The Long Term Investor

I have to leave about 8:00 today for a meeting downtown. BUT......I will be back perhaps about mid-morning. Here is a nice little article from the Portland Orgeon paper on the new CEO who starts today.......a FRESH START for NKE....although it is going to take at least a couple of years to un-do the massive damage to the company that the prior CEO and management caused.

Elliott Hill takes reins at Nike to cheers, but with challenges ahead

https://www.oregonlive.com/business...nike-to-cheers-but-with-challenges-ahead.html

(BOLD is my opinion OR what I consider important content)
"
In one of John Donahoe’s last all-staff meetings as Nike CEO, while discussing layoffs and the company’s performance, the virtual gathering’s chatroom filled with criticism, according to screenshots viewed by The Oregonian/OregonLive.

A much different vibe greeted Elliott Hill on Monday when he addressed employees for the first time as the company’s chief executive.

“Never (seen) so much love for a CEO,” a Nike employee wrote on LinkedIn, next to a screenshot of a chatroom filled with heart icons — real-time reactions from employees.

Nike named Hill its next CEO in September. He started work Monday.

The warm greeting wasn’t unexpected for Hill, a popular 32-year Nike veteran.

He hasn’t spoken publicly since getting the job, but analysts expect his priorities will include rebuilding the company’s relationships with wholesalers, getting new products to market and reducing inventory. But more than anything, they said he needs to salve the company’s culture, which deteriorated during Donahoe’s tenure.

“It’s about morale,” said Adrienne Yih, a Barclays consumer discretionary analyst, in a Monday appearance on Yahoo Finance’s Morning Brief.

Hill, 61, who retired from Nike in 2020, joined the company in 1988 as a sales intern in the Midwest. His 32-year career at Nike includes time in sales, Europe, retail and overseeing geographic territories, including the marketing and commercial operations for Nike and its Jordan brand.

The company has previously put him forward as a standard bearer. In 2018, in the wake of claims about a toxic culture at the company, he was among the executives chosen to sit on an internal Nike panel and speak about the need for men to be better allies.

Analysts hope the track record and experience leads to a boost in Nike’s morale.

“Under Mr. Hill’s leadership, we hope to see a revitalization of the Nike culture (the good parts),” Stifel analyst Jim Duffy wrote, in a note to investors last month.

Hill’s first day marked the end of Donahoe’s tenure as CEO, though Donahoe will remain with the company as an adviser though January.

Donahoe started work on Jan. 13, 2020. He had early success with a business plan focused on growing direct sales and selling more retro sneakers, but the plan fizzled as shoppers returned to stores and Nike’s product pipeline dried up. The strategic blunders fueled the sales of upstarts, including Hoka and On.

The missteps also deflated Nike’s stock price, which decreased 19% during Donahoe’s tenure, while the S&P 500, a broad basket of equities, increased 78%.

Nike had mass layoffs in 2020 and again this year, bruising the company’s culture.

At the virtual all-staff meeting in February, according to the screenshots and interviews with people who attended, Nike employees criticized Donahoe and other company leaders for not being “genuine” and being “too scripted.”

“Leadership sounds very disconnected from the people that Nike rely on to drive this business,” one Nike employee wrote.

Hill’s connection to the business — and its employees — is one of his strong suits. Multiple current employees on Monday posted pictures on social media taken with Hill on his first day as CEO.

“I’m not here because of the brand or because of the athletes or because of the product,” Hill said at the 2018 internal panel discussion, according to a Wall Street Journal report. “I’m here because of the people.”

While Hill hasn’t spoken publicly, in a video message shared with Nike employees when he was named CEO, he encouraged them to be a “hand raiser, not a finger pointer,” and “move with speed and a sense of urgency.”

Nike canceled an investor day planned for November at which Hill likely would have announced his short- and long-term plans. The company won’t report earnings again until late December, which could mean Hill’s first two months as CEO will pass without any major strategic updates from the company.

On recent earnings calls, and at Nike’s annual meeting in September, Donahoe and Chief Financial Officer Matt Friend described a comeback plan that included focusing on sports, getting new products to market quicker, better advertising and continuing to rebuild the company’s wholesale business.

