📊 Why You Need To Invest

1) Palantir Joins The S&P 500 2) Apple Unveils The iPhone 16 3) OpenAI Hits A $150B Valuation and more!

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Happy Sunday!

Investors couldn’t have asked for a better week.

Stocks wrapped up a five-day winning streak, with both the S&P 500 and Nasdaq posting their best weekly performance of 2024.

The market’s focus has turned to the Fed as the debate over the size of the upcoming rate cut on September 18th heats up.

According to the CME FedWatch Tool, traders currently expect a 55% chance of a 25 bps cut and a 45% chance of a 50 bps cut.

Some key data bites from this week that you should know:

In today’s newsletter:

  • 🆕 Palantir Joins The S&P 500

  • 📱 Apple Unveils The iPhone 16

  • 🛒 Walmart Is Thriving

  • 🔥 Why You Need To Invest

  • 📈 OpenAI Hits A $150B Valuation

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Palantir is officially joining the S&P 500, replacing American Airlines in the index.

The big data software company has had an impressive year, with its stock up roughly 115% thus far.

To qualify for the S&P 500, a company must meet several criteria such as:

  • Being profitable in the most recent quarter

  • Having cumulative profits over the last four quarters

  • A minimum market cap of $18B.

Dell will also join the S&P 500, replacing Etsy, while Erie Indemnity will take the spot of Bio-Rad Laboratories.

These changes will be effective on September 23rd.

On Monday, Apple hosted its annual event, unveiling the new iPhone 16 along with updates to other key products.

  • The iPhone 16 boasts improved cameras with an additional control button, a faster A18 chipset, and longer battery life, among other upgrades.

  • The standard iPhone 16 will be priced at $799, while the Pro version will start at $999.

A major highlight of the event was "Apple Intelligence," the new OS powering the iPhone 16.

  • Key features are designed to boost productivity, such as enhanced writing tools for text and prioritized messages in Mail, as well as image and emoji generation.

  • They’ve also upgraded Siri with personal context awareness, allowing it to act more like a private AI assistant.

The iPhone remains Apple’s biggest revenue driver, accounting for 51.5% of its total revenue over the past twelve months.

Despite the buzz, Apple's stock remained relatively flat this week, suggesting the event was already priced in.

Investors are betting on the new iPhone to fuel an upgrade cycle, with Wedbush Analyst Dan Ives expecting the company to sell a record 240M iPhones next year.

This year has been a bloodbath for discount retailers.

Big Lots filed for Chapter 11 bankruptcy protection this week and agreed to sell its assets to private equity firm Nexus Capital Management.

Before the filing, shares had already plunged by roughly 94% in 2024.

While Dollar General and Dollar Tree haven’t faced such a drastic collapse, they’re not having a good year either.

  • Both recently posted disappointing earnings, with their stocks plummeting after lowering their outlooks as lower-income customers continue to struggle.

On the opposite end, Walmart and Costco have emerged as rare exceptions.

Their stocks have surged 52% and 41% respectively, as both continue to see steady growth.

Just last month, Walmart beat analyst expectations for revenue and profits and raised its forecast for the year, signaling confidence in the health of its target customer base.

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Inflation has reached its lowest level in 3 years.

August’s CPI saw the 12-month inflation rate come in at 2.5%, below the estimated 2.6%, and down from July’s 2.9%.

Regardless of where inflation heads next, it remains critical to invest in stocks.

Over time, stocks have consistently proven to be the best vehicle for growing wealth

  • From 1970 to 2023, a $1,000 investment in the S&P 500 grew to $28,389, significantly outperforming other asset classes, per data compiled by NYU Professor Aswath Damodaran.

  • In comparison, Gold rose to $6,140, Bonds to $3,264, and T-Bills to just $1,243.

While Bonds (represented by 10-year Treasury bonds) and T-bills (3-month T-bills) offer stability, their returns often fall short during inflationary periods, limiting their ability to generate purchasing power.

Stocks, on the other hand, not only outpace inflation but also benefit from compounding, delivering exponentially higher growth.

  • Though Gold outperformed bonds and T-bills, it still fell well short of stocks. 

  • Gold shines during periods of high inflation, but those gains often taper off—and unlike stocks, gold doesn’t pay dividends.

For long-term investors, stocks should remain the cornerstone of any portfolio, offering the greatest potential for real growth over time.

