It Girl Identity: Issue 19

It Girl Identity Newsletter

Grab your espresso, dive into this week’s market movers, understand how the commodities market works, and check out our curated recommendations from It Girl Identity!

What’s Moving Markets

This week, investors will closely watch the retail sales and industrial production reports for economic insights ahead of the Federal Reserve's November 7 meeting, with a 90% probability of a 25-point rate cut. Earnings season remains in full swing, featuring reports from Netflix, Procter & Gamble, Taiwan Semiconductor, and key healthcare companies like UnitedHealth, Johnson & Johnson, and Abbott Laboratories.

What’s Up

• Twenty-First Century Fox (FOXA): Strong free cash flow yield of 8.9%, but slow dividend growth of 4% over the past year. Movement driven by steady content distribution and ad revenue.

• Super Micro Computer (SMCI): The stock has been surging since last Monday, marking a 2.86% increase overall, after the server maker announced positive shipment data, deploying over 100,000 liquid-cooled graphics processing units to large AI factories. This surge comes after a recent 10-for-1 stock split and follows a challenging month due to a Justice Department probe and an annual filing delay that initially spooked investors.

• Pfizer (PFE): Shares climbed 2.2% last Monday as activist investor Starboard Value acquired a roughly $1 billion stake in the drugmaker, urging the company to implement changes to improve performance. CEO Albert Bourla faces pressure to address the fallout from overestimated demand for COVID-related products and the underwhelming results of its weight-loss pill, especially in light of competitors like Eli Lilly and Novo Nordisk achieving greater success.

• Top S&P 500 Gainers: Uber Technologies (UBER) +16%. Super Micro Computer (SMCI) +16%. Norwegian Cruise Line Holdings (NCLH) +15%. Carnival Corporation & plc (CCL) +13%. Air Products and Chemicals (APD) +11%

What’s Down

• Tesla (TSLA): Elon Musk’s presentation of Tesla’s long-awaited Robocab didn’t go as badly as the infamous Cybertruck window incident, but the lack of key details left investors unimpressed. Uber and Lyft saw their stocks rise, benefiting from Tesla's failure to present a direct competitive threat in the ride-hailing space. 

• Top S&P 500 Losers: Tesla -13%, Vistra -9%, First Solar -9%, The AES -8%, Align Technology -8%

Markets & Economy

• Oil Prices Rising: Geopolitical tensions could push oil prices higher in the short term, especially if supply is disrupted in the Middle East.

• Wall Street Posts Five-Week Win Streak Despite Challenges: Wall Street ended last Friday with a five-week win streak, with the S&P 500 crossing 5,800 points for the first time and the Dow nearing 43,000. Despite Middle East tensions, inflation concerns, and shifts in Federal Reserve rate cut expectations, markets rose, driven by strong bank earnings and trader resilience. The Fed's September meeting minutes revealed broad support for a 50-basis-point rate cut, and inflation data dominated attention, with mixed CPI and PPI results. Earnings season kicked off and will intensify next week with key reports ahead.

• Soft Landing Prediction: Thanks to a strong jobs report, the job market remains healthy, helping the Federal Reserve aim for a "soft landing" with its interest rate decisions. Goldman economists now estimate a 15% chance of recession within the next 12 months, down from 20%. A recession refers to a period of declining economic activity, while a soft landing occurs when the Fed curbs inflation without triggering a recession.

• Goldman Sachs Raises S&P 500 Earnings Forecast for 2025: Goldman Sachs increased its 2025 earnings-per-share forecast for the S&P 500 to $268 from $256, driven by stronger-than-expected GDP growth and expanding profit margins. This revision reflects a healthier economic outlook and improving company earnings. Goldman now projects U.S. GDP to grow by 2.3% in 2025 and 2.0% in 2026, surpassing consensus estimates.

• AI Advancements: Google’s (GOOGL) researchers won Nobel Prizes, solidifying the company’s position in the AI space amid regulatory scrutiny. This underscores the importance of AI in tech innovation and could influence future regulatory discussions.

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 14

Speakers: Fed Governor Christopher Waller

• Columbus Day Holiday: Bond market closed.

Tuesday, October 15

Speakers: Fed Governor Adriana Kugler

• Empire State Manufacturing Survey (Oct): Forecast: 0.5 (Previous: 11.5).

  • Definition: A monthly survey of manufacturers in New York, indicating business conditions and sentiment in the manufacturing sector.

Wednesday, October 16 

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

• Import Price Index (Sept): Forecast: -0.3% (Previous: -0.3%).

  • Definition: Measures the average change in prices paid by U.S. businesses for imported goods, indicating inflation trends.

• Import Price Index minus Fuel (Sept): Previous: -0.1%.

  • Definition: A version of the Import Price Index that excludes fuel prices to assess underlying inflation.

Thursday, October 17

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

• Initial Jobless Claims (Oct 12): Forecast: 245,000 (Previous: 258,000).

  • Definition: Measures the number of new claims for unemployment benefits, indicating job market health.

• U.S. Retail Sales (Sept): Forecast: 0.3% (Previous: 0.1%).

