DHUnplugged #716: Path Change

DHUnplugged Podcast

Path Change – Once the air clears, how will markets react?

Cracking down on excessive “junk” fees

Cracking down on Unfree Speech?

Jackson Hole – big update about “The Path”

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Warm Up
-Cracking down on excessive "junk" fees
- Cracking down on Unfree Speech?
- Jackson Hole - big update about "The Path"
- Intel is nervous

Market Update
- Lower End Consumers Fueling Spend
- Big news this week - NVDA earnings
- Rotation ? Consumers are still spending (Discounters loving it!)
- Taxing Unrealized Gains?

Political rhetoric
- Taxing Unrealized gains - questions coming in
--- Realize this is for the ultra-rich and the potential to get this passed is not high
- BUT - Harris campaign wants to see about higher taxes - which are needed, but not a good thing
----- How else are we going to pay back this mountain of debt?

Jackson Hole
- Time to Change the Path of Rates
- Powell was clear and they are now pricing in a 100% probability of a 0.25% rate cut for September
- 0.50% will probably scare some people - so 0.25% is plan
- Odd ahead of election - but maybe Powell realizes he is behind the curve

Target
- Against the odds?
- Target beat Wall Street’s earnings and revenue expectations on Wednesday.
- Sales at the discounter grew as shoppers made more visits to Target’s stores and website and bought more discretionary items like clothing.
- Yet, the retailer struck a cautious note, saying it expects comparable sales for the full year to be in the lower range of its guidance.
- Target raised its profit guidance, however, saying it expects adjusted earnings per share to range from $9 to $9.70, up from the previous range of $8.60 and $9.60.
- Investors loved it! Stock moved from $135 - $169 on the news (back to $158)
---- Walmart near ATH and Ross Stores stock at ATH

SpaceX - Boeing
- So embarrassing for Boeing...
- Starliner is going to come back - Unmanned...
- Butch Wilmore and Suni Williams, will return to Earth on a SpaceX vehicle early next year

Telegram
- Telegram messaging app CEO Durov arrested in France
- Pavel Durov, the Russian-born billionaire founder and owner of the Telegram messaging app, was arrested at Le Bourget airport outside Paris shortly after landing on a private jet late on Saturday and placed in custody.
- Free speech under fire? Or is this more than just a Twitter alternative.
- Supposedly 900M Daily Active users???

Junk Fees
- FTC trying to crack down on "junk fees"
- Last year, 15% of restaurant owners added surcharges or fees to checks because of higher costs, according to the National Restaurant Association
- Inflation fee, credit card fee, health-care fee, house fee
- Restaurants are fighting back as they want the fees to add to bottom line and increase profitability and benefit staff.
- Makes the entire idea of going out to eat an expensive proposition.

What is this?
- Microsoft said Friday it will hold a conference in September for cybersecurity firms to discuss ways the industry can evolve following a faulty CrowdStrike software update that caused millions of Windows computers to crash in July.
- Microsoft will meet with CrowdStrike and other security companies at its campus in Redmond, Washington, on Sept. 10 to discuss how to prevent similar issues in the future
--- Wasn't this already something that was not supposed to happen?
- The executive said participants at the Windows Endpoint Security Ecosystem Summit will explore the possibility of having applications rely more on a part of Windows called user mode instead of the more privileged kernel mode.
- Software from CrowdStrike Check Point, SentinelOne and others in the endpoint-protection market currently depend on kernel mode.

Apple
- Planning an even on September 9th
- Apple iPhone 16 reveal?
- Any major updates or incremental again?
- Is this going to be the generational refresh cycle the analysts are so excited about?

More Apple
- Apple announced Monday that it will replace Chief Financial Officer Luca Maestri on Jan. 1 with Kevan Parekh, Apple’s current vice president of financial planning and analysis.
- Maestri will continue to lead teams focusing on IT, security and real estate development, Apple said.
- Maestri was named Apple CFO in 2014.

Intel - Getting Cold Sweats
- Intel is working with advisors including Morgan Stanley to help defend itself against activist investors, according to people familiar with the matter, as CEO Pat Gelsinger attempts to turn around the struggling chipmaker.
- While Intel has faced activist pressure in the past, no new campaign has been formally launched and it isn't clear if an activist investor has been in contact with the company's board.

