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đŸŽ¶ Starships Were Meant To Fly...

+ Earning Season (And Winter) Is Coming

October 14, 2024

Good afternoon! Tesla’s Optimus bots wowed the crowd at last week’s event, but there’s a catch—humans were secretly in control. While Elon Musk pitched the humanoids as future household helpers, from walking your dog to babysitting, some attendees noticed that staff were remotely operating the bots during interactions. That little detail, conveniently left out of Musk’s presentation, has raised eyebrows about how close Tesla really is to making Optimus fully autonomous.

Even with the assist, Musk doubled down, calling Optimus Tesla’s “biggest product ever,” priced between $20,000 and $30,000. The event also teased Tesla’s robotaxi, but it fell short on delivering any hard details. Investors weren’t thrilled either—Tesla shares dipped the next day, as questions lingered about when these futuristic promises will actually become reality.

MARKETS

*Stock data as of market close*

  • U.S. stocks kicked off the week with a bang, as Nvidia (NVDA) spearheaded a market-wide rally that pushed the S&P 500 and Dow to fresh record highs. With minimal economic data on the docket, investors turned their focus to earnings reports, banking on Corporate America to validate the market’s soft-landing hopes. The S&P 500 jumped nearly 1%, marking its 46th record close this year. The Nasdaq tacked on 0.87%, and the Dow climbed 201 points to close above 43,000 milestone for the first time.

  • Nvidia wasn’t the only star. Tech stocks took the lead, boosting the S&P 500’s tech sector by 1.4%. Investors cheered a healthy labor market and signs of easing inflation, with AI hype once again driving major indexes higher.

STOCKS
Winners & Losers

What’s up 📈

  • Upstart ($UPST) surged 14.99% after a Wedbush analyst upgraded the stock from Underweight (Sell) to Neutral, raising the price target from $10 to $45. The analyst believes the current price offers a balanced risk/reward.

  • SoFi Technologies ($SOFI) jumped 11.43% after the company announced a $2 billion agreement with Fortress Investment Group to expand its loan platform business.

  • Coinbase ($COIN) climbed 11.32% as stocks tied to cryptocurrencies surged, with Bitcoin gaining more than 5% and topping $66,000.

  • Sirius XM ($SIRI) rose 7.90% after Berkshire Hathaway disclosed that it increased its stake in the company by purchasing 3.6 million shares, bringing its total holdings to over 108 million shares.

  • Arm Holdings ($ARM) gained 6.84%, benefiting from Nvidia’s record close on Monday, as AI hardware stocks continue to attract investor enthusiasm.

  • Qualcomm ($QCOM) ticked up 4.74% as investor excitement around AI hardware stocks surged following Nvidia's record performance.

  • Nu Holdings ($NU) increased 7.08%.

  • Marvell Technology ($MRVL) rose 4.96%.

  • Lululemon ($LULU) edged up 3.06%.

What’s down 📉

  • Nio ($NIO) dropped 7.21% amid a broader China market selloff.

  • Dollar General ($DG) slid 3.31% despite a 4.2% increase in net sales for Q2 2024, as concerns over long-term growth and the impact of rural store locations weighed on investor sentiment.

  • MicroStrategy ($MSTR) fell 5.14%, despite earlier gains after Barclays analysts raised their price target for the stock, which is often considered a proxy for Bitcoin, to $225 from $173 while maintaining their Overweight rating.

  • CrowdStrike ($CRWD) declined 3.03%.

  • Zoom ($ZM) decreased 3.95%.

SPACE
đŸŽ¶ Starships Were Meant To Fly Be Caught

SpaceX just pulled off a literal grab for the history books. During Sunday’s Starship test, the Super Heavy booster returned to Earth and was caught by giant "chopstick" arms attached to the launch tower.

This first-of-its-kind move is another step toward making space travel more reusable and cost-effective, a goal that Elon Musk has been chasing like a kid after ice cream on a hot day.

It was a picture-perfect flight: The Super Heavy booster detached from Starship at an altitude of about 40 miles, did a U-turn, and headed back to the launchpad. Instead of landing on legs, like SpaceX’s Falcon 9 rockets, it steered into the waiting arms of the chopsticks. Cue the cheers at mission control.

Why It Matters
Reusability has always been SpaceX’s secret sauce. Traditional rockets? One and done. But Musk has been adamant that rockets should be like airplanes—you don’t throw them away after one trip. By catching the booster, SpaceX moves closer to making rapid, low-cost space launches a reality.

This isn’t just about saving money—it’s a crucial step toward launching multiple missions in a single day.

