Investors looking for safe havens in a dangerous market (0:30). Weight-loss drugmaker decline (1:45). Worry of recession eroding sentiment for consumer focused stocks (3:50). Fed decision out Wednesday (8:08). China EV data points coming next week (8:55). FedEx, Micron earnings coming (10:35).Episode transcripts: seekingalpha.com/wsbShow links: Novo Nordisk slips after data for next-gen obesity drugDespite recent sell-offs, Wedbush expects AI tech stocks to reach record highsIntel's appointment of Tan as CEO has Wall Street 'encouraged,' but questions remainSign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Chapter 1: What market trends are investors focusing on this week?
Brian Stewart, welcome back to Wall Street Breakfast. Great to be here on a Friday with you.
Thanks. Great to be here.
Yesterday, we had some discussion talking about markets going lower. What are you seeing out of the markets? What are you most focused on at week's end and looking ahead to next week?
So as you mentioned, the markets were down pretty sharply on Monday and continued to drift lower later in the week. So it was definitely a down week for the market. When we're looking at it, I think it's important to kind of pick out outliers and stocks that maybe buck the trend a little bit.
Chapter 2: Why are oil stocks outperforming in a down market?
If you go to the kind of winners and losers leaderboards for the week, there's just a lot of red and a lot of stocks that are down sort of similar amounts. It's kind of hard to pick out. ones to focus on. So if we're looking for some green and a big wash of red, you can look at some big oil players. So ConocoPhillips and ExxonMobil were both up over the past week.
ConocoPhillips is up 10%, ExxonMobil up 4%. They were both up as the markets fell on Monday. I think this is just sort of a seeking shelter kind of play. Overall, the stocks have been tracking oil prices over the past year and are actually down over the course of a year, underperforming the major averages. But now both stocks are beating the S&P 500 for year to date. So
Chapter 3: What is causing the decline in weight-loss drug stocks?
they've kind of jumped past the S&P 500. So I think that's just a sign that people are looking for safe havens in an overall dangerous market. And then we look at the other side, some of the unexpected leaders on the downside so far this week have been the weight loss drug makers. So Novo Nordisk is down 18% over the past week and Eli Lilly is down 12%. I think this is sort of a
a commentary on the overall weight loss market. I think there's a fear of saturation. There was a survey that came out recently that said one out of five Americans have tried GLP-1. So we're sort of getting to the point where people who want it are already using it. And so there's a question of where the next growth is coming from.
And then in terms of what's in the pipeline, there's been some underwhelming trial results lately. So there's not something on the horizon, the next great weight loss drug from these companies meant to take it over.
So I think in the sort of selling spirit that gripped the markets in general earlier this week, I think people in those stocks took the opportunity to sort of take profits, dump their position and look for other opportunities elsewhere.
What were those trials and
So Novo Nordisk, I don't know the drug off the top of my head, but it hit its primary endpoint, but it was less than people had expected in terms of the efficacy for the drug. This is sort of the next generation of their weight loss drug program. This came after another disappointing trial on the same drug earlier.
So there's just sort of a feeling that while this drug is performing competently, it's not a game changer on the market. So it's just going to be another kind of weight loss drug on a market. And so it might have some benefit for some users, but isn't going to open up the market the way people had once hoped.
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Chapter 4: How is recession fear impacting consumer stocks like Tesla and Starbucks?
Along with the losses from the weight loss drug makers, we also saw some big losses from the big discount retailers. Tesla, nobody paying attention to the markets is ignoring that fact. Tesla has been down pretty consistently. Starbucks has been down pretty consistently. What would you, is there a theme there?
So all those have the similarity that they're consumer focused stocks. So I do think that worry of a recession is just sort of eroding general sentiment for consumer stocks. Tesla obviously has been a major story, will remain a major story as we go forward. Elon Musk in his Doge role has really
Put a spotlight on the company in a way that's become a difficult brand management situation, to say the least, for the rest of the people at Tesla while he does his trip to Washington, his step away from Tesla leadership to be part of the Trump administration. So people are starting to get antsy, bulls in Tesla, people who have been kind of by the dip people so far this year.
So for instance, Dan Ives, who's a big bull on Tesla, he's from Web Bush. He called this a moment of truth and he called on Musk to step up as Tesla CEO to basically get back in the chair and start taking steps to improve the company's brand. It's been facing... protests and they've tried to push back. There was that sort of car show on the White House lawn that took place recently.
So it's just become a weird situation around Tesla. So I don't know if we can look at Tesla as a sort of market proxy at all, just because the headlines around it have made it just a bigger story. then Wall Street. You mentioned Starbucks. I think that's an interesting one because Starbucks was actually down before the major market shifts. It's been down seven of the last eight sessions.
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Chapter 5: What challenges is Tesla facing with its current leadership?
It had reached a 52-week high early last week, but then the CEO came out with rather harsh comments sort of message to workers. There were layoffs recently and the CEO said that the company had not been effective and he called on workers to work harder after the round of layoffs. He also called for leadership culture change, focus on accountability.
And I think it was jarring for shareholders because the stock had done well so far recently. And the comments from the CEO, I think were interpreted and is somewhat of a panic mode. Like we need to change, we're in trouble. And I think that that spooked a lot of shareholders. General feeling is that he's trying to just put a stamp on the company.
It's been kind of bouncing around for a number of years now. If you look at a chart, it's basically sideways for the last several years. Even reaching a 52-week high is just sort of getting back some losses that it had previously. So I think the idea isn't necessarily in the near term we need to make these changes.
It's more that we need to make these changes to break out of the doldrums that we've been in for a while now. There's been a lot of sort of leadership shuffle at Starbucks over the last few years. So I think it's just sort of planting the flag, saying I'm in charge now and kind of pointing a direction forward.
Chapter 6: What internal changes are happening at Starbucks?
perhaps putting himself out there in the zeitgeist. And as you said, making a leadership mark, I would say maybe as much for optics as for anything else.
I think that's an interesting point because I think we're coming off of an era of celebrity CEOs. Elon Musk is sort of a legacy one, obviously. But a lot of companies have kind of gone in a more generic way for their leadership. I'm thinking, I mean, Tim Cook, everybody knows his name because he's head of Apple.
But if you compare him to Steve Jobs, just sort of the personality profile he has in the culture, I mean, I don't expect a Walter Isaacson profile.
um biography of tim cook to come out anytime soon and so you might be right is part of it is just sort of getting in the public eye and creating a brand around starbucks that that has a personality to it that has a name to it that has a face of the company and uh moving away from the sort of more generic leadership that some companies have had after their founders have moved away i mean amazon's another
Good example with Bezos stepping away from the CEO role, it becomes a much less high profile position. It's more of a manager position and less of a kind of celebrity CEO situation.
Looking ahead to next week, what are you focused on there?
So the Fed decision's out Wednesday. That's going to be the big market mover. Currently, there's a 99% chance, the markets are pricing in a 99% chance that rates are going to hold steady next week. So that's basically in the can. There's not really much to debate there. But
The most interesting thing is going to be the commentary, especially Fed Chair Powell's remarks afterwards, the press conference that follows. See if there's anything off the cuff, especially related to the chances of a recession and the Fed's, how it feels like it can get out of the bind it's in. It's kind of been squeezed now with... weakening economy and sticky inflation.
There's sort of a mini stagflation situation that we've talked about. And so does he have a vision for how to sort of wiggle out of that? On the corporate side, there's not a lot of earnings coming out, but there are some interesting ones to look at. So there's a couple of Chinese EV makers. The biggest one to look at is Xpeng. It was up earlier this week. It was up 15% on Tuesday after it
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