Daily Brief - ☀️ Drowning in debt

TLDR: The United States of America is known as the Land of the Free, Home of the Brave and Owner of an Insurmountable Amount of Debt. According to the US Treasury Department, the Federal Government has accumulated $33.70 trillion in debt. Is it time to sound the alarm?

Of course not. This is America baby!

Jokes aside, government spending has skyrocketed. From FY 2019 to FY 2021, the government's attempt to soften the blow from the pandemic through tax cuts and its stimulus program led to a 50% increase in spending.

Simultaneously, GDP has not been able to keep up. Currently sitting at 123%, the debt to GDP ratio is unfavorably skewed on the debt side, indicating that the US has almost a fourth more of debt than its total economic output can handle.

Now that the US is getting a little strapped for cash, it needs to carefully choose where to spend its money.

That’s where Congress comes in, but disagreements between Democrats and Republicans on spending is delaying the passing of bills that are necessary to keep the government running.

Absent some kind of new funding bill, the government could shut down by Saturday.

Government shutdowns are old news to this market and in the past 10 since the 1980s, the S&P on average has surprisingly seen positive returns in the following month.

Sectors such as materials, energy and industrials have specifically been the best performers during this time. On the other hand, IT and consumer discretionary stocks have had a hard time over this period.

Even though the government has a habit of reaching last minute deals, history fortunately shows that a government shutdown is not the end of the world for equity markets.

What's happening in the markets?

This section is powered by Open AI connected to TOGGLE AI

XPeng Motors, a prominent Chinese electric vehicle manufacturer, is poised to announce its earnings tomorrow morning as the electric vehicle (EV) earnings season continues.

Analysts are projecting a loss of $0.53 per share and revenues totaling $1.16 billion for the quarter.

Historically, out of the nine instances in which the company has reported earnings, it has surpassed expectations only twice. Despite this, the stock has exhibited a tendency to rise on average even after falling short of earnings forecasts.

In a competitive market, XPeng Motors has defied challenges and delivered an impressive year-to-date return of approximately 54%, earning it the distinction of being Deutsche Bank's top pick in the electric vehicle sector.

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Earnings Update: TJX Companies reports tomorrow

TJX Companies Inc, the parent company of TJ Maxx, is likely to benefit from increased customer traffic across all divisions as shoppers hunt for bargains in a tough macro environment.

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.

Asset Spotlight: Hormel Foods at a low

Toggle analyzed 7 similar occasions in the past where Hormel Food's stock was trading near a low and historically this led to a median increase in the stock's price over the following 6 months. Read full insight!

General Interest: Goodbye NYC Traffic

This past weekend, electric vertical take-off and landing aircraft (eVTOL aka air taxi) company Joby Aviation performed a brief demonstration flight over New York City.

The display was part of a press conference hosted by Mayor Eric Adams who announced that the city plans to electrify two heliports on the island - Downtown Manhattan and East 34th st.

It’s only a matter of time before they start delivering your UberEats orders too.

Read more here.