👉 All-Time Highs Keep Comin'

Happy Sunday, everyone.

Before we begin, here’s three callouts that I believe are worth your while:

Portfolio Updates:

No changes to share as it relates to buying / selling within the stock portion of my portfolio. The Fed cutting rates catalyzed a welcomed bump in stock prices, allowing some of my largest “Long Risky” positions to hit new 52-week-highs.

In particular, Monday.com (MNDY) is now trading at $280 / share — the second largest “Long Risky” position. Nothing makes me happier than seeing a well-researched investment thesis come to life. Another name in the portfolio that enjoyed some gains this week was Crowdstrike after their management team reiterated some of their long-term financial targets (36% free cash flow margin by 2029 + $10B in ARR by 2030).

As it related to the cryptocurrency portfolio, I started buying Ethereum again. I have a feel we’re going to experience a bottom in the ETH / BTC pairing for this bull run cycle between now and the end of the year — and as someone who can’t time the market, I’ll be dollar cost averaging into ETH instead.

I plan to accumulate 10s of thousands of dollars worth of ETH between now and the end of Q1 2025.

Week in Review — Too Long, Didn’t Read:

Wall Street doesn’t believe FedEx’s management team, Olive Garden just partnered with Uber, Lennar is having trouble building new communities, BlackRock published a report encouraging investors to diversify their portfolios with Bitcoin, investors loved Nike’s CEO change, Salesforce introduced major updates at the biggest (non-Fed) event of the week, Qualcomm might try to acquire Intel, Jerome Powell cut interest rates by -50 basis points, and retail sales had a surprising (yet small) beat.

Key Earnings Announcements:

Wall Street doesn’t believe FedEx’s management team, Olive Garden just partnered with Uber, and Lennar is having trouble building new communities.

• FedEx (FDX)

Key Metrics

Revenue: $21.6 billion, compared to $21.7 billion last year

Operating Income: $1.1 billion, compared to $1.5 billion last year

Profits: $794.0 million, compared to $1.1 billion last year

Earnings Release Callout

“Despite a challenging quarter, we remain focused on transforming our network, improving our efficiency, lowering our cost-to-serve, and enhancing our ability to adapt with speed to evolving market dynamics.

Overall, I remain confident in the valuecreation opportunities ahead as we focus on reducing our structural cost, growing revenue profitably, and leveraging the insights from our vast collection of data as we continue to build the world’s most flexible, efficient and intelligent network.”

My Takeaway

• Darden Restaurants (DRI)

Key Metrics

Revenue: $2.7 billion, compared to $2.7 billion last year

Operating Income: $269.2 million, an increase of +6% YoY

Profits: $207.2 million, an increase of +6% YoY

Earnings Release Callout

“While we fell short of our expectations for the first quarter, I firmly believe in the strength of our business. I am confident in the actions all our brand teams are taking to address their guests' needs, which do not compromise the long-term health of our business for short-term benefits.”

My Takeaway

• Lennar Corp (LEN)

Key Metrics

Revenue: $9.4 billion, an increase of +8% YoY

Operating Income: $1.5 billion, an increase of +4% YoY

Profits: $1.2 billion, an increase of +5% YoY

Earnings Release Callout

“This week, the Fed decreased interest rates which should start to enhance affordability and accelerate the already strong demand for both new and existing homes.

While strong demand, enabled by incentives and mortgage rate buydowns, has driven the new home market over the past two years, we fully expect an even stronger, and more broad-based demand cycle, as rates move lower. Lower rates and controlled inflation will likely boost confidence."

My Takeaway

Investor Events / Global Affairs:

BlackRock published a report encouraging investors to diversify their portfolios with Bitcoin, investors loved Nike’s CEO change, Salesforce introduced major updates at the biggest (non-Fed) event of the week, and Qualcomm might try to acquire Intel.

• BlackRock (BLK) Picks Bitcoin to Combat $35 Trillion of American Debt

It took the United States ~200 years to accumulate our first trillion dollars of federal debt — now we’re adding that much every 100 days.

BlackRock — the world’s largest asset manager — is using Bitcoin as a way to counteract the growing debt. This looming financial instability has led to heightened institutional interest in Bitcoin as a hedge.

After the Fed’s 50 basis point interest rate cut, Bitcoin surged above $63,000 — which has helped spark optimism surrounding a “fresh liquidity cycle.” BlackRock views Bitcoin as a “unique diversifier” due to its unique scarcity and core differences when compared to traditional assets. In fact, the iShares Bitcoin Trust (operated by BlackRock) recently overtook Grayscale’s Bitcoin Trust as the largest in the world — with inflows exceeding $21 billion.

