It Girl Identity: Issue 18

It Girl Identity Newsletter

Grab your banana chai latte and read what's moving markets this week, stocks we have been eyeing, and enjoy our curated It Girl Identity recommendations!

What’s Moving Markets

Last week we saw surprising events such as the jobs report, oil price jumps leading to energy prices rising, and a soaring 2-year yield. The S&P 500 finished at a record high in September. Expected are major U.S. banks’ earnings reports this upcoming Friday, as well as the Consumer Price inflation issue on Thursday.

What’s Up

• S&P 500: After sharp falls in stock prices in August, the S&P 500 index finished its tenth positive month ending September with an overall total return of 2.1%.

• Top S&P 500 Gainers: Albemarle +8.25%, United Airlines Holdings +6.47%, Capital One Financial +5.67%, AMD +4.94%, Dell Technologies +4.11%, Tesla +3.91%.

What’s Down  

• Hims & Hers: The telehealth company originally offered generic substitutes to Eli Lilly’s weight-loss treatments. However, the company finally announced it developed enough supply of tirzepatide to meet high demand, which allows the pharmaceutical giant to further widening its share of the weight-loss drug market and consequently lowers the demand for Hims & Her’s products.

• Spirit Airlines: News of possible bankruptcy after a failed merger with JetBlue Airways caused turbulence in the stock. Shares dropped 25% on Friday. According to the WSJ: “The company has been struggling with losses and declining revenue as it aims to address coming maturities within its $3.3 billion debt load.”

• Nike: Nike experienced a 6.8% drop in its shares after announcing a nearly 30% decline in quarterly profits and withdrawing its full-year guidance. Investors are concerned about Nike's uncertain turnaround strategy as the company's incoming CEO, Elliott Hill, takes over soon. The decline in limited-edition sneaker releases and rising competition in both the running and lifestyle shoe markets were highlighted as contributing factors.

• Stellantis: The global automaker known for brands like Jeep and Chrysler, lowered its earnings forecast for the year, citing reduced demand in several markets. Additionally, the company issued a recall of more than 150,000 plug-in hybrid Jeep vehicles in the U.S. over potential fire hazards. These factors led to a 13% decline in Stellantis shares, hitting their lowest point since December 2022.

• Tesla: Tesla's share price fell 3.5% despite reporting a rise in global vehicle deliveries in the third quarter. Although the company delivered 462,890 vehicles during this period, which met analysts' expectations, it still trails behind its performance from last year. Investors are concerned that Tesla may struggle to achieve higher delivery numbers in the final quarter to surpass 2023's totals.

• Humana: Health insurer Humana warned of lower federal quality ratings for its Medicare Advantage plans, which is expected to impact its profitability by 2026. The stock dropped 12% over two consecutive days as the company noted that fewer plans would meet the four-star rating threshold, adding to concerns about rising Medicare costs and the increasing challenges within the healthcare sector.

• Top S&P 500 Losers: Verisk Analytic -1.85%, Crown Castle -2.46%, Mohawk Industries -2.56%, TransDigm Group -4.48%.

Markets & Economy

• Oil Prices: Oil prices spiked as the market prepares for possible strikes on Iran’s infrastructure. Iran launched 200 missiles into Israel as retaliation for the killing of Hezbollah and Hamas leaders and the invasion of Lebanon, and Israel reported plans of retaliation. This signals the beginning of a long-feared regional war that could destroy key resources, especially as President Biden reported possible US support of attacks on Iran oil. Brent Crude ticked up 8.7% and WTI oil futures rose 9.1% last week.

• East Coast Strike: US dockworkers on the East Coast returned to work this week after a successful 3-day strike closing ports from Maine to Texas. Their wages will increase 62% in 6 years, which sets a precedent for other unions to negotiate their work conditions. As the docks majorly affect the foundation of the US economy, shipping companies Maersk and Zim saw sharp declines in their stocks, and have yet to rebound.

• OpenAI Valued at $157b: Investment firm Thrive Capital led a $6.6 billion round in OpenAI, with participating stakeholders including Microsoft, Nvidia, SoftBank, Fidelity, and MGX. OpenAI also opened a new credit line with a consortium with JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Wells Fargo, and more, which boosts its liquidity to $10 billion and provides more R&D flexibility. As they transition from a nonprofit to a for-profit company, this translates towards increased profits and decision-making rights for Microsoft, its main investor.

