October 12, 2023

Birkenstock Shares Fall in Stock-Market Debut

📰 News Organizations

  • Birkenstock Opens 11% Below IPO Price in Trading Debut Flop. The German sandal maker’s debut is the worst opening for a listing of $1 billion or more in New York in over two years. Shares opened trading 11% below their price in the company’s $1.48 billion IPO.

  • Exxon to Buy Pioneer in $60 Billion Deal to Create Shale Giant. The deal, at $253 a share, values Pioneer at an almost 7% premium to its closing value of about $55.4 billion. It cements Exxon’s status as the dominant player in the American fracking industry.

  • Wholesale Inflation Rose 0.5% In September, More Than Expected. The PPI increased 0.5% for September, against the Dow Jones estimate for a 0.3% rise. Inflation pressures came primarily from final demand goods, which surged 0.9% on the month.

  • Goldman Sachs Warns of Hit to Third-Quarter Earnings. Goldman Sachs is selling its fintech lending platform, GreenSky, to a group led by Sixth Street, resulting in a 19 cents per share reduction in third-quarter earnings.

  • LVMH Sales Growth Slows as Global Luxury Demand Cools. Organic revenue at the crucial fashion and leather goods unit, which includes Louis Vuitton and Christian Dior, rose 9%, below analysts’ expectations and half the pace of the first six months.

🐦 Twitter

  • If history is any guide, the recent steepening of the yield curve from deeply inverted levels suggests that unemployment rates are likely to start rising significantly in the next couple of months. Source.

  • Amazon recently started reporting numbers on its advertising business and is steadily becoming a significant player in the digital ad space with annual revenues of $38B and 19% quarterly YoY growth. It holds a 7.3% market share, trailing Meta's 20.5% and Google's 28.8%. Source.

  • Spreads on BBB CMBS (commercial-mortgage-backed securities) have moved up to 1,351 bps, their widest levels in over a decade. Bond investors are pricing in a wave of defaults to come. Source.

  • After decades of maintaining near-zero interest rates, it is unclear whether the Bank of Japan can raise them without sparking a systemic financial crisis. But if inflation remains persistently high, policymakers will be forced to act. Source.

  • Lots of comparisons are being drawn to prior geopolitical crises and their effects on oil prices. For 1990 in particular, keep in mind that the oil spike happened during recession, not before it started. Source.

  • The biggest driver of today's PPI beat: a near record surge in PPI Deposit Services. In other words high rates (and inflation) lead to higher rates (and inflation). Source.

Just a few firms have contributed to lifetime shareholder wealth creation over time. The only way to guarantee that you own these stocks is to own a broad index. The majority of stocks (58.6%) since 1926 led to reduced rather than increased shareholder wealth.

Peter Mallouk

📓 Online Publications

  • Disney World Raises Prices. Theme park fans may not appreciate paying more, but the move should help Disney stock as it bounces off a nine-year low and heads into a potential springtime proxy battle.

  • FOMC Minutes. A majority of participants judged that one more increase in the target federal funds rate at a future meeting would likely be appropriate. Participants continued to judge that it was critical that the stance of monetary policy be kept sufficiently restrictive.

  • Housing Affordability Is The Worst It Has Been This Century. It is harder to own a home today than it has been in the last 40 years. Approximately 50% of American citizens are 40 years old or younger, so this is the worst housing affordability period in their lifetime thus far.

  • Drop In Bond Yields Could Also Give Mortgage Rates Room To Ease. Dovish remarks from Fed policymakers help ease fears of more rate hikes, bringing yields on benchmark 10-year Treasury notes back down to where they were at the beginning of October.

  • ChargePoint Shares Fall After Announcing $232 Million Raise. EV charging network operator ChargePoint said it’s raising $232 million via stock sales. The new funds, together with a recently secured credit line, will support the company into early 2025.

🎧 Podcasts

  • Hamas Crypto Fund. Hamas and affiliates garnered significant funds, collecting $93 million in crypto, and Hamas itself raised $41 million through digital payments. Crypto fundraising initiatives began in 2019 with a call for Bitcoin donations on social media. Source(3:37)

  • California Prohibits Manufacture & Sale of Chemical Used in 12,000 Products. The additives are linked to cancer, reproductive issues, and developmental problems in children. The additives are Red Dye three, Purple paraben, brominated vegetable oil, and potassium bromate. Source(12:15)

  • Bitcoin Potential Drop to 22,000. Bitcoin is currently showing lower highs, and if it breaks the 25,000 to 26,000 level, there's a measured target of 22,000. Its dislocation from the usual risk-on environment suggests that investors might be favoring assets like Nvidia and Tesla. Source(30:21)

  • Bond Market Reacts to Global Events and Fed Statements. The bond market is reacting to events in Israel and statements from Fed Governors, signaling that the recent rise in yields may alleviate pressure on financial conditions. Source(1:23)