Powell's warning

The Fed may further raise interest raises if necessary, S&P Global downgrades banks, Retail expansion, Rising theft, Meta's Llama, ARM IPO

Author

Carbon Finance
August 27, 2023

Happy Sunday! The most important news this week was Powell’s speech where he emphasized the US central bank's readiness to adjust interest rates amidst inflation concerns. All eyes will continue to focus on economic data in an effort to forecast what the Fed will do next.

Let’s dive right in!

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Data as of 8/27/23 1:15 PM EST

🎤 Powell’s Speech. Powell stated that while the economy is stronger than last year, the US central bank is ready to raise interest rates if necessary to manage inflation risks. [BB]

🏦 More Bank Downgrades. S&P Global Ratings has downgraded several US banks and adjusted its outlook for others due to the impact of higher interest rates and shifts in deposits, echoing similar concerns raised by Moody's. [BB]

🛍️ Retail Expansion. Despite challenges in commercial real estate, U.S. retailers are expanding, with a net opening of 1,000 stores this year. Retailers are leveraging online data to identify prime locations for their stores. [WSJ]

💸 Buyback Tax. The new 1% tax on stock buybacks has added over $3.5B to the tax burdens of major U.S. public companies in the first half of the year, but despite this, many companies continue their buyback plans. [WSJ]

🤖 AI Underperformance. AI-driven ETFs have largely underperformed the overall stock market, with many missing out on tech rallies and not adapting swiftly to major events, highlighting the current limitations of AI in portfolio management. [WSJ]

💨 Rising Theft. Major retailers, including Dick’s, Lowe’s, Target, and Macy’s, have reported reduced earnings due to a significant rise in theft and organized retail crime, prompting them to implement measures to address the issue and ensure safety. [SA]

💴 BRICS Expansion. BRICS has invited Iran, Saudi Arabia, the UAE, Argentina, Egypt, and Ethiopia to join, expanding its membership. [AP]

🦙 Meta’s Llama. Meta $META introduced "Code Llama," an open-source AI tool, to rival Microsoft and Google's coding solutions and offer software code suggestions to developers. [BB]

✂️ Schwab Cuts. Charles Schwab $SCHW is cutting jobs and downsizing offices to reduce costs, aiming for $500M in annual savings. [AP]

💾 ARM IPO. SoftBank’s ARM filed for an IPO on the Nasdaq aiming for a $60B+ valuation. [NYT]

💨 Python in Excel. Microsoft $MSFT introduced Python support in Excel, enabling advanced data analysis. [BZ]

📞 T-Mobile Layoffs. T-Mobile $TMUS plans to lay off 5,000 employees, 7% of its workforce, due to increased competition in the wireless industry and rising customer acquisition costs. [WSJ]

🏡 1% Mortgage. Zillow $ZG has introduced a program in Arizona offering mortgages with a 1% down payment to assist potential homebuyers impacted by rising interest rates and high housing costs. [CBS]

💳 Crypto Partnership End. Mastercard $MA and Binance are terminating their crypto card programs in Argentina, Brazil, Colombia, and Bahrain on September 22. [R]

🧵 Threads on the Web. Meta $META launched a web version of its microblogging app Threads after its usage declined by about 85% post-launch. [WSJ]

💊 Rite Aid Bankruptcy. Rite Aid $RAD is reportedly planning to file for bankruptcy due to numerous lawsuits over its alleged involvement in the opioid crisis, aiming to address its $3.3B debt and legal challenges. [WSJ]

Major Earnings Recap Week of August 21st:

  • Zoom ($ZM) reported better-than-expected fiscal Q2 results, with adjusted earnings and revenue surpassing Wall Street estimates, and highlighted growth in enterprise customers and new AI features. [B]

    • 🟢 EPS $1.34 Beats $1.05 Estimate

    • 🟢 Sales $1.14B Beats $1.12B Estimate

  • Lowe’s ($LOW) reported mixed fiscal Q2 results, and expects a short-term challenge due to reduced consumer discretionary spending. However, the company has a long-term outlook for home improvement driven by aging and limited U.S. housing availability. [CNBC]

    • 🟢 EPS $4.56 Beats $4.49 Estimate

    • 🔴 Sales $24.96B Misses $24.99B Estimate

  • Nvidia’s ($NVDA) shares surged after reporting strong fiscal Q2 results and a sales forecast that exceeded Wall Street expectations, highlighting the company's dominant position in the AI computing boom. [BB]

    • 🟢 EPS $2.70 Beats $2.09 Estimate

    • 🟢 Sales $13.51B Beats $11.22B Estimate

Notable Companies Reporting Earnings This Week:

  • Monday:

    • Heico ($HEI)

  • Tuesday:

    • HP ($HPQ), NIO ($NIO), Best Buy ($BBY)

  • Wednesday:

    • Salesforce ($CRM), CrowdStrike ($CRWD), Chewy ($CHWY), Okta ($OKTA)

  • Thursday:

    • Broadcom ($AVGO), UBS ($UBS), Lululemon ($LULU), Dollar General ($DG)

  • Friday:

    • Dingdong ($DDL)

All of the companies that are reporting earnings this week can be viewed here.

