🤖 Google & Tesla Kick Off Mega-Tech Earnings

What’s on the Menu 🍴

Earnings, ETFs, and Election Betting Markets…

Oh my!

Today we’re diving into some of the hottest investing topics of this month.

Let’s get into it:

• Google & Tesla Kick Off Mega-Tech Earnings 🤖

• Ethereum ETFs Make a $1B Splash 🌊

• Trust the Market, Not the Polls 🗳️

Today’s newsletter is a 5 minute read.

Google & Tesla Kick Off Mega-Tech Earnings 🤖

Investors were glued to their Bloomberg terminals on Tuesday afternoon, awaiting Q2 earnings reports from Google and Tesla.

So how did the first two from the “Magnificent 7” fare?

The TL;DR is that Google put up solid numbers which modestly beat expectations, while Tesla reported mixed results that failed to thrill investors.

Immediately following the earnings calls, GOOG stock fell about 1% while TSLA stock shed 7%.

Google produced year-over-year revenue growth of 14%, and operating profit grew 21%:

Google grew profit margins for the fifth quarter in a row, but investors are starting to worry that rapidly rising AI expenditures will soon end this streak.

CEO Sundar Pichai stated that the risk of spending too little on AI was greater than the risk of overspending at this juncture however.

All in all, it wasn’t a bad quarter for Google despite the muted stock price reaction late Tuesday afternoon.

TSLA stock however was feeling the pain, as promises of future technologies such as robots & robotaxis were not enough to overcome just 2% year-over-year revenue growth and a 28% decline in adjusted operating profit in Q2.

TSLA has posted four straight quarters of profit declines as margins have deteriorated in the automotive business.

The profit decline continued in Q2 despite big increases in regulatory subsidies, Cybertruck deliveries, and energy storage demand.

TSLA stock is still up 60%+ in three months however, so it hasn’t been all doom & gloom for bulls lately.

The key question with TSLA is whether its premium valuation will keep holding up on mere promises of future products and growth:

Whether its redesigned Roadsters, semi trucks, humanoid robots, and/or robotaxis, eventually Elon Musk and company will have to deliver the goods.

We’ll have more coverage of Magnificent 7 earnings next week with Amazon, Apple, Meta, and Microsoft set to report, so stay tuned!

Ethereum ETFs Make a $1B Splash 🌊

Yesterday marked a significant milestone in the crypto world with the launch of several new Ether ETFs.

Investors traded over $1 billion worth of shares on their first day, a noteworthy debut but still a fraction of the spot Bitcoin ETFs' initial volume.

The trading volumes highlight a growing appetite for Ethereum investment vehicles, even if the numbers didn't quite match Bitcoin's explosive entry into the ETF market.

Breaking Down the Numbers

On launch day, the total trading volume for the new Ether ETFs hit $1.077 billion.

This impressive figure is about 20% of the $4.5 billion in trading volume that Bitcoin ETFs saw on their first day back in January.

The discrepancy raises questions about investor sentiment and market conditions.

• Grayscale's Ethereum Trust (ETHE) led the pack with nearly $458 million in trading volume, accounting for almost half of the overall activity.

• BlackRock's iShares Ethereum Trust (ETHA) followed with $243 million, which is particularly interesting because it's believed that these trades represent more inflows compared to Grayscale's potential outflows.

The New Players

While ETHE and ETHA were the frontrunners, other new entrants like Ark/21 Shares and Bitwise also saw notable activity, though their volumes were less than $100 million each.

21Shares’ Core Ethereum ETF (ETHC) saw the least traction, highlighting a possible preference among investors for more established or well-known brands.

The Bigger Picture

Looking at the broader crypto ETF landscape, Bitcoin spot ETFs have been seeing impressive flows throughout July, averaging over $150 million a day in inflows.

This continuous stream of investment highlights sustained interest and confidence in Bitcoin as an investment asset.

The debut of Ether ETFs, while substantial, reveals the differences in market reception and investor behavior between the two leading cryptocurrencies.

Ethereum's growing use cases and development activity suggest it might catch up, but for now, Bitcoin remains the king of the crypto ETF space.

Trust the Market, Not the Polls 🗳️

Polls have long been the go-to for predicting election outcomes, but let's face it: they often miss the mark.

Enter Polymarket, a platform where people bet on political outcomes, pooling over $355 million on the 2024 presidential race.

Unlike traditional polls, Polymarket lets people back their predictions with real money, making it a potentially more accurate gauge of public sentiment.

Why Polls Often Miss the Mark

Polls can be notoriously inaccurate. Remember the 2016 election?

Pollsters largely predicted a Clinton victory, yet we all know how that turned out.

There are several reasons for this:

1. Sampling Errors: Polls rely on a sample of the population, which can be skewed depending on who answers the phone or online survey.

2. Nonresponse Bias: Certain groups may be less likely to respond to polls, leading to an overrepresentation of other demographics.

3. Social Desirability Bias: Respondents may not always tell the truth, especially on sensitive topics, skewing the results.

4. Timing: Polls are snapshots of a moment in time and can miss late shifts in voter sentiment.

Betting Markets: The Wisdom of Crowds

Betting markets like Polymarket, on the other hand, leverage the “wisdom of crowds.”

This concept suggests that collective predictions of a group are often more accurate than those of individual experts.

Here’s why betting markets might be a better predictor:

1. Financial Incentives: Participants have skin in the game. They are likely to invest time and resources into researching before placing a bet, leading to more informed decisions.

2. Dynamic Adjustments: Betting odds fluctuate in real-time, reflecting the latest news and changes in public sentiment.

3. Crowdsourced Intelligence: The aggregate of many bets tends to filter out individual biases, offering a more balanced prediction.

Current Betting Odds

As of now, Polymarket shows Trump leading Harris 61% to 37%. This stands in contrast to a recent Reuters/Ipsos poll, which shows Harris slightly ahead at 44% to Trump’s 42%.

The difference?

Polymarket’s figures are driven by financial stakes, not just opinions.

Food For Thought 🧠

"Time is the friend of the wonderful business, the enemy of the mediocre."
- Warren Buffett

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.