The Rundown - Peloton's Dismal Forecast, Fed Meeting Recap

Episode Date: February 1, 2024

Stock market update for February 1, 2024. S&P 500 Has Its Worst Fed-Decision Day Since March (Bloomberg) Elon Musk’s $50 Billion Tesla Pay Was Struck Down. What Happens Next? (NY Times) Activist Elliott builds roughly 13% stake in Etsy, secures board seat (CNBC) Peloton shares plummet 20% as fitness company gives dismal outlook (CNBC) The content of the podcast is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures. Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.

Welcome to The Rundown, your daily market update in under five minutes. My name is Zaid Admani, and today is Thursday, February 1st. In today's episode of The Rundown, we recap the Fed meeting and talk about why Jerome Powell bummed out investors. We also do some Elon talk and discuss why he might reincorporate Tesla in Texas. Say that five times fast. And then we end the show talking about Peloton and Etsy. One is headed in the right direction, the other not so much. Okay, let's dive into it.

Well, January is finally. over, it felt like it was going on forever, and the stock market ended the month with a thud. The Dow, S&P, and NASDAQ all dropped on Wednesday thanks to some comments made by Fed Chair Jerome Powell at the Fed meeting yesterday. So let's talk about the Fed meeting. I told you guys I was going to watch it and yes, I watched all of it. And you know, it started off pretty boring. The Fed said they wouldn't be changing interest rates, which was expected. But then Jerome Powell's press conference started and he made some comments that had the stock market reacting. Jerome Powell was asked if he thought that the economy had achieved a soft landing.

And he said that no, he wouldn't say that they've achieved that. And quote, we still have a ways to go. Obviously, investors didn't love hearing that. But I think what he said next, really bummed out investors. Jerome Powell was asked if the Fed could expect to cut interest rates in March. And he said that he doesn't think that it's likely that the central bank will cut rates in March of 2024. Yeah, those comments really just took the air out of the market. Because for the last few months, there was so much chatter about rate cuts happening in March.

and Jerome Powell pretty much shut the door on that. So according to Jerome Powell, no soft landing just yet and no rate cuts just yet. You know, it's easy to see why the markets reacted the way they did yesterday. But despite the big drop on Wednesday, the Dow, S&P, and NASDAQ did finish higher for the month of January, making that three months in a row of positive gains. You know, there's this Wall Street folklore that says as goes January, so does the year, which means that if stocks had a positive January, the markets are likely to finish in the green for the year. And since 1983, that has been true 74% of the time. So at least we have that going for us. Stocks are having a nice bounce back day today as all three major indices are in the green at the time of this recording, around 1 p.m. Eastern.

We have another action-pack day today as Apple, Amazon, and meta, all report earnings after the market closes. I'm going to be diving into those earnings and recapping them in tomorrow's episode of the rundown. So make sure you tune in. Let's do a little Elon talk because the dude has had a pretty tough start to 2024, for being the richest man in the world at least. To start off, Tesla stock is down more than 20% this year. To make matters worse, earlier this week, a Delaware judge struck down a $50 billion compensation package that the Tesla board of directors gave to Elon back in 2018. I guess some shareholders thought that the package was a little excessive, and they sued the Tesla board,

and the judge sided with them. Now, Tesla says they do plan to appeal the decision, and Elon is already floating the idea of reincorporating Tesla in another state, like maybe Texas. So this story's not over, and I'm not over. I'm sure we're going to have more updates over the next couple weeks. All right, let's talk about some stocks making moves today. Both of these stocks that I'm about to talk about were pandemic darlings, but they've had a few bumps in the road since.

Let's first talk about Etsy. It's a winner for today because the stock jumped more than 9% after news came out that activist investor Elliott Management has built up a 13% stake in the company, and they've also secured a seat on the board of directors. Elliott Management is now the largest shareholder in the company. See, whenever news of activist investors building up a stake in the company comes out, it tends to make the stock go up because activist investors buy shares in companies that they think are undervalued and they use their influence on the board of directors to make some changes of the company

to make it perform better. And if you look at Esti's performance over the last year, not great. It's completely underperformed the overall market. The stock is down more than 45% over the last year. So Elliott Management thinks that they're undervalued and they got some ideas on how they can turn around the company. And that's enough for investors to get hype. And that's why Etsy is one of the best performing stocks in the S&P 500 today. Let's talk about the other pandemic, darling. It's not having us great of a day. Peloton. Peloton stock is down more than 20% today after reporting mixed Q4 earnings. They actually beat on revenue estimates, but lost slightly more money than what Wall Street was expecting. But to make matters worse, Peloton forecasted weaker sales and bigger losses than expected in its current quarter.

And that's why the stock dropped more than 20% today at the time of this recording around 1 p.m. Eastern. See, the problem for Peloton is that their sales continued to drop. They're not growing sales anymore. And the company has warned investors, that it's still months away from growing sales or turning a profit. So, you know, you can see why the stock dropped so much today. All right, let's wrap up the show with a fun fact of the day. Today's fun fact, pretty nerdy, but I thought it was interesting. The number of companies that went public in the U.S. in 2023 grew by 42% compared to 2022.

Remember, 2022 is when the markets took a dip and not many companies were going public. So it's good to see that the IPO market is coming back. But the IPO market is still down 24% if you compared to pre-pemic levels. There's some pretty high profile IPOs that are coming this year. There's word that Reddit should be IPOing in the next couple months. So that's going to be interesting. Also, the company that makes the Wilson Tennis Rackets, Amir Sports, IPO today. So, you know, we're starting to see some movement in the IPO market.

It's good to see. All right, that's all I got for you guys today. Remember, big tech earnings coming out later today. We're going to be recapping them tomorrow. So make sure you tune in. Thank you guys for listening. We'll see you guys tomorrow. This is Public Live, your real-time resource for news events and trends in the markets.

All views presented in this show. reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Public live hosts are not financial advisors and are not affiliated with public holdings or its subsidiaries. You should make your own financial and investment decisions or consult. Respective professionals.

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