Plus, the whistleblower’s complaint has been released, Peloton has gone public, and McDonald’s is about to test out plant-based burgers.
Stocks were mixed on the open, but fell quickly Thursday morning. The Dow was 33 points, or 0.1%, higher at the open, while the S&P 500 added just 0.02% and the Nasdaq traded down slightly.
The whistleblower complaint against President Trump was released by the House Intelligence Committee Thursday morning. The complaint details an “urgent concern” that Trump was “using the power of his office to solicit interference from a foreign country in the 2020 U.S. election.” The nine-page document details Trump’s call with Ukrainian president Zelenskiy, as well as the administration’s attempts to “lock down” records of the conversation. “This interference includes, among other things, pressuring a foreign country to investigate one of the president’s main domestic political rivals,” the complaint reads. “The president’s personal lawyer, Mr. Rudolph Giuliani, is a central figure in this effort. Attorney General Barr appears to be involved as well.” The whistleblower’s complaint is based on the accounts of more than half a dozen U.S. officials who “were deeply disturbed by what had transpired in the phone call. They told me that there was already a ‘discussion ongoing’ with White House lawyers about how to treat the call because of the likelihood, in the officials’ retelling, that they had witnessed the president abuse his office for personal gain.”
Acting National Intelligence Director Joseph Maguire testified about the complaint at the House Intelligence Committee. Maguire called the matter “unprecedented,” and said the whistleblower “did the right thing” by filing the complaint. He declined to say whether he had spoken to Trump about the complaint, calling such conversations “privileged.” Maguire also said that once security clearance issues have been worked out, the whistleblower will be able to “testify fully, and freely, and enjoy the protection of the law” to Congress in its impeachment inquiry.
September has been a volatile month for oil, and things are still getting more unpredictable. The U.S. slapped penalties on a handful of Chinese tanker firms for continuing to transport Iranian crude after sanctions waivers lapsed in May. Four companies, including a unit of COSCO, have been charged with knowingly violating restrictions on handling and transacting petroleum from Iran. “The sanctions this time are more direct and will have an immediate effect on anyone chartering sanctioned tonnage,” said JTD Energy Service Pte. chief strategist John Driscoll. “These latest moves are likely to add more inconvenience and result in higher costs. Anyone time-chartering tonnage from a sanctioned owner better have a Plan B.” There are also some concerns that the new sanctions could complicate next month’s trade negotiations with China as the world’s second largest economy, and largest crude buyer, has continued to import small amounts of oil from Iran despite the White House’s sanctions from May.
Peloton began trading publicly today. The company debuted at $27 per share, and values the company at $7.4 billion. The premium at-home cycling company has grown a loyal following of avid users, who pay monthly subscription fees to stream its classes from their homes. Its $2,000 bikes and $4,000 treadmill have helped the company command strong margins, and its growing memberships helped the company grow to $915 million for its fiscal 2019, up 110% from FY18. Those sales, though, have come at a cost, and Peloton’s net losses swelled to $245.7 million in 2019 from a net loss of $47.9 million last year. The company’s CEO, John Foley, said this morning that the rising costs from marketing and sales should be seen as “investments,” and stressed that Peloton is “in investment mode” and is “prioritizing growth over profitability.”
Shares of Beyond Meat are up nearly 9% at the time of writing after McDonald’s announced today that it plans to test the alternative meat maker’s patties in a plant-based burger in Canada. The sandwich McDonald’s is testing has been dubbed the P.L.T., for plant, lettuce, and tomato. “This test allows us to learn more about real-world implications of serving the P.L.T., including customer demand and impact on restaurant operations,” said Ann Wahlgren, McDonald’s vice president of global menu strategy. Since its IPO in May, Beyond Meat stock has surged more than 500%, though shares have tumbled nearly -12% in the last month following a secondary stock offering amid concerns about rising competition from Big Food rivals and the company’s valuation.
Stocks We’re Watching
Medicines Company (NASDAQ: MDCO): Medicines Co. shares are up 160% so far this year, and 5% over the last week. The company recently announced positive results from its Orion-11 study, the first of three pivotal trials for inclisiran, a twice-yearly injection for patients with stubbornly high levels of low-density lipoprotein cholesterol (LDL-C). The Orion-11 study found LDL-C reductions of 54% at the 510-day observation without any serious side effects. It’s expected that Medicines Co. will deliver more positive results later this year and will submit a new drug application in 2020. Inclisiran could top $2 billion in peak annual sales, which could drive Medicines Co. shares far higher.
Nike (NYSE: NKE): Nike shares surged to all-time highs yesterday after it reported earnings that exceeded even the most optimistic analyst estimates. The athletic shoe maker reported earnings per share of $0.86 on revenue of $10.66 billion, compared to average earnings per share of $0.70 on revenue of $10.44 billion expected by Wall Street. “Even amidst the increasingly volatile macroeconomic and geopolitical environment, we expect our unrelenting focus on better serving the consumer to continue fueling strong, broad-based growth across our global portfolio,” said Andy Campion, Nike’s executive vice president and CFO.