The Rundown - Port Strike Threatens Economy, Nvidia Rival Files to Go Public

Episode Date: October 1, 2024

Stock market update for October 1, 2024.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zadmani, and today is Tuesday, October 1st. In today's episode, we recap Q3 and tell you about Jerome Powell's latest comments on interest rates. Then we dive into the port strikes happening up and down the East Coast and the wide-ranging impact it can have on the economy. Then stick around to the end of the show to find out why Boeing shares are falling and Pepsi's latest acquisition to beef up their snack lineup. All right, let's go.

Stocks closed out the month of September on a high note. Both the S&P 500 and NASDAQ were up 0.4% with the S&P closing at a new record high. And stocks finally had a decent September. Remember, historically, September has been the worst month of the stock market, and the month started off pretty bad. But after the first week, stocks bounced back, and the S&P had its first positive September since 2019, adding about 2%. And the NASDAQ also jumped 2.7%. Now, one reason that September was a great month for the stock market was the Fed rate cuts

for mid-September. The Fed cut rates by 50 basis points. And Jerome Powell expects the Fed to cut rates two more times this year. He actually said this while speaking at an event in Nashville on Monday. But he also said that rate cuts were likely going to be smaller. The end of September also marked the end of Q3, and it was a pretty wild quarter. The S&P 500 was up 5.5%. the NASDAQ added 2.6%.

And the Dow was up 8.2%. But nobody cares about the Dow. So the big winners in Q3 were PayPal and Tesla. Both were up more than 32%. And the big loser was Super Micro, down more than 50%. Now we enter Q4, which is objectively the best quarter of the year. All right? And in a couple weeks, we're going to be right back into earnings season.

So make sure you guys are subscribed to the podcast to stay in the loop. Let's run through some headlines. And we have to start with the most important story right now. Port workers are on strike up and down the East Coast. This strike is impacting 14 U.S. ports spanning from Maine all the way to Texas. Approximately 50,000 workers part of the International Longshoreman Association Union to load and unload cargo at these ports have walked out due to a contract dispute. And this could have a pretty significant impact on the U.S. economy.

According to CNBC, between 43 and 49 percent of all U.S. imports come in from these ports. that's going to have an impact on supply chains. It's going to have an impact on imports and exports. It's going to have an impact on prices. There's a lot of things at play here. In fact, J.P. Morgan estimates the strike could cost the U.S. economy $5 billion a day, which is equivalent to about 6% of GDP. Now, it's been a while since the last time we had a strike at the ports. The last one was back in 1977. And the world looks a lot different since 1977. We become a more globalized economy. We have more goods flowing in and out of our ports. Like a lot of stuff comes through the ports these days, raw goods for construction, clothes, pharmaceutical stuff. So the longer this drags on, the more of an

impact it will have on the economy. And it doesn't seem like the two sides are close in a deal right now. The port workers are fed up with their wages, which currently sits at $39 an hour, according to the New York Times, and it's been outpaced by inflation over the past few years. Now, the port operators offered the union a 50% wage increase over six years, but that deal was rejected by the union. And it's not just a dispute over pay. Port workers are also opposing the use of automated technologies at these ports. And obviously port operators want to put in more automation. So there's a lot for both of these sides to work out. Now, some companies have started to divert shipments to West Coast ports because those workers belong to a different union so they aren't on strike. But that costs more time

and money and it's going to jam up West Coast ports, which is ultimately going to lead to increase prices for consumers. So yeah, let's hope that both these sides can come to an agreement soon. The quicker this gets resolved, the less of an impact it will have on the economy. But, man, if this strike drags on for weeks or maybe even a month, I mean, don't be. surprised if we see a ton of executives and companies mention it in their upcoming earnings column. Let's shift gears and talk about an Nvidia competitor that just filed to go public. I'm talking about the AI chipmaker's Cerebrus systems. Now, they're not really a household name right now, but they also sell chips that are used to train and run AI models. Their chip is

the WSE3 chip. And it says on their website that it has more memory than Nvidia's famous H-100 chips. Now, when I say that Cerebris is an Nvidia competitor, I'm using the word competitor pretty loosely here. Like, for example, in the first six months of the year, Cerebrus had a net loss of $66.6 million on just $136 million in sales. And back in 2021, the company had a valuation of $4 billion. Meanwhile, Nvidia's market cap is hovering around $3 trillion. Maybe Nvidia competitor might be going a little too far there. But hey, don't be surprised if Cerebus gets a lot of hype initially. While the AI hype isn't what it was earlier this year, it's still not fully gone away. Cerebris plans to list under ticker symbol CBRS on the NASDAQ. I kind of think they need

a better name. Like Cerebris doesn't really roll off the tongue, you know? Let's talk about some stocks making moves today. Shares of Trump media, ticker symbol DJT, are up more than 5% this morning. In fact, the stock has gotten up more than 30% in the past five days. Now, there's no report or reason to point to on why shares are up, but the vice president debate between J.D. Vance and Tim Walt is happening tonight in New York. Maybe it might be an anticipation of that. Now, on the flip side, Boeing shares are down this morning after reports emerged that the airplane manufacturer was thinking about raising $10 billion in a new stock offering

in order to raise funds and wake up the labor strike issues. Remember, more than 30,000 workers are on strike at Boeing. And it's estimated to cost Boeing around $1.5 billion a month, according to JP Morgan. Now, Boeing last reported they had more than $12.5 billion in cash and cash equivalent. So if they really need more cash, I mean, yeah, they're going to have to issue more shares, which typically is not good for the stock. Now, this decision to raise $10 billion isn't final. The company says they're still deciding on what to do.

But still, shares of Boeing are down more than 1% on this news. At one point, they were down more than 4% in the pre-market. They've recovered a little bit. Let's wrap the show with a fun fact. Pepsi is looking to beef up their snack game and they have their sides set on Siette. Siette makes the best tortilla chips in the world. and Pepsi is thinking about acquiring them for over a billion dollars per the Wall Street Journal. Now Pepsi has been in the snack game for a long time. In fact, since 1965, they merged with Frito Leigh.

And in fact, today, food makes up 59% of Pepsi's total sales. And honestly, their portfolio of snacks is pretty solid. They got Cheetos, they got Tostitos, Lays, Quaker Oats, if you want to count that. Now, Siette is legit. All right, they're based in my home state of Texas, family run business, and they make some great chips. And it's a relatively new company. They started back in 2014. So in just 10 years, they might sell the company for a billion dollars. That's incredible. But this brings up an important question.

If Pepsi does end up buying Siette, how is that going to impact the sales of their Tostitos brand? Tostitos is way more popular, so maybe it won't impact it at all. I don't know. I'm more of a Doritos slash Cheetos guy personally. Actually, let's make that today's Spotify poll. What is your favorite chip? It might be the classic Lays chips. Some of you freaks out there might like Ruggles.

We're going to make that the poll on Spotify today. So if you're listening to this episode on Spotify, tap today's episode and vote in today's poll and let us know. Well, all right, guys, that's the rundown for today. Got a lot going on all of a sudden with the strikes and Jerome Powell making comments. And today we got our Nike earnings coming up. So we'll be recapping that on tomorrow's episode. So if you guys haven't already, please subscribe to the podcast. And if you guys enjoyed today's episode, consider giving us a five-star rating on Apple and Spotify.

That engagement really does help us out. Thank you guys so much for listening. Shout out to Mike and Connor for all the hell. help behind the scenes, and we'll see you guys back here tomorrow. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in the 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.

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