• Unemployment Data: Payrolls rose 254,000 in September, the most in the last six months and significantly higher than the 132,500 consensus. The unemployment rate also decreased to 4.1%, and job growth topped all estimates. While this shows a good sign for the economy, Fed Chair Jerome Powell confirmed that simulating the labor market was the main reason for the large interest rate cut, lowering the chance of another 50 bps rate cut in November.

IPOs & Mergers and Acquisitions

• TPG Acquiring DirecTV: TPG and EchoStar reached an agreement to acquire the remaining 70% stake in DIRECTV from AT&T. The deal includes video distribution business DISH and Sling TV through a debt exchange transaction. The deal itself only costs $1, but TPG will also acquire DISH’s debt for a total face value of approximately $9.75 billion.

• CVS Possible Breakup: CVS faced challenges with higher-than-expected medical costs with insurance and pharmacy reimbursement pressure, and their shares have dropped more than 20% this year. To restructure, they reported possible splitting up its retail pharmacy and insurance units, which still poses problems and risks consumer loss as CVS has spent billions of dollars on vertical acquisitions to reinvent itself as a one-stop health destination for patients. Currently, CVS is implementing a $2 billion cost-cutting plan and layoffs of almost 3,000 employees, and has yet to recover margins in its insurance business.

• PepsiCo Acquiring Siete Foods: PepsiCo agreed to acquire Siete Foods for $1.2B, which is a health-conscious brand featuring grain-free tortillas, chips, sales, and seasonings. PepsiCo’s current portfolio of chips offers Tostitos, Fritos, Cheetos, Lay’s, and more, but this sets a precedent for more companies to focus on shifting consumer preferences and dietary restrictions. PepsiCo believes in Siete’s passion and authenticity, and is further looking to expand their multicultural portfolio. Centerview and CitiBank advised PepsiCo, while Lazard advised Siete Foods.

Earnings Calendar

This Week's Major U.S. Economic Reports & Fed Speakers

Here is a quick breakdown of this week’s Fed Speaker events and economic indicators, what they mean, and their forecasts!

Monday, October 7

Speakers: Fed Governor Michelle Bowman, St. Louis Fed President Alberto Musalem

• Consumer Credit (Sep): Forecast: $12B (Previous: $25.5)

Tuesday, October 8

Speakers: Fed Governor Adriana Kugler, Atlanta Fed President Raphael Bostic, Federal Reserve Vice Chair Philip Jefferson

• NFIB Optimism Index (Sep): Gauges the sentiment of small business owners in the U.S. Forecast: 91.6 (Previous: 91.2).

• U.S. Trade Deficit (Aug): Forecast: -$70.8B (Previous: -$78.8B).

Wednesday, October 9

Speakers: Atlanta Fed President Raphael Bostic, Dallas Fed President Lorie Logan, Chicago Fed President Austan Goolsbee, Federal Reserve Vice Chair Philip Jefferson, San Francisco Fed President Mary Daly

• FOMC Meeting Minutes (Sep)

• Wholesale Inventories (Aug): Forecast: 0.2% (Previous: 0.2%).

Thursday, October 10

Speakers: Fed Governor Lisa Cook, Richmond Fed President Tom Barkin, New York Fed President John Williams

• Initial Jobless Claims (Oct. 5): Number of new claims for unemployment benefits, indicating the health of the job market. Forecast: 230,000 (Previous: 225,000).

• Consumer Price Index (Sep): Measures changes in the price level of a market basket of consumer goods and services. Forecast: 0.1% (Previous: 0.2%).

  • CPI Year Over Year: Measures the percentage change in consumer prices from the previous year. Forecast: 2.3% (Previous: 2.5%).

  • Core CPI (Sep): Excludes food and energy prices to measure underlying inflation. Forecast: 0.2% (Previous: 0.3%).

  • Core CPI Year Over Year: Measures the percentage change in core consumer prices from the previous year. Forecast: 3.2% (Previous: 3.2%).

Friday, October 11

Speakers: Chicago Fed President Austan Goolsbee, Dallas Fed President Lorie Logan, Fed Governor Michelle Bowman

• Producer Price Index (Sep): Measures the average change in prices received by domestic producers for their output. Forecast: 0.1% (Previous: 0.2%).

