__"In the red"...__ Not a phrase we've heard recently re: the stock market. The market closed lower last week, after rallying to records for three weeks in a row. Yesterday, things got *worse* for the major stock indexes. 

- __[The Dow](https://learn.robinhood.com/articles/13urVTf3GSQYdsr7Eq5fHL/what-is-the-dow/)__ was the worst performer, plunging more than 2% in its biggest one-day drop of the year. The elite index tracks the stocks of 30 large US companies, and it's heavy on cyclicals —  aka: stocks that tend to move in tandem with the health of the economy. 
- __[The S&P 500](https://learn.robinhood.com/articles/7kFFEUv46vmMCmMfLuNiRX/what-is-the-s-and-p-500/)__, which tracks the stocks of the 500 most valuable US companies, dropped 1.6%. Travel, energy, and financial companies (all cyclicals) were the worst-performers. Airlines and cruise companies plunged. 
- __[The Nasdaq](https://learn.robinhood.com/articles/1GXPrecRfkSNp0aBblBSsL/what-is-the-nasdaq/)__, the tech-heavy index which tracks 3K+ stocks, fell 1%. 

__Cloudy with a chance of N-95 masks...__ A surge in Covid cases driven by the highly-contagious Delta variant is pouring cold water on recovery optimism. Ballooning Covid cases — mostly among the unvaccinated — in highly-vaxed countries like the US and the UK have dampened investors' expectations of economic growth. The CDC is [calling ](https://www.washingtonpost.com/health/2021/07/16/covid-cases-rising/) the US surge "a pandemic of the unvaccinated." A few big counties, including LA, brought back indoor mask mandates last week.  Meanwhile in developing countries, the situation is more dire. 


_Investors cranking out the umbrellas like [praetorianphoto/E+ via GettyImages]_

__The market mood has shifted...__ again. Stock market prices aren't just a product of fundamentals like profits, but also of human psychology.  Stocks have been basking in Caribbean-level sunshine, but investors are starting to fear clouds ahead. The VIX, which measures the stock market's expectation of volatility, has soared 36% in the past five days. As Delta rises, confidence is waning: US consumer sentiment [plunged](https://www.cnbc.com/2021/07/16/us-consumer-sentiment-drops-in-early-july-on-inflation-fears-.html) in early July to its lowest level in five months. Sharp price increases  in everyday items  could also be knocking confidence in spending. It's TBD how long this shift will last. 

Delta rises, confidence falls: a cold shower just rained on the stock market's parade

__Bringing the tractor factor...__ minus the tractor. Hardware chain __[Tractor Supply Co](https://robinhood.com/stocks/TSCO).__ sells tractor-*adjacent* products like animal feed, tractor apparel, and anything that caters to the “tractor lifestyle.” Turns out, the tractor lifestyle has been booming: TSC reported record profits last quarter after a pandemic-fueled boom in DIY projects.

__Like the Peloton of farmland...__ TSC has created a lifestyle brand focused on community — in its own words: "a rural lifestyle brand." TSC differentiates itself from competitors like __[Home Depot](https://robinhood.com/stocks/HD)__ and __[Lowe's](https://robinhood.com/stocks/LOW)__ by prioritizing farm-specific needs. A few features of its lifestyle strategy:

- __Experts:__ Just like Peloton hires aspirational instructors, TSC hires “lifestylers” with ranching and farming backgrounds to establish credibility. A description of one employee: "farmer's daughter, barrel racer." 
- __Events:__ Instead of doubling down on e-marketing, TSC partners with local orgs to host on-site events like pet clinics for your cow. As one employee put it: "Learn their pet's name, and you've got a customer for life."
- __Community:__ TSC opens stores in areas with high concentrations of cattle farmers, and has expanded its fast-growing “Neighbor's Club”  loyalty program, which already has 21M+ members.


Rollin

__Niche sounds small, but it can be big...__ Unlike Home Depot, TSC isn't targeting the needs of everyone with a house — just like Peloton isn't targeting everyone who likes to sweat. TSC's core customers [are](https://s23.q4cdn.com/539497486/files/doc_financials/2020/q4/5ff22cae-c3bc-4a2b-b027-a41386c73a5e.pdf) "recreational farmers, ranchers, and all those who enjoy living the rural lifestyle." It was able to pull in big profits last quarter by catering to these farm-specific needs (“[Fly Control Strategies for Your Barn](https://www.google.com/url?q=https://www.tractorsupply.com/tsc/cms/life-out-here/the-barn/horse/fly-control-strategies-for-your-barn&sa=D&source=editors&ust=1626746922116000&usg=AOvVaw00knU6fPHAljx0DKb6XLdS),” anyone?). TSC says that this "specialized market niche" is what sets it apart from the competition. 

Tractor Supply Co. reaped record profits by becoming the Peloton of rural America

S&P 500

Dow Jones

Nasdaq

Bitcoin

📉 Stocks go down 

__Cue: Tokyo Drift from *Fast & Furious*...__ Except, not so fast.  After a year-long pandemic postponement, the 2020 Olympics kick off this Friday in Tokyo — and they're now called the 2021 Olympics. Some key numbers:

- __0:__ Number of fans attending. All spectators have been banned, after Japan declared another state of emergency amid rising Covid cases this month. 
- __$15.4B:__ Cost of the Tokyo Olympics, according to organizers. That's 22% [higher](https://apnews.com/article/tokyo-coronavirus-pandemic-2020-tokyo-olympics-japan-olympic-games-3c46bce81928865d9aae0832b5ddd9e3) than planned due to extra pandemic-related costs.
- __$3B:__ How much Tokyo has raised from 47 domestic sponsors, a record from host nation businesses at the Games. 
- __-90%:__ How much spending tied to the Games is [expected](https://www.japantimes.co.jp/news/2021/01/23/business/economy-business/tokyo-olympics-losses-cancel/) to drop with zero spectators — and that *doesn't* include spillover tourism spend (think: hotels).

__You don't have to bring home the gold...__ if it's already home. For decades, hosting the Olympics has been a source of national pride. But while the Olympics are touted as an engine of economic growth and urban revitalization, the economic benefits of hosting aren't clear. Evidence points to no real change in economic activity for host countries — but very real costs.

