Spooky Earnings Szn | The Daily Peel | 10/11/22

Market Snapshot

Stocks were down to start the week ahead of a flurry of Q3 earnings releases coming up. PepsiCo, Delta, Walgreens, Blackrock, and several big banks will tell investors this week how bad JPow is railing them.

It sure seems like plenty of bad news is priced in, but we’ll see how the market reacts to reports this week.

At the close, the Dow sank 0.32%, the Nasdaq dropped 1.04%, and the S&P fell 0.75%.

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What's Ripe

Wheat Futures — Wheat prices have been relatively stable since mid-summer after wild spikes in the first half of the year.

But the increasing intensity of the war in eastern Europe sent prices higher to start the week.

Russia and Ukraine are some of the world’s top wheat producers, and the price of the commodity will likely continue to move along with news around the war.

Wheat was up 7.53% by the end of the day.

Walgreens Boots Alliance ($WBA) — Walgreens is reporting its Q4 earnings this week, and investors are generally optimistic.

Vax demand at its U.S. locations likely helped it in the quarter. When you go in for a jab, chances are you’ll pick up some toothpaste or shampoo while you’re there.

Although it’s been on a steady slide downward this year, $WBA has good value and pays a nice dividend, which helped lift shares Monday.

$WBA was up 4.33% by the end of the day.

What's Rotten

Rivian ($RIVN) — The brutal year for Rivian got much worse Monday.

12k vehicles, nearly all that it’s produced in its lifetime, are getting recalled due to a loose fastener.

Recalls are part of the game when you’re making cars, but this one will really hurt.

$RIVN ended the day down 7.28%.

DraftKings ($DKNG) — The fantasy sports betting company initially popped on the news that it was nearing a deal with ESPN but plummeted soon after.

$DKNG has been looking for ways to outcompete main rival FanDuel. Both platforms offer similar services, but $DKNG has more coverage of international sports.

As long as the market keeps growing, there’s probably room for an Uber-Lyft-style duopoly between the two companies.

By the end of the day, $DKNG was down 13.82%.

Thought Banana

EVs Shift Eastward — American EV manufacturers are hoping that the industry doesn’t follow the same trajectory as the combustion engine vehicle.

We all know about the Model T as the first widespread consumer car, created in the U.S. by Henry Ford. Detroit dominated the sector for decades, cranking out thousands of cars and enabling a booming economy in the area.

But Detroit, and the U.S. more broadly, lost that dominant position to Japanese brands like Toyota, who were able to make higher-quality cars that Americans loved.

History could be repeating itself in the EV market.

• Other than Tesla, no other American EV maker has been able to gain a solid foothold in the industry. Rivian just took a huge step back this week
• There’s been a deluge of EV IPOs in Asia this year, giving those companies the fuel needed to continue growing.
• The Asian market, especially China, stands to be the biggest growth area for EV demand in the near future.

For now, the U.S. seems more preoccupied with onshore chip production than owning the EV space.

But giving up yet another lead in vehicle production would definitely hurt. We’ll see if the biggest American car brands can reinvent themselves as EV makers as the industry moves in that direction.

Wise Investor Says