🛬 Boeing Charged with Fraud

MARKET UPDATE

Good Morning Investor! Shares of Tesla ($TSLA) surged over 6% ahead of the company’s delivery numbers announcement on Tuesday, even though it is widely anticipated that the company will report its second consecutive quarter of declining deliveries. Meanwhile, the excitement surrounding RoaringKitty’s new position in Chewy ($CHWY) seems to have dissipated, with the stock plummeting nearly 7%.

TODAY’S BIG HEADLINES

Boeing Charged with Fraud

Nicotine-Free Vapes Could be the Next Big Thing

UK Voting Day & Its Impact on Stocks

TRAVEL & INDUSTRIALS

Boeing Charged with Fraud🛬

Stealing Boeing’s Thunder: Boeing ($BA) is experiencing a year that's nothing short of tumultuous, and it just keeps going from bad to worse. Hot on the heels of announcing a $4.7 billion acquisition of engine manufacturer Spirit AeroSystems, federal prosecutors dropped the hammer on Boeing by charging the company with fraud. Talk about turbulence.

• Prosecutors allege that Boeing lied to air-safety regulators about the 737 Max plans. The legal eagles want the company to plead guilty, giving Boeing until the end of the week to decide whether to accept the plea deal or go to trial. It's like picking between a rock and a hard place while your plane is in a nosedive.

Losses Onboard: If Boeing accepts the guilty plea deal, they’ll be on the hook for a $243 million penalty and will need to hire an outside consultant to monitor compliance.

• This might sound like a slap on the wrist, especially to the crash victims' families, who are calling it a "sweetheart deal" compared to their requested $25 billion fine. Attorney Paul Cassell hasn't minced words, criticizing the plea for failing to acknowledge the 346 deaths caused by Boeing's actions.

Stock Market Shouts: Boeing’s year has been so rough that the news hardly made a dent in its stock, which is already down over 27% year-to-date. This makes it one of the worst performers in the S&P 500. Given the rocky road ahead, it's safe to say Boeing’s thunder has been well and truly stolen.

CONSUMER DISCRETIONARIES

Nicotine-Free Vapes Could be the Next Big Thing ☁️

Zebra Changing its Stripes: Can the industry that’s kept us hooked on everything from Camel cigarettes to Zyn nicotine pouches really change its ways? Reynolds American is trying to do just that by launching a range of nicotine-free vapes. This marks a significant shift, considering their Vuse brand of nicotine e-cigarettes currently leads the industry in market share.

• The main driver behind this new direction appears to be a desire to reduce regulatory scrutiny. The vape industry has been under constant attack, with the FDA recently ordering Reynolds American to remove all but its unflavored tobacco Vuse pods from the market. By offering nicotine-free options, Reynolds American aims to navigate these regulatory challenges more effectively.

The China Factor: One big issue plaguing the vape industry is the influx of cheap Chinese products that don’t adhere to safety standards, overwhelming the FDA’s capacity to regulate them. Reynolds American's new nicotine-free range, dubbed "Sensa," seeks to address several issues:

• Regulatory Relief: Nicotine-free products are likely to face less regulatory scrutiny compared to their nicotine-containing counterparts.

• Product Offering: Sensa vapes will come in six different flavors, priced at $19.99 each, slightly higher than most competitors in the disposable e-cigarette market.

• Age Restrictions: The company will require retailers to sell these vapes only to customers who are at least 21, despite the current lack of legal mandate for this age restriction.

INTERNATIONAL AFFAIRS

UK Voting Day & Its Impact on Stocks 🗳️

Leadership Shakeup: This is a pivotal election year globally, with the United Kingdom diving headfirst into a general election on Thursday. All signs indicate a potential change in leadership that could significantly impact the country’s economic decision-making.

• Polls widely suggest that the opposition Labour Party is poised for a decisive victory. The party has pledged to boost economic growth, maintain tight spending, rein in debt, build new homes, and upgrade crumbling infrastructure.

Market Anxiety: Despite initial concerns, a resounding Labour win could be positive for financial markets, according to a JP Morgan strategist. The sectors likely to benefit the most include banks, homebuilders, and grocers.

• Analysts are betting on more significant gains for the domestically focused FTSE 250 index of medium-sized UK companies. Historically, the FTSE 250 has outperformed the FTSE 100 post-elections, with even stronger gains when Labour is in power.

Flipping Upside Down: However, not all segments will fare equally under a Labour government. The party's plans to nationalize the rail network and impose higher taxes on energy firms could negatively affect these sectors. Additionally, Labour’s environmental plans could mean increased regulation for water companies, while other utilities might benefit from more spending on green energy infrastructure, particularly solar companies.

• Japanese investment firm MUFG suggests that the British pound could be the biggest winner if Labour triumphs. This is attributed to the end of a disruptive decade under the Conservative party and the potential for closer relations with the EU in a post-Brexit world.

MORE NEWS

Additional market-moving events🌎

NFL loses $4 billion+: A jury found that NFL Sunday Ticket violated antitrust laws by inflating the price of out-of-market games and limiting access to single-team TV packages. (fos)

Ackman’s IPO: Bill Ackman’s Pershing Square set the IPO price of its potential $25B US closed-end vehicle at $50 per share. (Bloomberg)

The Market in Charts: WSJ has published six interesting charts depicting the state of the US stock market in Q2. (WSJ)

Chipotle-Gate: Analysts at Wells Fargo purchased 75 identical bowls from eight Chipotle ($CMG) locations in NYC and reported that sizes “varied widely.” (Quartz)

OUR PICKS

Our selections performance👾

On Monday the 11th of March, we released our “two superperformers” stock picks which we believe will provide significant outperformance compared to the S&P 500. Then on the 10th of June we released our next stock selection.

Here’s how the three stocks have performed since:

• Evolution AB: 1,109.00 SEK (📉-15.50%)

• Hims & Hers Health: $21.42 (📈+48.03%)

• PayPal: $57.81 (📉-8.86%)

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