- __The Rio Olympics cost $13B__, paid for with tax dollars and corporate cash. After the Games, Rio had little to show for its investment (and an abandoned pool that turned [orange](https://news.sky.com/story/abandoned-rio-olympic-pool-turns-murky-orange-10761239)).
- __The LA Olympics in 1984__ marked the [first](https://www.cfr.org/backgrounder/economics-hosting-olympic-games) and [last time](https://www.sportscasting.com/the-1984-summer-olympics-marks-the-last-time-the-games-were-profitable/) the Olympics were profitable, mostly because planners avoided building new stadiums. 
- __Looking forward:__ The International Olympics Committee (IOC) is struggling to attract bidders for future Games. Poor economics for host countries and cities have caused many potential bids to be shot down by voters. 


Tokyo

__The Olympic economy is an unequal ecosystem...__ While Japan would've taken an even *bigger* financial hit by cancelling, it still stands to lose the most. The Japanese hospitality and transportation sector is expected to lose up to $1.4B. Meanwhile, the IOC is poised to make $4B in television rights income, despite zero attendees. Companies with broadcast rights will be fine, too: __[NBCUniversal](https://robinhood.com/stocks/CMCSA)__ has already beat the $1.2B it earned for Rio ads. But sponsors like __Asahi__ will get less bang for their buck without the ability to get stadiums of spectators chugging the “Tokyo 2020 Official Beer.”


The Olympic Economy: we're weighing the benefits of hosting vs. the massive costs

__Check the succulent receipts...__ Consumer prices [jumped](https://snacks.robinhood.com/newsletters/6MmYKB2qyTGOmgSv4zyTxs/articles/40UsGpKF29ntRtuFwc6KwT/) 5.4% in June from last year, accelerating at the fastest pace since 2008. A few examples: car and truck rental prices (+88%), women's dresses (+16%), and indoor plants (+5%). Fed Chairman Jerome Powell expects this inflation could be a one-time price increase as the economy rebounds. But for lower-income consumers, a spike in the price of meat, milk, or clothes can make a big difference.

__The "secret" stimulus...__ A super-charged child tax credit. Last week, the US government started [sending](https://snacks.robinhood.com/newsletters/4UfptC7RMAEOo0YSfMmIZm/articles/9MKQo3q2RW7laXpPvRaf6/) parents monthly checks for each child they have. Each month for the rest of 2021, eligible parents can expect $250 or $300 per kid, depending on their age. 39M households will receive payments, covering 88% of US children. Pandemic stimulus checks boosted spending at go-to chains like __[Walmart](https://robinhood.com/stocks/WMT)__, __[Costco](https://robinhood.com/stocks/COST)__, __[TJ Maxx](https://robinhood.com/stocks/TJX)__ and __[Target](https://robinhood.com/stocks/TGT)__. This monthly child "allowance" could provide a similar boost to family-favorite retailers.


Zoom Out

Stories we're watching...

__Shoot your shot...__ __[Johnson & Johnson](https://robinhood.com/stocks/JNJ)__ reports earnings on Wednesday, but don't expect a major boost from vax sales: unlike __[Moderna](https://robinhood.com/stocks/MRNA)__ and __[Pfizer](https://robinhood.com/stocks/PFE)__, J&J pledged to sell its vaccine "at cost" (read: no profit). Out of $22B+ in sales last quarter, Covid vaccines [made up](https://qz.com/1999082/jj-sold-100-million-worth-of-covid-19-vaccine-shots/) just $100M of J&J's revenue — or roughly 2%. The no-profit approach could help J&J from a PR perspective. *Not* helpful: last week J&J recalled several Neutrogena and Aveeno spray sunscreens over a possible cancer risk, and it's dealing with [lawsuits](https://www.businessinsider.com/baby-powder-cancer-lawsuits-johnson-johnson-j-j-asbestos-sec-2021-2) from its baby powder scandal. 

__Ghosted like a Fleet...__ __[Twitter](https://robinhood.com/stocks/TWTR)__ and __[Snap](https://robinhood.com/stocks/SNAP)__ kick off social media earnings on Thursday. In February, Snap got investors excited by [saying](https://snacks.robinhood.com/newsletters/6ayK3gl1rqepiw8vkFk0FE/articles/1w3MRpNTnNQjpGR8ALRL7z/) it expects 50% annual sales growth for the next several years. Meanwhile, Twitter's yearly sales growth [pales](https://snacks.robinhood.com/newsletters/7Diuno0ArouMGsyNQkshkC/articles/73dVpRGQ9Foe8OjLlbQg6e/) in comparison to Snap and __[Facebook](https://robinhood.com/stocks/FB)__'s. It's been struggling to gain users, and it just killed its Stories feature "Fleets." More broadly, social media platforms continue to face criticism from regulators and customers for failing to police hate speech and misinformation. TBD if that'll hurt the bottom line.

Events

Coming up this week...

- __[Cashed](https://snacks.robinhood.com/newsletters/2Dx6BpeCelL6ERgFEQBzuf/articles/7FGQ9LWK0pYQ0cJrD5MQd9/):__ Big Banks like __[Chase](https://robinhood.com/stocks/JPM)__, __[Goldman](https://robinhood.com/stocks/GS)__, and __[Citi](https://robinhood.com/stocks/C)__ brought home booming profits last quarter — but their win is really about the economy. 
- __[Loose](https://snacks.robinhood.com/newsletters/YT38JsvnXohOf0FUMOuuu/articles/1QYBI5AuCj6KdCiF9yAt9a/):__ __[Levi's](https://robinhood.com/stocks/LEVI)__ sales more than doubled from last year, as the jean icon thrives on baggier fits and changed waistlines (RIP skinny jeans). 
- __[Juicy](https://snacks.robinhood.com/newsletters/4UfptC7RMAEOo0YSfMmIZm/articles/2F1XpjHeLwrURVe31KHxXi/):__ Korean conglomerate __LG__ is investing $5.2B in its battery biz, but it's juicing up for more than just electric cars. 

ICYMI

Last week's highlights...

