🛒☄️ The IPO Market is Back!
Happy Sunday,
On Thursday we posted a video titled “Wealth Inequality in America: The Brutal Truth”, and it is the biggest project we ever worked on for our YouTube channel. Check it out here, or at the very end of the newsletter.
It’s already been reposted on TikTok and received 10x as many comments as we usually receive in a video for the number of views it has!
In other personal news, I am working on some more free resources for our community, and working on a personal website. We may be switching newsletter providers in the future, but if we do that will be announced with ample time. Be on the lookout for future publications where we share that news.
This week we’re going to be keeping track of the Federal Reserve meeting, they meet on Sep 19-20th and we are expecting a pause in rate hikes. In our edition today, we also discuss the IPO Market and August Inflation numbers.
Thank you for reading Hump Days, I appreciate your readership, it allows me to continue creating content for you all!
— Humphrey, Rickie, Tim
Market Report
Is the IPO Market Back?
Over the past year or so, the IPO market has struggled due to high-interest rates, a banking crisis triggered by the downfall of Silicon Valley Bank, economic uncertainties, and the disappointing performance of recent IPOs. Inspite of these challenges, IPOs have recently seen a ray of optimism with the impressive debut of British semiconductor design company, Arm Holdings. On its first day of trading, Arm's shares surged by 25%, providing a much-needed boost to the IPO market.
Interestingly enough, this revival isn't sector-specific. Even Birkenstock, a German sandal company with a history spanning nearly 250 years, has announced its plans to go public on the New York Stock Exchange.
Another notable player in the IPO landscape is Instacart, the San Francisco-based grocery delivery app. The company recently raised its proposed IPO price range, aiming for a valuation of up to $10 billion, a significant increase from its previous target. This decision followed the successful launch of Arm Holdings and suggests strong investor demand for Instacart's offering. However, it's worth noting that the company's current valuation target is a mere fraction of its worth from a funding round two years ago.
Arm Holdings' strong market performance shows the continued optimism and excitement for the chip industry, which has witnessed significant growth this year driven by large corporate investments in chip-dependent AI technology. The positive reception of Arm could set a precedent, instilling confidence in other companies interested in accessing the IPO market.
August Inflation Spike as Future Expectations Shift
In August, inflation saw an acceleration due to surging gasoline prices, according to a report by the Labor Department. While overall CPI grew by 3.7% in the 12 months leading to August, the core measure — which excludes food and energy prices — rose by 4.3%, a drop from 4.7% the previous month. Gasoline prices alone jumped nearly 11% in August, which accounted for over half of the overall monthly increase.
While the Federal Reserve is still expected to maintain interest rates in its upcoming decision, the continuing rise in energy prices could influence future inflation expectations. In early September, US inflation expectations declined to their lowest in over two years, with consumers projecting a 3.1% annual price increase over the next year, a decrease from 3.5% in August.
Retail Sales Growth Hit Brakes Amid Rising Gasoline Prices
US retail sales slowed down in August, growing by only 0.6% from July, as consumers curbed discretionary spending due to escalating gasoline prices, according to Commerce Department data. When gasoline sales are excluded from the data, the increase was a mere 0.2%, one of the lowest increases this year. Although sales did increase in sectors like clothing and electronics, there was a marked deceleration in areas such as grocery and department stores.
UAW Strikes Challenge Detroit's Big Three
The United Auto Workers (UAW) union initiated an unprecedented strike against the Detroit Three automakers: General Motors, Ford, and Stellantis, following unsuccessful negotiations for a new contract. Collectively, these automakers employ about 150,000 UAW-represented workers across several U.S. factories producing cars like the Ford F-150 and Chevrolet Silverado.
UAW President, Shawn Fain, announced strikes at specific factories, emphasizing the union's readiness to extend the strikes if their demands aren't met. These demands include a 36% pay hike and a return to traditional pensions. In contrast, automakers are seeking terms that allow them to remain competitive against non-unionized entities like Tesla.
Experts warn that even selective strikes could disrupt the supply chain, costing over $5 billion in just 10 days if all U.S. plants of the automakers were involved. A prolonged strike could also hinder the automakers' progression in the electric vehicle market. The UAW, on the other hand, believes these companies can afford the pay raises, citing their significant profits over recent years.
Forecast Ahead
Federal Reserve officials will gather for the two-day meeting of the Federal Open Market Committee (FOMC) on Tuesday, with an interest rate decision and press conference featuring Chair Jerome Powell expected on Wednesday.
Big Number: 50.1%
Thanks to an increase in state pay-transparency laws, slightly more than half of the listings on Indeed.com now include salary information, the highest share yet.