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Need to Know: How investing in the stock market could be like buying tickets to the Fyre Festival

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Welcome to Wall Street’s version of the Fyre Festival.

Or, as Vincent Deluard of INTL FCStone puts it, the “faking-it economy,” where you’ll find capitalism without capital” and “employers without employees.”

In our call of the day, the market strategist says the most important factor in the next decade is how investors assess “businesses whose value is generated by employees and tangible capital” versus those that have “broken away from physical realities.”

Deluard uses Macy’s M, +2.38%  , Ford F, +2.94% and Hilton HLT, -1.15% as examples of value in owning assets and big workforces, whereas the value in companies like Visa V, -0.23%  , Netflix NFLX, -1.65% and Zoom ZOOM, +17.90% lie in controlling access, not owning the content.

Take a look at this chart, which shows what the “death-by-Amazon” effect is doing to the retail sector, where valuations are dominated by the likes of “immaterial” companies, that act as market places rather than makers, like EBay EBAY, +1.16%  , Amazon AMZN, +0.50% and Booking BOOK, -0.01%

“As long as capital remain free, investors will almost certainly keep avoiding capital-heavy and worker-intensive companies,” he explained. “Only a sustained period of higher rates can separate the wheat from the chaff.”

Deluard had previously called for higher rates this year that would have favored the likes the “tangible” companies. But, by his own admission, that call has gone “spectacularly wrong.” Now, he sees the script being flipped.

“The prospect of another round of monetary insanity may result in a last heroic surge for the immaterial sector,” he wrote.

No “heroic surge” so far this morning.

The market

Futures on the Dow YMU19, +0.14% , S&P ESU19, +0.14% and Nasdaq NQU19, +0.08% are all poised for a lower open. Gold GCQ19, +0.35% is seeing slight uptick, while oil US:CLN19 US:CLN19 is down. The dollar DXY, -0.06% is holding steady.

Europe stocks SXXP, -0.14% are feeling a bit of a downdraft in the early part of their session. Asian markets ADOW, +0.22% closed mostly mixed.

Bitcoin BTCUSD, -3.17% is taking another tumble.

Read: Donald Trump is right about bitcoin

The chart

Anyone living on the West Coast of America knows this all too well: Housing costs are getting completely out of whack. But the truth is, it’s happening all over the country to varying degrees. Wolf Richter of the Wolf Street blog posted this telling chart to illustrate just how bad it’s gotten in recent decades.

Richter explained how the Census data going back to 1960 shows incomes have risen 16%, while rents have jumped 72% and house prices have soared 121%. Something has to give, obviously.

The quote

“Why don’t they go back and help fix the totally broken and crime infested places from which they came. Then come back and show us how it is done” — President Trump, talking about four congresswomen in a series of tweets that were widely slammed as being racist. Needless to say, the comments erupted across Twitter:

The buzz

We’re in the midst of 48 hours of Amazon Prime Day, featuring sales on thousands of items online and a live concert broadcast through Prime Video’s streaming service with Taylor Swift and Dua Lipa. Check out these tips on what NOT to buy on during this massive online shopping spree.

The second-quarter earnings season kicks off next week, and there could be some bad news on the way. Here are 5 things to keep in mind.

The Trump administration, in an about-face, may start approving certain U.S. companies to sell their products to China’s Huawei Technologies in as soon as two weeks, Reuters reported on Sunday.

The tweet
The economy

The New York Fed Empire State manufacturing survey for July hits at 8:30 a.m. Eastern, but that’s about all that’s on tap today in terms of notable data. Later on in the week, we’ll get June housing starts and retail sales. We’ll also hear from Federal Reserve Chairman Jerome Powell on Tuesday.

Read: This month the U.S. economy will have been growing for a record 121 months – what could cause a recession?

Random reads

This Epstein stuff just keeps getting worse.

The divorce is final and Amazon’s AMZN, +0.50% Jeff Bezos brings his girlfriend to “billionaire summer camp” in Sun Valley.

Why it took Pete Buttigieg 33 years to come out of the closet.

Meet the next 007… she’s shaking things up.

Grandmaster gets caught cheating at chess by hiding a phone in a toilet.

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