More Earnings
- CAVA ("the next CMG")
- Earnings per share: 17 cents vs. 13 cents expected
- Revenue: $233 million vs. $220 million expected
- The Mediterranean restaurant chain reported fiscal second-quarter net income of $19.7 million, or 17 cents per share, up from $6.5 million, or 21 cents per share, a year earlier.
- Net sales climbed 35% to $233 million. The company's same-store sales rose 14.4%
-- Ever Eat there?
-- MORE - Cava Group (CAVA) tumbled Tuesday after CEO Brent Schulman and several key executives and directors disclosed sales of Cava stock in the wake of the Mediterranean-themed restaurant chain's post-earnings spike to record highs.

Peleton - Shares move..
- Earnings and things looked less dire
- Stock up 30% since lows - still off > $90% since all-time-high

AI
- Anthropic, the Amazon-backed artificial intelligence startup, on Monday was hit with a class-action lawsuit in California federal court over alleged copyright infringement. Three authors said in the filing that Anthropic "built a multibillion-dollar business by stealing hundreds of thousands of copyrighted books," including their own.
- Authors Andrea Bartz, Charles Graeber and Kirk Wallace Johnson alleged in the lawsuit that "an essential component of Anthropic's business model — and its flagship 'Claude' family of large language models (or 'LLMs')— is the largescale theft of copyrighted works," later alleging that "Anthropic downloaded known pirated versions of Plaintiffs' works, made copies of them, and fed these pirated copies into its models."
- "Copyright law prohibits what Anthropic has done here: downloading and copying hundreds of thousands of copyrighted books taken from pirated and illegal websites," the lawsuit states.
- If this happens - what about the rest of the stolen blog posts, books, writings that were used to build other LLM's??

AI - NVDA
- Earnings exprected after the close on Wednesday
- FactSet EPS consensus: 0.65
- FactSet Rev consensus: 28.72 bln
- Any big news out of company on lower guidance due to delay of Blackwell chip may be an issue
- - Some talk about slowing demand of chips due to datacenter issues with electric grid (some areas of country)

Meaningful?
- Monday Morning - Key Reversal Indicator hits +6
- Came in as markets faded throughout the day on Monday
- last time was June 2020 -reversal came in 2 days of about 5%

Crude Oil
- Rangebound
- But escalations in the Mid-East pushed prices up 3% 0n new news
- Bottom end $72ish - top end $80ish

Icahn
- Shares of billionaire investor Carl Icahn's Icahn Enterprises closed at a more than 20-year low on Monday after the firm said it will sell up to $400 million depository units through an "at-the-market" offering program.
-The stock dropped as much as 14.3% to $13.62, the lowest since November 2003, but pared losses to close down 11.5% at $14.07, the weakest since February 2004.
- Has been at the center of a short-seller hit job (looks like they were right)
- In a regulatory filing, the company said it intends to use net proceeds from the offering to fund potential acquisitions and for company purposes.

CEO Money
- Former Peloton chief executive John Foley says his fortune has dried up, two years after his departure from the high-end fitness company he co-founded.
- "Oh I’m an open book," the former billionaire told The New York Post in an interview. "You know, at one point I had a lot of money on paper. Not actually [in the bank], unfortunately. I’ve lost all my money. I’ve had to sell almost everything in my life."
- The former Peloton chief said he still spends his summer weekends in the Hamptons, although he has downsized twice, including unloading his $55 million oceanfront estate in East Hampton.

Inflation - Not Really Dead
- Cash Shiller Numbers out today - NEW ALL TIME HIGH
- Prices nationally were 5.4% higher than June 2023.
- New York saw the highest annual gain among the top 20 cities, with prices increasing 9% in June, followed by San Diego and Las Vegas with annual increases of 8.7% and 8.5%, respectively.
- Portland, Oregon saw just a 0.8% annual increase in June, the smallest gain of the top cities.

Liquidity Event
- NFL owners voted on Tuesday to allow select private equity firms to invest at up to 10% of a team stake.
- The initial firms include Ares Management, Sixth Street Partners and Arctos Partners as well as a group that includes Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners and Ludis.
- The NFL is the last major sports league to allow private equity investment as rising valuations make it harder for owners to buy in.

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