 The U.S. economy shrank 0.9% in Q2, following a 1.6% decline in Q1. The National Bureau of Economic Research (NBER) officially declares recessions and expansions but would not likely make a judgment on the current period for months to come. People often associate two straight quarters of negative GDP growth with a sign of a recession. More: - Several factors contributed to the decline in GDP, including decreases in inventories, residential and nonresidential investment, and government spending at the federal, state, and local levels.
- Gross private domestic investment declined 13.5% in Q2.
- Consumer spending rose 1%, driven by spending on services, which rose 4.1%.
- Spending on nondurable and durable goods fell by 5.5% and 2.6%, respectively.
- Inflation rose 8.6% in Q2, the fastest increase since Q4 of 1981.
- On Wednesday, Fed Chair Jerome Powell said the economy was not in recession considering the “very strong labor market.”
- Fed officials announced a second 0.75% interest rate increase, bringing the benchmark federal funds rate between 2.25% to 2.5%.
- Jobless claims totaled 256,000 for the week ended July 23, down 5,000 from the prior week.
- The unemployment rate has remained at 3.6%, just shy of the pre-pandemic level of 3.5%.
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 Meta CEO Mark Zuckerberg and COO Sheryl Sandberg | Image: Facebook Meta released its Q2 earnings on Wednesday, reporting a 1% drop in revenue, the company’s first-ever revenue decline since its IPO in 2012. The parent of Facebook reported $28.8B in total revenue, citing market conditions and the ongoing effect of Apple’s recent privacy policy changes. Net income came in at $6.7B, or $2.46 a share, down 36% YoY. CEO Mark Zuckerberg said the company would reduce headcount growth over the next year as it prepares for a potential economic slowdown. More: - Meta’s Family of Apps, which includes Facebook, Instagram, and WhatsApp, generated $28.4B in revenue.
- Meta’s Reality Labs arm, which is spearheading its metaverse push and is home to its XR hardware products, brought in $452M in revenue, up nearly 50% YoY.
- Meta’s DAUs across its family of apps were 2.88 billion, and its monthly active users were 3.65 billion, both up 4% YoY.
- The average revenue per user was $9.82.
- Zuckerberg said that Instagram Reels, its TikTok clone, has reached $1B in annualized revenue.
- The company released weaker than expected guidance for Q3, expecting revenue between $26B to $28.5B, a 2% to 11% drop from last year.
- Meta announced some senior staff transitions during its earnings call, effective Nov. 1:
- Current CFO David Wehner will transition to a new chief strategy officer role overseeing corporate development.
- Current VP of finance Susan Li will take on the role of CFO.
- The earnings call was the last for Sheryl Sandberg, Meta’s long-serving COO. Sandberg announced in June that she would leave the company at the end of Q3.
- Meta shares closed at $160.72 on Thursday, down ~5%; the company’s stock is down over 50% YTD.
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 JetBlue Airways agreed to acquire Spirit Airlines for $3.8B, a day after the latter terminated its merger agreement with Frontier. JetBlue has offered $33.50 per share, of which $2.50 per share would be given as pre-payment after Spirit’s board grants its approval. After January, JetBlue will pay an additional 10 cents per share in ticking fees. The combined JetBlue-Spirit entity, if approved by antitrust regulators, would be the fifth largest airline in the U.S., with around 9% of the nation’s air-travel market share. More: - JetBlue has been vying for Spirit ever since its unsolicited initial offer of $3.6B, which at the time was 40% higher than Frontier’s offer of $2.9B.
- The Spirit board initially rejected JetBlue’s offer, stating that antitrust regulators would not approve it.
- As it now stands, JetBlue will pay Spirit a reverse break-up fee of $70M and its shareholders $400M in case the acquisition is declined by antitrust regulators.
- After the acquisition closes, Spirit’s fleet will be absorbed into JetBlue, raising its fleet number to 458 planes.
- As a result of the transaction, JetBlue anticipates annual synergies of $600M to $700M.
- The combined company is forecasted to generate $11.9B in revenues, based on 2019’s figures.
