September 20, 2023

Instacart Delivers 12% Debut Gain After IPO

📰 News Organizations

  • Instacart Delivers 12% Debut Gain After $660 Million IPO. Instacart racked up a 12% trading-debut gain in one of the year’s biggest IPOs, showing investors are receptive to the online grocery delivery firm’s pivot to advertising and also adding momentum for US listings.

  • U.S. National Debt Hits $33 Trillion For The First Time. The level was reached less than two weeks before the federal government faces a potential shutdown over a lack of funding authorization. The issue of the debt is at the center of a standstill in Congress.

  • Klaviyo prices IPO at $30. The digital automated marketing platform Klaviyo has priced its IPO at $30, above its expected range. Shares are expected to begin trading on Wednesday on the New York Stock Exchange under the ticker symbol “KVYO.”

  • Auto Suppliers at Risk of Losing $38 Billion. Around 76 publicly traded companies supplied Ford, General Motors, and Stellantis NV in their most recent reporting period. Nexteer Automotive Group Ltd. is the most exposed with 76% of its revenues coming from the three.

  • Pinterest Shares Rally After Executives Said Growth Is Accelerating. During its first investor day, Pinterest called for a compound annual growth rate in the mid to high teens over the next three to five years. A new partnership with Amazon also appears to be helping the ad business.

🐦 Twitter

  • Purchases by real estate investors in the US decreased by 45% in the second quarter compared to last year. This is the biggest drop since 2008. Source.

  • Nationwide, nearly 60,000 home-purchase agreements were canceled in August, which equaled 15.7% of homes that went under contract that month. The highest share since October 2022 per Redfin. Source.

  • Another sign of a tight US labor market: Amazon is planning to hire 250,000 holiday workers to pack and store warehouse items, up from 150,000 last year, & is offering more pay. While this reflects a shift to online shopping, it speaks to economic strength. Source.

  • Today's bond market hinges on three assumptions: a negative term premium, low inflation, and a stagnant neutral rate. Yet, from a chart perspective, it seems obvious that the secular bull market for bonds ended in 2020. Source.

  • The federal budget deficit was 6.2% of GDP in Q2 — typically 6% of GDP deficits are when the economy is already in recession or exiting recession. Tough for aggregate demand to slump a ton with this much of a fiscal tailwind. Source.

Hedge funds aren't necessarily an asset class. Instead, it's better to think about them as "diversified alpha" strategies that are pursuing many different sources of differentiated returns vs. index investing.

Bob Elliott

📓 Online Publications

  • Buyers Cancel Contracts In Droves As Prices And Interest Rates Soar. Nearly 60,000 home purchase contracts were canceled nationwide during August, even when it meant losing their earnest money deposits, according to Redfin's report.

  • Share of Mortgage Loans in Forbearance Decreases to 0.33% in August. The forbearance rate is just 8 basis points shy of where it was at the beginning of March 2020, which indicates that most homeowners have recovered from the pandemic.

  • Unity Faces Revolt From Developers Over New Install Fees. The company said it would alter the new fees, but didn't offer specifics. Uncertainty over the company's growth outlook and developer loyalty sent shares plunging on Monday.

  • Novo Nordisk’s Production Challenges. The company behind the popular weight loss drugs, Wegovy -- and, to a lesser extent, Ozempic -- saw its share price erode by 2% on Monday, following a media report about its production challenges and difficulty meeting demand.

  • Housing Starts Decreased to 1.283 million Annual Rate in August. Privately‐owned housing starts in August were at a seasonally adjusted annual rate of 1,283,000. This is 11.3% below the revised July estimate of 1,447,000 and is 14.8 percent below the August 2022 rate of 1,505,000.

🎧 Podcasts

  • Nasdaq And Nyse Fight Closest Listings Battle In Five Years. Instacart’s debut will push Nasdaq further ahead of the NYSE in the fight for new listings. It’s the closest battle between the exchanges in five years. Listings are a sign of prestige and a source of income for the exchanges. Source(1:05)

  • Hedge Fund Bets Could Spark Turmoil In US Treasuries, BIS Warns. Central banks are concerned because, during market stress, highly leveraged hedge funds engaged in basis trades often unwind their positions for cash, causing fluctuations in Treasury market rates. Source(3:16)

  • Kellogg’s Splitting on October 2nd. Kellogg’s is spinning off its core cereal business and will become two independent companies to focus on the fast-growing snacks market. Jason Moser says this gives them the opportunity to focus on different strategies for snacks and cereal. Source(1:55)

  • The State of Commercial Real Estate. Ken McElroy says commercial real estate is in big trouble right now because of the work-from-home trend and eCommerce eating market share from retailers. To top it all off, it’s not easy to convert office or mall spaces into residential units. Source(19:15)

  • Streaming Cancellation Surge Overblown. Major streamers combine for a 12.2% cancellation rate which is way below what the public previously assumed. Max has the highest rate of cancellation at 27%. Shows are likelier to be canceled after their first season. Source(17:30)

  • Energy is Emerging as an Anti-Fragile Asset Class. Despite its underrepresentation in portfolios due to ESG constraints and a challenging decade, as its diversification potential gains recognition, it's likely to be incorporated into quantitative models, attracting increased investment flows. Source(12:48)