🚀 Getting in Before the Growth

Plus, the maker of Samuel Adams received a merger offer from an unlikely source.

Happy Tuesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟩 | US Stocks Rose Slightly on Tuesday. The three major indexes made marginal gains as investors hope that upcoming labor market data is sufficiently weak to warrant rate cuts but not so weak that it causes panic over a coming recession.

  • 📈 | One Notable Gainer: Shares of Carnival Cruise Line surged 6% on news that the company will fold P&O Cruises Australia into its flagship cruise line in a strategic move to increase its capacity.

  • 📉 | One Notable Decliner: BP’s stock dropped more than 2% after OPEC+ announced plans to phase out production of 2.2 million barrels per day beginning in October 2024 through September 2025. That announcement caused other major energy stocks to fall as well.

  • 🚀 | Tomorrow's Trade: Getting in Before the Growth. Scroll down for more.

YESTERDAY’S POLL RESULTS

🟩🟩🟩🟩🟩🟩 Ford (F)

🟨🟨🟨⬜️⬜️⬜️ Airbnb (ABNB)

🟨🟨🟨🟨⬜️⬜️ Norwegian Cruise Lines (NCLH)

S&P 500 Heatmap. Credit: Finviz

All Stock Heatmap. Credit: Finviz

Global ADR snapshot. Credit: Finviz

MARKET MOVERS

PARA (-4%) Despite the coming merger between Paramount and Skydance, shares of Paramount fell after announcing job cuts (LA Times)

MAXN (-5%) Goldman Sachs downgraded Maxeon Solar Technologies from Buy to Sell and drastically reduced its price target from $11 to $1 (Investing.com)

SAIA (+7%) American trucking company Saia reported that its less-than-truckload shipments and tonnage jumped in the first two months of Q2 (MW)

SWK (-4%) Barclays downgraded Stanley Black & Decker from Overweight to Equalweight, citing US consumer trends impacting hardware and tool sales (YF)

BOOT (+4%) Western apparel company Boot Barn indicated that its sales for the current quarter are trending above its prior expectations (MW)

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OVERHEARD ON THE STREET

AP: Popular soda brand Poppi is facing a class-action lawsuit filed by consumers who say its products don’t improve gut health as much as its marketing suggests.

CNN: Elon Musk is being accused of improperly selling $7.5 billion in Tesla stock before a weak January 2023 sales report that sent the stock price plunging.

WP: A letter signed by current and former employees of OpenAI, Anthropic, and Google DeepMind asked for greater transparency and warned of AI dangers.

YF: Meta is looking to revitalize its Facebook app for users in a fresh push to grab Gen Z’s attention.

WSJ: Cannabis producer Green Thumb sent a letter to Boston Beer founder Jim Koch over the weekend, seeking to discuss a potential merger.

TOMORROW’S TRADE IDEA, TODAY

Down for a Discount

Brazil’s market has been struggling, but analysts believe its poor performance could present an opportunity. The country’s stock index Bovespa (IBOV) is down around 9% this year.

The emerging market fell 3% just last month following expectations that the US Federal Reserve will hold off on rate cuts. The country’s debt is dollar-denominated and becomes more expensive with higher interest rates. 

Most investors now anticipate a single rate cut at the end of 2024, shifting their expectations from the original hope for multiple cuts. Brazil’s economy could see a significant bounce back with a cut, and this has some analysts bullish on Brazilian stocks.

Strong Spending

According to Morgan Stanley (MS), consumer spending could be a driving force behind economic growth in Brazil. The bank believes the country’s economy will benefit from a strong labor market, increased minimum wages, and growing credit origination. 

According to Itaú, Latin America’s largest money manager, personal loans rose over 11% year-over-year. It expects that trend to persist and growth to occur as delinquency rates improve.

Getting in the Game

There are two main avenues for US-based investors to gain exposure to Brazilian stocks: ETFs and ADRs. 

On the ETF side, there are the iShares MSCI Brazil ETF (EWZ) and iShares MSCI Brazil Small-Cap ETF (EWZS). As for ADRs, companies with strong fundamentals are a good starting point. Analysts are bullish on mining company Vale (VALE) and oil and gas producer Petrobras (PBR). Vale is down 24% this year while Petrobras has fallen around 3%. But the stocks are yielding 10.9% and 15.6%, respectively. 

Brazil’s economy is tied to US interest rates and could benefit from future rate cuts. If delays continue, the market could face increased headwinds, but investors may be able to buy select stocks at a discount.

Do you think the Brazilian stock index Bovespa (IBOV) will finish 2024 higher or lower than it started?

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TOGETHER WITH BETTERMENT

Put your money to work in a high-yield cash account with up to $2M in FDIC† insurance through program banks.

Get started today, with as little as $10.

ON OUR RADAR

CNBC: The Small Business Administration plans to unveil new government-backed credit lines of up to $5 million for small businesses.

CNN: The FDA met today to weigh the risks and benefits of using MDMA, commonly known as ecstasy, to treat post-traumatic stress disorder.

Bloomberg: According to a recent poll, almost two-thirds of Americans considered middle class said they are facing economic hardships.

CNBC: Epoch Times’ CFO Bill Guan was arrested and charged with leading a yearslong scheme to launder at least $67 million in illicit funds.

CNN: Indian stocks plunged as vote counting in the country’s election suggested Prime Minister Narendra Modi’s dream of a landslide victory is at risk.

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