Regardless of what happens tomorrow, next week, or next year… it’s clear that BlackRock is “in it for the long-run” with Bitcoin (and digital assets as a whole). We highly encourage you to check out the report linked here.

• Nike (NKE) Rallies After CEO Change

As you can tell from the image above — Nike’s newest leader has been around for quite some time.

Nike CEO John Donahoe is stepping down on October 13, 2024 and will be succeeded by company veteran Elliott Hill — who worked at Nike for 32 years before retiring in 2020.

That’s right folks… this guy went from intern to CEO at one of the most legendary brands known to man.

Donahoe, who took over as CEO in January 2020, will stay on as an advisor until the end of January 2025. Hill’s return comes as Nike faces challenges, including a -25% stock drop this year and a broader restructuring plan. Hill, known for his deep understanding of Nike’s culture, aims to guide the company through its next phase — focusing on innovation and reconnecting with employees.

Nike's stock surged +8% immediately on the news.

• Takeaways from the Salesforce (CRM) “Dreamforce” Conference

At Dreamforce 2024 — Salesforce introduced several key innovations aimed at enhancing AI-driven solutions:

• The Agentforce Partner Network was launched, enabling partners like Accenture and AWS to deliver AI agents.

• Salesforce and IBM (IBM) expanded their partnership, bringing pre-built AI agents to improve productivity across industries using Watsonx and Agentforce technologies.

• A new collaboration between Salesforce and Google Cloud (GOOG) will allow for custom AI agents integrated with Google Workspace and BigQuery.

• Salesforce also unveiled updates to its Data Cloud, enhancing real-time data capabilities, security, and AI-driven personalization.

• Slack (owned by Salesforce) advancements include third-party AI agents and enhanced search and collaboration tools, with Agentforce integration coming soon.

• Lastly, Salesforce and Nvidia (NVDA) announced a partnership to develop AI-powered avatars for real-time customer and employee interactions.

• Qualcomm (QCOM) Approached Intel (INTC) About Takeover

Qualcomm recently approached Intel about a potential takeover, with Intel valued at approximately $87 billion. Intel — once the world’s most valuable chip company — has seen its shares plummet -60% this year, sparking interest from Qualcomm.

While no deal is certain, such a transaction would likely face antitrust scrutiny but could be viewed as a boost to the U.S. semiconductor industry. Qualcomm, valued at $185 billion, might sell parts of Intel to facilitate the deal.

BofA analyst, Vivek Arya, published the following pros and cons list over the weekend — we thought we’d share it with you.

Pros:

• Greater scale for Qualcomm with $90B now in combined annual sales

• Leadership across PC, Mobile, and server CPU

• The opportunity to leverage Intel’s large fab footprint for further scale

Cons:

• Tough regulatory environment, especially in China as history tells us even small to mid-sized deals take years to close

• Intel’s weak financials and large annual cash burn including $53B in debt and large CapEx intensity needed to support their large fab footprint

• Qualcomm’s existing relationship with ARM and TSMC make it tough to competing products to market

Major Economic Events:

Jerome Powell moved the markets in a MAJOR way and retail sales had a surprising (yet small) beat.

• Breaking Down the Fed’s Decision

The Federal Reserve cut interest rates by 50 basis points, lowering its key rate to a range of 4.75%-5% — and marking its first rate reduction since the pandemic.

This aggressive cut signals the Fed’s attempt to strike a balance between cooling inflation and a softening labor market. The decision was supported by vote of 11-1 in the FOMC.

The Fed’s “dot plot” indicates expectations of an additional 50 basis points in cuts by year-end, with another full percentage point decrease projected by 2025. Despite this move, the Fed maintained its quantitative tightening program, reducing its balance sheet to $7.2 trillion.

Chair Jerome Powell emphasized that the Fed aims to restore price stability without triggering significant unemployment increases. Markets reacted with initial volatility, and while the Dow jumped 375 points post-announcement, stocks ultimately ended the day slightly lower. Then Thursday morning rolled around — and the markets RIPPED:

The Fed's decision comes as inflation is expected to hit 2.3% by year-end, with unemployment rising to 4.4%. It’s questionable that the Fed was so eager to drop rates when Jerome Powell consistently said that the “economy is strong” — but we’ll see if this time will truly be different for the markets:

• Retail Sales Gave Economists a Positive Surprise

US retail sales unexpectedly rose +0.1% in August — beating estimates of a -0.2% decline — driven by a +1.4% increase in e-commerce sales.

• Electronics, clothing, and furniture saw declines, while control-group sales — which exclude volatile categories like autos and gas — rose +0.3% for the fourth straight month.

• The control group's +5.7% annualized growth over the last three months is the fastest since August 2023.

• Gas station receipts fell due to lower pump prices, while restaurant and bar spending remained flat.

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