Weekend Update #196
Thank you for your continued support and engagement. 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.
Equities rebounded this week as investors favored a set of economic data showing underlying resilience while the Federal Reserve is ready to take action on rate cuts. Throughout the week, the market-implied probability of a 50 basis point rate hike decision at the FOMC’s September 18th meeting increased to just under 50% (market implied -1.492 cuts). While economic data surprises this week largely showed a resilient economy, traders are betting that the Federal Reserve wants to appear “ahead of the curve” as their focus shifts to mitigating risks to the labor market. The updated expectations also come as the European Central Bank enacted a second rate cut since June and signaled openness to an October cut if the economy weakens.
All eyes were on the presidential debate this week between Donald Trump and Kamala Harris, as 62 million viewers got a first look at Harris’ policy proposals and the two had the chance to spar for the first time. Following the debate, betting markets showed Kamala Harris swinging back to the frontrunner to win the election in November, but the margin remains thin in a tight race. Equity markets responded to recalculate the increased odds of a Harris victory, and Trump Media & Technology Group (DJT) shares fell as much as 17.8% in the day following the debate.
Key economic data this week included CPI and PPI reports, which largely came in line with expectations with some slightly hotter-than-expected pockets — importantly highlighting a resilient economy. An increase in shelter costs led to a slightly hot core CPI month-over-month reading at 0.3% vs. the consensus 0.2% expectation. Core CPI year-over-year remained at 3.2%, which was in line with expectations. PPI month-over-month metrics also were slightly hotter than expected with core PPI month-over-month at 0.3% vs. the expected 0.2% and the core PPI year-over-year reading at 2.4%, in line with expectations. Consumer sentiment showed an upside surprise with stronger views on the current economic situation and the future outlook, thanks largely to more stable pricing and the expectation of falling interest rates. However, NFIB’s small business optimism report showed a high level of uncertainty with weak outlooks for business conditions among small business owners.
Next week, equity markets will look to retail sales data on Tuesday and the FOMC’s rate decision on Wednesday to set the tone for trading.
Friday’s Close (Weekly Performance)
S&P 500 5,626.02 (+4.02%)
Nasdaq 17,683.98 (+5.95%)
Dow Jones 41,393.78 (+2.60%)
Thank you Blue Room Analyst JARED FENLEY
U.S. stocks are once again approaching all-time highs, and we are pleased to share that Fund One not only posted gains this week but also outperformed the S&P 500. Stocks received a boost from the bond market, as Treasury yields fell in anticipation of next week’s Federal Reserve meeting. Market expectations are high for the Fed to announce its first interest rate cut in over four years on Wednesday, with some traders hoping for a more significant reduction.
The Federal Reserve has maintained its main interest rate at a two-decade high to curb inflation by cooling the economy. However, with inflation moderating since its peak two summers ago, the Fed is now shifting its focus toward supporting the slowing job market and overall economic growth.
Sweetgreen was our top performer this week, with its stock surging over 24%. The company continues to exceed expectations in both sales growth and profit margins. Operationally, Sweetgreen has made significant strides, including the successful retrofit of its Infinite Kitchen, which has notably reduced customer wait times.
Our short position in Adobe also contributed positively to our performance. Adobe's shares fell sharply, marking their largest decline in six months, after the company’s outlook disappointed investors. The drop reflects growing frustration over the slow financial returns from Adobe's new artificial intelligence tools. Although Adobe has been integrating its proprietary AI technology, Firefly, into its applications like Photoshop and Illustrator, investors are eager for more immediate revenue gains, especially given the competitive pressures from emerging startups.
Conversely, Moderna was a key detractor from our performance this week. The company's announcement of a planned 20% reduction in its research and development budget over the next three years, coupled with a lower revenue forecast for 2025, has eroded investor confidence. While we are maintaining our position for now, we will continue to monitor Moderna closely.
Our short position in Arm also faced challenges as the stock rallied this week. Despite having doubled in value this year, Arm’s shares rose further following a bullish initiation report from a Wall Street analyst. We remain patient and believe that Arm is currently overvalued. We see a clear growth trajectory for AI-related companies like Nvidia, our largest holding, which justifies its valuation. In contrast, we feel that Arm’s shares have become overly inflated.
Despite a few detractors, we are pleased with the overall performance of the portfolio and remain confident in our strategy.
Thank you Blue Room Investing President JOHN FENLEY
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DRY STORAGE AND BRUTØ
ARE COMPANIES
GREATLY IMPACTING
OUR BEINGS AND
THE PLANET.
