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Many employees can't afford a hefty medical bill that pops up out of the blue. But it happens. And employees who are financially stressed are understandably more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, Aflac plans help with out of pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more@aflac.com Frumarkets that's aflac.com Frumarkets
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Ford Wingstop PG it's an earnings bonanza day. We break down new results from some of the biggest consumer facing names Succession A family expose pushes one famous luxury goods patriarch to an unexpected place. We take a billionaires trip through X and it's Fed decision day. Rates held steady. That vote was far from unanimous for Wednesday, July 29th. It's Brew Markets Daily and I'm Ann Berry. More market details to come. But first, the Fed, of course, the Fed keeping interest rates Constant in a 9 to 3 vote by the Federal Open Markets Committee. Now in June, rates were also kept Constant at that 3 and a half to 3 and 3 quarter percent level. And this time the Fed's official statement was almost identical and I mean word for word, bar one from the last one. So the difference? Well, in June, the committee voted unanimously for the hold rate study outcome. That vote was 12 to 0 this time not so. There were three votes against the monetary policy action, one coming from Beth Hammock, a former Goldman Sachs executive and now president of the Cleveland Fed. I follow her on LinkedIn. It's worth doing. And she candidly has signaled this move in a series of posts about needing a data driven laser focus on that 2% inflation target. She voted for a quarter point hike alongside Neel Kashkari, Federal Reserve bank of Minneapolis and Lori Logan of the Dallas Fed. Well, in his press conference I was glued to the TV screen. I watched Chair Kevin Walsh reiterate his stance that quote, there is no soft inflation target, there's only a target and it's 2%. And he made it clear that he had expected dissent in the mode of a, quote, family fight. Well, the overall view of the Fed was spelled out in its official release. It's pretty self explanatory. I'll just read it here. It's thorough economic activity is expanding at a solid pace despite elevated uncertainty that owes in part to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce and the unemployment rate has changed little. Inflation remains elevated relative to the committee's 2% goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The committee will deliver price stability. So where do we go from here? Well, late next month we have the annual Jackson Hole Economic Policy Symposium. The who's who of central bank leaders globally and finance ministers turn up to the mountains with their interviews and statements followed extremely closely for early signs of fall monetary policy shifts. And then of course there's the next Fed rate decision due in September. Now looking at the CME Fed watch tool. That's what the market gets uses to try and understand what the vote is in the markets for what's going on next. Clear from that that the market's increasingly anticipating a US Rate hike next time around. Again, that's in September. We're going to keep on watching. We're now on to other headlines from the day's trading session, starting with earnings from the auto sector. Shares in Ford, that's Ticker F, rose more than 5% after the company beat second quarter earnings estimates and raised its full year outlook.
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The company said demand for its high margin pickup trucks and SUVs remains resilient despite that inflation and investors looked past the $1.3 billion net loss for the quarter, which was largely due to one time special charges related to Ford's pullback in all electric vehicles.
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As for the company's flagship F series trucks, production is ramping on back up after two fires at an aluminium supplier last year crippled the supply chain. John wanted me to say aluminum just for the record. Well, Ford estimates about 100,000 units of production were lost as a result of fires. And after retreating from EV production and getting truck production back on track, shares in ford are up 20% overall this
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year, sticking with earnings but bringing it home. Shares of Procter and Gamble, Tickler, Ticker, pg.
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But I love tickler.
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Yes, exactly.
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Tickler in there.
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I feel tickled to talk about this. Ticker PG fell over 2 and a half percent after the massive consumer goods company reported weaker than expected sales and issued disappointing guidance. The results came as consumers are becoming increasingly value conscious and delaying purchases by making everyday household products last longer.
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Well, that trend showed up across much of P&G's business because we saw this too in the beauty and fabric and home care segments. That's low single digit growth. Every other division though reporting volume declines. So let's talk some more about that guidance. P and G said it will face around a billion dollar headwind in fiscal year 2027, coming from higher raw material, energy and transportation costs.
