and Activity: 🚀 Gross bookings surged 19% to nearly $40 billion, with daily trips hitting 30 million. Monthly active users rose 14% to 156 million, and driver activity reached record highs, contributing to an adjusted EBITDA of $1.57 billion.
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