_When couch fans are the only fans [amriphoto/E+ via GettyImages]_

 🏃‍♀️  The Olympic economy 

__Take it to the bank...__ Big Banks came through with expectation-beating earnings and booming profits. While the economy roared back to life last quarter, banks were busy making loans, collecting interest, and closing deals. That flurry of activity translated into big profits: 

- __[Goldman Sachs](https://robinhood.com/stocks/GS)__ made a profit of [$5.5B](https://www.cnn.com/2021/07/13/investing/goldman-sachs-earnings/index.html), compared to $373M in the same quarter last year. 
- __[JPMorgan Chase](https://robinhood.com/stocks/JPM)__ saw its profits more than double from last year to $12B. 
- __[Citi](https://robinhood.com/stocks/C)__'s quarterly profit more than *5X'd* to $6.2B. 

__Bankers dropping bangers...__ Your quarterly reminder that Goldman's CEO is an [EDM DJ](https://nypost.com/2020/07/27/david-solomon-djs-in-the-hamptons-after-reaching-3-9b-1mbd-settlement/). Last year, banks added billions in rainy day funds to their reserves. 17M Americans were newly unemployed, so banks set aside $$$ to prep for loan losses. Think: defaults on mortgages, credit cards, and biz loans. But economic healing happened faster than expected, so banks *released* those loan loss emergency funds. 

- __That translated into profit.__ Chase got a [$2.3B](https://www.cnbc.com/2021/07/13/jpm-earnings-2q-2021-.html) boost to its bottom line by releasing $3B in reserves. Citi got a [$1.1B](https://www.cnbc.com/2021/07/14/citigroup-earnings-2q-2021.html) boost from reserves. 
- __Record i-banking activity helped, too.__ Most of Goldman's growth was driven by its investment banking biz, which had its [best](https://www.cnn.com/2021/07/13/investing/goldman-sachs-earnings/index.html) second quarter ever. 


_Mood: Loan loss reserves, unleashed [Westend61 via GettyImages]_

__A growing economy is a silver bullet for banks...__ and other cyclical stocks – aka: shares of companies that are closely tied to the health of the economy. Last year, banks were diving into fallout shelters, prepping for worst-case scenario bankruptcies and defaults. This year, banks are undoing that emergency prep. A key reason: the US economy is expected to grow at the fastest pace since the '80s this year. More money in American pockets means more $$$ in the coffers of US banks. 


Banks profited thanks to reserves, but their win is really about the economy

__iCal it so I know it's real…__ Your backlog of doc appointments. As patients across the US rekindled their relationships with their doctors, __[UnitedHealth](https://robinhood.com/stocks/UNH)__'s quarterly revenue jumped 13% from last year. But profits at America's largest health insurer took a post-pandemic hit.

- __Cancel the checkup:__ As people avoided waiting rooms and germy hotspots last year, UnitedHealth [had](https://snacks.robinhood.com/newsletters/695acOxqA9l0V9Q9Xp38oj/articles/6TuKPDyMpL7gPV2Z8tHuP7/) its most profitable quarter *ever*. You didn't use the insurance benefits you pay for monthly — so your canceled visit went straight into United's pocket
- __Fit me in ASAP:__ Now that people are getting their weird bumps checked out, UnitedHealth has to foot the bill. Profit plunged last quarter thanks to all those expensive doc dates. 

__Re-United…__ and it feels so "meh." Most industries are thrilled to see customers return — that’s not necessarily the case for health insurers. Insurers encourage preventive visits, which help avoid expensive – and dangerous – problems like heart disease or cancer. But they might prefer *not* to see customers go in for non-urgent visits like check-ups, and even pay big bucks to keep them away. That's why...

- __Telehealth:__ UnitedHealth expanded its telehealth offerings, which are cheaper than IRL appts, to all 50 states during the pandemic. Competing insurers __[Oscar](https://robinhood.com/stocks/OSCR)__, __[Amazon Care](https://robinhood.com/stocks/AMZN)__, and __Kaiser Permanente__ also expanded virtual-first care plans this year. 
- __Wearables:__ UnitedHealth also offers customers free Apple Watches or Fitbits… *if* they get their steps in. 


__Sometimes, *not* spending is good business…__ and can help boost the bottom line. The health insurance biz has a classic “do less” model: Just like Olive Garden doesn’t *really* want you to spend that gift certificate, health insurers often make less money the *more* their customers use their services. Ditto for car insurance companies. 

UnitedHealth sees more revenue, but less profit… and it doesn’t really want to see you

Bitcoin 

🏦 The Big Bank theory 

__Crank out the piggy bank...__ If you're still signing field trip forms, a $300 check could be on its way. Today, the US government starts sending US parents $300 per month for each child they have (your 25-year-old who lives at home doesn't count). This temporary increase in the child tax credit was passed as part of Biden’s $1.9T stimulus rescue package in March. 

- __39M households__ will receive payments, covering *88%* of US children. Each month for the rest of 2021, eligible parents can expect $250 or $300 per kid, depending on age.
- __$105B:__ How much the boost will cost Uncle Sam. Last year, the credit was $2K/child per year. Now it could be up to $3.6K each year. Buut: it expires in December.
- __$150K:__ The full credit starts getting smaller for married couples who earn more than $150K/year, and individuals who make more than $75K.

__Give the kid some credit...__ Since 1997, the child tax credit has reduced income liability for people with children. With the *old* child tax credit, parents saved on taxes owed when they went to file. With this *new* credit, parents are straight-up getting paid, even if they have no income. It's less like a tax break, more like a monthly allowance. 

- __Dems tout the payments as a way to reduce child poverty__ and change lump-sum refunds into a reliable income stream. And Biden hopes to extend it for years. 


Piggy

__Prepare for the "secret stimulus"...__ that could [benefit](https://www.cnbc.com/2021/07/12/child-tax-credit-payments-may-boost-retail-sales-as-soon-as-this-month.html) big retailers. Pandemic stimulus checks boosted consumer spending, helping out go-to chains like __Walmart__, __Costco__, and __Target__. This monthly "credit" could have a similar effect on the family-favorite retailers. Target and __Dollar General__ mentioned the sales-boosting potential in their earnings calls, and Walmart, __American Eagle__, and __TJ Maxx__ are prepping for strong back-to-school sales.  And it's not just binders and diapers — that spending could [spill into](https://www.cnbc.com/2021/07/12/child-tax-credit-payments-may-boost-retail-sales-as-soon-as-this-month.html) adult categories like alcohol, restaurants, and travel. 


