Wall Street Brunch- September 16

Summary

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Let's start with a little history, shall we?

On September 16, 1620, the Mayflower sails from Plymouth, England, bound for the New World with 102 passengers. The ship was headed for Virginia, where the colonists—half religious dissenters and half entrepreneurs—had been authorized to settle by the British crown. However, stormy weather and navigational errors forced the Mayflower off course, and on November 21 the “Pilgrims” reached Massachusetts, where they founded the first permanent European settlement in New England in late December.  In a difficult Atlantic crossing, the 90-foot Mayflower encountered rough seas and storms and was blown more than 500 miles off course. Along the way, the settlers formulated and signed the Mayflower Compact, an agreement that bound the signatories into a “civil body politic.” Because it established constitutional law and the rule of the majority, the compact is regarded as an important precursor to American democracy. After a 66-day voyage, the ship landed on November 21 on the tip of Cape Cod at what is now Provincetown, Massachusetts.  In the first year of settlement, half the colonists died of disease. In 1621, the health and economic condition of the colonists improved, and that autumn Governor William Bradford invited neighboring Indians to Plymouth to celebrate the bounty of that year’s harvest season. Plymouth soon secured treaties with most local Indian tribes, and the economy steadily grew, and more colonists were attracted to the settlement. By the mid 1640s, Plymouth’s population numbered 3,000 people, but by then the settlement had been overshadowed by the larger Massachusetts Bay Colony to the north, settled by Puritans in 1629.  The term “Pilgrim” was not used to describe the Plymouth colonists until the early 19th century and was derived from a manuscript in which Governor Bradford spoke of the “saints” who left Holland as “pilgrimes.” The orator Daniel Webster spoke of “Pilgrim Fathers” at a bicentennial celebration of Plymouth’s founding in 1820, and thereafter the term entered common usage. 

On September 16, 1893, the largest land run in history begins with more than 100,000 people pouring into the Cherokee Strip of Oklahoma to claim valuable land that had once belonged to Native Americans. With a single shot from a pistol the mad dash began, and land-hungry pioneers on horseback and in carriages raced forward to stake their claims to the best acres.  Ironically, not many years before that same land had once been considered worthless desert. Early explorers of Oklahoma believed that the territory was too arid and treeless for white settlement, but several suggested it might be the perfect place to resettle Native Americans, whose rich and fertile lands in the southeast were increasingly coveted by Americans. The U.S. government later took this advice and began removing eastern tribes like the Cherokee and Choctaw to Oklahoma Territory in 1817. No more eager than the whites to leave their green and well-watered lands for the arid plains, some Native Americans resisted and had to be removed by force-most tragically, the 4,000 Cherokee who died during the brutal overland march known appropriately as the “Trail of Tears.”  By 1885, a diverse mixture of Native American tribes had been pushed onto reservations in eastern Oklahoma and promised that the land would be theirs “as long as the grass grows and the water runs.” Yet even this seemingly marginal land did not long escape the attention of land-hungry Americans. By the late nineteenth century, farmers had developed new methods that suddenly made the formerly reviled Plains hugely valuable. Pressure steadily increased to open the Native lands to settlement, and in 1889, President Benjamin Harrison succumbed and threw open large areas of unoccupied Native American lands to white settlement. The giant Cherokee Strip rush was only the largest of a series of massive “land runs” that began in the 1890s, with thousands of immigrants stampeding into Oklahoma Territory and establishing towns like Norman and Oklahoma City almost overnight. 