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And guess what, Ann more earnings Shares in Wingstop Ticker Wing are up over 7% today, despite the company reporting earnings that saw a 7.5% drop in domestic same store sales. And the company revised its full year guidance downward for the second straight quarter. So what's encouraging investors? The chain continues to expand, opening nearly 100 new locations a quarter with each bringing in franchise fee, royalty, revenue and perhaps Wingstop stock.
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A lot to get those syllables out looks undervalued at least relative to where they've been trading historically because that ST price is down 50% year over year. Well, moving on from earnings to a mini merger moment, but one that caught our eye. I am a nerd after all. Shares of audit firm CBIZ, that's ticker CBZ rallied 18% after the company agreed to be acquired by its rival Grant Thornton. Well, the tax and advisory firm is buying CBIZ in an all cash deal with an enterprise value of roughly $5 billion.
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And the acquisition marks the largest transaction in the accounting industry in over 25 years. It will also create the fifth largest AUD consulting firm in the United States. And who are the big four? Well, it's Deloitte PricewaterhouseCooper, Ernst Young and KPMG. Grant Thornton will pay $55 a share for CBIZ, an 18% premium to Tuesday's closing price.
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And the reason that caught my eye? Just to clarify, for those of us in the finance industry, there's long been a discussion about whether a fifth player would be created to try and go up against the Big Four. Often folks are finding when it comes to their big company levels that it's difficult to try and find an independent auditor just given so much business is already going to those Big four. So one wor watching, it's getting more more vibes on Wall street than you might think. Well finally, shares in DoorDash, that's ticker dash, are up nearly 2% after the company announced it's received FAA approval to operate its own drone delivery service.
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DoorDash has previously partnered with established drone and robotics partners to build out their autonomous delivery pilot programs like that dot delivery bot that everyone thinks is so cute. And DoorDash will continue to do so. But an in house drone venture may eventually differentiate DoorDash from its main rival Uber, which has teamed up with some of those same autonomous delivery partners. And reading about this today, I realized I only think about the end point challenges of drone delivery. But DoorDash pointed out that real challenges to be solved is routing and handoff systems at drive thrus, rooftops and restaurants, back doors. I hadn't pictured that. You have the food ready and then someone has to bring it out the back of a restaurant or maybe get it to the roof. That is going to be a real challenge for drone delivery.
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Yeah, it's going to be a bit of an assault course to try and get through that. Well, let's take a quick break and when we come back, we're going to talk about the luxury giant lvmh. Expose on the family behind LVMH and on Europe's richest man. He's now taken to pushing back on claims of succession drama.
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It's time to talk luxury. A little bit of indulgence. Who doesn't want one on this hump of the weekday? Well, specifically, we're going to dig into the French luxury goods conglomerate L, the parent, of course, of Louis Vuitton, Dior and over 70 other brands. LVMH just reported a solid quarter, but the headlines have really been focused on the company's leader. That's the French billionaire Bernard Arnault. There was a recent expose in the French daily newspaper Le Monde which revealed inside details of how LVMH does business and specifically how Arnault runs it, along with speculation about succession drama in in the family. There we had in the headlines in that Le Monde article, quote, the Arnaults are France's last royal family. Well, what came about in that article was enough to compel the patriarch to take to X for the first time. With a somewhat cheeky response. More on the X post in just a moment. But, John, let's start with LVMH results from the latest quarter.
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That's right. And I'm going to roughly convert these euro numbers into US dollars. LVMH is France's largest company by Market cap, market cap of $265 billion and mentioned it owns some of the world's best known brands, including Louis Vuitton, Muay Hennessy, Christian Dior, Tiffany and Bulgari. Recent quarter they brought in revenue of $22 billion. And overall for the first half of the year, revenue was down 3%. But much of that was attributed to the result of currency differences. So in general, there was a return to organic growth. That's the assessment. The company made it clear that it's being impacted by the US Iran war. Sales are down in Gulf countries directly impacted by the war. And European luxury markets are softer because of lackluster tourism. Fewer visitors are coming to Europe to shop. But watches and jewelry is a standout category for the company. Organic growth grew 11% in Q2, driven in part by Tiffany and their brand new ambassador, Natalie Portman.