The turnaround remains a work in progress. On Oct. 1, Nike announced a 10% quarterly sales decline and forecast sales will decline 8% to 10% in the current quarter.

“A comeback at this scale takes time,” Friend said. “And while there are some early wins, we have yet to turn the corner.”

Yih, the Barclays analyst, said it typically takes a new CEO six to nine months to start to show results, and it can take a full year for a CEO’s strategy to play out.

She said you can likely cut those numbers in half for Hill, given his previous tenure at Nike, but it will still take at least nine months to develop new products."

MY COMMENT

A good first step....bring in a long time "company-man" that knows what they are doing in this business. This is a perfect illustration of what happens when you bring in a CEO that does not know the business or the company and is too ARROGANT to learn or even know that they are ignorant. Boeing is another perfect example of distracted, arrogant, bean-counter, disconnected management.

I STILL would not buy either company......at this point they are both falling knives although NIKE is now moving forward....Boeing is still collapsing. Perhaps.....they will be "buy-able" in about a couple of years.....or....perhaps not....it is very difficult to put Humpty Dumpty back together again once the magic is gone.

 

WOW....bank earnings have been flowing in and they are HOT. I cant remember a better start to earnings in the past few years. Not that this has much to do with what other companies outside banking will put up for numbers.

 

Today I have an art meeting at the Austin Club....so I will miss the open. I am part of a group that is forming to promote Early Texas Art.

Yesterday I missed the entire day to go up to Dallas for some business.....along the way I participated by phone...... as a board member in the annual meeting of a family corporation that is in the OIL BUSINESS.

Sounds good right.....the OIL BUSINESS in Texas.

Most of our mineral right holdings are in the Permian Basin. BUT....BUMMER....our annual gross income is usually less than $3000. by the time we pay taxes and fees and for our CPA.....we are lucky to not have a loss. When we make a profit it is usually only a few hundred dollars. Everything is leased........and producing....but with very minimal results.

This company was established by my Grandfather and holds land and mineral rights in Texas and New Mexico. The shares are owned by myself and my sibling as joint tenants......and....all of our cousins. So far this year we have a net income of......drum roll please......$267.

 

Ok....I will be back later......

 

Are you calling me dumb.....Strathmore?

Oh...never-mind.....LOL....I dont care. I just had my first chance today to check my account. I have only two stocks in the green. BUT....one is NVDA and the other is HD. So of course with NVDA dominating my portfolio these days....I am nicely in the green with my entire account.

 

i heard this on the radio this morning and it is mentioned by TireSmoke above. It would be very nice if the need for energy to power all the AI farms......led to a revival and massive use of NUCLEAR ENERGY in the USA. It would be a good thing compared to trying to rely on solar and wind. I am sure the AI farms will also strongly benefit the use of NAT GAS for energy production also.

Amazon, Google make dueling nuclear investments to power data centers with clean energy

https://finance.yahoo.com/news/amaz...f-8jlcqOmp62GxLKMaFT2rEshtmpjFuQTBOCiLZsmL3Lp

(BOLD is my opinion OR what I consider important content)

"Amazon (AMZN) on Wednesday said that it was investing in small nuclear reactors, coming just two days after a similar announcement by Google (GOOG), as both tech giants seek new sources of carbon-free electricity to meet surging demand from data centers and artificial intelligence.

The plans come as the owner of the shuttered Three Mile Island nuclear power plant said last month it plans to restart the reactor so tech giant Microsoft can buy the power to supply its data centers. All three companies have been investing in solar and wind technologies, which make electricity without producing greenhouse gas emissions. Now they say they need to go further in the search for clean electricity to meet both demand and their own commitments to cut emissions.

Nuclear energy is a climate solution in that its reactors don’t emit the planet-warming greenhouse gases that come from power plants that burn fossil fuels, such as oil, coal and gas. The demand for power is surging globally as buildings and vehicles electrify. People used more electricity than ever last year, placing strain on electric grids around the world. Much of the demand also comes from data centers and artificial intelligence.