  • Definition: Indicates the total sales of retail goods and services, reflecting consumer spending trends.

Friday, October 18

Speakers: Fed Governor Christopher Waller

• Housing Starts (Sept): Forecast: 1.34 million (Previous: 1.36 million).

  • Definition: Measures the number of new residential construction projects started, indicating the health of the housing market.

• Building Permits (Sept): Forecast: 1.44 million (Previous: 1.48 million).

  • Definition: Reflects the number of permits issued for new construction projects, serving as a leading indicator of future housing activity.

    Sources: Nasdaq, Markets Insider

Understanding Commodities: A Focus on Gold

Commodities are basic goods that can be bought and sold, and they often serve as the building blocks for more complex products. These include natural resources and agricultural products like oil, wheat, and gold. Here’s a simplified explanation of how commodities work, using gold as an example.

What is Gold?
Gold is a precious metal commonly traded in the commodity markets. It's valued for its rarity, beauty, and physical properties, making it a popular choice for jewelry and investment. Unlike stocks or bonds, which represent ownership or debt, gold is a tangible asset. Investors buy gold for various reasons, including wealth preservation, inflation hedging, and portfolio diversification. Its historical significance as a store of value and perception as a safe haven during economic uncertainty further solidify gold's role as a prime example of a commodity.

Current Gold Movement
Gold prices experienced a dip in early Asian trade on October 13, 2024, as a potential technical correction followed a five-week rise. Spot gold is currently down 0.3%, trading at $2,649.44 per ounce. This correction occurs against a backdrop of shifting economic factors, with the World Gold Council highlighting a favorable environment for gold due to lower bond yields, wavering corporate spreads, and consistent equity-bond correlations. These conditions provide investors with diversification opportunities and a hedge against portfolio risk.

Supply and Demand Dynamics
The price of gold, like other commodities, is driven by supply and demand. When demand for gold increases—such as during economic uncertainty or rising inflation—prices tend to rise. Conversely, if there's a surplus of gold or reduced demand (for example, during economic stability), prices can fall. Factors influencing gold demand include jewelry consumption, industrial use, and investment activity, including purchases from central banks and individual investors. The intrinsic value of gold, derived from its limited supply and the effort required to mine it, enhances its reliability.

Trading Gold
Gold can be traded in various forms, including physical bullion, coins, and exchange-traded funds (ETFs). It is also commonly traded on commodities exchanges, where contracts are bought and sold. These contracts specify the quantity and price of gold to be delivered at a future date. Traders and investors use these contracts to speculate on price movements or hedge against risk. For instance, a trader might buy gold futures if they believe the price will rise, allowing them to sell it at a profit later.

In summary, commodities like gold operate within a framework of supply and demand, with their prices influenced by various economic factors. Gold serves as an essential commodity in investment portfolios due to its intrinsic value and ability to act as a safe haven during times of uncertainty.

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

It Girl Recommendations

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

Spicy Mexican Hot Chocolate with Orange zest Recipe

This creamy, sweet winter drink delivers a delightful combination of chocolate, spice, and citrus, making it a truly unique treat. We hope you love it as much as we do!

Ingredients:

• 2 cups milk (or milk alternative)

• 2 tablespoons unsweetened cocoa powder

• 2 tablespoons brown sugar

• 1/4 teaspoon ground cinnamon

• 1/4 teaspoon chili powder

• 1/4 teaspoon vanilla extract

• Pinch of salt

• 1 teaspoon orange zest

Recipe:

• Heat the Milk: In a medium saucepan, heat the milk over medium heat, stirring occasionally.

• Mix Dry Ingredients: Whisk together the cocoa powder, brown sugar, ground cinnamon, chili powder, and salt in a separate bowl.

• Combine: Once the milk is warm (not boiling), whisk in the dry mixture until fully combined.

• Add Vanilla and Orange Zest: Stir in the vanilla extract and orange zest, blending well.

• Taste and Adjust: Taste your hot chocolate and adjust the sweetness or spice level as desired.

• Serve and enjoy!

Finance Flicks

Hey It Girls! Delve into some fictional stories or documentaries to build on your knowledge of the industry or bask in the glory of the high-stakes world of finance, where ambition, greed, and moral dilemmas collide in fascinating ways 🎥.

1. Billions: A high-stakes drama that explores the power struggles between a brilliant hedge fund manager and a determined U.S. Attorney, highlighting the moral ambiguities of wealth and ambition in the world of finance.

2. Dumb Money: This film recounts the true events of the GameStop stock trading frenzy in 2021, where retail investors united on Reddit to drive up the stock price and challenge Wall Street institutions.

3. The wolf of wall street: Based on the life of Jordan Belfort, this film depicts his rise as a stockbroker involved in massive fraud and corruption through his company.

4. Dirty money: This documentary series explores real cases of corporate greed and corruption, featuring stories like the Volkswagen emissions scandal and the Theranos fraud to highlight unethical business practices.

Follow Our Other Socials

• TikTok

• Instagram

• LinkedIn

• Benable

• Amazon Storefront

See you next Monday, It Girls!

With Love,

It Girl Identity