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  • 💣 Hindenburg Drops A Bomb On Roblox

💣 Hindenburg Drops A Bomb On Roblox

+ China Stocks Lose Steam, Traders Disappointed Without More Major Stimulus

October 08, 2024

Good afternoon! The Van Gogh Museum just dropped a major revelation, uncovering three so-called “Van Gogh” works in private collections that aren’t the real deal. One of the fakes, Head of a Woman, was authenticated in 2011 and sold for almost $1 million before experts realized it was a copy. Another, Interior of a Restaurant, was exposed due to inaccurate colors and a suspicious use of Manganese blue—a pigment only available after Van Gogh’s time.

The museum, usually tight-lipped about fakes, is finally spilling the tea, and art collectors are sweating. One painting even included yellow sunflowers that didn’t match the season Van Gogh painted the original. With some forgeries dating back to the early 1900s, these revelations underscore just how complex the world of authentication can be, as even seasoned experts occasionally get fooled.

MARKETS

*Stock data as of market close*

  • Tech stocks came roaring back Tuesday, giving the S&P 500 a nice boost while the "Magnificent Seven" tech giants all posted gains. Investors brushed off concerns about rising oil prices and the looming U.S. elections, shifting their focus to the upcoming earnings season and Thursday’s inflation report. Most sectors joined the party, but tech clearly stole the spotlight.

  • The Nasdaq jumped 1.45%, and the S&P 500 wasn’t far behind, up nearly 1%. A dip in oil prices and cooling tensions in the Middle East helped lift markets after their worst session in a month. Even the Dow Jones managed a 0.3% bump, with investors breathing a little easier as they await more signals on the economy.

STOCKS
Winners & Losers

What’s up 📈

  • Robinhood ($HOOD) soared 9.82% after announcing its first investor day event, scheduled for December 4.

  • Affirm Holdings ($AFRM) advanced 6.61% after BTIG upgraded the stock to buy, citing its growth compared to traditional payment companies.

  • Palantir Technologies ($PLTR) gained 6.58% following its CTO's CNBC appearance, highlighting enterprise automation as the company's key value proposition.

  • DocuSign ($DOCU) increased 6.55% after it was announced the company would replace MDU Resources in the S&P MidCap 400 index.

  • WeightWatchers ($WW) rose 4.95% after announcing it would offer compounded semaglutide, an off-brand version of Ozempic and Wegovy, to its members.

  • Nvidia ($NVDA) climbed 4.05% after Foxconn's chairman mentioned strong demand for its upcoming AI Blackwell chip.

  • Sweetgreen ($SG) climbed 9.61%.

  • Palo Alto Networks ($PANW) rose 5.09%.

  • Intel ($INTC) gained 4.20%.

What’s down 📉

  • Chinese stocks, which had been experiencing solid growth, saw a sharp drop today after the country’s central economic authority failed to introduce any new stimulus measures. Bilibili ($BILI) sank 12.93%, JD. com ($JD) dropped 7.52%, Alibaba ($BABA) fell 6.67%, and Nio ($NIO) slipped 8.10%.

  • Marathon Petroleum ($MPC) dropped 7.66% as energy stocks were hit by an oil selloff.

  • Super Micro Computer ($SMCI) pulled back 5.01% after surging the previous day due to issuing over 100,000 GPUs to major AI factories.

  • Rio Tinto ($RIO) declined 4.25% after expressing interest in acquiring U.S. lithium producer Arcadium.

  • Wynn Resorts ($WYNN) and Las Vegas Sands ($LVS) dropped 3.32% and 2.79%, respectively, as both casino operators, with ties to Macau, were impacted by the lack of new stimulus measures from China.

  • Sphere Entertainment ($SPHR) fell 2.84% after announcing CFO David Byrnes would leave the company, though he will stay on for an interim period to aid the transition.

GAMING
Short Seller Hindenburg Goes After Roblox

Roblox had a rough Tuesday after Hindenburg Research, a notorious short-seller, came swinging with allegations that the gaming platform is playing fast and loose with its numbers.

The report accused Roblox of inflating user data and failing to protect its youngest players from harmful content. Naturally, the stock took a dive, dropping nearly 10% in early trading—a steep fall for the platform that’s been a favorite among younger gamers.

More Bots Than Humans?
Hindenburg’s beef? The firm claims Roblox has been cooking the books by counting bots and duplicate accounts as individual users. According to the report, Roblox's daily user count may be overstated by up to 42%. And while Roblox claims its users are spending hours immersed in the digital world, Hindenburg suggests a lot of that "engagement" comes from bots that are just... there.

