Weekend Update #108
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 first week of 2023 was anything but uneventful.
On Wednesday, the ISM Manufacturing Index came in ever so slightly below expectations—48.4 vs 48.5 expected, while ISM Prices Paid came in at 39.4 vs 42.9 expected, signaling perhaps a cooling down of prices at the business-to-business level. Meanwhile JOLTS (Job Openings and Labor Turnover Survey) showed that the level of job openings was higher than expected for the month of November—10,458,000 vs 10,050,000 expected, indicating the demand for labor is still hot. Somewhat coincidentally, the FOMC minutes for the December meeting were also released, and one of the most important items from that report was confirmation that the Fed is now focused on the supply-demand imbalance of the labor market and ensuing higher-than-desired average hourly earnings growth, since they are a large contributor to the services portion of core PCE, the Fed’s preferred measure of inflation.
Thursday saw further confirmation of a still-strong labor market, with the ADP employment numbers showing 235,000 jobs added in December versus 150,000 expected, while initial and continuing jobless claims both came in lower than expected.
Friday provided additional evidence of a strong labor market, with a change in nonfarm payrolls of 223,000 in December versus 188,000 expected, and an unemployment rate of 3.5% versus 3.7%. All of the aforementioned jobs data led to declines in the major indices, until the release of the ISM Services Index, which came in at 49.6 versus 55.0 expected, signaling a potential decline in the service component of inflation, which would potentially give the Fed reason to ease their current policy of monetary tightening. This led the major indices to end the week up, with the S&P, Dow, and Nasdaq up 1.45%, 1.46% and 0.92%, respectively.
In other news this week, Amazon announced it would be laying of 18,000 employees, higher than the 10,000 originally estimated. Salesforce also indicated it would cut 10% of its workforce, and Microsoft said it planned to incorporate OpenAI’s ChatGPT software in its Bing search engine. Meta was fined $414 million for targeting ads in Europe, and Bed, Bath and Beyond may have taken the “Beyond” part to heart when they announced that their ability to continue as a going concern was in “substantial doubt.” Find more on the above in this week’s Blue Room Newsletter.
Friday’s Close
S&P 500 3,895.08 +2.28%
Dow Jones 33,630.61. +2.13%
Nasdaq 10,569.29. +2.56%
Thank you Blue Room Analyst OMAR GUZMAN
This week the Federal Reserve released minutes for the Federal Open Market Committee meeting on December 13 and 14. Members reiterated Chairman Powell’s comments regarding their commitment to price stability, maximum employment, and achieving their 2% inflation target. In my view, one of the most notable paragraphs in the document is the following:
Participants reaffirmed their strong commitment to returning inflation to the Committee’s two percent objective. A number of participants emphasized that it would be important to clearly communicate that a slowing in the pace of rate increases was not an indication of any weakening of the Committee’s resolve to achieve its price-stability goal or a judgment that inflation was already on a persistent downward path. Participants noted that, because monetary policy worked importantly through financial markets, an unwarranted easing in financial conditions, especially if driven by a misperception by the public of the Committee’s reaction function, would complicate the Committee’s effort to restore price stability. Several participants commented that the medians of participants’ assessments for the appropriate path of the federal funds rate in the Summary of Economic Projections, which tracked notably above market-based measures of policy rate expectations, underscored the Committee’s strong commitment to returning inflation to its 2 percent goal.”=
The committee acknowledged that even the act of communicating they were slowing the pace of rate increases has led to an easing of financial conditions, which complicates the Committee’s effort to restore price stability (i.e., achieving their 2 percent inflation target). The minutes also reflect an acknowledgment that a reduction in real GDP growth, nominal wage growth, and a loosening of the labor market will be needed to restore supply and demand imbalances. Further, the latter two have tended to be closely linked to core services excluding shelter—the largest component of core PCE price inflation—and this is increasingly being seen as the next likely source of continued price increases. These will be the key data points to watch going forward as the Fed navigates its implementation of monetary policy in its effort to achieve its price stability and maximum employment objectives.