This booster recovery milestone is also a win for NASA, which is banking on Starship to land humans on the Moon by 2026 as part of its Artemis mission. With Sunday’s success, SpaceX is proving that its reusable rocket tech isn’t just sci-fi fantasy anymore—it’s happening.

Eyes on Mars
But don’t think Musk is stopping at the Moon. His ultimate goal? Sending humans to Mars. SpaceX has its sights set on launching five uncrewed Starship missions to the red planet in the next two years. Each test, like Sunday’s catch, brings Musk closer to making that dream a reality.

So, while the Super Heavy booster’s flawless return is impressive, it’s just the beginning of SpaceX’s larger cosmic ambitions.

NEWS
Market Movements

  • đŸ’» Nvidia Hits Record High Amid AI Chip Demand: Nvidia ($NVDA) closed at a record high of $138.07 as demand for its AI chips continues to surge, with major tech companies like Microsoft, Meta, and Google purchasing its GPUs in large quantities. Nvidia's market cap now exceeds $3.4 trillion, making it the second-most valuable publicly traded U.S. company after Apple.

  • 🏩 Fed Governor Waller Urges Caution on Future Rate Cuts: Federal Reserve Governor Christopher Waller signaled that future interest rate cuts will be less aggressive than the previous 50 basis point reduction in September. Citing stronger-than-expected employment, inflation, and GDP data, Waller emphasized a more cautious approach moving forward as the economy may not be slowing as anticipated.

  • 🔋 Google Signs Deal with Kairos Power for Nuclear Energy: Google ($GOOGL) has inked a deal with Kairos Power to purchase power from small modular reactors (SMRs) as part of its efforts to meet the growing energy demands of its data centers. The first reactor is expected to come online by 2030, with more following by 2035, adding 500 megawatts to the grid.

  • đŸ“» Berkshire Hathaway Increases Stake in SiriusXM: Warren Buffett's Berkshire Hathaway raised its stake in SiriusXM ($SIRI) to 32% following a recent deal by Liberty Media. Despite the stock gaining 8% on Monday, SiriusXM has struggled with subscriber losses and a 50% drop in share price YTD.

  • đŸ’» TSMC Earnings Boosted by AI Demand: Taiwan Semiconductor Manufacturing Co. ($TSM) is forecasted to report a 40% increase in Q3 profits, reaching $9.27 billion, driven by strong AI chip demand from clients like Apple and Nvidia. TSMC shares have surged 77% this year.

  • 🚗 BYD Criticizes E.U. Tariffs on Chinese EVs: BYD slammed the E.U.’s proposed tariffs on Chinese-made electric vehicles, warning that higher prices could deter consumers. The criticism came during the Paris Auto Show, where BYD and other Chinese brands unveiled new models

  • đŸ’Œ ServiceNow Invests $1.5 Billion in U.K. Expansion: ServiceNow ($NOW) announced a $1.5 billion investment in the U.K. over the next five years to expand operations, grow its workforce, and localize AI data processing.

  • 🏭 Catalent to Sell New Jersey Drug Facility: Catalent ($CTLT) has agreed to sell its oral drug development facility in New Jersey to private drug manufacturer Ardena. The financial terms were not disclosed, but the deal is expected to close in early 2025.

MARKETS
Earning’s Season Is Here

Earnings season is upon us, and after a $9 trillion rally, 2024’s bullish run faces a reality check. Analysts are calling for just a 4.3% profit bump for the S&P 500 this quarter—the weakest growth we’ve seen in a year. Expectations have been on a diet, too: Back in June, experts were predicting a solid 8.4% rise.

But don't lose hope just yet—this is Wall Street, where surprises lurk around every corner. Remember the first quarter when projections were bleak but profits soared 7.9%?

Despite the low bar, the S&P 500 has been climbing like it’s auditioning for an action movie, hitting fresh highs and clocking a 22% gain in 2024 so far. It's the best start since 1997, and some investors are betting this could lead to an earnings surprise, just like earlier this year. The optimists might just have a point.

The AI Party Slows Down
Speaking of action movies, the "Magnificent Seven" tech giants—Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla—are still the stars of the earnings show. Together, they’re expected to post an 18% profit rise, but don’t get too excited: their growth rate is slowing. They were churning out over 30% increases last year, but this quarter, the AI-fueled party is looking a little more low-key.

For the rest of the S&P 500, it’s a bit of a grind. Profits outside of the tech bubble are set to rise just 1.8%. But hey, a win’s a win, right? And looking ahead, analysts expect much stronger numbers in early 2025, with double-digit growth on the horizon.

A Stock Picker’s Playground
Here’s where things get spicy: this could be a stock picker’s paradise. While overall market volatility is snoozing, individual stocks are gearing up for some wild moves. Bank of America’s data shows that post-earnings swings could be the biggest since 2021, so if you can spot the winners and losers, you might just walk away with a big payout.