The International Energy Agency forecasts that data centers’ total electricity consumption could reach more than 1,000 terawatt hours in 2026, more than doubling from 2022. Estimates suggest one terawatt hour can power 70,000 homes for a year.

“AI is driving a significant increase in the amount of data centers and power that are required on the grid,” Kevin Miller, Amazon Web Services’ vice president of global data centers, told The Associated Press, adding: “We view advanced new nuclear capacity as really key and essential."

The United States is pursuing small modular reactors, a type of nuclear reactor that can generate up to roughly one-third the amount of power of a traditional reactor. Developers say small reactors will be built faster and at a lower cost than large power reactors, scaling to fit needs of a particular location. They aim to start spinning up electricity in the early 2030s, if the Nuclear Regulatory Commission gives permission to build and operate their designs and the technology succeeds.

If new, clean power isn’t added as data centers are developed, the U.S. runs the risk of “browning the grid,” or including more power that isn't made from clean sources, said Kathryn Huff, a former U.S. assistant secretary for nuclear energy who is now an associate professor at the University of Illinois Urbana-Champaign.

The reactors are currently under development, with none currently providing power to the electric grid in the U.S. Big investors can help change that, and these announcements could be the “inflection point” that makes scaling up this technology truly possible, Huff said.

Jacopo Buongiorno, professor of nuclear science and engineering at the Massachusetts Institute of Technology, echoed that, saying the industry needs customers who value the reliability and carbon-free attributes of nuclear and are willing to pay a premium for it at first, until a number of the next-generation reactors are deployed and the cost comes down.

On Monday, Google said it was signing a contract to purchase nuclear energy from multiple small modular reactors that Kairos Power, a nuclear technology company, plans to develop.

The news highlights “the technologies that we’re going to need to achieve round the clock clean energy, not only for Google but for the world,” Michael Terrell, Google's senior director of energy and climate, told the AP.

With Kairos, Google said it expects to bring the first small modular reactor online by 2030, with more to come through 2035. The deal is projected to bring 500 megawatts of power to the grid. For context, Google consumed more than 24 terawatt hours of electricity last year, according to the company's annual environmental report. One terawatt is equal to 1,000,000 megawatts.

Meanwhile, Amazon's announcements Wednesday included working with utility Dominion Energy to explore putting a small modular reactor near its existing North Anna nuclear power station in Virginia. It's investing in reactor developer X-energy for its early development work, and collaborating with regional utility Energy Northwest in central Washington to put four of the X-energy reactors there.

Combined, the three announcements could account for more than 5,000 megawatts of power by the late 2030s with the possibility of more. All of that is still likely only a small fraction of the company’s total energy consumption, a figure that Amazon does not report publicly.

New reactor designs pair well with industrial applications because they can be built on a small footprint and generate reliable power, with some able to provide high-temperature heat too, at the site, said Doug True, chief nuclear officer at the industry trade association, Nuclear Energy Institute.

“It seems like a really good fit to support those facilities, and for a lot of different applications depending upon the amount of power that’s needed by the customer,” he said.

Both Amazon and Google have committed to using renewable energy to address climate change. By 2030, Google has pledged to meet net-zero emissions, and run carbon-free energy every hour of every day on every grid where it operates. It says it has already matched 100% of its global electricity consumption with renewable energy purchases on an annual basis. However, the company has fallen short on decreasing its emissions.

Amazon has said it would match all of its global electricity consumption with 100% renewable energy by 2030, and recently announced it met that goal early in 2023. Though the company has matched its consumption as far as purchases of an equivalent amount of renewable energy, that does not necessarily mean it is using that to power its operations.

Amazon saw its electricity emissions drop 11%, but direct emissions — known as Scope 1 — increased 7%, according to its 2023 sustainability report. The company is also targeting net zero-carbon by 2040."

MY COMMENT

Good for them....especially if it beccomes the wave of the future. I also WELCOME the use of NAT GAS for power generation....at this point it is basically "clean" with the great technology we have.

Wind and solar......disregarding the politics and social commentary.....are doomed as unreliable. Not to mention the HUGE impact on the environment that solar and wind fields have.

