The Rundown - Starbucks Steals Chipotle's CEO, Key Inflation Metric Comes in Cooler Than Expected

Episode Date: August 13, 2024

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Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Tuesday, August 13th. In today's episode, we recap the latest inflation data and tell you what it means for interest rates. Also, Starbucks is shaking things up with a new CEO, and you won't believe who they hired. So far, investors are pumped about the new CEO. Then stick around to the end of the show to find out how many people watch the Olympics. The ratings were up big, and you're not. and it might have to do with Peacock.

We got a lot to talk about, so let's go. Well, it was a pretty choppy day in the markets to start the week. The S&P was jumping between green and red pretty much the entire day and ended up finishing the day exactly where it started. But the NASDAG did squeeze out a gain of 0.2%. So that was nice. Yesterday was one of those weird days where more than two thirds of the stocks in the S&P 500 were actually down.

But the index was flat because it got carried by a big name like NVIDIA, which was up 4% yesterday because it was named as a top rebound stock by Bank of America. Overall, though, it was a pretty low volume day to start the week. And the investors are waiting on the inflation data to come out this week before making any major moves. And also, like, it's August, so people are also trying to enjoy whatever's left of summer. And speaking of inflation, the PPI report just came out, which measures wholesale inflation. And according to this report, wholesale inflation in July was up 0.1% compared to June and up 2.2% compared to a year ago. That is less than expected. So this is just more data showing that inflation continues

to cool and it opens the door for the Fed to cut rates in September. I mean, the markets are pricing in a hundred percent chance of the fed's cutting rates in September, but now it's a question of how big of a cut is it going to be. But remember, this is just the first of many economic data to come out this week. We're getting the CPI report tomorrow, and that number is what most people cite when they say inflation. We'll recap the CPI report in tomorrow's episode. Make sure you guys tune in to stay in the loop. Let's run through some headlines. And we have to start with the breaking news. Starbucks is replacing their CEO. The company just announced that they're removing their CEO, Lakshman, Natashimon and replacing him with Chipotle CEO Brian Nicol. Now this comes

after two activist hedge funds, Elliott Management and Starboard bought a stake in the coffee giant. We don't know the exact values, but the timing on the CEO change is not a coincidence. Because these activist hedge funds were looking to push changes at Starbucks to turn around the business. Sometimes companies resist these changes and it goes to a proxy battle. Starbucks decided not to resist and decided to replace their CEO to avoid any sort of proxy war. I mean, Starbucks business has been facing a lot of challenges, especially in China, where same store sales were down 14% in the latest quarter. That's one of the reasons why Starbucks stock is down more than 17% this year.

But investors are getting hyped about the new CEO, Brian Nickel, coming in from Chipotle. Shares of Starbucks are up more than 15% in the pre-market on this news. And it's hard not to get excited because Brian Nicol has been the CEO of Chipotle since 2018. And during his reign as CEO, shares of Chipotle are up more than 760%. And that's actually one of the reasons why Chipotle's shares are down close to 10% in reaction to this news. So maybe Brian Nicol can do what he did at Chipotle over at Starbucks. I mean, the businesses are different and have different challenges. Like Chipotle has never operated in China.

they have a substantially smaller international presence than Starbucks does. So we'll see if he can navigate some of the problems that Starbucks is having. Starbucks must have paid Brian Nicol a lot of money because I don't know by you guys, I would much rather be the CEO of Chipotle over the CEO of Starbucks. Let's make that the poll on Spotify for today. Would you rather be the CEO of Chipotle or the CEO of Starbucks? So if you're listening on Spotify, tap today's episode and vote in today's poll. I think the only downside for Chipotle is having to answer about portion sizes all the time.

Let's shift gears and talk about Home Depot. The Home Improvement retailer reported mixed earnings and is now forecasting lower sales for the rest of the year. Comparable sales in their latest quarter dropped by 3.3%. The company now expects comparable sales to decline by 3 to 4% for the entire year. Previously, they had estimated a decline of around 1%. Home Depot is blaming the decline in sales to high interest rates, which means that less people are buying houses or borrowing money to make home improvements. Management even said that customers are deferring purchases until the Fed lowers rates. And the company is also getting spooked about the direction of the economy. If the economy slows down substantially, the first thing that gets kicked from the budget is a kitchen renovation.

Let's talk about some stocks making moves today. Shears of Hullow Fresh are jumping after the meal kit company saw a sizable boost to its ready-to-eat meal delivery unit. Now, a lot of people were using HulloFresh during the pandemic when people were scared to go to the the grocery stores, companies like Hello Fresh would deliver you these meal prep kits that you still had to cook before you could eat it. Well, now the company is focused on ready to eat meals. Like there's no work required. This ready to eat meal delivery business grew by 50% year over year in the first half of 2024. I mean, this is pretty obvious, but people just don't like to cook anymore. That's why meal deliveries have become a very, very big business. I mean, I'm very guilty of this.

My Uber Eats and DoorDash budget just keeps growing every month. And so HelloFresh is now jumping on this trend and making investors pretty excited. Hello Fresh stock is up more than 10% in reaction to this news. The stock is still down more than 50% for the year, though. And down more than 90% from all-time highs from back in 2021. So they have a lot of work to do to get back to where they used to be. And on the flip side, shares of athletic apparel company on holdings are down after delivering a mixed earnings report.

Revenue's topped estimates per earnings fell short of expectations. Sales were up nearly 28%. And management reiterated its full-year outlook of at least 30% net sales growth. On Holdings is a Swiss company. They're known for their running sneakers, and they're competing pretty well against Nike. In fact, they've had record sales in back-to-back quarters to start the year. If you want to go check out the stock, it's ticker symbol O-N-O-N-O-N, and you can go check it out on the public app. Let's wrap the show with a fun fact.

The ratings for the Paris Olympics were up 82% compared to the Tokyo Games in 2021. Over 30 million people on average tuned in every single day on Comcast Media outlets, So that includes channels like NBC, USA, but also Peacock. I mean, I had Peacock running every single day for the last two weeks, and I'm kind of going through some Olympic withdrawals right now. And I'm not going to lie, Peacock was pretty awesome. The interface was pretty easy to navigate. You could watch any event live.

I mean, they did a pretty good job. But I think the big question for Comcast and Comcast investors will be, well, people that subscribe to Peacock to watch the Olympics stick around now that the games are done. I mean, Comcast is working pretty hard to establish Peacock as a legit streamer to compete with the Netflix and Disney Pluses of the world. We'll see if they can stick around. I'm sure we'll get more info about Peacock on Comcast's next earnings call, which is expected to come out in late October.

So we've got to wait a couple months. By the way, this will probably be the last Olympics-related fun fact, until 2028. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's show. Even though it's August and it feels like things are slowing down, there's still a lot to talk about in the markets. If you guys enjoyed the show,

please hit us with a five-star rating on Apple and Spotify. We're almost at 3,000 5-star ratings on Spotify, which is incredible. Thank you guys so much for all the support. 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.

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