  • Core PPI (Sep): Excludes food and energy prices to measure inflation at the wholesale level. (Previous: 0.3%).

  • PPI Year Over Year: Measures the percentage change in producer prices from the previous year. (Previous: 1.7%).

  • Core PPI Year Over Year: Measures the percentage change in core producer prices from the previous year. (Previous: 3.3%).

• Consumer Sentiment (Prelim.) (Oct): Forecast: 70.3 (Previous: 70.1).

Sources: Nasdaq, Markets Insider, WSJ, CNBC, Stock Analysis

Top 10 Stocks We are Watching

Big Moves in Telecom, EV, and Banking

Disclaimer: Information shared here is for educational purposes only. Consult a financial advisor for personalized advice.

1. Verizon (VZ): Verizon shares are heading toward a two-year high after sealing a $3.3 billion deal to lease its wireless-communication towers to Vertical Bridge. The deal supports Verizon’s efforts to cut costs while giving it continued access to crucial infrastructure. Investors are optimistic about the cash inflow and cost-saving measures.

2. JPMorgan Chase (JPM): Morgan Stanley downgraded JPMorgan to equal-weight due to the stock’s strong 2024 rally and concerns about limited upside from lower interest rates. Despite this, JPMorgan remains a leader in the banking sector with robust capital strength.

3. Nio (NIO): Chinese EV manufacturer Nio saw its stock surge by 24% this week, fueled by China's new economic stimulus plans. These measures are expected to drive demand for electric vehicles, positioning Nio to benefit from increased consumer and government support.

4. Alibaba (BABA): U.S. shares of Alibaba surged following China’s economic stimulus. As one of the top tech giants in China, Alibaba stands to gain from increased consumer activity and capital markets support, making it a stock to watch for continued growth.

5. Microsoft (MSFT): Raising $6.5B for OpenAI as it transitions to a for-profit model. Investors eyeing equity opportunities.

6. Nvidia (NVDA): Involved in OpenAI's fundraising; their GPUs remain crucial for AI applications.

7. Stellantis (STLA): Stellantis shares dropped after the company slashed its full-year outlook, citing inventory issues and declining U.S. demand. This comes as part of broader industry challenges, with concerns over global automotive demand.

8. Ford (F): Ford’s stock dipped alongside Stellantis after issuing a negative outlook for the rest of the year. Weak demand in China and persistent supply chain challenges weigh on its performance, though its EV transition strategy continues to attract investor attention.

9. Phoenix Group Holdings (PHNX): This insurance firm saw its shares rise by 1.07% at the end of the week, benefiting from a positive market rally in the UK. The company’s steady performance and strong fundamentals make it a safe bet for those looking at financial services stocks.

10. Mullen Automotive (MULN): Facing financial difficulties, Mullen has announced a 1-for-100 reverse stock split to maintain its NASDAQ listing. Despite securing new orders and launching its SUV model, the company’s ongoing losses and recent stock decline are raising red flags for investors.

It Girl Recommendations

Shop Our Other Recommendations Here: health, fashion, fitness, education, beauty, and skincare...

Invigorating Green Juice recipe

This healthy green juice drink will keep your immune system in check as we head into the cold winter months!

Ingredients:

• 2 cups kale (can substitute with spinach)

• 2 celery stalks

• 1 cucumber

• 1 green apple

• ½ lemon (peeled)

• 1-inch piece of ginger (optional)

• ½ cup water

Recipe:

• Wash all the vegetables and fruit thoroughly.

• Using a juicer or blender, add all ingredients with a the water and blend. Strain the mixture using a fine sieve or cheesecloth to remove the pulp.

• Serve: Pour into a glass, stir, and enjoy fresh.

Finance Flicks

Hey It Girls! We’re changing up our recommendations for you this week and delving into some movies and tv shows based in or around the financial industry 🎥.

1. Fair Play: A couple's relationship unravels as they compete for power and success in a high-stakes finance firm.

2. Succession: A wealthy, dysfunctional family battles for control over their global media empire as their patriarch's health declines.

3. Industry: Young graduates navigate the ruthless world of international finance while trying to secure positions at a top investment bank.

4. The Big Short: A group of outsiders predict the 2008 financial crisis and profit by betting against the housing market collapse.

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See you next Monday, It Girls!

With Love,

It Girl Identity