CHARGEPOINT AND MERCEDES-BENZ ENHANCE DRIVER EXPERIENCE WITH FAST CHARGING NETWORK IN NORTH AMERICA (1/5/2023)
ChargePoint Express Plus platform delivers the speed that drivers expect and the flexibility that businesses want in a high-powered charging solution
ChargePoint Holdings, Inc. (NYSE:CHPT), a leading EV charging provider, Mercedes-Benz and MN8 Energy, one of the largest U.S. solar, stationary power and renewable energy providers, today announced plans to rapidly expand the availability of DC fast charging with the development of over 400 charging hubs across the U.S. and Canada. Powered by the ChargePoint network, the Mercedes-Benz charging hubs will be in key cities and urban population centers, along major highway corridors and close to convenient retail and service destinations.
Starting this year, ChargePoint, Mercedes-Benz, and MN8 will develop more than 400 charging hubs across N. America with more than 2,5000 ChargePoint DC fast charging ports that will enable a premium, sustainable and reliable charging experience for EV drivers. MN8 and Mercedes-Benz will jointly finance and operate the charging hubs, powered by ChargePoint’s industry leading charging hardware and software solutions.
“Automotive leaders like Mercedes-Benz continue to lead the transition to electric mobility by bringing new EVs to market, and ChargePoint remains committed to enabling the simplicity that drivers expect and the charging speed they need for all vehicles whenever and wherever drivers want,” said Pasquale Romano, CEO of ChargePoint. “With this partnership, we are expanding upon our existing relationships with Mercedes-Benz and MN8 to deliver a seamless charging experience for drivers, and turnkey charging solutions at no upfront cost to site hosts. We believe the expansion of charging hubs like these will enable the emergence of a new 30 minute retail economy, at the intersection of innovation and accessibility that combines charging and commerce, giving drivers a superior experience to charge quickly and easily.”
You won’t find two industries that have more of an impact on the world than agriculture and construction
These are helping the world to be more sustainable
You may know John Deere because of the green and yellow tractors
What you may not be aware of is how Deere has been leading innovation for 186 years
In 1837, John Deere himself invented the first self-scouring steel plow that cultivated some of the most productive land in the U.S.
In 1918, Deere replaced horses with engines — launching the first 2 tractors: the Waterloo Boy and the John Deere tractor
In 1947, Deere introduced its first self-propelled combine harvester — which merged cutting, shelling, and cleaning crop
In 1958, Deere invented the first all-hydraulic bulldozer
Since then, Deere has continuously innovated and invested to help farmers and contractors
They’ve expanded beyond agriculture into earthmoving, roadbuilding, and getting into backyards around the world.
(…)Today, Deere will show how its technology is helping farmers execute more efficiently
Farmers represent less than 2% of the U.S. population
Yet, farmers across the world grow the food, fuel, and fiber we need
Thursday
January 5, 2023
12 PM
BLUE ROOM
GLOBAL MEETING
NUMBER 104
__________ __________
Happy New Year!!!
Agenda
I. Blue Room Updates: Ops and Calendar
-- Emily
II. Blue Room Investing: Fund One 2022 Performance Update
-- Min
III. Blue Room Impact
-- Housing
-- Art
-- Agriculture
Icebreaker: Two choices:
I. Leadership. Representative Kevin McCarthy says he has earned the right to lead his party, yet a small minority of his own party disagree, why.
+ If you have an opinion, why has Mr. McCarthy failed to secure his coveted leadership position?
+ What are the hidden qualities of a great leader?
+ What are the responsibilities of a great "follower" or team member?
II. Resolutions. What are your resolutions for 2023? If you don't believe in New Years resolutions, what are your ongoing goals?
Editorial: https://www.nytimes.com/2023/01/04/opinion/kevin-mccarthy-speaker-race.html
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