$300 monthly checks to parents start today, but the real winners could be retailers

__From toothpaste to smartphones…__ Korean conglomerate __LG__ makes just about everything. It also owns one of the world’s largest manufacturers of car batteries: LG Energy. LG Chem, its parent company,  brought in $27.1B in revenue last year, and has sealed car battery deals with __GM__, __Tesla__, and __Volkswagen__. Now, it's [juicing up](https://techcrunch.com/2021/07/14/lg-chem-will-invest-5-2b-in-battery-materials-through-2025/) with a $5.2B investment in its battery materials biz. 

__Not just Tesla juice…__ Thanks to government subsidies and clean energy concerns, demand for EV batteries is soaring. But battery behemoths like LG have their eyes set on more than just EVs. They want to service the entire renewable energy industry by fixing its storage problem.

- __The Problem:__ "Intermittency." That's when solar panels stop generating electricity on cloudy days, or wind turbines slow down in less-gusty weather. 
- __The Solution:__ Gigantic, factory-sized batteries that save up energy to use on a (literal) rainy day. LG has already installed utility-scale batteries across the US, including at the world’s largest battery storage complex in CA. 


Juicy

__Big batteries = big potential…__ EV batteries are top of mind for consumers, but utility-scale batteries are a massive opportunity for renewable energy infrastructure. They solve the "intermittency problem" for companies and governments that are setting ambitious carbon-reduction goals. Bigger batteries could also mean bigger business: the global market for energy storage is expected to hit $426B in the next decade.

 LG invests $5.2B in batteries, but it's juicing up for more than just electric cars 

_Back-to-school is about to be lit [Lorado/E+ via GettyImages]_

💰 The secret stimulus

__Bringing home the bacon...__ correction: *the 8% more expensive bacon*. Consumer prices jumped 5.4% in June from last year, continuing to accelerate at the fastest pace since 2008. As the US economy gets more #flated, the BLS' monthly Consumer Price Index has been getting attention. The [CPI](https://www.bls.gov/news.release/pdf/cpi.pdf) measures prices of 80K common items — sounds like a snooze fest, *reads like a thriller*. A few gems from prices compared to a year ago:

- __Women’s dresses__ were 16% pricier. Men's pants and shorts: +11%
- __Indoor plants and flowers__ were up a succulent 5% 
- __Hotel__ prices jumped 17%. Car and truck rentals: *+88%*
- __Candy and gum:__ +3%. Liquor at restaurants: a hard +5%
- __Pet services:__ +5%. Your dog walker isn't complaining. 

__Get meta with it...__ Many economists believe that inflation fears are, in themselves, inflated. Fed Chairman Jerome Powell expects this inflation could be a one-time price increase as the economy rebounds (#tempflation). Supply chain and labor shortages have been driving up prices of raw materials and goods. A few examples:

- __Cars:__ The global chip shortage caused a spike in used car and truck prices (+45%), which are responsible for a whopping one-third of the overall CPI increase.
- __Flights:__ Airlines are [dealing](https://snacks.robinhood.com/newsletters/2ai2OqBmW4LfHN2ln2qdFL/articles/uqadxY2cnV2UQ4gAbFQ0A/) with a shortage of pilots and workers while demand is rebounding, leading to pricier flights (+25%).  


Flated

__There are two sides to inflation...__ The side that pays extra, and the side who gets *paid* extra. Lower-income consumers are more sensitive to rising prices — a spike in the price of meat, milk, or clothing can make a big difference. But some are seeing an upside too: rising wages. From Uber to McDonald's, companies are raising wages and incentives to fill the labor shortage — which, in turn, can contribute to rising prices. Another inflationary upside: soaring home and car prices — for those who own them. Homeowners got $2T richer during the first three months of this year as values spiked.

Inflation on the rise: higher prices are weighing on wallets — but making some bigger

__Grills just want to have funds...__ Grill-maker __Weber__ is taking its charbroiled stock public, and could seek a $6B valuation in an IPO. Weber's 70-year grilling history began with George Stephen Snr, the man who invented modern grills — and added a lid (key). By the time the 60s rolled around, if you didn't have a Weber grill at your backyard party, you didn't have a backyard party. Now, Weber is sounding less *Happy Days*, more *Silicon Valley*:

- __44:__ The number of times Weber used the word "disrupt" in its IPO filing. 
- __12:__ Mentions of "installed base" — 30M grills in the US, and 50M globally. 
- __iGrill3:__ Weber's app-connected grill dongle tells you when the patty is crispy.  

__And a little bit of chicken grilled...__ BBQ'ing may be the epitome of American summer, but it's also a hallmark of pandemic socializing. The "outdoor revolution" has [benefited](https://snacks.robinhood.com/newsletters/7HtER4ksmLcN4p38u13Ss9/articles/58znHWdR9HlhGlFh3iDeTX/) everyone from RV companies like __[Winnebago](https://robinhood.com/stocks/WGO)__ and __[Thor](https://robinhood.com/stocks/THO)__, to outdoor gear companies like __[Yeti](https://robinhood.com/stocks/YETI)__ and __[Canada Goose](https://robinhood.com/stocks/GOOS)__. Now, it's helping Weber and BBQ rivals like __Traeger__, which also filed to go public last week. 

- __$1B in revenue:__ For the six months ended in March, Weber's sales were up 62% compared to the same period last year. 
- __24% market share:__ One in four grills on Earth are Weber's, and it holds the top spot for American brands. 


__Brand can be more important than product...__ Weber isn’t selling grills – it’s selling its brand name. For Weber, brand recognition is more important than grill innovation (even bluetooth dongles). Weber's biggest strength is that 87% of Americans are aware of its brand — but that's also its #1 *risk* : *“Our business depends on maintaining and strengthening our brand.”* That's why it's jacking up marketing spend and [hosting](https://webergrillrestaurant.com/special-events-grilling-classes/) events like grill classes and patio parties. 


