📈 Keurig's $1B Ghost Deal

Judge blocks Tapestry acquisition, SpaceX crew returns to Earth, Hurricanes could test catastrophe bond market, Biden looking into air travel, Energy drink wars heat up

Author

Evelio Silvera
October 25, 2024

Good morning.

⚡ The Fast Five → Judge blocks Tapestry acquisition, SpaceX crew returns to Earth, Hurricanes could test catastrophe bond market, Biden looking into air travel, Energy drink wars heat up

And now…

⏱️ Your 5-minute briefing for Friday, October 25, 2024:

MARKET BRIEF
Before the Open

As of market close 10/24/2024.

Pre-Market

  • Tesla shares surged 22%, the biggest gain on the S&P and the Nasdaq.

  • IBM shares dropped 6.2%, the steepest decline on the Dow.

Fear & Greed

*DOWN 1 pt

Trends

Markets in Review

Nasdaq climbed 0.8% to 18,415.5 and S&P 500 edged up 0.2%, while the Dow slipped 0.3% amid mixed tech earnings.

The Big Picture

Tesla's (TSLA) monster 22% surge — its biggest daily gain of 2024 — reignited investor confidence in the EV sector after the company crushed earnings expectations and painted a rosy picture for 2025 production targets.

This rally, coupled with strong PMI data showing a 29-month high in business outlook, suggests the market's "soft landing" narrative is gaining traction even as Treasury yields hover above 4%.

Go Deeper

  • Follow the money: Consumer discretionary stocks led gains, with Molina Healthcare (MOH) jumping 18% on stellar earnings — highlighting resilient consumer spending despite higher rates.

  • Tech's two faces: While Tesla soared, IBM's (IBM) 6.2% drop on weak consulting revenue shows the ongoing tech sector bifurcation between AI winners and traditional players still finding their footing.

  • Economic green shoots: New home sales beat expectations despite elevated mortgage rates, suggesting Gen Z and millennial homebuyers are adapting to the higher-rate environment.

What They're Saying

"Companies hope that a stabler post-election environment is more conducive to growth," says Chris Williamson, Chief Economist at S&P Global Market Intelligence. "This is especially true in manufacturing."

WHAT WE’RE WATCHING
Events

  • Tues. Oct. 29: Conference Board - Consumer Confidence, 10:00AM

  • Why You Should Care: Financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity.

Earnings Reports

  • Today: HCA Healthcare, Colgate-Palmolive, Aon, Centene, AutoNation

  • Monday: Waste Management, Ford, Brown & Brown

MARKET BRIEF
Leading News

Energy Drink Showdown: KDP's $1B Ghost Deal

Why it matters: Keurig Dr Pepper's (KDP) bold move into premium energy drinks signals a major shift in the $20B+ energy drink market, as legacy beverage giants race to capture younger consumers ditching coffee for trendy energy alternatives.

The big picture: KDP is dropping $990M for a 60% stake in Ghost, the cult-favorite energy drink brand known for its Sour Patch Kids collabs and gym-rat following. The deal includes plans to acquire the remaining 40% by 2028.

Ghost's secret sauce? A direct connection with Gen Z and millennials through its lifestyle brand positioning and viral flavors – something traditional beverage makers have struggled to replicate.

Go deeper:

  • Ghost's founders (staying on post-acquisition) built a social media-driven brand that spans energy drinks, supplements, and wellness products

  • KDP is pledging $250M to supercharge Ghost's distribution network, potentially setting up a David vs. Goliath showdown with Monster (MNST) and Celsius (CELH)

  • The energy drink market is seeing a generational shift as younger consumers choose performance beverages over traditional coffee

What they're saying: "The battle for market share comes as many consumers opt for energy drinks... instead of coffee," highlighting how brands like Ghost are reshaping morning routines.

Bottom line: For investors, look for potential upside as the brand leverages KDP's massive distribution network to challenge category leaders Monster and Celsius. But watch those margins – premium positioning often means premium costs.

Headlines

  • SpaceX crew returns to Earth after facing delay due to Boeing capsule trouble and hurricane (link)

  • Recent hurricanes could test the growing catastrophe bond market (link)

  • The Biden administration is launching an investigation of competition in air travel (link)

  • 100m affected in February cyberattack, UnitedHealth reveals (link)

  • Judge blocks Coach owner Tapestry’s proposed acquisition of Michael Kors parent Capri (link)

CRYPTO
Fear & Greed

*DOWN 1 pt

Headlines

  • The Popular $100K Year-End Goal for Bitcoin Has Less Than 10% Probability in Options Market (link)

  • Ripple contests prior ruling’s Howey test application on XRP institutional sales in appeal (link)

  • Bitcoin Liquidity Could Flow to Cardano Ecosystem With New BTC Bridge (link)

DAILY SHARE
On the Socials

*Hat-tip to HighYieldHarry