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- No Ad | March 7th, 2024
No Ad | March 7th, 2024
GOOD MORNING
Here’s everything you need to know today
Well, a brand new banking crisis tried to kick off yesterday, but quick-acting from a bunch of different firms has stabilized the situation for now.
New York Community Bank sent shockwaves through the financial system yesterday by announcing they needed a capital injection to avoid collapse. The stock quickly recovered after hours when former Trump Treasury Secretary Steve Mnuchin swooped in with enough funds to keep the bank afloat.
Of course, investors still have a lot of questions about commercial real estate and the strength of regional banks—but there's still enough confidence to keep major indexes airborne for now. NYCB sure had a fun sense of timing since we're coming up on the 1-year anniversary of the bank run that crushed Silicon Valley Bank.
The only thing we need to keep in mind here is how there are still a ton of different pressures that could completely trip up this rally. While the Street is shrugging off this latest crisis—this rally is hot enough that it could readily turn on a dime. We're not calling the top, we're just checking our math very carefully for the foreseeable future.
Otherwise, the market is more focused on winners and losers than anything as the trading day ramps up. Let's check in on the dynamics powering another mild moment of equilibrium.
Notable Earnings Today
Markets at a Glance
| Index/Asset | Day | Month | Year |
|---|---|---|---|
| Dow | 0.20% | 0.70% | 17.61% |
| S&P | 0.51% | 3.12% | 28.02% |
| Nasdaq | 0.58% | 2.52% | 38.76% |
| Bitcoin | 3.64% | 53.43% | 204.73% |
| 10-Year | -0.80% | -1.06% | 3.64% |
FINANCE
NYCB Saved With $1 Billion Lifeline
Can the community bank keep holding on?
BREAKING NEWS
New York Community Bank capped off a wild week of price swings with an announcement they had secured $1 billion in funding from several firms including Steve Mnuchin's Liberty Strategic Capital. Let's break down all the dramatic events leading up to the rescue.
WHAT HAPPENED
NYCB has been struggling after acquiring assets from Signature Bank—one of the regional players that failed last year. They announced a leadership change and some concerns they had about risk assessment last week. Yesterday, NYCB stock was in freefall after they announced they would not survive without making a capital raise.
QUICK RESCUE
Within hours, a collection of firms had pooled upwards of $1 billion to provide NYCB with an emergency capital injection. Led by former Treasury Secretary Steve Mnuchin, the firms include Liberty Strategic Capital, Reverence Capital Partners, and Hudson Bay Capital. In addition to the investment, Mnuchin and three other investors will be added to NYCB's board. One of Mnuchin's former Treasury officials—Joseph Otting—will also take over as CEO of the ailing bank.
WHY IT MATTERS
Honestly, this move is significant enough to fully stabilize NYCB after a tumultuous start to the year. Things can still go sideways at the bank, but a leadership change this tight and focused can help assuage concerns. Mnuchin has a reputation for takeovers like this and the Street prefers familiar faces in times of crisis. After a roller coaster yesterday, NYCB stock rose 50% from bottom and stabilized. Sure, the stock is still down 24% on the week and over 66% since the start of the year—but at least collapse is no longer on the table.
BIG PHARMA
Novo Nordisk Lands a Huge Blow in GLP-1 War
But will this be enough to catch Eli Lilly?
BREAKING NEWS
Novo Nordisk stock popped after revealing incredible trial results during their Investor Day presentation. A new weight loss treatment is starting to show promise right at the moment when Eli Lilly was starting to pull away with the GLP-1 market.
WHAT HAPPENED
Despite all their success, Novo Nordisk has been lagging behind Eli Lilly in the GLP-1 race. Lilly's Mounjaro drug is more effective than Novo's Ozempic. However, Novo Nordisk revealed that their latest weight loss treatment—Amycretin—helped patients lose 13.1% of their weight in 12 weeks. This is way more effective than Ozempic and in line with results that Eli Lilly is generating with their treatments. More importantly, Amycretin can be formulated as both an injection and a pill taken orally.
BIGGEST LOSERS
This is massive because it was starting to look like Eli Lilly could just run away with the weight loss market. Now, things are looking really competitive again. Novo's Amycretin acts on both GLP-1 receptors and Amylin in the body. Eli Lilly's treatments have been seen as superior because they also treat two different pathways: GLP-1 and GIP. Analysts also are betting that the oral GLP-1 market is going to be way more important for future growth. Novo Nordisk now looks a lot stronger since they have a much more compelling potential oral treatment on the horizon.
WHY IT MATTERS
Of course, Amycretin is only in phase I trials, which have very small sample sizes. Companies like Pfizer have been crushed after their weight loss pills were canceled after phase II trials. Novo's data can still come back weaker after more trials are conducted. More importantly, Amycretin is well behind Eli Lilly's weight loss pill, so this is still very much LLY's game to lose. However, the competitive landscape in this industry just got a lot more interesting. Investors loved Novo's Investor Day presentation overall, sending the stock up 6% in early trading.
GROCERY
Kroger Surges on Profit Beat
Kroger aims to fight for the right to acquire Albertson's
BREAKING NEWS
Kroger stock continued its months-long rally today after the grocery empire smashed profit expectations and signaled that they would still pursue their proposed acquisition of Albertson's. Let's explore the details:
WHAT HAPPENED
After a year of putting their operations back together to survive this inflationary meta, Kroger boosted their net income to $736 million—nearly double last year's $450 million. This surge in profitability was generated from revenues rising only 6.4% to $37 billion. The market loves to see this level of efficiency as Kroger finally gets a better hold on their costs and logistics. More importantly, Kroger has singled this growth in optimization will continue throughout 2024.
FIGHT THE FEDS
Kroger also announced they were going to continue pushing for their proposed merger with Albertson's despite FTC lawsuits trying to block the transaction. Hearings are now slated for mid-to-late summer but Kroger is confident they can make a strong argument here. A merger with Albertson's would create a grocery juggernaut that would have tremendous monopoly pressure nationwide—but we'll wait and see how this plays out.
WHY IT MATTERS
Inflationary pressures have been weighing hard on the food business and Kroger's results here are a huge relief. Even though prices are staying high, businesses are able to create enough efficiencies to get profit growth back on track. That's all the Street really needs to see. Investors are keen for more growth, so Kroger stock popped over 6% in early trading.
Extra Moby Snacks
American Eagle stock is flying high this morning thanks to a new plan to boost their profitability. The stock added 13% in early trading after an incredible 70% surge in the past year.
Victoria’s Secret is just not thriving on their own. The stock cratered even harder today after the retailer simply could not raise investor confidence about their revenue or profitability outlook for 2024. The stock is down over 27% in early trading, giving back most of the gains they’ve earned since October.
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