Weekend Update #148
Welcome to Blue Room's Weekend Update. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.
The markets began trading this week amid the escalating conflict in Israel. Given the bank holiday on Monday, fixed income markets were closed but a proxy for US Treasuries—the TLT ETF—showed a bit of flight to safety after US 10-Year yields reached 4.8% the previous week. Gold, another safe-haven asset, jumped upon news of the event, further corroborating increased appetite for safer assets. WTI Oil spiked 4.9%, jumping from $82.30 to $86.30 per barrel following the news as concerns mounted around potential supply reductions arising from Middle Eastern producers. US equity futures on Sunday evening pointed to a downward open, but as the trading day progressed, all three major indices reversed their losses and made their way into green territory, signaling that the Israeli-Palestinian conflict had a very limited immediate impact on markets.
On the earnings front, Pepsi reported on Tuesday morning, beating revenue and earnings expectations and raising its fiscal year guidance. Earnings season kicked off in earnest as major banks reported their Q3 2023 earnings. Wells Fargo beat analyst expectations with net interest income of $13.1 billion and raised its full-year guidance. JPMorgan reported adjusted revenue and net interest income that exceeded estimates. Citigroup reported sales and trading revenue of $3.56 billion, exceeding expectations of $3.25 billion. Certainly the financial sector has benefited from the current high-interest rate environment—however, it will be interesting to see how companies fare next week, including Tesla, Netflix, Lam Research, ASML, TSMC, Union Pacific and American Express.
With regard to economic data, the story of the week was the Bureau of Labor Statistics’ latest CPI report which revealed headline CPI year-over-year growth of 3.7% which exceeded the median economist estimate of 3.6%, while core CPI maintained at the 4.1% level. Services inflation was a large contributor to the latest reading, offsetting minor disinflation seen in more of your commoditized goods, including home furnishings. Shelter also remained elevated, raising concerns that it was not falling as fast as perhaps the Fed would like. Small Business Optimism came in below expectations while PPI came in at 2.2% year-over-year growth, vastly exceeding the 1.6% expected, adding credence to the idea that the Fed will have to hold rates higher for longer. On Friday the University of Michigan Sentiment reading was released, indicating increased pessimism as well as increased expectations for 1-year- and 5-10-year inflation expectations—a measure the Fed has previously described as “well-anchored.” Markets responded negatively, with the S&P index closing the day down 50 basis points. You can find this and more in this week’s Blue Room Newsletter.
Weekly Performance
S&P 500 4,327.78 +0.47%
Dow Jones 33,670.29 +0.79%
Nasdaq 13,407.23 +0.15%
Key Economic Readings Next Week
Monday, October 16 — Empire Manufacturing
Tuesday, October 17 — Retail Sales; Industrial Production and Capacity Utilization
Wednesday, October 18 — Building Permits and Housing Starts
Thursday, October 19 — Existing Home Sales; Philadelphia Fed Business Outlook
Friday, October 20 — Bloomberg October United States Economic Survey
Thank you Blue Room Team Leader OMAR GUZMAN
OVERVIEW
United States Producer Price Index YoY and MoM
PPI is a family of data that gauges the costs of production. There are three areas of PPI classification that use the same pool of data from the BLS: industry, commodity and commodity-based final and intermediate demand (FD-ID).
Finished Goods YoY~ Finished goods are goods that have completed the manufacturing process but have not yet been sold or distributed to the end user.
Final Demand ~ PPI for final demand measures the average change in prices received by domestic producers of goods, services and construction sold for personal consumption, capital, investment, government and export.
