September 18, 2023

Instacart to Price IPO Shares Monday

📰 News Organizations

  • Instacart to Price IPO Shares Monday. Instacart said in a filing last Friday that it is now seeking to raise as much as $660 million by marketing shares at $28 to $30 each, up from a previously indicated range of $26 to $28 per share.

  • Arm’s Second Trading Day Is More Subdued. The valuation still tops $60 billion tough. A lot of focus this week has been on some of the risk around the company including its exposure to China and rising competition from a rival semiconductor architecture.

  • Sequoia And Andreessen To Take A Huge Hit After A 75% Plunge In Instacart Valuation. The venture firms invested $50 million each in Instacart in 2021. Based on Instacart’s latest IPO prospectus, the value of those investments has sunk by more than three-quarters.

  • Cheaper Airfares Are Squeezing Airline Stocks. Airlines that focus on domestic flights are being squeezed as Americans embrace travel to Europe over vacations closer to home. Airfares across the industry were down 13.3% in August from a year ago.

  • California Sues Oil Giants Claiming Deception, Harm to Climate. Oil giants Shell, BP, Chevron are among the defendants in the sweeping lawsuit. The State alleges energy companies deceived the public for decades while creating or contributing to local climate catastrophes.

  • Flood of Russian Wheat Halves World Prices. Russia’s second consecutive bumper wheat harvest is reinforcing its position as the No. 1 exporter, but it’s also easing price pressures. The nation is set to export record volumes of wheat for a second year.

🐦 Twitter

  • Bank lending is quietly growing again after stagnating for months (following record growth in 2022). Maybe everyone is getting more comfortable with higher rates, and banks have shaken off the March shock. Source.

  • S&P 500 thoughts: At the surface the markets have rallied this week. The index is up 1%. Under the surface is a different story. Everyday this week more stocks have made new lows than new highs. Source.

  • Stocks down. Bonds down. Gold up. Oil up. Combo is starting to become a trend. The worst possible combination for the 60/40 investor. Time to start thinking hard about whether you are prepared for more of the same. Source.

  • 3-month average of restaurant/bar retail sales moved lower again in August. Still hanging in there but a step down from pace seen in early 2021 and throughout 2022. Source.

  • The average price of a used Tesla has declined 14 months in a row, moving from a record high of $67,900 in July 2022 to a record low of $41,034 today (-40%). Source.

  • Despite record low unemployment current US budget deficit is where it was during the GFC. Imagine where the deficit will be during next recession. Source.

It’s enormously expensive for the global auto industry to have to run both ICE and EV production systems in parallel (with each operating at sub-optimal scale). Ultimately capitalism will force one to win and it’s pretty obvious which one it is.

Conor Sen

📓 Online Publications

  • U.S. Homeowners Have $30 Trillion in Home Equity. That amounts to roughly $200,000 per homeowner in tappable equity -- meaning, the amount of equity you can borrow against in order to still maintain 20% equity in your home. It puts existing homeowners in a stronger financial position.

  • Existing Home Sales Numbers Next Week. The NAR is scheduled to release August existing home sales next week on Thursday, September 21st, at 10:00 AM ET. The consensus is the NAR will report sales of 4.10 million SAAR, up from 4.07 million in July.

  • Zillow Predicts Home Values Will Increase by 5.8% in 2023. Existing homeowners have benefited from rising home values and may continue to do so. Zillow notes that tight inventory conditions have continued to put upward pressure on home prices.

  • Return-to-Office Policies Are Primary Reason People Are Moving. In-office requirements were identified as an emerging factor in the real estate market, as fewer and fewer companies are willing to accommodate remote work, according to a report by Redfin.

  • The Best Week To Buy Is Coming. The Realtor.com economic team has identified the very best week to buy a home in 2023: Oct. 1–7. Historical data suggests buyers can save more than $15,000 on median home prices this week as they pore through up to 18.9% of new listings.

🎧 Podcasts

  • Inflation Poses a Challenge Amidst Non-Restrictive Interest Rates. Juliette Declare says inflation is poised to present a more significant challenge than central banks currently anticipate, primarily due to the fact that interest rates are not yet at a restrictive level. Source(1:49)

  • Inflation Stability at Risk in Changing Environment. Liz Ann Sonders notes a decline in inflation stability due to a substantial 30-year drop in both inflation and interest rates. She believes this trend is unlikely to repeat in the next three decades. Source(2:00)

  • It’s a ‘Peak Oil’ World. Luke Gromen argues that we're in a "peak oil" era where the cheap oil has depleted, leading to a long-term increase in oil prices. Consequently, this trend will eventually deplete dollar foreign exchange reserves. Source(2:18)

  • Delta's Loyalty Program Changes Stir Controversy. Sky Club visits are now limited and will prioritize card spending over flight frequency for medallion status. The change reflects the industry's shift toward serving affluent travelers in a high-demand market. Source(12:04)

  • Soft Landing To Extend Several Quarters. A soft landing is a bridge between the previous business expansion and the contraction phase, and we are currently experiencing one for the past year. Soft landings can extend for several quarters, as seen in historical instances. Source(8:51)