The Rundown - Starbucks' New CEO Unveils Turnaround Plan, Banks Secure Regulatory Win

Episode Date: September 11, 2024

Stock market update for September 11, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zaid Admani, and today is Wednesday, September 11th. In today's episode, we recap the CPI report and tell you what this means for the Fed. We also tell you Starbucks new CEO's plan to turn around the company and why Warren Buffett might be selling billions of dollars in bank stocks. Then stick around to the end of the show to find out how much money has been bet on U.S. elections so far, and why that number is likely to go way up. All right, let's go.

Stocks were up for the second day in a row as this week is off to a great start. The S&P and NASDAQ spent some time in the red yesterday, but ultimately finished higher with the S&P up 0.4%, and the NASDAQ up nearly 1%. The index was probably helped by tech stocks having a nice day yesterday. Oracle saw an 11% jump, thanks to some solid earnings. We covered that on yesterday's episodes to go check that out if you missed it. Amazon, Microsoft, and Tesla also had great days.

But now the markets turn their attention to the same. CPI report. The report just dropped this morning and it's pretty good. The CPI in August was 2.5% year over year, which is less than the 2.6% expected and less than the 2.9% that was in July. So inflation continues to cool and now it's at its lowest level since February of 2021. And then looking at core CPI, which some people like to focus on more because it removes volatile prices like food and energy, that came in at 3.2%, which was in line with expectations. So overall, this is more data showing that inflation continues to cool. And now the ball is in the Fed's court.

We have to wait and see what the Fed does. And we know they're cutting rates next week, but are they going to cut 25 basis points or are they going to go a full 50? Right now, the markets are pricing in an 85% chance of a 25 basis cut, according to the CME Fed Watch tool. But you never know. Jerome Powell could have a surprise for us. We'll let you guys know next week.

Let's run through some headlines. Starbucks new CEO, Brian Nicol, officially started his role as CEO this week. and he already has a plan to turn around the company. Brian Nicol published an open letter to all the Starbucks customers and shareholders, and it was a relatively short letter, less than a thousand words. And in that letter, he has a couple of ideas and how he plans to turn around the company. See, over the last couple of years, Starbucks went from being a spot where people met up and hung out and pretending to do work, let's be honest,

to being a spot where there are just people standing in line around the counter waiting way too long to pick up their mobile orders. And I feel like Starbucks also started reducing the number of seats and outlets in their shops. Well, Brian Nicol wants to change all that. He wants to make Starbucks inviting again. The dude's talking about bringing back comfortable seating and have a thoughtful design, like having a separate spot in the store specifically designed for people picking up mobile orders and making that separate from the spot where people are planning to stay and, you know, pretend work. And then on top of that, he wants to improve the ordering experience in the app

and then also improve operational efficiency so people aren't waiting 30 plus minutes to pick up their mobile order. I mean, that all sounds great, but we'll see what steps he actually takes to make those improvements. In his letter, he says he's going to spend the first 100 days at the stores and at support centers, meeting with key partners and suppliers, to figure out how to make these changes. He's got a lot of work to do, but investors seem to be pretty optimistic. Starbucks shares haven't really given back much of the gains after it saw a huge spike a month ago when he was announced as CEO. Now, let's shift gears and talk about big banks. Markets aren't feeling so optimistic about big banks right now.

And it might have to do with some of the comments coming out from executives from these banks. Like, for example, JP Morgan stock fell the most in four years yesterday after their president, Daniel Pinto said the projections for the company's earnings are too optimistic. That also followed comments from Goldman Sachs CEO David Solomon that said that their trading revenue is on track to drop 10% in Q3. That's a bit of a turnaround because banks and finance stocks have been some of the best performing this year. In fact, the S&P 500's finance sector is up more than 17% year to date, but maybe the good times might be in the past. I mean, Warren Buffett has been dumping billions of dollars of Bank of America stock over the last few weeks. Since mid-July, Warren Buffett has sold more than $7 billion in Bank of America stock.

So maybe he knows something. Now, something to note big banks did get a win this week with regulators. Regulators will likely look to increase big bank capital requirements by 9%. Previously, regulators had called for a capital requirement of 20% after the collapse of several banks last year, like Silicon Valley Bank. So that's good news for these big banks, but not good enough to offset some of these other concerns. Also, I have to do a quick correction on something I said in yesterday's episode. I said that Apple lost a court case in the EU and now owes the EU 1.3 billion euros in back taxes. Well, it turns out that I was off by a factor of 10.

Apple lost the court case and owes the EU 13 billion euros in back taxes, specifically Ireland. Yeah, my bad. That was a big mistake on my part. This is for a case going all the way back in 2016. So they finally got settled and Apple's going to have to pay up. I mean, 13 billion euros. That's got to sting a bit, even for a company like Apple. But hey, good news for them.

The new iPhone's about to come out. So the EU, man, they keep going after these big tech companies. In fact, yesterday, the EU's highest court also upheld a two-party. $2.4 billion fine against Google from back in 2017. This was regarding Google favoring their own shopping services. So the big tech companies are not having a good time in Europe right now. Let's talk about some stocks making moves today. Dave and Buster's stock is on the rise this morning after delivering better than expected earnings. Dave and Buster's revenue grew just shy of 3% and their earnings jumped by 65%. Now, Dave and Buster's same store sales fell by 6.3%, but I guess investors seem to be given them

a pass on that. David Buster's stock is up around 4% in reaction to these earnings, but still, the stock has lost nearly half its value since the start of the year. Now, a stock not doing so great this morning is Trump Media. The parent company of truth social stock is down big and hit record lows. This could be in reaction to the debate last night. The stock has essentially turned into a proxy on if Donald Trump will win the presidency. It could also do with the fact that the company's lockup period will end September 20th, which would allow Donald Trump, who's the majority shareholder, to sell his stake in the company. Maybe investors are that he'll sell a chunk of a stake, which could cause the stock to drop further. Right now,

the stock is down around 15% at the time of this recording. Also, GameStop is down this morning after they reported disappointing earnings. The company reported revenue declines of over 31%, which is more than what analysts had expected. The company also disclosed a stock offering up to 20 million shares. So not great. The stock is down around 15% in reaction to these earnings. Let's wrap the show with a fun fact. Over $800 million has been bet on the year. U.S. elections since June, according to Dune Analytics. Now, I bet that number has gone up. See, most of that betting has been taking place on offshore websites because betting on elections hasn't been legal in the U.S. But this week, a court in the U.S. overturned a betting ban on

U.S. elections. So yeah, people in the U.S. can now directly make money on who's going to win the election. Should be interesting. Well, all right, guys, that's the rundown for today. If you guys enjoyed today's episode, don't forget to hit us with a five-star rating on Apple in Spotify. And if you're listening on Spotify, don't forget to vote in today's Spotify poll. That engagement really does help us out. Thank you guys again for listening. Shout out to Connor and Mike for all the 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 a recommendation to buy, sell or hold that security. Rounddown guests 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. Respected professionals. Learn more at public.com disclosures. In partnership with Zayidimani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.