The BBQ IPO: Weber files to take its famous grills public, but it's more about brand

_Check the succulent receipts [staticnak1983/E+ via GettyImages]_

💰 Inflation intensifies (feat. succulents)

__RIP skinny jeans...__ When you realize that skinny jeans are no longer in fashion — a year too late. __[Levi](https://robinhood.com/stocks/LEVI)__ sales plunged last year as we forgot what waistbands feel like (#legging-life). Last quarter, the company that invented blue jeans made a big comeback. 

- __Earnings, unzipped:__ Levi's sales more than  doubled from last year, and it swung to a $65M profit as you traded in yoga pants for "going out" fits. 
- __Bring out the party pants:__ Levi's stock is up 46% this year as reopening drives "revenge spending" on *non*-stretchy clothing. 

__Mom jeans FTW...__ While the days of 24/7 sweats are behind us, consumers are now seeking sweatpansy qualities in going-out clothes. Call it a pandemic hangover: the quest for comfort has carried over to jeans. Levi's CEO said that baggier fits made up nearly half of both men’s and women’s sales last quarter, a major shift from two years ago. Case in point: "[balloon pants](https://www.levi.com/US/en_US/apparel/clothing/bottoms/balloon-leg-womens-jeans/p/853140002)" are sold out. 

- __Trends change:__ Gen Z revived high-waisted, loose fits, which have become uniforms on TikTok. Now, __Madewell__ is even releasing gateway styles to help hardcore skinnyjeaners transition, calling them: "training wheels for people coming out of skinny.”
- __Waistlines change:__  One in three US consumers have seen a change in their waistlines since the pandemic, according to Levi's CEO. And nearly 40% of people say they no longer fit in their clothes from last year. That calls for a wardrobe change.  


Jeanius

__The real opportunity isn't the trend...__ it's the *spillover trend*. The skinny jean era has passed, and we've [entered](https://www.nytimes.com/2021/04/15/business/denim-cycle-loose-jeans.html) a "New Denim Cycle." But the big opportunity isn't changing waistlines or styles — it's the spillover potential of those trends. First you change the cut of your jeans — then you change your tops, jackets, and shoes to match (boots don't pair well with a tapered ankle). The data confirms it: Nine in 10 shoppers [plan](https://www.marketwatch.com/story/levi-strauss-gets-a-boost-from-changing-waistlines-during-the-pandemic-11625848347?mod=mw_latestnews) to revamp their wardrobes. Apparel retailers could benefit.

Levi’s big stretch: the jean icon is thriving on baggier fits and changed waistlines

__Subway, refresh...__ Doesn't sound right. This week, __Subway__ launched an “Eat Fresh Refresh” campaign to win customers back from fast-casual competitors like __[Chipotle](https://robinhood.com/stocks/CMG)__. Subway once set the sandwich bar high by pioneering a healthy, customizable sammie menu. But sales have been slipping for years as consumer tastes shift. Enter, Refresh:

- __20+ new ingredients,__ including new breads, smashed avocado, and fresh mozzarella
- __1M free sandwiches__ across the country, to whet customers’ appetites
- __A fresh online ordering system__ with revamped in-app ordering and nationwide Doordash delivery

__Biz strategies get stale, too…__ Subway's “healthy” fast food was out-innovated by competitors like Chipotle, that offered premium ingredients and convenient ordering *in addition* to customizable, "fresh" meals. The pandemic hit Subway hard, since it had few delivery and drive-through options for contactless orders. Meanwhile, competitors saw digital orders more than double over 2020. Subway has also struggled with:

- __Good fat > Low fat:__ Changing consumer preferences caused low-fat options like the Oven Roasted Chicken sammie to lose ground to low-carb and organic alternatives.
- __PR disasters:__ Including fake tuna (#funa) allegations and the sentencing of Subway spokesman Jared Fogle to 15 years in prison.


__Innovation is always in season…__ and even huge, global chains like Subway lose business when they don’t pay attention to changing tastes. Subway relied on its early “Eat Fresh” success for years, even as its reputational lettuce wilted. Now, Subway is trying to win customers back with e-orders and avocados (good fat). But its competitors have already taken a big bite out of the fast-casual market.

Subway unveils a fresh strategy after sales fall short of the full foot-long 

_Saying a final goodbye to the skinny jeans [Simon Winnall/The Image Bank via GettyImages]_

👖 Levi's loose quarter

__Comet me, bro...__ The Space Battle of the Billionaires has moved from the [Twitter](https://twitter.com/blueorigin/status/1413521627116032001) sphere to the thermosphere. Yesterday, __[Virgin Galactic](https://robinhood.com/stocks/SPCE)__ founder Richard Branson [boarded](https://www.cnbc.com/2021/07/11/richard-branson-reaches-space-on-virgin-galactic-flight.html) Virgin's VSS Unity, traveling faster than three times the speed of sound to reach the edge of space. Branson just became the first billionaire founder of a space company to go to space on his own spacecraft (meta). Next up is Jeff Bezos, who announced his own trip *before* Branson decided to out-space him. The former Amazon CEO plans to take off on a __Blue Origin__ spaceplane on July 20, along with his brother and a mystery bidder who's dropping [$28M](https://www.npr.org/2021/06/12/1005908618/jeff-bezos-blue-origin-space-auction-winner-28-million) to join them  — or $2.5M per minute of ride time. 

__Spaghetti Apollo-gnese...__ Apart from fueling billionaires' egos, these trips are major endorsements for NASA-sponsored space tourism (think: restaurant bookings on the ISS). NASA is leaning on private companies to help commercialize space. In May last year, Elon's __SpaceX__ became the first private company to send humans to space. In May, Virgin completed its first human spaceflight, a critical step before it flies space tourists — ETA: early 2022. While $250K tickets to space make headlines, tourism is still a tiny sliver of the space industry.

- __Satellites:__ One of the largest space industry subsectors, providing everything from WiFi, to telecom, to GPS and weather sensing. SpaceX's Starlink project has already [launched](https://www.cnbc.com/2021/02/09/spacexs-starlink-accepting-99-preorders-as-musk-considers-ipo.html) 1K+ high-speed internet satellites into low earth orbit — and is accepting $99 preorders. 
- __Defense:__ The real-life Space Force. For fiscal year 2022, the Pentagon requested $21B to invest in outer space security. Defense giants  __[Lockheed Martin](https://robinhood.com/stocks/LMT)__ and __[Boeing](https://robinhood.com/stocks/BA)__ both have space divisions. 
- __NASA missions:__ Boeing is [developing](https://www.ndtahq.com/how-a-public-private-partnership-is-expanding-americas-capabilities/) a spacecraft for NASA flights, and Elon's SpaceX won a $2.9B contract to develop a NASA lunar lander, beating out Bezos' Blue Origin (RIP Prime Moon delivery).