THEY ARE BOTH
VERY NEAR AND DEAR
TO OUR HEARTS
HERE AT BLUE ROOM
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FROM
PLANTING TO PLATE
— A Generational Experience at Id Est’s Michelin Restaurant > BRUTØ < in Denver, Colorado—
by Naia Morse
Blue Room Investing DIRECTOR OF IMPACT
Dry Storage SUPPLY CHAIN MANAGER
A chef’s table meal at Kelly Whitaker’s revelation, BRUTØ, for my mother’s 60th birthday was such a great idea. I patted myself on the back after spending weeks trying to come up with a good gift to get her and my grandmother, whose birthday happened to be on the following day. They both made the trip from Hawai’i to spend the week with me in my new-ish home, Colorado.
We propped ourselves up on the barstool high seats and took in our surroundings of the Michelin-awarded restaurant: the moss-covered wood hung over the bar was noted by grandma, the aroma of the swirling sea from the kitchen was noted by my mom, and the anticipation of the flavors we were about to dive into from me.
We are a Filipino family obsessed with food. Being from Hawai’i, we typically consider our cuisine a melting pot of sorts with the most flavorful dishes from many different cultures. My family and my home is where I inherited my love for food. My grandma and mom are accustomed to large portions with a lot of flavor and a lot of rice. Maybe this Michelin-star meal would not impress either of them, I considered, I guess we will see what happens.
BRUTØ had prepared 11 meals and nine courses all sourced sustainably. As the supply chain manager for Dry Storage Mills, seeing our grains and flours used throughout the meal was extremely rewarding. From the sourdough piada bread that incorporates white sonora flour, the dumpling wrapper made with the rouge de bordeaux flour, to the wheat berry “risotto” created from the whole white sonora wheat berry, I was in awe. All of this excited me.
The staple piada is the everlasting dish among all of BRUTØ’s seasonal menus: soft, flavorful, and garnished with porcini butter. YUM. The extensibility of the dumpling coupled with the rasam soup dish intertwined Eastern and Southeastern Asian cuisine. YUMMY. The wheat berry “risotto” was heartier than the typical risotto, like oat milk compared to coconut milk, topped with a game bird and home-made teriyaki glaze. To me, a bite tasted cohesive, unique, and taste-provoking in relation to the sight of a melting-pot of cultural staples. YUMMIEST.
At that moment, I reflected on all the time spent and work done prior to these plates being made:
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Earlier this spring, we took last year's crop of wheat, cleaned it for seed, and handed it off to our farmer(s). One of our organic farmers, Eric Pfannenstiel, grew the Rouge de Bordeaux down in the San Luis Valley.
The fun backstory: the rouge used in the dumpling and rasam dish had actually been intercropped with mustard (a regenerative practice to deter weeds from the wheat), and mustard is a key ingredient for the rasam. What a cool coincidence.
Over the spring and summer, our team visited the wheat as it grew: learned how the wheats grew from a little green bud coming out of the ground to full blown wheat stalks. At the time of harvest, we saw that some wheat had lodged due to hail, some had gotten crushed by the neighboring horses, but some ended up finding their perfect angle to face the sunlight. Throughout late summer, we coordinated the best dates for combining the ready-to-harvest wheat, sent it to the organic cleaners, got test results, and transported it to our mill. All while hoping that nothing goes wrong along the way. Spoiler alert, something always goes wrong as not one of us can control mother nature. That’s just the name of the game.
But at the end of the day, our team is dedicated to growing, sourcing, and producing the highest quality product for our accounts: grain, malted grain, and flour while doing right by the soil and the planet.
Mustard growing alongside the rouge
Final stage of wheat before harvest “heading”
White Sonora being cleaned
Getting out of my head, I looked up and wondered, “Is mom or grandma questioning the process?” I thought I knew the answer to that: of course not, they expected food to be local just like most of their foods in Hawai’i. Then I wondered, “Did they notice the enhanced flavors and notes that these dishes showcased?” As if they had read my mind, they were smiling with each bite they took and amazed with not only the flavor profiles but the in-depth background of the ingredients and the sourcing that each chef at BRUTØ knew by heart.
This made me so happy. Something typically regarded as a commodity crop, a raw material used to make a simple basic ingredient: flour. Known to Dry Storage as not only a premium product, but a tool to make this world a more sustainable and nutritious place. It seemed like BRUTØ understood the passion too, and so did my mom and grandma. I had the opportunity to watch tastemakers and artisans perform their magic with flour and wheat berries, I had known the grain from before it was in the ground, I had witnessed its evolution into a flavorful, creative, healthy end form; all of this came full circle for me. The best part was that I got to share this experience with the two people who taught me the importance of food in the first place.
Thank you, Naia, for sharing your family, your story, your passion and your talent with us at Dry Storage and Blue Room.
10% OF ALL BLUE ROOM REVENUES GO DIRECTLY TO FUND OUR NON PROFIT TOGETHERISM.
WE CAN ACCOMPLISH ANYTHING TOGETHER.
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