Good Morning!

Good Morning Everyone! Help us make GRIT your top daily finance read! 📈 Take our survey (here) by August 29, 2023, for a shot at a FREE 1-year subscription and a 30-minute Zoom chat with Genevieve Roch-Decter.
Let's do this! Sign Up Here! 💪📊🎉 

NVIDIA crushed the quarter. And they are just getting started. In less than a decade, its data center business has gone from a rounding error to main source of sales.

Now analysts estimate a $1 trillion market opportunity.

A new computing era has begun.

🏭 Business activity in the US slowed to a crawl in August. That's according to S&P Global's flash purchasing managers indices which showed composite output (manufacturing plus services) fell more than expected to 50.4 from 52. Readings below 50 indicate a contraction. Beneath the headline number, manufacturing activity has contracted for 7 out of the last 8 months while the recent strength in services has faded with the index now reflecting the slowest expansion in 6 months. Zooming out, global PMIs paint a similar picture of contracting manufacturing activity and softer services expansion.

👩🏼‍🏭 The US labor market is not as hot as you think. Revised data from the Bureau of Labor Statistics (BLS) reveal there were (probably) about 306k fewer jobs than initially reported in March. Most of the downward revisions were seen in the transportation & warehousing and professional & business services industries. And yet, the labor market is still hot: even after taking the revisions into account, there were still at least 2.8 million more jobs in March than there were before the pandemic.

📈 "Aww, sh!t, here we go again." - Nvidia short-sellers (probably). Having already risen +225% YTD, the bar could not have been higher for Nvidia's Q2 earnings report. And yet the stock-market-carrying, AI-chip-making company not only beat Wall Street estimates, it knocked them out of the park! Booming demand from companies jockeying for position in the AI race led to revenue and profits that were 30% and 21% above consensus, respectively. That includes record revenue from its data center which rose 171% from a year ago. Turning to the current quarter, Nvidia once again blew away expectations, projecting revenues of $15.68 to $16.32 billion. Analysts were expecting "just" $12.6 billion.

🗣️ The Jackson Hole symposium kicks off today. How have stocks historically performed around the annual conference? According to DataTrek Research, stocks see an average pre-conference gain of 0.4% over the 5-days preceding the event (excluding last year's sell-off). That's just below the current +0.57% gain for the S&P 500 over the last 5 days. In the 5 days following the conference, the index has posted an average gain of 1% (again, excluding last year). What happens from here will all come down to how investors digest Powell's address tomorrow morning.

🛢️ US crude inventories are at their lowest since December 2022. Crude stocks drew more than double the expected amount last week while stockpiles at the Cushing hub saw their sharpest drop since October 2021. Oil prices fell yesterday though as production boosts from Iran and a possible easing of sanctions in Venezuela more than offset the bullish supply draw.

📊 Yesterday’s highlights:

FL Foot Locker: $0.04 EPS (vs. $0.042 expected) ❌, $1.86 billion in revenue (vs. $1.88B expected) ❌.

• The sneaker retailer missed profit and sales estimates for the second consecutive quarter.

• Like Dick's, Foot Locker has been hampered by inventory shrink and has been forced to rely on promotions to drive sales.

• The company lowered its outlook for the fiscal year sharply, also for the second consecutive quarter.

PTON Peloton: -$0.68 EPS (vs. -$0.38 expected) ❌, $642.1 million in revenue (vs. $639.9M expected) ✅.

• Peloton has now missed earnings estimates for 9 straight quarters.

• Total subscribers are up 4% from a year ago but declined by 29k from the previous quarter.

• The company issued revenue guidance for the current quarter that fell below analysts' expectations.

👀 What we’re watching today:

• INTU Intuit

• TD Toronto-Dominion Bank

• NTES NetEase

• WDAY Workday

• MRVL Marvell Technology

• DLTR Dollar Tree

• ULTA Ulta Beauty

• HTHT H World Group

• BURL Burlington Stores

• FUTU Futu Holdings

• AFRM Affirm

• GPS Gap

• JWN Nordstrom

• Shocker: Wagner Group owner Yevgeny Prigozhin's business jet "fell out of a window".

• EU PMI: Manufacturing and services activity in the EU points to stagflation.

• Transparency: The SEC has approved new rules for the private equity and hedge fund industries.

• Mortgage demand: Mortgage applications in the US fell to the lowest since 1995.

• 0DTE debate: Bank of America and Goldman Sachs are duking it out over the impact of zero-day options.

• Retail earnings: Abercrombie & Fitch shares surged after-hours after the company smashed earnings estimates.

• Software earnings: Snowflake bucked its trend of outlook cuts and reaffirmed guidance following yesterday's earnings.

• WGA offer: Hollywood producers made public the latest offer presented to them by striking writers.

• Battery deal: Engie SA will acquire US battery firm Broad Reach Power for $1.6 billion.

• Healthcare sale: Shares of NextGen surged after reports the company is considering a potential sale.

• Healthcare SPAC: Sanuwave Health plans to go public via SPAC merger.

• Steel bid: Esmark has withdrawn its $7.8 billion bid to purchase US Steel Corp.

• Pub sale: KKR is close to selling pub operator Australian Venue for ~$906 million.

Sources:

• https://www.pmi.spglobal.com/Public/Release/PressReleases?language=en

• https://www.bls.gov/web/empsit/cesprelbmk.htm

• https://twitter.com/EconomyApp/status/1694448140336984537

• https://datatrekresearch.com/

• https://www.cnbc.com/2023/08/23/foot-locker-fl-earnings-q2-2023-.html

• https://www.cnbc.com/2023/08/23/peloton-pton-earnings-q4-2023.html

Grit is a publisher of financial information, not an investment advisor. Grit does not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient. Grit does not guarantee the accuracy or completeness of the information provided in this page. All statements and expressions herein are the sole opinion of the author or paid advertiser.

THE INFORMATION CONTAINED ON THIS WEBSITE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF ANY COMPANY MAY TRADE AT ANY TIME. THE INFORMATION AND OPINIONS PROVIDED HEREIN SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND DECISIONS REGARDING THE PROSPECTS OF ANY COMPANY DISCUSSED HEREIN BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED HEREIN. INVESTORS SHOULD OBTAIN INDIVIDUAL INVESTMENT ADVICE BASED ON THEIR OWN CIRCUMSTANCES BEFORE MAKING AN INVESTMENT DECISION

No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned.

The author, publisher or insiders of the publisher may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.

Any projections, market outlooks or estimates herein are forward looking statements and are inherently unreliable. They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur. Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein. The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and Grit undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material.

Grit does not accept any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.

By using the Site or any related social media account, you are indicating your consent and agreement to this disclaimer and our terms of use. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.

^{Please read: Terms of Use, Privacy Policy, Disclosure Policy, State Disclosure Policy, and Disclaimer Policy}

If you have any questions please contact us at help@gritcap.io