_Spotted, UFB: Unidentified Flying Billionaire [Marc Ward/Stocktrek Images via GettyImages]_

Launch

__This isn't sci-fi...__ The space industry is taking off in a real way. Space startups raised $7B in 2020, double what they raised in 2018. Today "space customers" mainly consist of governments and companies paying to launch satellites, cargo, and astronauts into space. In the not-so-distant future, they could be commercial space tourists. In the more distant future, they could be space colonizers on the Moon and even Mars ([see](https://www.cnbc.com/2021/04/23/elon-musk-aiming-for-mars-so-humanity-is-not-a-single-planet-species.html): Elon's Martian vision). 

Inside the Space Race: Branson, Bezos, and the future of the space industry 

__Waiting for the drink trolley like...__ __[Delta](https://robinhood.com/stocks/DAL)__ is rolling up with earnings for the quarter ended in June. Compared to 2020's tomato juice numbers, 2021 might look like champagne: TSA traveler volumes are back to [85%](https://finance.yahoo.com/news/delta-air-lines-dal-expected-190007635.html) of pre-pandemic levels, and Delta's expected to report a sales increase from last year (no shocker there). Domestic recreational travel is rebounding — Fourth of July flyers even *surpassed* 2019 levels. But international and business travel, which brings in [75%](https://snacks.robinhood.com/newsletters/5gmxJQUqpvzHWE4CeHvylQ/articles/48Z9me8i4MIZs8HeJ2o573/) of airline profits, remains grounded. Bill Gates said that half of biz travel may *never* return. 

__Get DJ D-Sol in here...__ Goldman Sachs' DJ-ing CEO David Solomon (aka: the banker who [drops](https://www.cbsnews.com/news/hamptons-chainsmokers-party-dj-david-solomon-goldman-sachs-investigation/) bangers) is dropping earnings instead. It's Big Banks earnings week, with __[Chase](https://robinhood.com/stocks/CCF),__ __[Citi](https://robinhood.com/stocks/C)__, __[Goldman](https://robinhood.com/stocks/GS)__, and others unveiling their numbers. In April, Chase and Goldman [revealed](https://snacks.robinhood.com/newsletters/2BaDoIcdXsja53tyH93ccQ/articles/5K9cPXQOlSNtntgG0U2X40/) record quarterly profits thanks to the IPO-palooza. Corporate and investment banking made up nearly half of Chase's revenue that quarter, and most of Goldman's. Despite a record first half for M&A activity, analysts [expect](https://www.bloomberg.com/news/articles/2021-07-09/banks-in-u-s-poised-for-weaker-results-after-pandemic-windfall?sref=q3KSFp38) that trading and loan revenue has slowed from last year. 

__Big week for stablecoins...__  Stablecoin = a type of cryptocurrency whose value is tied to an asset like the dollar or gold. USD Coin, one of Earth's largest dollar-pegged stablecoins, made headlines last week.  __[Visa](https://robinhood.com/stocks/V)__ [said](https://markets.businessinsider.com/currencies/news/cryptocurreny-payments-visa-partnership-clients-spend-convert-digital-currencies-2021-7) it'll allow cardholders to pay with USD Coin at 70M merchants worldwide. Merchants will get paid in fiat (aka: regular) currency. Meanwhile, __Circle__ — the firm that operates USD Coin — is [going public](https://markets.businessinsider.com/news/stocks/circle-usdc-stablecoin-public-spac-valuation-cryptocurrency-concord-stock-price-2021-7) via SPAC at a  $4.5B valuation. While crypto mainstream-ification is advancing, regulator [scrutiny](https://www.wsj.com/articles/bitcoin-draws-more-scrutiny-from-regulators-worried-about-fraud-11625576400?mod=politics_lead_pos3) of the crypto market is also heating up. 

__Feeling the pushback...__ Big business in the US. On Friday, President Biden [signed](https://www.wsj.com/articles/biden-to-target-railroads-ocean-shipping-in-executive-order-11625736601?mod=business_lead_pos3) an exec order to curb the dominance of companies in industries including shipping, agriculture, healthcare, and tech. The goal: promote competitive markets and limit corporate dominance in everything from railroads to prescription drugs. It's part of a broader effort to confront consolidation and perceived anti-competitive pricing in big industries — and it has big companies on edge.


- __[Antitrusted](https://snacks.robinhood.com/newsletters/4XhXFxZ9Jc6bcL9aMggLSr/articles/5DhQrRVBBPnLyHqLLoYa2c/):__ __BMW__ and __Volkswagen__ were fined $1B for colluding to *avoid* building greener car tech. 
- __[Blocked](https://snacks.robinhood.com/newsletters/3X5QOUOPZP7r08Bn09G0wM/articles/1bh7VsNPhZAUrYlZdft4vv/):__ __Didi__'s mega IPO party gets cut short, as China blocks app downloads and signups for the ride-hail giant. 
- __[Fitted](https://snacks.robinhood.com/newsletters/3X5QOUOPZP7r08Bn09G0wM/articles/2r41d7ctRv7gEv407QapzX/):__ __Torrid__'s hot IPO: how the plus-size retailer is tapping into a major, underserved market. 


🚀 Inside the space race

__If Tony Soprano were driving in 2021…__ he’d pull up in a Volkswagen. European antitrust regulators [fined](https://www.wsj.com/articles/volkswagen-bmw-fined-1-billion-by-europe-over-diesel-tech-collusion-11625741892) Volkswagen and BMW more than $1B – about 5% of their annual profits – for colluding to avoid upgrading their emissions tech. In this plot, the "conspirators" are __Volkswagen__, __BMW__, and Mercedes-maker __Daimler__.