But the bigger blow? Hindenburg also painted a grim picture of the platform’s safety features, claiming Roblox isn’t doing enough to keep predators at bay. And for a platform with millions of young users, that’s a serious accusation.

Roblox Fights Back
Roblox wasn’t about to sit quietly. The company shot back, calling Hindenburg’s report "misleading" and driven by the short-seller’s agenda. In a statement, they emphasized that user safety is a top priority and that the financial metrics they report are accurate.

Roblox's defense comes with some financial backing: the company saw a 22% boost in bookings year-over-year and reported $576 million in free cash flow for the second quarter.

The Fallout: Despite the firm’s aggressive rebuttal, Roblox’s stock took a hit, falling by 9.4% before regaining some ground. Investors are likely left wondering if Hindenburg’s accusations will have lasting effects or if Roblox can shake off the controversy like it has before. Either way, it’s clear that the platform’s future will be closely watched, especially when it comes to how it handles both its user base—and the safety of those users.

NEWS
Market Movements

  • đŸ“± Epic v. Google: A Game-Changer for App Stores? A judge ruled that Google ($GOOGL) must open its Android app store to third-party stores and offer access to Google Play’s catalog for three years starting in November 2024. Google plans to appeal.

  • đŸŒȘ Hurricane Milton Threatens $175 Billion in Damage: Hurricane Milton could cause as much as $175 billion in damage, with estimates ranging from $50 billion to $175 billion, depending on where the storm makes landfall in Florida. The storm's impact could surpass that of Hurricane Helene, which caused $11 billion in damage just 12 days prior.

  • đŸ€– Uber's AI Assistant to Drive EV Adoption: Uber ($UBER) plans to launch an AI assistant powered by OpenAI’s GPT-4 to help drivers transition to electric vehicles, part of its $800M commitment for a fully electric fleet by 2040.

  • đŸ§Ș Honeywell Set to Spin Off Advanced Materials Unit: Honeywell ($HON) is planning to spin off its advanced materials division, valued at over $10B, to focus on core businesses like aviation and energy transition.

  • 📉 Samsung's Chip Struggles Hit Q3 Earnings: Samsung ($SSNLF) projected a Q3 operating profit of $6.1B, falling short of estimates due to weak demand and supply issues in its memory chip division. Shares fell 0.98%.

  • 🛒 Sam’s Club Goes Fully Digital in Dallas: Walmart’s Sam’s Club ($WMT) is launching an all-digital store in Dallas, where customers will use the Scan & Go app, with the store prioritizing online order fulfillment.

  • 🚗 Lyft Boosts Driver Pay Incentives: Lyft ($LYFT) introduced new pay incentives, including higher earnings for longer trips and remote pickups, and unveiled additional programs to support EV drivers.

  • đŸ’Œ Boeing Strikes Continue Amid Pay Disputes: Boeing ($BA) and its union will return to the negotiating table after 25 days of striking by 33,000 workers. The union is demanding a 40% pay raise and pension restoration, while Boeing has offered a 30% raise and bonuses.

  • 🧃 PepsiCo Cuts Outlook After Soft Q3: PepsiCo ($PEP) lowered its 2024 revenue outlook, citing weaker demand and international market disruptions. Q3 revenue dropped 0.6% to $23.32B, missing estimates, though EPS topped forecasts at $2.31.

    đŸŒŠïž Zillow Adds Climate Risk Data to Listings: Zillow ($ZG) integrated climate risk data from First Street into its listings, showing specific flood, fire, wind, and heat risks for each property, along with future projections.

INTERNATIONAL
China Stocks Lose Steam, Traders Disappointed Without More Major Stimulus

China’s stock markets went from euphoria to disappointment faster than you can say “stimulus.” After weeks of rallying on hopes for a massive fiscal boost, investors were left high and dry on Tuesday when the National Development and Reform Commission (NDRC) announced just 200 billion yuan in spending—way short of the expected 3 trillion yuan. The Hang Seng Index dropped nearly 10%, marking its worst day since 2008, while Chinese stocks lost almost half their gains from an 11% surge earlier in the day.

The market's reaction is a clear sign of a mismatch between investor expectations and Beijing’s cautious fiscal stance. The rally, driven by monetary easing and government promises, now seems shaky without substantial fiscal follow-through.

