Hello there.

Happy Wednesday. Here’s to another week of kicking back and beating the heat. 🍻

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Are you more of a steak or shrimp kinda guy? My heart wants to throw some shrimp on the barbie, but my brain tells me they’re water bugs. I just can’t do it. I’d sooner take out a loan for the luxury of a New York Strip any day of the week. More below 👇

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You know how everyone's always saying "consumers are pulling back" and "people are cutting spending"? Yeah, that's apparently not happening at the grill. Beef prices are at some of the highest levels ever recorded, and Americans just shrugged and threw another ribeye on the grill last weekend.

Here's the deal: the US cattle herd is the smallest it's been in decades. Years of drought, expensive feed, and ranchers selling off their herds mean there's way less beef to go around. Ground beef is up 13% from last year. Steak is up 16%, at the second-highest price ever.

But Fourth of July beef sales still jumped by $352 million compared to last year. Turns out, Americans view steak as an "affordable luxury" they refuse to give up, even when it costs more than their streaming subscriptions combined. Instead of switching to chicken or going vegetarian, people are just cutting costs somewhere else in their grocery cart. Quality labels like USDA Prime, grass-fed, and "no antibiotics ever" are actually becoming more popular. When it comes to grilling season, we're not backing down.

Still, from an investment angle, we’ve gotta remember that this dynamic can't last forever. Rebuilding the cattle herd takes years, so prices will probably stay elevated for a while. Companies that sell beef are benefiting from consumers refusing to trade down (for now). But if the economy actually gets worse, that's when we'll see if steak is truly a sacred cow.

Welcome to the heat wave, where it’s hot, sweaty, sticky, gross, and actively ruining the economy.

When temperatures hit triple digits for days or weeks at a time, entire sectors of the economy literally stop working. Construction crews can't build in 110-degree weather. Transportation gets disrupted, schools close, and events get canceled. Emergency rooms overflow with heat-related illnesses. If that all sounds a bit doomer-y, well, economists are comparing some of these disruptions to pandemic lockdowns, which is, uh… not good, to say the least.

Phoenix is basically ground zero for this. The city regularly hits 100°F for over 100 days a year, with at least 20 of those days going above 110. When it gets that hot, outdoor work just... stops. People living paycheck to paycheck have to choose between cranking the AC or buying groceries. None of that is great for local spending or productivity.

Yet Phoenix is still one of the fastest-growing areas in the country. People are moving there despite the fact that it's becoming increasingly unlivable for large chunks of the summer.

But this isn't just a Phoenix problem anymore. Texas, Vegas, and now even East Coast cities like New York, Philly, and Boston are dealing with heat waves that look more like what we'd expect in Arizona.

As far as the market’s concerned, this is one of those slow-burn (pun intended) issues. Right now, the GDP hit is probably under 1%. But as these heat events become more common and more intense, the costs add up through healthcare, lost work hours, infrastructure strain, and higher electricity bills. It's not a crisis yet, but it's definitely something to keep on your radar if you're thinking long-term. I wouldn’t all-in on a construction project in the desert right now, to say the least.

A lot can happen in a week!

Let’s take a quick look at who struck gold and who struck out since our last issue:

Apple Inc. (AAPL): +11.01%
Microsoft Corporation (MSFT): +6.63%
Alphabet Inc. (GOOGL): +4.51%
Amazon.com, Inc. (AMZN): +2.11%
NVIDIA Corporation (NVDA): +1.61%

Micron Technology, Inc. (MU): -18.11%
Space Exploration Technologies Corp. (SPCX): -7.35%
Taiwan Semiconductor (TSM): -4.03%
Tesla, Inc. (TSLA): -1.23%
Broadcom Inc. (AVGO): -0.05%

That’s all for today. Write us and let us know your thoughts on the market, the newsletter, or the weather—we’d just love to hear from you.

Till next time,
— Brandon and Blake of Invested Inc.