Tech, communication services, and healthcare stocks are expected to shine, while energy stocks may take a hit as crude prices slide.

Margin Watch and Election Talk
As earnings trickle in, one thing everyone will be keeping an eye on is profit margins. The forecast? A slight dip to 12.9% from last quarter’s 13.1%, as companies face rising input costs. But don’t sweat it too much—margins are expected to rebound soon enough.

Oh, and let’s not forget about politics. With the U.S. presidential election around the corner, corporate America is getting nervous. Mentions of "election" on earnings calls are up 62% from four years ago, and history suggests investment could take a breather until the dust settles.

Calendar
On The Horizon

Tomorrow

Earnings season kicks off tomorrow, and it’s poised to send some ripples through the markets. With big reports from key players set to roll in, investors are gearing up for what could be a pivotal moment. Expect some surprises and volatility as the numbers start to drop—this is when things get interesting.

Before Market Open:

  • Warren Buffett seems to be cooling on Bank of America ($BAC), offloading shares consistently for months. While that’s hardly a confidence booster, shareholders shouldn’t panic just yet. Interest rate cuts and AI developments could still bolster the bank’s long-term outlook. Plus, recent earnings from major banks signal stronger net interest income across the board. Analysts are expecting $0.77 EPS on $25.31 billion in revenue.

  • Meanwhile, Albertsons Companies ($ACI) has left investors anxiously awaiting news on its potential merger with Kroger. The deal has been in the works for two years, but even if it falls through, Albertsons remains a strong player in the grocery space. With same-store sales growth and widening profit margins, the company should continue to hold its own. The consensus? $0.48 EPS and $18.47 billion in revenue.

After Market Close:

  • United Airlines ($UAL) might not seem like a top pick given the turbulence the airline industry has faced lately—think major IT outages and struggling competitors. But United has managed to rise above the chaos. If Delta’s performance is any indication (despite the impact of CrowdStrike’s toll on the sector), United is likely to stay on course. Analysts remain optimistic. The consensus? $3.07 EPS and $14.78 billion in revenue.

NEWS
The Daily Rundown

  • 🛾 Mystery Drones Swarm U.S. Military Base: For 17 days, mystery drones flew over a U.S. military base, leaving the Pentagon stumped. Officials are still investigating the origin and intent of the drones, adding to security concerns.

  • 📜 Christopher Columbus’ Origins Spark New Debate: A new documentary has added to the 500-year debate over Christopher Columbus’ origins, suggesting that the explorer may have been Spanish and of Sephardic Jewish descent. The claim, based on a 20-year genetic investigation, has yet to be vetted by scientific journals. This comes just a week after another documentary speculated that Satoshi Nakamoto, the creator of Bitcoin, might be Canadian software developer Peter Todd.

  • đŸŽœ Kenyan Runners Shatter Records at Chicago Marathon: Ruth Chepngetich broke the women's world marathon record in Chicago, becoming the first woman to run a marathon in under 2:10. John Korir won the men’s race, finishing in 2:02:44. Both athletes dedicated their victories to the late Kelvin Kiptum, a Kenyan runner who set the men’s world record last year.

  • đŸŒȘ Tourism Takes a Hit After Hurricanes: Businesses in Asheville, NC, are bracing for a rough season after Hurricane Helene left the city’s peak tourist spots covered in mud. In Florida, citrus farmers were dealt a setback by Hurricane Milton, which destroyed groves just before harvest. President Biden has announced $612 million in recovery aid for both states.

  • 🔧 Private Equity Firms Eye Trades Like Plumbing and HVAC: Private equity investors are snapping up businesses in trades like plumbing and HVAC, with over 800 companies sold since 2022. More business owners in these sectors are choosing to stay on board after the sale, helping grow the company after receiving their payout.

  • đŸ›Ąïž US Sends Advanced Missile Defense System to Israel: The Pentagon announced that the US will deploy the Terminal High-Altitude Area Defense (THAAD) missile system to Israel, along with American troops to operate it, as a precaution against potential ballistic missile attacks from Iran. The move comes after President Biden criticized Israel for recent attacks on the UN peacekeeping mission in Lebanon.

  • 🇹🇳 China's Finance Minister Disappoints Investors: China’s finance minister held a much-anticipated briefing, promising more government support for the economy. However, a lack of detailed plans left investors disappointed and cautious about the country's economic recovery.

  • 🏈 Army and Navy Football Teams Undefeated: For the first time since 1945, both the Army and Navy football teams are 5-0. The two teams could meet multiple times this season, once in their conference championship and again in their annual rivalry game.

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