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Well, overall what we're seeing is fashion brands trying to win back shoppers after two years of stagnant sales. And that followed a pandemic era boom in luxury spending. Now historically, John, when you look back, luxury has typically been found to be somewhat resilient to stresses in consumer budget. So people do watch this closely to see particularly if that top end of the K shape economy are starting to feel budget compression. Well, on top of that, LVMH has been doing a lot of things internally. It's overhauled much of its creative team, including shifting the creative direction and one of its signature brands, which is Dior. And in earnings, the company said that Dior saw a quote, excellent start when it came to the first designs of Jonathan Anderson, who now holds the top creative job over at the fashion house. So there are green shoots at lvmh. The other thing, of course, all eyes have been on China, which has historically been a big driver of European luxury goods sales. But the war is taking an ongoing toll not only in terms of hitting consumer confidence in Europe, it is impacting flights coming from the Middle east, particularly during this busy summer season. And we're not seeing as much shopping going on in the Gulf region itself. So shares in LVMH are down over 25% so far this year. We do love to talk about luxury shopping, but let's get to the really ju juicy part of this couture story.
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All right, and the name at the head of this story, as you mentioned, is Bernard arnault. In the 1980s, he revived Dior. Building on that success, he later acquired and combined dozens of these luxury brands to create the LVMH empire, which he has run for nearly 40 years. And he's a billionaire. He's 77. He has five children, none of which are heir apparent. And that means he is the patriarch at the center of a reported succession drama.
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Well, the press scrutiny on Arnault has been increasing. Again, he's 76, seven, he has five children, none are heir apparent. There's been a book on his family that was published recently, and there's been a steady stream of articles in several publications about reported tensions within his family and jockeying amongst his five children to try to get a leg up inside the LVMH organization. But what's really driven a series of sort of interesting posts was 6 recent articles in Le Monde, which is a big deal publication in France. And the final was published in Le Monde last Friday. And that is ultimately what drove Arnaud to X for the first time. So 77 year old Arnaud is taking to X and he does it to publish a public letter in response to what has been said in this article. Now, it's possibly because the articles position Arnault as a, quote, patron of the arts and a lover of tax breaks. And the succession issue has been described in these articles as, quote, the poison at the heart of lvmh. So the writing these stories, really not pulling any punches, at least as they try to paint a picture and articulate their sense of what's going on inside lvmh.
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Absolutely. And I read some of these articles and they point out that they had the cooperation of the family and that may have been what stung so badly. There's two notable things about the reporting. Arnaud spoke with the newspaper for the series and his children and several executives did as well. Also, Arnaud's daughter Delphine is partnered with another billionaire, and that's Xavier Neal. They have children together. And Bernard calls Xavier his son in law. Well, Xavier has historically been a major financial backer of Lamond and sits on the board. So you've got these sort of shots coming from inside the house.
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Well, Arnaud took to X and posted a spirited and often wry response to the reporting. With respect to his family's cooperation with the reporting, he wrote, quote, I very clearly suspect you of having punished transparency. So he doesn't hold back. He also suggested that the Wertheimer family, which is behind Chanel, a big rival luxury brand, got more favorable coverage from Le Monde by not cooperating with the papers. So there he was, saying it was better to keep your distance. And then about the succession rumors, he said among the or nos apparently we don't discuss, we plot, we don't deliberate. We compete in reality. He wrote, quote, my children run businesses, manage teams, make decisions, and call one another on Sundays. I got to tell you, it's punchy writing.
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Oh, it's excellent.
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It's excellent writing.
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So we've discussed Rupert Murdoch and his
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publishing empire included Deja Vu.
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Yes. And the family drama that inspired the TV show succession. And now it's reported that Rupert's kids would actually get insight into what their father was thinking or scheming by watching storylines unfold on that TV show's succession. And so I'm curious if any of the kids are reading these Lamont articles
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and saying, like, oh, is that what message was planted? Look, as a publisher, Rupert Murdoch does get various platforms to take to if he wants to get his point across. His last post, X specifically though, was pretty long ago. It was in 2016, so a decade old post after. After getting engaged, he fittingly posted no more tweets for 10 days or ever. It was still called Twitter then. Feel like the luckiest and happiest man in the world. But with our nose post, the timing is interesting. It's the second time in a week that we've seen a billionaire take to X for the first time. We saw Nvidia CEO Jensen Huang join X last week posting a letter advocating for open AI models. So, you know, it's sort of becoming the platform of choice for folks who want to get their message to a big audience instantaneously.
