Weekend Update #82
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.
Markets ended with a positive note to start the second half of 2022 as the Dow Jones, S&P 500, NASDAQ all recorded positive returns. Despite the major indices all being up, mixed economic data continues to gloom over the macroenvironment. Jobless claims continue to tick upwards, with the 4-week moving average reaching its highest level since December as various companies announce layoffs and hiring freezes. Demand for mortgages fell week over week, even as rates declined slightly, showing some signs of a slowdown in the housing market. Conversely, job openings and nonfarm payrolls came in above estimates. With the strength in the labor market and inflation yet to peak, policymakers have indicated a 75 basis point rate hike is likely at their July meeting. However, the decline in job openings since March has been outpacing the decline in total unemployment and shows that the tightness in the labor market is beginning to loosen. Additionally, GDP contracted 1.6% in the first quarter and is on pace to decline 1.9% in the second quarter, meeting the standard classification of a recession, so the Fed will have to tread carefully.
Foreign governments have been facing their own crises as Boris Johnson announced his resignation as Prime Minister in the UK on July 7th after multiple cabinet officials stepped down, citing lack of confidence in his leadership following multiple scandals. Shinzo Abe, Japan’s former Prime Minister, was assassinated on July 8th. Abe was known for his “Abenomics” stimulus policies and statesmanship and was a supporter of the central bank's monetary policy.
MAJOR INDICES - PERFORMANCE THIS WEEK
S&P 500 — +1.9%
Nasdaq — +4.6%
DJIA — +0.8%
Thank you Analyst NICK PEART
This week the Commerce Department released factory order data for the month of May. It grew 1.6% month-over-month, driven by increases in:
iron and steel mills +4.7%
turbines, generators, and other power transmission equipment +4.0
ships and boats +9.6%
defense aircraft and parts +8.1%
The categories with the largest declines included:
defense communications equipment (4.3%)
material handling equipment (4.1%)
household appliances (3.0%)
electrical equipment (2.8%)
Potentially the biggest positive coming out of the COVID-19 pandemic has been the historic strength of the labor market in the United States, but that strength can be a double-edged sword.
Since May 2021, total job openings have outpaced the total number of unemployed Americans at a staggering rate — even reaching 2 job openings for every unemployed person at the peak in March 2022.
On Wednesday, July 6th, JOLTS data was released for the month of May showing 11.25 million job openings in the U.S. — slightly above the consensus estimate of 11.00 million. However, the decline in job openings since March is outpacing the decline in total unemployment and shows that the tightness in the labor market is beginning to loosen.
On Friday, July 8th, the Bureau of Labor Statistics’ data showed the total number of unemployed Americans decreased to 5.91 million in June.
ISSAQUAH, Wash., July 07, 2022 (GLOBE NEWSWIRE) -- Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today reported net sales of $22.78 billion for the retail month of June, the five weeks ended July 3, 2022, an increase of 20.4 percent from $18.92 billion last year.
For the forty-four weeks ended July 3,2022, the Company reported net sales of $188.34 billion, an increase of 16.9% from $161.09 billion during the similar period last year.
Thursday
July 7, 2022
12 PM
BLUE ROOM
MEETING NUMBER 90
__________ __________
Dear Blue Room:
Last week's meeting: vimeo.com/725784218
With respect to gratitude, I am thankful for the United States of America. In 1945, U.S.-led Allied victory freed my people from imperial Japanese rule (1910-1945). In 1950, North Korea invaded the South (w/ approval of Russia and China) pushing all the way to Busan, the final perimeter of defense (to which my grandfather, 19, fled). America, led by General Douglas MacArthur, repelled the North Koreans and the Chinese, and in 1953, the two Koreas were politically and physically divided after a military stalemate.
en.wikipedia.org/wiki/Korean_War
On July 3, 1976, my parents, Sang and Kim, left their home in Namyeolri, Goheung-gun with a suitcase, borrowed cash, and airplane tickets financed through Korean Air. We lived in Wapakoneta, the birthplace of Neil Armstong (1976-1981), Lima, home of Lima Army Tank Plant (1981-1984), and then Dayton, the birthplace of the Wright Brothers and home to the Wright-Patterson AFB (1984-1994). The challenges we faced as a first generation immigrant family were enormous. But we made it. During the 1980s recession, my dad scraped enough savings to speculate on a vacant commercial lot at the end of town. The profit from that investment was seed capital to purchase a Chinese restaurant in Dayton called Mandarin Kitchen. We had lots of ups and downs, and adversity helped me truly appreciate how special it was for both me and my brother to get to attend Dartmouth, with gratitude for the financial aid package we received. Because I have been blessed with generosity from others, I want to give back as much as I can, with my time, talent and treasure. Our mission at Blue Room is to create a business platform which can change the world. This is why we are actively investing in three core platforms: finance and investment, real estate & housing, and food & agriculture.
Question:
+ What is your long term goal for yourself?
+ What is your long term goal for your community?
____________________________________
Thursday
July 4, 1776
We celebrate the founding of our country with the signing of the Declaration of Independence, written by Thomas Jefferson (POTUS #3, 1801-1809).
en.wikipedia.org/wiki/United_States_Declaration_of_Independence
Fourth of July fireworks show at Pensacola:
+ vimeo.com/727646074
+ vimeo.com/727661316
On June 8th, 2022, iRobot participated in Bank of America Securities’ 2022 Global Technology Conference. Some highlights, followed by a transcript of the event:
CFO Julie Zeiler reiterated iRobot’s financial targets provided in the 1Q earnings call: year-end revenue of $1.64 billion to $1.74 billion, gross margins between 36% to 37%, operating income between 3% to 4% and non-GAAP EPS of $1.50 to $2.10
The latest iRobot OS is a software innovation that increases the robot’s understanding of a home which allows the R&D team to improve upon features consumers want and needs
As the company thinks about new features, they try to identify logical extensions of adjacent products that align with what iRobot is already doing—air purification is an example of this; the company expects $150 million in revenue from this product line “in a number of years”
A new area of innovation for iRobot is around home security—checking on pets, seeing who is at the door
The company highlighted their 14.9 million connected, opted-in consumers, which grew 40% year-over-year, and indicates future direct-to-consumer channel growth
The iRobot Select is a Robot-as-a-Service subscription program in which customers have access to a robot of their choice, the requisite accessories, and a special customer support line; it is currently in the pilot phase
PLEASE ENJOY THESE COMPANY UPDATES FROM OUR BRILLIANT TEAM OF INTERNS
JACKSON BLAUFELD
Ticker: KR
Name: The Kroger Company
GROCERY RETAIL INDUSTRY ANALYSIS
LUCA FAGOTTI
Ticker: TWLO
Name: Twilio, Inc.
COMMUNICATIONS PLATFORM AS A SERVICE
INDUSTRY OVERVIEW
RYAN JOHNSON
Ticker: V
Name: Visa Inc.
FINANCIAL SERVICES INDUSTRY OVERVIEW
NITESH PANT
Ticker: CHPT
Name: Chargepoint
ELECTRIC CHARGING TECHNOLOGY SOLUTIONS PROVIDER
INDUSTRY OVERVIEW
JOSH ZUMMACH
Ticker: UNP
Name: Union Pacific
RAIL FREIGHT INDUSTRY OVERVIEW
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10% OF ALL BLUE ROOM REVENUES GO DIRECTLY TO FUND OUR NON PROFIT TOGETHERISM.
WE CAN ACCOMPLISH ANYTHING TOGETHER.
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