- __The pact:__ Between 2009 and 2014, the three German car giants agreed *not* to compete with each other to develop cleaner, expensive emissions tech. *"I won't do it if you don't."*
- __The rat:__ Daimler  agreed to blow the whistle on its co-conspirators in exchange for immunity in the EU investigation.
- __The punishment:__ Severe. VW will pay $590M, BMW will pay $442M, and Daimler *would've* paid nearly $900M — if it hadn’t squealed.

__But this is actually *a sequel*...__ Volkswagen’s been busted before. In 2015’s #Dieselgate, VW outfitted cars with software to [cheat](https://snacks.robinhood.com/newsletters/2FGYY02td4t3rp9KjKvLQM/articles/2UCVo6eZfPbk4jUIyb9qaM/) emissions tests. Since then, VW’s paid $38B+ in fines and fees – but the German auto biz has struggled to clean up its soiled reputation. Now, EU regulators are sending an unprecedented message: no collusion of any kind. 


Colluded

__EU antitrust just got broader...__ It’s the first time the EU has used antitrust law to punish companies for suppressing tech innovation, instead of usual no-nos like [price-fixing](https://snacks.robinhood.com/newsletters/4c8kK4Rid9pHznCNpssxSz/articles/4dudsh94ZC6uaeWk14f7up/). The three car companies didn't agree to all raise prices at once — that would be OG collusion. Instead, they tried a more *creative* type of collusion: don't innovate, boost profit. But the EU put its foot down. Antitrust might get broader in the US, too. New FTC leader Lina Khan has [said](https://snacks.robinhood.com/newsletters/2Z4BofvGDzgoroXZ4OTaiL/articles/75lgUHK9VCoHmFBsxK4D6C/) that we need "a new vocabulary" for addressing Big Tech's dominance.

Antier-trust: BMW and Volkswagen were fined $1B for colluding to avoid building cleaner tech

__Don't eat the milk jelly cleanser...__ __Glossier__ is the viral direct-to-consumer makeup/skincare brand whose products look like candy — or art supplies. From tubes of "Cloud Paint" blush and "Balm Dotcom" skin salves, to roll-on highlighter sticks, Glossier is the epitome of Instagram-able packaging. Now it has something else to gram about: 

- __Double unicorn status:__ Almost. Glossier just raised $80M in funding, [reportedly](https://wwd.com/beauty-industry-news/beauty-features/glossier-beauty-fundraise-265-millino-venture-capital-stores-1234876045/) bringing its valuation to $1.8B.  
- __The digital-first company__ plans to use the fresh cash to bring back physical locations, which it shut down during the pandemic. The first new stores will be in Seattle, LA, and London.

__Signature makeup look...__ The "no makeup" makeup look. Seven-year-old Glossier pioneered modern, direct-to-consumer beauty with its TikTok-friendly minimal aesthetic. Think: Millennial pink and pastel-everything. It keeps things simple with 39 products that are easy to apply.

- __Household name with Gen Zillennials:__ Two in every five US women between ages 18 and 34 have heard of Glossier, and it has 5M+ customers globally.
- __Digital super power:__ Glossier's online sales increased across all categories during the pandemic, while makeup sales plummeted for OG retailers. 80% of its sales come from its own site.


Highlight

__The power is in the packaging...__ because it's the first thing we see. People often buy makeup, food, and other items because they look *cute*, without even knowing the ingredients or quality. Cool retail stores are a form of packaging, too. For Glossier, they're an extension of its marketing strategy to inspire, then *acquire* customers. Examples of "well-packaged" Glossier shops: a [fried chicken](https://sf.eater.com/2018/3/14/17117234/glossier-rheas-cafe-mission-pop-up-san-francisco) and lipstick pop-up at a pink cafe in SF, and a Boston setup made of university-inspired “campuses." Coming this August: a huge, mushroom-themed concept store in Seattle.  


Millennial makeup favorite Glossier snags a $1.8B valuation by embracing "the power of the package" 

_No makeup makeup vibes [Westend61 via GettyImages]_

🚗 Volkswagen's collusion plot twist

__Put down your lightsabers...__ The JEDI war is over. In 2019,  __[Microsoft](https://robinhood.com/stocks/MSFT)__ scored a huge win by snagging the Pentagon's $10B cloud-computing contract (aka: "JEDI"). Over 10 years, Microsoft would modernize the Department of Defense's IT systems, storing and crunching government data in its cloud. After losing the bid, cloud competitor __[Amazon](https://robinhood.com/stocks/AMZN)__ appealed the decision. In response to the 'Zon's lawsuit, a federal judge temporarily blocked the deal earlier this year. 

- __The tea:__ Amazon claimed that then-President Donald Trump sabotaged its JEDI bid because of beef with *The Washington Post*, which Jeff Bezos owns.
- __Now, JEDI is canceled.__ The Biden admin [scrapped](https://www.cnbc.com/2021/07/06/pentagon-cancels-10-billion-jedi-cloud-contract.html) the contract, in favor of a new contract that will be awarded to multiple cloud companies. 

__Cloud moves fast...__ Two years after outlining its cloud-computing needs, the DoD wants to reassess its options. Now, Amazon and Microsoft will both be solicited for proposals for the new contract, called "Joint Warfighter Cloud Capability" (less catchy). Other qualified bidders could [include](https://www.wsj.com/articles/pentagon-plans-reboot-of-jedi-cloud-contract-11625589039) __[Google](https://robinhood.com/stocks/GOOG)__, __[Oracle](https://robinhood.com/stocks/ORCL)__, and __[IBM](https://robinhood.com/stocks/IBM)__. The DoD is America's largest employer, which means big cloud cash. 

- __In context:__ Companies and governments are moving in droves from on-premise data storage (think: OG Word doc on your PC) to cloud storage (think: Google Doc in the cloud).
- __The cloud-computing market is worth $214B__, and the competition for market share is intense. Amazon's AWS is the leader, while Microsoft's Azure is #2.

JEDI

__The Cloud Wars are far from fluffy...__ They're brutal for a reason.  Cloud is the oil of the modern economy, powering everything from Netflix to your credit card payments.  Cloud infrastructure service revenue was $39B in the first quarter, up 37% from last year. Once a company transitions to a cloud service, it's hard to move off because of high switching costs. High-profile contracts like this Pentagon deal are crucial to gaining market share in a cloud-eat-cloud world.