 

OK......the opposite of yesterday. today I only had TWO stocks up in my account.....NVDA and HD. BUT.....with NVDA being my largest position I ended up with a solid medium-to big gain today. I also beat the SP500 today by 0.62%.

It has been a WILD and CRAZY week so far.....but....I am hanging in there. Lets finish it off in style and move on into earnings.

 

I was just kidding....Strathmore.

BOTH you guys above hit the nail on the head when it comes to new/young investors. They are being suckered by Social Media and all the confusion that it causes to new investors....especially young men.

Hopefully most of them will learn some hard lessons and move on to a more RATIONAL form of investing like....long term investing.

 

I am glad that I dont own DISNEY. This sort of story is really an eye-opener and warning. They are going to KILL their business with out of line pricing.

Can you imagine paying $22 yo $26 for a SINGLE slice of cake? Can you imagine paying $8 for a SINGLE Coke?

Disney fans rip ‘offensive’ prices at new bakery — with slices starting at $22

https://nypost.com/2024/10/15/busin...ces-at-new-bakery-with-slices-starting-at-22/

 

Some of the issues driving the markets today.

Stocks Hit New Highs on Signs Consumer Holding Up

https://finance.yahoo.com/news/asian-stocks-advance-amid-us-222029442.html

(BOLD is my opinion OR what I consider important content)

"Bloomberg) -- Stocks rose and bonds fell after a solid retail sales report bolstered optimism the Federal Reserve will be able to achieve a soft landing.

Equities hit fresh all-time highs as the data underscored strong consumer demand that continues to power the world’s largest economy. Tech shares led gains on Thursday after Taiwan Semiconductor Manufacturing Co. raised its target for 2024 revenue growth. Treasury yields climbed, with traders trimming bets on Fed rate cuts. The euro dropped after the European Central Bank eased policy for the third time this year.

US retail sales strengthened in September by more than forecast in a broad advance. The value of retail purchases, unadjusted for inflation, increased 0.4% after a 0.1% gain in August. Excluding autos and gasoline stations, sales climbed 0.7%. Meantime, US jobless claims unexpectedly fell after jumping the previous week in Southeastern states affected by Hurricane Helene.

“Retail sales came in well above expectations and continue to defy the weak economy thesis,” said Quincy Krosby at LPL Financial. “The implications for monetary policy center on whether the Fed worries that the renewed strength in the economy fuels an uptick in inflation, although expectations remain that there will be a 25 basis point cut at the next meeting.”

The S&P 500 rose 0.4%, heading toward its 47th record in 2024. The Nasdaq 100 climbed 0.7%. The Dow Jones Industrial Average added 0.2%. Nvidia Corp. led gains in megacaps. the Russell 2000 fluctuated. Travelers Cos. soared 7% on a profit beat even after a larger-than-anticipated catastrophe loss driven by Hurricane Helene. Netflix Inc. dropped ahead of its earnings report.

Treasury 10-year yields advanced seven basis points to 4.09%. The yen slid to touch the key psychological level of 150 per dollar, bringing the risk of intervention by Japan back into focus. West Texas Intermediate crude rose 0.6% to $70.83 a barrel.

“Real wage growth and underlying demand for goods and services are overshadowing negative sentiment,” said David Russell at TradeStation. “The economy continues to accelerate thanks to the US consumer, and may improve further as lower fuel prices kick in. Today’s numbers make a recession look even less likely. Santa could be coming to town this year. In fact, he might already be here.”

Jeff Roach at LPL Research says strong consumer spending in September suggests economic growth in the previous quarter was solidly above trend. Looking ahead, investors need to monitor any signs that the unemployed are finding it more difficult to earn a paycheck.

“Our baseline remains that the Fed will likely cut a quarter of a percent in both November and December,” he said.

“Treasuries were under pressure ahead of the data and since the headlines, we’ve seen an extension of the price action,” said Ian Lyngen at BMO Capital Markets. “The upside in consumption reinforces investors’ perception that September was a strong month for the US real economy.”