Stocks on a Rollercoaster
It wasn’t just disappointment in the air—it was a stock sell-off. Bank of China tumbled 5.38%, and the yuan slipped 0.64% against the dollar. The once-booming rally fizzled as investors realized that Tuesday’s announcement wasn’t the knockout punch they were hoping for.

Analysts at Jefferies had pegged the potential damage at 175 billion yuan in a worst-case scenario, but Beijing’s response left the markets wondering if that punch is ever coming.For a brief moment, China’s stock market had a party—rising over 30% since late September—but the NDRC’s meager offering effectively ended the celebration.

Is There More in the Pipeline?
While Tuesday’s lackluster stimulus dampened spirits, some analysts believe the big guns are still on their way. Banks like Morgan Stanley are betting that up to 2 trillion yuan in stimulus could still be in the works. The key question now: Will President Xi pull the trigger before markets lose faith?

For now, traders are left in a wait-and-see mode, with hopes that Beijing will unveil the kind of aggressive fiscal measures needed to fuel a long-term recovery. Until then, investors might need to buckle up for more market turbulence.

Calendar
On The Horizon

Tomorrow

Tomorrow’s looking like a breather ahead of the CPI report, with wholesale inventories being the main event. This gives us a sense of how manufacturers’ stock levels are holding up. Manufacturing’s been struggling for a while, but with rate cuts now in effect, we might see a change on the horizon.

We’ll also get a peek at the minutes from the Fed’s September meeting. While we already know about the half-point rate cut, the backstory on why they made that decision could offer some fresh insights.

NEWS
The Daily Rundown

  • đŸŒȘ Another Hurricane Hits Florida: Still recovering from Hurricane Helene, Florida braces for Hurricane Milton, expected to make landfall as a Category 5 by tomorrow night. The greater Tampa Bay area, already devastated by Helene, could face up to 12-foot storm surges. Florida is carrying out its largest evacuation in years, with 8,000 National Guard troops deployed, and President Biden has declared a state of emergency to mobilize federal disaster relief.

  • ⚖ SCOTUS Takes on Ghost Guns: The Supreme Court will hear a challenge to ghost gun regulations, which require serial numbers and background checks for kits used to assemble untraceable firearms. Gun control advocates warn that overturning the rule could reverse progress in reducing ghost gun crime.

  • 🧬 American Scientists Win Nobel Prize in Medicine: Victor Ambros and Gary Ruvkun have won the Nobel Prize in medicine for discovering microRNA, small RNA molecules that regulate gene expression. Their groundbreaking research has led to advancements in understanding diseases such as cancer and diabetes. This discovery has revolutionized our understanding of gene regulation.

  • ⚖ Supreme Court Blocks Emergency Abortion Care Effort: The Supreme Court declined to hear the Biden administration's appeal to enforce federal guidance requiring emergency abortion care in Texas. The decision allows Texas' near-total abortion ban to remain in effect, blocking emergency abortions even in life-threatening situations, while Georgia reinstated its six-week abortion ban.

  • 📉 Elizabeth Warren Targets Shrinkflation: Senator Elizabeth Warren, along with Representative Madeleine Dean, urged General Mills, Coca-Cola, and PepsiCo to stop engaging in shrinkflation—reducing product sizes while keeping prices the same or higher. Warren accused these companies of price gouging and called for more transparency on their pricing practices.

  • đŸŽ¶ Cissy Houston Passes Away: Grammy-winning artist Cissy Houston, mother of Whitney Houston, has died at age 91 after battling Alzheimer's disease. Known for her contributions to gospel and popular music, Cissy's seven-decade career included singing backup for legends like Aretha Franklin and Elvis Presley before launching a successful solo career.

  • 🎄 Spirit Halloween to Convert to Christmas Stores: Spirit Halloween is transitioning 10 of its locations into Spirit Christmas stores for the holiday season. These new stores, primarily located in the Northeast, will open from late October through November, offering a wide range of holiday dĂ©cor, gifts, and unique experiences like visits with Santa and a life-sized gingerbread village. This move follows the company's success with its Halloween pop-ups and aims to capture the festive spirit of Christmas.

  • 🏠 Housing Market Struggles Intensify: Florida's hurricane woes are compounding housing market challenges, as migration slows and demand weakens. With Tampa's housing supply up 58% and home insurance rates skyrocketing by up to 400% in recent years, property sales are stalling. Experts project Hurricane Milton could cause an additional $35 billion in damage.

RESOURCES
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