PPI SUMMARY - INCLUDING FOOD & ENERGY
September PPI for Final Demand MoM rose +0.5% vs +0.3% expected above expectations. (1)
On a year-over-year basis in September, the PPI index rose +2.2%, versus the surveyed +1.6% above expectations. (2)
(1) Above expectations is a negative surprise
(2) Above expectations is a negative surprise
On Monday, October 9, The Royal Swedish Academy of Sciences announced that Claudia Goldin was awarded the Nobel Prize in Economic Sciences, making her the third woman to receive the economics prize since the prize’s establishment in 1969 and the first woman to win the prize solo. The Harvard economist specializes in labor economics and economic history and has spent decades analyzing data to illuminate the history of women’s job-market experiences. In the Royal Swedish Academy of Science’s press release announcing her victory, the committee noted “Claudia Goldin…provided the first comprehensive account of women’s earnings and [labor] market participation through the centuries. Her research reveals the causes of change, as well as the main sources of the remaining gender gap.”
Ms. Goldin’s economic footprint is large, and her work’s societal impact is august. Goldin’s research spans a wide range of topics, including the female labor force, the gender gap in earnings, income inequality, technological change, education and immigration. Most of her research interprets the present through the lens of the past and explores the origins of current societal issues of concern. Goldin is best known for her historical work on women in the U.S. economy. “Her most influential papers in that area have concerned the history of women’s quest for career and family, coeducation in higher education, the impact of the ‘pill’ on women’s career and marriage decisions, women’s surnames after marriage as a social indicator, the reasons why women are now the majority of undergraduates, and the lifecycle of women’s employment.” Goldin’s work is inspired, and you would be hard pressed to find an economist who does not agree that she is absolutely deserving of the Nobel Prize.
Goldin received her doctorate in economics from the University of Chicago, becoming a disciple of the greatest minds in economics such as Friedman, Stigler, Becker, Harberger, Fogel, Telser, McCloskey, Griliches, Coase, Gregg Lewis, and Harry Johnson. Goldin’s work began as an economic historian with a focus on industrial development. Her dissertation focused on the role of slavery in the urban and industrial development of the antebellum South. After completing graduate school, Goldin briefly taught at the University of Wisconsin, Madison before moving to Princeton University in 1972 and then to the University of Pennsylvania in 1979, where she became a tenured full professor. In 1990, she joined the economics department at Harvard University, where she was the first woman to be offered tenure in that department.
October 12, 2023 BLUE ROOM Global Meeting #129
Thursday
October 12, 2023
12 PM
BLUE ROOM
MEETING NUMBER 129
Minyoung Sohn
Attachments
Oct 12, 2023, 9:53 AM (1 day ago)
to All, Eduardo, Kelly, Cole, Chad, Adam
Hello Blue Room,
Today, we will be celebrating Homecoming.
Agenda:
I. Blue Room Updates
> BOO-ROOM on Wednesday, October 18
> MCA Gala on Thursday, October 19
II. Blue Room Investing
> Economic Update: September CPI, by Omar Guzman and team
III. Blue Room Impact
> Updates: Ag, Housing, Art
Icebreaker:
Homecoming is a tradition in which members of an organization come back to visit the community. What does Homecoming mean to you and what makes it memorable?
THREE YEARS AGO
10-10-2020
<<< WE PUBLISHED >>>
THE FIRST NEWSLETTER
It all begins with an idea.
THREE YEARS AGO
WE DECIDED TO TAKE ON
HOUSING
<<< BLUE ROOM Meeting #23 on October 15, 2020 >>>
10% OF ALL BLUE ROOM REVENUES GO DIRECTLY TO FUND OUR NON PROFIT TOGETHERISM.
WE CAN ACCOMPLISH ANYTHING TOGETHER.
These materials do not purport to be all-inclusive or to contain all the information that a prospective investor may desire in considering an investment. These materials are intended merely for preliminary discussion only and may not be relied upon for making any investment decision. Any discussion or information contained in this presentation does not serve as a receipt of, or as a substitute for, personalized investment advice from Blueroom or your advisor.
This publication does not constitute an offer to sell or a solicitation to buy any securities in any fund, market sector, strategy or any other product. Investing is speculative and involves substantial risks (including, the risk of loss of the investor’s entire investment). Past performance is not indicative of future results, and there can be no assurance that the future performance of any specific investment, investment strategy, or product will be profitable.
For more information about us and our general disclosures contact us directly.