Hand bags are displayed at Macy’s Herald Square store on December 17, 2023 in New York City.
Kena Betancur | Corbis News | Getty Images
My top 10 things to watch Friday, Oct. 25
1. Wall Street is on pace for a higher open as the yield on the benchmark 10-year Treasury note was little changed, hovering just below 4.2%. The bond market has been a thorn in the side of equities lately. The Nasdaq, S&P 500 and Dow enter Friday lower for the week.
2. The Federal Trade Commission picked up a huge win when a U.S. judge blocked the $8.5 billion merger between Tapestry, which owns brands including Coach and Kate Spade, and Capri Holdings, which owns Versace and Michael Kors. The judge said the tie-up would reduce competition in the market for so-called affordable luxury handbags.
3. Tesla shares have more room to run, even after posting their best day in more than a decade Thursday, up nearly 22% in response to earnings. The reason is Elon Musk’s electric vehicle maker is much further along on self-driving technology than people think. Club holding Nvidia‘s chips help power Tesla’s self-driving systems.
4. KeyBanc downgraded Club name Apple to a sell-equivalent underweight rating from sector weight, arguing the iPhone SE is not “purely additive” to iPhone sales; a refreshed version of the low-end iPhone is reportedly due out next year. The analyst also cited concern over upgrade rates at U.S. cell phone providers. I’m not expecting Apple to report a blowout quarter next week, but you have to take your medicine with an excellent long-term performer like Apple.
5. I spent yesterday on Chevron‘s floating production unit in the Gulf of Mexico, about 140 miles off the coast of Louisiana. Among my reflections from the rig: This is a technological marvel. It’s all electric. I was there to spotlight the growing importance of energy in the age of AI, which requires power-intensive computing. For the Club, we own electrical equipment maker Eaton as a bet on increasing data center usage.
6. Is there an opportunity in Carrier Global? Shares sold off hard Thursday on earnings. There’s seemingly some confusion regarding changes to Carrier’s guidance to reflect the sale of its fire-and-security unit, rather than an actual shortfall. Come on, man! A couple analysts lowered their price targets on the stock.
7. James Gorman is becoming a non-employee advisor to Morgan Stanley, the Wall Street bank he ran for 14 years, and will receive $400,000 a year and access to a company car, according to a U.S. securities filing. Gorman retired as CEO at the end of 2023 and will step down as executive chairman at the end of this year. His replacement, Ted Pick, will become chair of the bank, which we own for the Club. Gorman also is leading succession planning for Bob Iger at Disney, another Club stock.
8. Colgate-Palmolive delivered a classic beat-and-raise quarter. Earnings per share of 91 cents topped estimates by 2 cents and sales of $5.03 billion were ahead of the $5 billion consensus. Full-year organic sales growth is now expected in the range of 7% to 8%, up from 6% to 8% previously. Colgate has become a machine. Incredible.
9. Texas Roadhouse is the best chain you’ve never heard of — it’s got an early dine menu that offers meals around $11. Several analysts upped their price targets on the stock after its earnings report Thursday, including Baird, which went to $205 a share from $190.
10. Scotiabank downgraded gold miner Newmont Corporation to a hold-equivalent rating from outperform after its disappointing quarterly results. Costs are too high. The stock is on track for more losses at Friday’s open after a nearly 15% tumble Thursday.
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