Major Trades Published 8/21 - 8/25. Trades may include family members.
[Source: 2iQ]

Buys:

  • Victoria Spartz (R)

    • Company: Simon Property Group ($SPG)

      • Amount Purchased: $15K-$50K

  • Michael Guest (R)

    • Company: Chord Energy ($CHRD)

      • Amount Purchased: $15K-$50K

    • Company: Airbnb ($ABNB)

      • Amount Purchased: $1K-$15K

    • Company: Exxon Mobil ($XOM)

      • Amount Purchased: $1K-$15K

  • Josh Gottheimer (D)

    • Company: AMD ($AMD)

      • Amount Purchased: $1K-$15K

Sells:

  • Michael Guest (R)

    • Company: Kinder Morgan ($KMI)

      • Amount Sold: $15K-$50K

    • Company: AT&T ($T)

      • Amount Sold: $2K-$30K

  • Josh Gottheimer (D)

    • Company: Microsoft ($MSFT)

      • Amount Sold: $2K-$30K

    • Company: Nvidia ($NVDA)

      • Amount Sold: $1K-$15K

Major Trades Published 8/17 - 8/25

Buys

  • Energy Transfer ($ET)

    • Insider: Kelcy Warren (Executive Chairman)

      • # of Shares Purchased: 3,000,000

      • $ Amount: $38,892,500

      • SEC Forms: [1], [2], [3]

  • Asana ($ASAN)

    • Insider: Dustin Moskovitz (CEO)

      • # of Shares Purchased: 849,999

      • $ Amount: $17,265,443

      • SEC Forms: [1], [2], [3], [4]

  • Mercury Systems ($MRCY)

    • Insider: Jana Partners LLC (Director)

      • # of Shares Purchased: 50,000

      • $ Amount: $1,902,500

      • SEC Forms: [1]

    • Insider: William Ballhaus (President & CEO)

      • # of Shares Purchased: 39,925

      • $ Amount: $1,499,998

      • SEC Forms: [1]

Sells

  • Wendy’s ($WEN)

    • Insider: Nelson Peltz (Director)

      • # of Shares Sold: 2,905,569

      • $ Amount: $58,983,051

      • SEC Forms: [1]

    • Insider: Peter May (Director)

      • # of Shares Sold: 2,905,569

      • $ Amount: $58,983,051

      • SEC Forms: [1]

  • Airbnb ($ABNB)

    • Insider: Joseph Gebbia (Director)

      • # of Shares Sold: 166,667

      • $ Amount: $20,882,958

      • SEC Forms: [1]

  • Celsius ($CELH)

    • Insider: John Fieldly (CEO)

      • # of Shares Sold: 90,000

      • $ Amount: $15,691,149

      • SEC Forms: [1]

    • Insider: Nicholas Castaldo (Director)

      • # of Shares Sold: 55,000

      • $ Amount: $9,986,900

      • SEC Forms: [1]

  • Regeneron Pharmaceuticals ($REGN)

    • Insider: Christine Poon (Director)

      • # of Shares Sold: 12,280

      • $ Amount: $10,314,829

      • SEC Forms: [1]

    • Insider: Neil Stahl (EVP R&D)

      • # of Shares Sold: 11,665

      • $ Amount: $9,810,082

      • SEC Forms: [1]

All times in ET

  • MONDAY, AUG. 28

    • None scheduled

  • TUESDAY, AUG. 29

    • 9:00 am S&P Case-Shiller home price index (20 cities) - June

    • 10:00 am Job openings - July

    • 10:00 am Consumer confidence - August

  • WEDNESDAY, AUG. 30

    • 8:15 am ADP employment - August

    • 8:30 am GDP (revision)

    • 8:30 am Advanced U.S. trade balance in goods - July

    • 8:30 am Advanced retail inventories - July

    • 8:30 am Advanced wholesale inventories - July

    • 10:00 am Pending home sales - July

  • THURSDAY, AUG. 31

    • 8:30 am Initial jobless claims - August

    • 8:30 am Personal income (nominal) - August

    • 8:30 am Personal spending (nominal) - August

    • 8:30 am PCE index - July

    • 8:30 am Core PCE index - July

    • 8:30 am PCE (year-over-year)

    • 8:30 am Core PCE (year-over-year)

    • 9:45 am Chicago Business Barometer - August

  • FRIDAY, SEPT. 1

    • 8:30 am U.S. nonfarm payroll - August

    • 8:30 am U.S. unemployment rate- August

    • 8:30 am U.S. hourly wages - August

    • 8:30 am Hourly wages year over year

    • 10:00 am ISM manufacturing - August

    • 10:00 am Construction spending - July

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