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 The Jackdaw natural gas field in the UK's North Sea. | Image: Bloomberg Shell released its Q2 earnings on Wednesday, breaking its profit record for the second consecutive quarter. The U.K.-based oil giant announced a $6B share buyback program for the current quarter and maintained its dividend at $0.25 a share. Revenue came in at $18B, up from $3.4B reported last year. Net income was $11.5B, up from $5.5B reported the previous year and breaking its Q1 profit record of $9.1B. Adjusted EPS was $1.54. More: - Several countries, including the U.K., have imposed additional taxes on energy companies this year, and many expect more calls for higher taxes to come following these results.
- For its record earnings, Shell pointed to higher energy prices, refining margins, and strong gas and power trading.
- The results were slightly offset by lower liquefied natural gas trading.
- Refining profit margins tripled in the quarter to $28 a barrel.
- Shell bought back $8.5B worth of shares in H1.
- On Monday, Shell approved the development of the Jackdaw gasfield in the U.K. North Sea.
- Shell maintained its Capex forecast for 2022 at $23B to $27B.
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Pfizer released its Q2 earnings report on Wednesday, reporting a 47% growth in revenue. The revenue for the second quarter totaled $27.7B, beating analysts’ expectations of $25.7B. Net income came at $9.9B, 78% higher than the same period in 2021. Pfizer reported $2.04 adjusted EPS, higher than analysts’ estimates of $1.78 per share. More: - The company expects annual earnings to be in line with the previously reported guidance range of $98B to $102B.
- The lower range of the annual EPS was increased by 5 cents, with the updated guidance now being between $6.30 to $6.45 per share.
- Strong demand for Pfizer’s COVID-19 vaccine (Comirnaty) and Paxlovid tablets helped the company rake in $8.8B and $8.1B, respectively.
- The pharmaceutical firm expects the year-end total for the COVID vaccine and Paxlovid to be $32B and $22B, respectively.
- The U.S. government in June placed an order for 105 million vaccine doses, manufactured by Pfizer in partnership with BioNTech, in a deal worth $3.2B, with an option to purchase 195 million more doses.
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 Ford reported $40.2B in revenue and $667M in net income in its Q2 earnings. Operating cash flow came in at $2.9B. Revenue from automotive shipments increased by 35%, resulting in an increase in revenue of 20% from Q2 2021 to Q2 2022. Adjusted EPS stood at 68 cents, beating analysts’ expectations of 45 cents. More: - The automaker affirmed the operating profit guidance for the full year at $11.5B to $12.5B.
- The reported profit for the last quarter is higher than the $561M profit announced in Q2 2021 against $26.8B in revenue.
- Ford said the current income figures accounted for the $2.4B valuation drop of its stake in Rivian.
- During the current quarter, Ford sold 1 million vehicles, almost 25% higher than the 764,000 units sold in the same period in 2021, but still less than 1.4 million units from 2019.
- Ford forecasts it will be able to hit an annual EV production rate of 600,000 cars by 2023, with the goal of hitting 2 million units per year by 2026.
- The chip supply is better than before, but it’s not quite at optimal levels, with 53,000 Ford vehicles in its inventory waiting for electronic components.
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 Jack Ma | Image: Marlene Awaad/Bloomberg Quick Hits - Jennifer Lopez’s and Aaron Rodgers’ newest bottled coffee investment. Get 30% off two 12-packs.*
- Carmaker Stellantis NV shut down its only Jeep factory in China, pointing to local politicians increasingly meddling in its business. CEO Carlos Tavares said the company is implementing an “asset-light” strategy in China over fears that rising political tensions could lead to economic sanctions imposed against China.
- Cigarette maker Altria’s $13B investment in e-cigarette company Juul Labs is now worth less than 5% of its original value as U.S. regulators move to ban its e-cigarettes. Altria cut the value of its Juul investment to $450M on Thursday.
- Alibaba founder Jack Ma plans to cede control of Ant Group following a year of pressure from Chinese regulators. Authorities halted Ant Group’s planned IPO in 2020 and have forced the technology company to reorganize as a financial holding company regulated by China’s central bank.
- The U.S. House of Representatives passed the $280B CHIPS bill aimed at boosting U.S. production of semiconductor chips. The legislation passed in a 243-187 vote, and is now headed to the desk of President Biden to sign.
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 |  | Vanessa Omeokachie is a Researcher at Inside. Her interests include finance, tech, and startups. In her free time, she enjoys reading, hiking, attending music festivals, and traveling. Connect with her on Twitter @VanessaOmeo or through email at vanessa@inside.com |  | | Editor | Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 Ford. | |
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