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- 📈 McDonald's Slips on E. Coli News
📈 McDonald's Slips on E. Coli News
Starbucks shares slide, FAA clears flying taxis for takeoff, Natural gas boom potentially coming, EU wants to crackdown on big tech, McDonald's outbreak scare
Evelio Silvera
October 23, 2024
In partnership with
Good morning.
⚡ The Fast Five → Starbucks shares slide, FAA clears flying taxis for takeoff, Natural gas boom potentially coming, EU wants to crackdown on big tech, McDonald's outbreak scare
And now…
⏱️ Your 5-minute briefing for Wednesday, October 23, 2024:
MARKET BRIEF
Before the Open
As of market close 10/22/2024.
Pre-Market
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Fear & Greed
*DOWN 1 pt
Trends
Big Tech's Smoke-Free Future Just Lit Up Wall Street
Markets in Review: Mixed day on Wall Street with Nasdaq up 0.2% to 18,573, while S&P 500 dipped slightly. Tech resilience continues despite Treasury yields climbing.
The Big Picture: Old-school companies are crushing it in the new economy. Philip Morris (PM) shocked markets with an 11% surge after crushing earnings thanks to its pivot to smoke-free products – proving that even "dinosaur" industries can reinvent themselves for the digital age.
Meanwhile, General Motors (GM) is showing Detroit still has some muscle, jumping 9.8% after proving its electric dreams aren't just vapor. The auto giant's earnings beat shows legacy players can compete in the EV race against Tesla.
Go Deeper:
The smoke-free revolution: PM's smokeless product sales now drive growth, showing how traditional vice stocks are morphing into tech plays. Think: Silicon Valley meets Big Tobacco.
Detroit's electric comeback: GM's guidance boost suggests the EV transition might be smoother than bears feared. Legacy automakers trading at value stock multiples could be sleeping giants.
Hidden inflation winner: With global inflation expected to hit 3.5% by end-2024 (below pre-pandemic norms), companies with pricing power like PM are positioned to thrive.
What They're Saying: "The battle against price growth has largely been won" — IMF Economic Counsellor Pierre-Olivier Gourinchas, signaling a potential goldilocks scenario for stocks.
WHAT WE’RE WATCHING
Events
Thurs. Oct. 24: Dept. of Labor - Unemployment Claims, 8:30AM
Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.
Earnings Reports
Today: Tesla, Tmobile, NextEra, Coca Cola, ServiceNow, At&t, Boeing, General Dynamics
Tomorrow: S&P Global, Union Pacific, Honeywell, KKR, Northrop Grumman, Capital One, Keurig Dr Pepper, Barclays
MARKET BRIEF
Leading News
McDonald's Stumbles on E. Coli Outbreak
Why it matters: McDonald's (MCD) 7% after-hours plunge creates a potential buying opportunity for long-term investors, as historically, food safety scares create temporary dips in otherwise robust quick-service restaurant stocks.
The big picture: McDonald's is facing an E. coli outbreak linked to Quarter Pounders, with 49 cases across 10 states and one fatality. The company's swift response — immediately removing suspect onions and implementing supply chain controls — demonstrates strong crisis management capabilities.
This isn't Mickey D's first food safety rodeo, and their $200B+ market cap provides substantial padding for weathering such storms. Past incidents, including the 2022 Alabama case, showed minimal long-term impact on earnings.
Go deeper:
Supply chain resilience: McDonald's vast supplier network means they can quickly pivot to new onion sources, limiting menu disruption to just a few Western states
Financial impact: Quarter Pounders represent an estimated $4B annual revenue stream, but the temporary regional pause affects less than 15% of U.S. locations
Digital transformation hedge: MCD's robust mobile app and delivery infrastructure (up 40% YoY) helps maintain sales during in-store crises
What they're saying: "We are working quickly to return our full menu in these states as soon as possible," says Joe Erlinger, McDonald's USA President, highlighting the company's commitment to both safety and operational efficiency.
The bottom line: Smart money sees this as a buying opportunity. McDonald's robust crisis response, diversified menu, and digital acceleration make this dip look more like a Happy Meal for value investors than a genuine threat to the company's fundamentals. History shows these food safety scares typically resolve within one quarter, while McDonald's long-term growth story remains intact.
Headlines
Starbucks shares slide after coffee chain says sales fell again (link)
Flying air taxis move closer to US takeoff with issuing of FAA rule (link)
A 2nd major recall for Honda in October, this time for pumps that can crack, leak fuel (link)
Denny's to close 150 restaurant locations (link)
Qualcomm shares fall 5% after report of Arm threat to scrap key license in escalating dispute (link)
EU antitrust chief nominee vows to intensify Big Tech crackdown (link)
A ‘tidal wave’ of natural gas supply — the biggest yet — will reshape global markets (link)
CRYPTO
Fear & Greed
*UP 1 pt
Headlines
DAILY SHARE
On the Socials
*Hat-tip to litcapital
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