Mood | February 5th, 2024

TOGETHER WITH

Today’s report is brought to you by Mood, 100% federally legal THC from small U.S. farms.

LEARN MORE ABOUT MOOD

[ good morning ]

Here’s everything you need to know today

With the uncut euphoria of big tech earnings behind us—we’re now entering into a far more complex and important phase of earnings season. Our economy’s biggest winners have demonstrated that they’ll keep winning no matter what the conditions are. Can the S&P 493 and Russell 2000 produce enough positive growth despite how hard things are for players outside of the very top?

Watching the winners for the next few weeks is going to be critical—as this market simply cannot decide how confident it feels about the status of inflation. Oil prices keep getting crushed despite fears of a wider conflict erupting across the Middle East—but U.S. treasury yields are surging after Friday’s jobs report came back much hotter than expected.

Any stock outside the Mag 7 that pulls off any kind of positive lift in the next week or so will demonstrate a really important formula for 2024. The era of winners and losers appears to be intensifying as investors need a long list of good reasons to put money in places besides Meta and Treasuries. Free Cash Flow appears to be king right now—but we’ll watch the patterns closely and keep you posted as the market reveals the real priorities for 2024 as we struggle our way into another difficult year.

For now—let’s explore the major winners who are powering the price action today. There’s a lot to unpack—so let’s jump right in:

Markets at a Glance

*Market data based on standard trading hours and calculated close to close

[ industrials ]

Caterpillar Has Completely Transformed Operations

EPS and revenue are surging despite fears of a global construction slowdown

BREAKING NEWS
Despite an overall decline in volume—construction kingpin Caterpillar ($CAT) rode a wave of higher prices and operational efficiencies to a blockbuster earnings report for Q4. The stock is ascendant.

WHAT HAPPENED
Caterpillar managed to squeeze a $5.23 EPS out of $17.1 billion in revenue in their last quarter—a huge improvement over this same time last year. Caterpillar’s margins are the real highlight here as investors simply didn’t expect that an industrial manufacturer could establish more efficient operations this quickly.

MOVING EARTH
Caterpillar suffered through lower construction and resource sales in the last quarter—but more than made up for it as their Energy and Transportation division took over as their top revenue driver. Demand in the energy equipment space has simply erupted during this period.

CAT also simply crushed their costs—making lower revenue across other divisions hurt much less as their operating profit jumped 87% in the last year. Basically—even though fewer operations are buying equipment, the ones that are buying are also generating enough revenue to justify higher equipment costs.

WHY IT MATTERS
CAT is a great demonstration of this wild bifurcation we’re seeing in the market. Caterpillar moved fast to focus sales on winning organizations that can justify higher costs, and this focus generated enough of a profit boom to completely offset what was technically a lower-volume quarter than last year. With Caterpillar anticipating 2024 to be more of the same—the market is piling onto the stock in hopes of getting access to even higher profit rewards. Caterpillar jumped over 4% in early trading.

READ MORE ➔

Together With Mood

This cannabis startup pioneered “rapid onset” gummies

Most people prefer to smoke cannabis but that isn’t an option if you’re at work or in public.

That’s why we were so excited when we found out about Mood’s new Rapid Onset THC Gummies. They can take effect in as little as 5 minutes without the need for a lighter, lingering smells or any coughing.

Nobody will ever know you’re enjoying some THC. We recommend you try them out because they offer a 100% money-back guarantee. And for a limited time, you can receive 20% off with code FIRST20.

Sectors at a Glance

*Market data based on standard trading hours and calculated close to close

[ beauty ]

Estee Lauder Shines as Management Signals Turnaround

It’s been a crushing year of declines—but there’s light at the end of the tunnel

BREAKING NEWS
Despite posting yet another decline in profits and revenue, Estee Lauder jumped in early trading after management announced layoffs and a new push to efficiency. Let’s break down their turnaround:

WHAT HAPPENED
Despite decades at the top of the beauty industry, Estee Lauder has experienced a pretty brutal decline for the past 2 years. The stock is down over 50% thanks to consistently crumbling demand in Asia and China specifically. In response, Estee Lauder is reorganizing operations and laying off 5% of their staff.

FINDING THE BOTTOM
The jump in Estee Lauder’s stock here might come across as counter-intuitive because profits fell 21% YoY and are projected to fall even further. Net sales also slumped an additional 7% in their latest report. While Estee Lauder also projects that their profits will continue to decline in 2024—the range for that decline is now narrowing and these new layoffs will help the company reverse the trend of the last two years.

WHY IT MATTERS
The stock market is fundamentally forward-looking and investors are simply rewarding Estee Lauder for finally making a significant enough plan to deal with the demand crisis the brand is facing. Estee Lauder still has a long way to go with layoffs set to affect over 3,100 positions—but at least there is an end in sight here. Estee Lauder stock popped over 16% in early trading.

READ MORE ➔

[ big pharma ]

Novo Nordisk Announces Bold Catalent Buyout

As the GLP-1 race heats up, the Ozempic OG seeks to control the suppliers

BREAKING NEWS
The stakes just got even higher in the GLP-1 race as Novo Nordisk announced they are acquiring Catalent for 16.5 billion. Catalent is a critical supplier for GLP-1 drugs and Novo Nordisk is trying to take over distribution before Eli Lilly corners the market.

WHAT HAPPENED
Catalent stock has been on a wild run after being a key manufacturer for Moderna’s initial COVID-19 vaccine and then a critical supplier of components for delivering Ozempic to patients. Technically, Novo Nordisk’s controlling shareholder—Novo Holdings—will be acquiring Catalent in an all-cash deal. The goal here is for Novo Nordisk to expand production of Ozempic and future GLP-1 drugs as efficiently as possible before the market becomes too saturated.

ALL OUT WAR
Novo Nordisk’s rival—Eli Lilly—is set to release two potentially industry-defining oral GLP-1 treatments in the next 2 years. While these won’t be a death blow to Ozempic, they could potentially shift the landscape drastically. At the same time, Novo Nordisk has their own oral treatments and a new combination drug that looks promising. With mountains of money piling into this sector—Novo Nordisk is taking advantage of a moment where they still have a competitive lead to ensure they can stand tall even as things heat up. Novo expects to expand operations quickly after closing this sale.

WHY IT MATTERS
This is a huge move that shows just how high the stakes are in the GLP-1 race. Before this, it honestly looked like Novo could fade into obscurity as Eli Lilly's treatments continued to outshine Ozempic. Now—Novo Nordisk has a much more secure foundation to stand tall in this market and push toward growth. Novo Nordisk stock rose over 1% in early trading while Catalent surged 9%. The market loves this move and loves seeing this space become all the more competitive.

READ MORE ➔

 Extra Moby Snacks

TOGETHER WITH

Today’s report is brought to you by Mood, 100% federally legal THC from small U.S. farms.

LEARN MORE ABOUT MOOD

Friends of Moby
Please support our partners who help make this daily report possible

Finance Buzz
Democratizing Financial Independence
What you should read ➔  6 Things To Do If You’re Barely Scraping By Financially