On September 16, 1908, Buick Motor Company head William Crapo Durant spends $2,000 to incorporate General Motors in New Jersey. Durant, a high-school dropout, had made his fortune building horse-drawn carriages, and in fact he hated cars–he thought they were noisy, smelly, and dangerous. Nevertheless, the giant company he built would dominate the American auto industry for decades.  In the first years of the 20th century, however, that industry was a mess. There were about 45 different car companies in the United States, most of which sold only a handful of cars each year (and many of which had an unpleasant tendency to take customers’ down payments and then go out of business before delivering a completed automobile). Industrialist Benjamin Briscoe called this way of doing business “manufacturing gambling,” and he proposed a better idea. To build consumer confidence and drive the weakest car companies out of business, he wanted to consolidate the largest and most reliable manufacturers (Ford, REO, his own Maxwell-Briscoe, and Durant’s Buick) into one big company. This idea appealed to Durant (though not to Henry Ford or REO’s Ransom E. Olds), who had made his millions in the carriage business just that way: Instead of selling one kind of vehicle to one kind of customer, Durant’s company had sold carriages and carts of all kinds, from the utilitarian to the luxurious.  But Briscoe wanted to merge all the companies completely into one, while Durant wanted to build a holding company that would leave its individual parts more or less alone. (“Durant is for states’ rights,” Briscoe said. “I am for a union.”) Durant got his way, and the new GM was the opposite of Ford: Instead of just making one car, like the Model T, it produced a wide variety of cars for a wide variety of buyers. In its first two years, GM cobbled together 30 companies, including 11 automakers like Oldsmobile, Cadillac, and Oakland (which later became Pontiac), some supplier firms, and even an electric company.  Buying all these companies was too expensive for the fledgling GM, and in 1911 the corporation’s board forced the spendthrift Durant to quit. He started a new car company with the Chevrolet brothers and was able to buy enough GM stock to regain control of the corporation in 1916, but his profligate ways got the better of him and he was forced out again in 1920. During the Depression, Durant went bankrupt, and he spent his last years managing a bowling alley in Flint.  

Now for some stock and investing news-

Futures are bright. Not sure shades are needed.

Making headlines is data warehouse firm Snowflake (SNOW), which is backed by Warren Buffett (BRK.A, BRK.B) and Salesforce (NYSE:CRM), and will begin trading on the NYSE today at a valuation of almost $33B (shares will be priced at $120). That would make it the biggest deal of the year, as well as the largest software IPO of all time. Also on the calendar this week are the IPOs of software videogame maker Unity Software (U), a direct rival of Epic Games, and packaging company Pactiv Evergreen (PTVE).

While several governance problems stemmed from Eastman Kodak's (NYSE:KODK) July announcement of a planned $765M loan from the U.S. government, a special committee hired by the board said none of those issues violated the law. The stock soared before, and after, the announcement - which vaulted the one-time photography giant into drug manufacturing - but quickly turned into a roller coaster ride as shares fell precipitously. Kodak seems to be getting back to its old ways on the news, with the stock up 41% premarket to $8.80/share.

The House Committee on Transportation and Infrastructure has released a 238-page filing, in the works for about 18 months, that paints a Boeing (NYSE:BA) that prioritized profits over safety. Numerous design, management and regulatory failures during the development phase of the 737 MAX had preceded the "preventable death" of 346 people in two crashes of the popular jetliner, as well as an FAA that was unable to ensure passenger safety. The report comes as regulators are in the final stretch of recertifying the 737 MAX, which has been grounded worldwide since March 2019. Boeing has also been hit with the coronavirus pandemic that has roiled air travel demand and recently discovered flaws on some 787 Dreamliners.

Bank of America boosts its price target on Buy-rated FedEx (NYSE:FDX) to $300 from $250 after factoring in the shipper's FQ1 numbers.  BofA says FedEx capitalized on improved volumes and the continuation of last year’s shift in focus to pricing, which began when it walked away from the Amazon business in FY19. 

Amazon (NASDAQ:AMZN) will open 1,000 delivery hubs in smaller neighborhoods across the United States, which will bring delivery's last mile closer to customers in the suburbs.  The push comes after Amazon faced pandemic-related delivery delays. CEO Jeff Bezos is reportedly prioritizing meeting the promise of same-day deliveries for many Prime members as we head into the holiday season. 

There's a significant turnaround in financials, says HC Wainwright, putting a Street-high $16 price target on Pacific Ethanol (NASDAQ:PEIX), meaning a possible three-bagger from yesterday's close.  HC Wainwright: "This shift has brought about a material immediate change in the company's financial profile taking it from an outlook burdened with expected losses to one of profitable growth." Shares are up 23.1% premarket to $5.91. 

Where is Jon Corzine and will MF Global be buying shares of Boeing today?

Where is Marissa Mayer and did her online sports betting company have the Nuggets beating the Clippers?

Where is Elizabeth Holmes and if her "mental disease" defense doesn't work, what will her team try next?

Where is Elon Musk and does he have any idea who William Durant was and does he enjoy bowling?

Have a great day everyone. Stay safe out there.

This is the day The Lord has made. Let us rejoice and be glad in it.

I can do all things through Christ who strengthens me.

Had a great visit with my oldest son, a police officer, and talked about the perceptions that go along with his job and how he is handling things. Proud of you and the men and women in blue my son.