To Bret Kenwell at eToro, if the data continues to come in strong, it could force investors to lower their expectations of Fed rate cuts going forward.

“While rate cuts do matter for the market, they’re not the only thing that matters. Consider how well the market has done this year despite wild fluctuations in interest rate expectations, as earnings and the economy have powered stocks higher,” he noted. “So long as these pillars remain in place, it should bode well for equities.”

While US stocks are hovering near a record, at least one group of investors — sytematic funds — is reducing its equity exposure amid rising price swings. But if history is any guide, the trend will reverse after the election.

The CBOE Volatility Index, or the VIX, is trading near 20, up from its average reading of 15 this year through September. That’s created selling pressure for rules-based systematic funds that typically take cues from the market direction.

Historically, price swings tend to rise leading up to the US Presidential Election as political uncertainty gets on traders’ nerves, before subsiding shortly after, says Tanvir Sandhu, Bloomberg Intelligence’s chief global derivatives strategist."

MY COMMENT

You better watch out
You better not cry
You better not pout
I'm telling you why......SANTA CLAUS IS COMING TO TOWN.

Stock market town...that is. We have very good potential for an EPIC year end rally this year. All we have to do is get past the election and hope that they somehow manage to count the votes in less than a month.....in the most advanced country in the world.

YES.....I know most of the so called "EXPERTS".....have been talking about moderate earnings....but so far....earnings are hitting it out of the park. I am going to call it right now before the guts of earnings even start...... we are going to see a GREAT EARNINGS SEASON...this time around.

In spite of people getting hammered by inflation and high prices and having a DOUR attitude.....the economy is STRONG.

 

We had a nice GREEN open today but are seeing the typical mid-morning moderation right now.

In spite of the current Ten Year Yield.....we are in rate cut mode and it will continue for 2025.

Big central banks are firmly in rate-cut mode

https://finance.yahoo.com/news/big-central-banks-firmly-rate-134056989.html

 

If you care about ECONOMIC data.....here is the Retail Sales data mentioned in a post above. Good data for the economy....BUT....I do not invest based on the economy....especially one month of data. there is a real split right now between the general economy and how people are feeling in their day to day lives.

Strong discretionary spending lifts US retail sales in September

https://finance.yahoo.com/news/us-retail-sales-increase-solidly-123836143.html

In my view the upper 25% or so of the population is driving much of the economy right now. Stocks are UP BIG and people that have high incomes are feeling good and are showing it with spending.

In my day to day contact with......"regular people"....there is a HUGE amount of concern out there right now about prices and trying to get by.

We were talking to a waiter in one of our favorite restaurants a few days ago. His income is way down this year and he is really concerned about high prices of eggs, and everything else in the store.

We are also seeing a BIG DROP OFF in business in most of the places we go for lunch. We tend to go to down-home......medium to low price places.......to eat lunch daily. We know all the places with two for one deals, and other specials, we use coupons as much as possible. Many restaurants are really in trouble right now. Our basic style is.....hole in the wall restaurants, mom and pop......we have lost a lot of them to the economy over the past three years.

 

A CLASSIC tale of an EXPERT investor.....BUT.....at least he has the GUTS to admit it.

Stanley Druckenmiller says he’s ‘licking my wounds’ from selling Nvidia too soon

https://www.cnbc.com/2024/10/16/sta...-nvidia-sale-after-stock-tripled-in-2023.html

 

HERE is a little anecdotal restaurant story relevant to what I was talking about above. This industry is in DEMAND DESTRUCTION HELL. They raised their prices too much and are now losing massive amounts of business.

TGI Fridays closes a dozen stores across America in just one month
The casual dining chain also shuttered 35 doors across the pond in the UK

https://www.foxbusiness.com/media/tgi-fridays-closes-dozen-stores-across-america-just-one-month

 

A very similar day today for me compared to yesterday. I have not looked at my account but in general know that I have a nice gain so far.....with ONLY two stocks UP....NVDA and MSFT.

We are seeing a little pause in the BIG CAP TECH stocks this week. We need to get more movement into the green today if we want to avoid a negative close.