Cloud Wars: the Pentagon calls off its $10B JEDI contract, two years after Microsoft won

__*Has anyone seen my tabby cat?*...__ When Tabitha's missing, a Facebook post won't help  — so you turn to __Nextdoor__. The hyper-local social networking app allows you to chat with neighbors, exchange recs, and get the scoop on local news. Like: your fave mailman just retired, and that "earthquake" you felt was actually just you. People seek advice on everything from babysitters, to laundromats, to borrowing BBQ grills. 

- __Nextdoor is going public__ through a SPAC merger that values it at [$4.3B](https://www.wsj.com/articles/nextdoor-to-go-public-in-proposed-spac-merger-11625574577), nearly double its 2019 valuation. The 10-year-old company will raise nearly $700M. 
- __KIND:__ Nextdoor's future ticker combats perceptions about its chatrooms, like "Trina, can you take out your stupid trash before 2 am.”
- __$$$:__ Nextdoor makes most of its money from ads for local businesses and real estate brokers. Two big trends in its favor: business reopenings and the housing boom.

__Giving away my extra TP rolls...__ Too kind. Nextdoor thrived during the pandemic, as people flocked to the app for info about Covid, testing/vax sites, and local biz closures. Now:

- __Nearly one in three households__ in the US use the Nextdoor app. 
- __275K+__ neighborhoods across 11 countries are on Nextdoor.
- __Facebook__ is [trying](https://abc7news.com/facebook-neighborhoods-ad-library-login-community-standards/7216725/) to Zuck Nextdoor with a copycat called “Neighborhoods.”


_"This is definitely going on Nextdoor" [Caspar Benson via GettyImages]_

Tabitha

__OG social has become too antisocial...__ Most of the time: You're scrolling photos of random influencers and meme accounts, and barely interacting with your 1K followers. On FB, you're flooded with notifications about people you haven't seen since 5th grade. People are seeking real community post-pandemic, but big social networks have become *too* big. Tight-knit communities and real-life connections help Nextdoor users feel closer — call it "local media." 

Neighborhood social network Nextdoor is going public: it’s capitalizing on “local media”

☁️ Cloud Wars, demystified

__Cancel the IPO honeymoon...__ Celebrations didn't last long for __[Didi Chuxing](https://robinhood.com/stocks/DIDI)__. Last week, the Chinese ride-hail giant raised $4.4B in the largest US IPO of the year — and the biggest IPO by a Chinese company since ecomm giant __[Alibaba](https://robinhood.com/stocks/BABA)__ in 2014. Didi notched a $68B market cap on its first trading day (two-thirds of an Uber). But that's  *how it started*. 

- __*How it's going*:__  Not well. Over the weekend, Chinese regulators ordered Didi to stop adding users and told app-store operators like __[Apple](https://robinhood.com/stocks/AAPL)__ to take down Didi’s China service.
- __Why:__ China's explanation was vague, but regulators said Didi collected personal info “in violation” of the country's rules. Now, China is carrying out a cybersecurity review.
- __Didi's stock plunged 20%__ yesterday. BTW: two other recently IPO’d Chinese companies, __[Full Truck Alliance](https://robinhood.com/stocks/YMM)__ and __[Kanzhun](https://robinhood.com/stocks/BZ)__, are facing the same restrictions. 

__Control > success...__ Five years ago, China might've hailed Didi's blockbuster IPO as a source of national pride. This year, China is driving the flops of its own biggest IPOs as it reminds tech companies who's in charge:

- __Strike 1:__ The infamous __Ant Group__ [squashing](https://snacks.robinhood.com/newsletters/3Y16VU6wsQpOaP5bwzUgFf/articles/10lyNbTzg1HbB3563ygUqe/). China halted the fintech giant's mega-IPO, and pressured it to restructure its biz. 
- __Strike 2:__ China ordered 34 of the country's largest tech cos, including TikTok-owner __ByteDance__, to comply with anti-monopoly laws or face “severe punishment."
- __Strike 3:__ China's antitrust regulator slapped Alibaba with a record-breaking $2.8B fine.


Blocked

__The theme has shifted for investors...__ It used to be: "Invest in China's growth opportunity." Now it's more like: *"Invest in China at your own risk."* Didi warned of this risk in its IPO filing, saying that if the Chinese government changes its interpretation of regulations or finds that Didi isn't compliant, the company could face "severe penalties." Zooming out, investors' opportunity is the growing size of China’s consumer market. The risk is the Chinese government's growing oversight. 


Didi's mega IPO party gets cut short, as China blocks app downloads and signups

__All about that CURV...__ __[Torrid](https://robinhood.com/stocks/CURV)__ is the largest direct-to-consumer brand of women’s plus-size clothing in North America. You might remember it as a sub-brand of Hot Topic (RIP studded belts). Six years after breaking up with checkered skinny jeans, Torrid has its own hot topic: a successful IPO. Torrid stock has jumped 15% since its NYSE [debut](https://finance.yahoo.com/news/why-shares-of-plus-size-womens-clothing-brand-torrid-are-going-haywire-on-its-ipo-day-182344258.html) last week — ticker symbol: CURV. 

- __The profile:__ Torrid defines its style as "unapologetically youthful and sexy," and is "maniacally" focused on fit. 
- __The numbers:__ Nearly $1B in sales last year, and it's profitable. But its profit has been roughly halving each year since 2018.
- __The source:__ Online sales made up 70% of Torrid's revenue last year while its 600+ stores were temporarily closed. 

__Don't curve your enthusiasm...__ The plus-sized market is significant, and it's growing. In the US, it serves a whopping 90M women wearing sizes 10 and up. Torrid says many brands treat plus-size customers as an afterthought, which is why the market has been underserved. Torrid's biggest strength: putting that customer base front-and-center. 


Curve

__Torrid turned fit into a brand...__ and won strong customer loyalty. 78% of plus-size women say they would spend more on clothes if they had more options available in their size. Urban Outfitter's blind spot is Torrid's super power: Last year, Torrid had an *82%* customer retention rate. By dedicating itself to the needs of a broad, unsaturated market, Torrid is tapping into a key opportunity. 