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Yes. Without having to go through the layer of journalism that maybe they don't agree with.
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Right.
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And so if we're talking about billionaires on X, of course, Elon Musk, who controls X through the parent space X. So Musk reposted Arnaud's inaugural post, writing, the best way to communicate with the world is directly in your own words, not through the reality distortion nightmare mirror that is the legacy mainstream press. And so Musk encouraging other billionaires to get on there and speak their mind.
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So there are a couple of quirky little details in there too, which sort of added some personality to all of this. Not that more personality was needed, but it's sort of fun nuggets. Le Monde reported that ties so this is neckties from its competitor Hermes were banned or are banned from Arnault's office. LeMond writing quote, not even an occasional visitor would show up in monsieur's office wearing an Hermes tie. An aide would hand you a different one before you even reached the elevator. Well, in his open letter on X Arnault said that visitors don't in fact have their ties confiscated. He said, quote, we let them keep them. We simply offer a second one, more discreet for the elevator. A question of manners. And he says, I add under the seal of secrecy that I own several. This reminds me, but I think I can say this now because it was long enough ago when I was starting my career in London, I was part of a pitch to Jimmy Choo.
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Oh, okay.
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And I was very junior. I was out of college, and I was in a team. I was the most junior person on the team. And I, of course, didn't own remotely anything like a picture pair of Jimmy Choose. I own no designer shoes whatsoever. I was sort of clunking around in ill fitting Zara shoes, trying to look professional. But I distinctly remember there was a lady on my team who wasn't the most senior person, but she sort of more senior than I was. And she walked in and she suddenly realized she was wearing a pair of Gucci shoes. And she looked like she absolutely wanted the floor to swallow her up. Now, Tamara Mellon was still running Jimmy Choo at the time. And I have. She just gave these feet an icy stare. And it was a lesson to me, always do your homework. I will tell you another Goldman Sachs story, actually. So Goldman famously won the pitch. I think it was to IPO Lululemon, because everyone, including David Solomon, the CEO, turned up to that pitch wearing a Lululemon outfit. This stuff matters. It is a sign of business eq. So, you know, career advice for nothing here.
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Yes. Stay on brand.
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Stay on brand. All right.
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And I'm going to close this out with something that Arnaud ended his letter with his opening.
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You can do it in Frank, he
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wrote, quant a mal ra jacintier a practitique le mans croissant des man qui oxellent. Which means, as for me, do not worry, I will keep doing the crossword puzzles in Le Mans, which are excellent.
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He dropped the mic.
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There he is.
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He dropped the mic. Can we just like. Here's your round of applause. This is my solo. It's not really a round, it's a person's applause. But just on behalf of everyone, round of applause for the French reading. The French interpretation.
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Source material.
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The source material. That's amazing. Well, with that, it is now 4pm on the east Coast. The market's wrapping up for today. There it is, the closing bell. We don't have a ticker tape, so instead we'll throw it over to our human ticker, our producer, John the major
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indices bounced around today waiting for and then digesting that Fed decision, eventually ending the day decidedly down. The S&P 500 lost 1.5%, the NASDAQ finished down one and three quarters of a percent, and the Dow finished the day down over 2%.
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Well, earnings coming out right this minute from big Tech, we've got matter. We've got Microsoft hitting the wire, of course, too, looking out for Starbucks and Chipotle. So we've got a ton to do. I got to tell you, it's eerily quiet in the studio and surrounds today. It is definitely the afternoon after the company outing the night before, so we're going to have to get a lot of coffee going for people. That's it for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Anne Berry and produced by John Crateau, Tarkab Delatif Avenue, La Roya and Emily Miller. Brittany Dotacco is our audio engineer and the president of Morning Brew Inc. Is Devin Emery.
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Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. See you back here tomorrow, same time, same place.