OpenAI has cemented its place as one of the top three most valuable unicorn companies in the world.

  • For those that don’t know, a unicorn is a privately-owned, venture-backed startup company valued at over $1B.

According to Bloomberg, the maker of ChatGPT is in talks to raise $6.5B at a staggering $150B valuation

  • Earlier this year, the company allowed employees to sell stakes in a tender offer that valued OpenAI at $86B.

  • Today’s valuation reflects a remarkable 74% increase since February.

At $150B, OpenAI now sits just behind SpaceX and ByteDance, the parent company of TikTok.

The company recently released its new large language model, code-named Strawberry, which features more enhanced logical reasoning.

🏦 Estimate Miss. JPMorgan $JPM shares dipped after COO Daniel Pinto called current net interest income estimates unreasonable - BB

🎨 Adobe Dips. Adobe $ADBE shares fell after the company’s next quarter revenue guidance fell below expectations - ADBE

🤝 Credit Alliance. Apollo $APO is looking to partner with State Street $STT to offer a Private Credit ETF - BB

🚊 Derailed. Norfolk Southern’s $NSC CEO was fired after an affair with the company’s legal chief - CNBC

Notable Companies Reporting Earnings This Week:

  • Tuesday (9/17):

    • Ferguson Enterprises $FERG

  • Wednesday (9/18):

    • General Mills $GIS

  • Thursday (9/19):

    • FedEx $FDX, Lennar $LEN

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

📚 Recommended Reading

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Major Trades Published 09/09 - 09/13. Trades may be those of family members. [Source: 2iQ]

Buys

  • Ro Khanna (D)

    • Company: UBS Group ($UBS)

      • Amount Purchased: $151K - $365K

    • Company: Caterpillar ($CAT)

      • Amount Purchased: $51K - $115K

  • Josh Gottheimer (D)

    • Company: Microsoft ($MSFT)

      • Amount Purchased: $15K - $50K

Sells

  • Suzan DelBene (D)

    • Company: Microsoft ($MSFT)

      • Amount Sold: $100K - $250K

      • Description: Vested shares sold to separate trust not for the benefit of filer or spouse pursuant to forward contract dated

  • Ro Khanna (D)

    • Company: Amazon ($AMZN)

      • Amount Sold: $51K - $115K

    • Company: Cummins ($CMI)

      • Amount Sold: $50K - $100K

  • Mark Green (R)

    • Company: NGL Energy Partners ($NGL)

      • Amount Sold: $50K - $100K

  • Josh Gottheimer (D)

    • Company: Microsoft ($MSFT)

      • Amount Sold: $15K - $50K

      • Description: Call Options, Strike Price $225, Expires 12/19/2025

Major Trades Published 09/09 - 09/13

Buys

  • Transocean Ltd ($RIG)

    • Insider: Frederik Mohn (Director)

      • # of Shares Purchased: 1,500,000

      • $ Amount: $6,195,000

      • SEC Forms: [1]

  • Permian Resources ($PR)

    • Insider: William Quinn (Director)

      • # of Shares Purchased: 250,000

      • $ Amount: $3,199,875

      • SEC Forms: [1]

  • Prospect Capital ($PSEC)

    • Insider: John Barry (CEO)

      • # of Shares Purchased: 568,507

      • $ Amount: $3,012,132

      • SEC Forms: [1], [2]

Sells

  • Dell ($DELL)

    • Insider: Michael Dell (CEO)

      • # of Shares Sold: 7,096,264

      • $ Amount: $772,423,804

      • SEC Forms: [1], [2]

  • PACS Group ($PACS)

    • Insider: Jason Murray (Co-Founder, CEO & Chairman)

      • # of Shares Sold: 8,128,352

      • $ Amount: $294,652,760

      • SEC Forms: [1]

    • Insider: Mark Hancock (Co-Founder & Exec. Vice Chair.)

      • # of Shares Sold: 8,128,352

      • $ Amount: $294,652,760

      • SEC Forms: [1]

  • Berkshire Hathaway ($BRK.A)

    • Insider: Ajit Jain (Vice Chairman)

      • # of Shares Sold: 200

      • $ Amount: $139,083,512

      • SEC Forms: [1]

  • Cava Group ($CAVA)

    • Insider: Ronald Shaich (Director)

      • # of Shares Sold: 946,603

      • $ Amount: $111,486,594

      • SEC Forms: [1]

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