Weekend Update #249
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.
Equity markets gained this week, despite the beginning of a federal government shutdown on Wednesday, as investors maintain positivity in the underlying earnings environment. The government shutdown will result in around 750,000 government furloughs, losing $400 million per day in compensation, while President Trump has alluded to using the shutdown to make permanent some of those jobs cuts. While political and economic uncertainty has increased, OpenAI reaching a $500 billion private valuation this week signifies the continued upward revisions in the trajectory for AI-related earnings. Given the backdrop, equities continue to find buyers at these valuation levels.
Although the government shutdown delayed all major public economic data releases, private data continued to flow through the end of the week. JOLTS Job Openings showed a positive surprise on economists’ estimates at 7.227 million for August, but for only the second month since 2021, there are now fewer job openings in the U.S. than total unemployed workers. Consumer Confidence also slipped on weaker perceptions of the business environment and the labor market, while perceived buying conditions remain relatively stable. ADP’s September job report showed that private jobs in the U.S. contracted for 3 out of the last 4 months, losing -32,000 jobs in September compared to the +51,000 estimate. The September Challenger survey revealed that companies have fewer plans to hire workers but with fewer plans to lay off workers as well. ISM Manufacturing showed business activity was in contraction for the 7th straight month but with an index level that was a positive surprise on estimates. ISM Services was another negative surprise as business activity fell into contraction for the first time since May 2020 while its inflation gauge was one of the highest in 3 years. Friday’s Nonfarm Payrolls report will be delayed until at least the government shutdown is ended, which adds further uncertainty to the current economic picture.
Key stock-specific announcements included Pfizer reaching an agreement with the Trump administration to delay pharmaceutical-related tariffs by three years. In exchange, the pharma company agreed to lower drug pricing for Americans under a Trump-branded prescription platform, implementing the President’s suggested “most-favored nation” pricing. The news created some pockets of hope within the pharmaceutical market that there is room for negotiation, but the overarching pressure remains for companies to lower prices which creates fear about the resulting earnings impact. Electronic Arts became the largest private buyout on record this week as Saudi Arabia’s public investment fund, Silver Lake Management, and Affinity Partners agreed to pay $55 billion for the video game company.
Friday’s Close
(Weekly Performance)
S&P 500 6,715.79 (+1.09%)
Nasdaq 22,780.51 (+1.32%)
Dow Jones 46,758.28 (+1.10%)
Thank you Blue Room Senior Analyst JARED FENLEY.
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.