🗳️ Markets Collapse on Election Results

MARKET UPDATE

Good Morning Investor! Shares of Waste Management ($WM) fell over 4% on Monday after announcing a $7.2 billion acquisition of Stericycle. Meanwhile, shares of Carnival Cruise ($CCL) rallied 5% on the announcement that the company will absorb its P&O Cruises Australia brand. Additionally, European gas prices have just surged 13% overnight, after a Norwegian outage.

TODAY’S BIG HEADLINES

International Markets Collapse on Election Results

The Airline Industry is Booming…in Secret

Elon is Buying Chips for xAI at Tesla’s Expense

MACROECONOMICS

International Markets Collapse on Election Results 🗳️

Claudia's Clout Sends Markets South: Brace yourselves, folks! Earlier this week, Mexico made history by electing its first-ever female president, Claudia Sheinbaum. While this was a monumental moment for gender equality, it sent the Mexican stock market into a dramatic nosedive.

• The iShares Mexico ETF ($EWW) plummeted almost 11% in a single day, marking a record not for progress but for panic. Year-to-date, the index is now down over 13%, proving that the market has a flair for melodrama even when global markets are soaring.

• Not to be outdone, the Franklin FTSE Mexico ETF ($FLMX) tanked 10% in its worst performance in over four years. It seems the only thing dropping faster than these ETFs was the Mexican Peso, which tumbled a staggering 4.5% in a single day following the election.

• As if this wasn't enough excitement, yields on Mexican government bonds ticked upward while Pemex's dollar bonds edged down. Who knew democracy could be this thrilling?

Morena's Majority Makes Markets Moody: So, what’s got investors quaking in their boots? The landslide victory of Morena’s party, which secured a two-thirds majority in the lower house and looks set to repeat the feat in the Senate. Investors fear that Morena’s plans for constitutional reforms might lead to uncharted economic waters. This is very reminiscent of Liz Truss’ time in office as the Prime Minister of the UK.

Modi’s Majority in Jeopardy: Meanwhile, across the globe, India is having its own electoral excitement. The Indian stock market took a hit after early voting tallies hinted at Prime Minister Modi’s Bharatiya Janata Party (BJP) losing its majority.

• On Tuesday, the Nifty 50 index dropped almost 6%, giving investors the kind of heartburn usually reserved for spicy curries. For those brave enough to seek exposure, there's the iShares India 50 ETF ($INDY).

• Adding to the tension, the India VIX Index, the country's volatility barometer, spiked around 20 percent, hitting a new 52-week peak of 26.32. If you thought roller coasters were thrilling, try keeping up with these market swings.

From Euphoria to Uncertainty: The market tantrum stems from the whiplash between early polls, which showed Modi’s party comfortably ahead, and the contradictory exit polls and early results. On Monday, investors were on cloud nine, expecting sustained economic growth. By Tuesday, they were biting their nails over India’s future economic prospects. It seems uncertainty is the only thing that’s certain in these elections.

TRAVEL & HOTELS

The Airline Industry is Booming…in Secret

Sky-High Profits with Turbulent Realities: On Monday, the International Air Transport Association (IATA) unveiled its semi-annual report, revealing that the anticipated $30.5 billion industry-wide profit isn’t quite the jackpot it appears to be. The report noted an impressive 19% boost in profit forecasts for fiscal 2024 compared to the last forecast, made just six months ago.

• Revenue for the air travel industry is also set to soar, with expectations of nearly 10% growth, reaching a dizzying $966 billion.

• This boom is courtesy of a record-breaking 5 billion passengers predicted to take to the skies in 2024, which, if true, means every frequent flyer will have even more reasons to grumble about seat sizes and luggage space.

Profits on a Diet: Despite these uplifting numbers, airlines are still not winning any business popularity contests. High capital expenditures and slim profit margins mean this growth is accompanied by a 9.4% increase in total expenses, bringing the grand total to $936 billion.

• Profit margins are set to stay as thin as an in-flight snack, limiting the airlines' ability to boost their returns on invested capital.

• To put it in perspective, the profits per passenger are expected to be a paltry $6.14 – barely enough for a good airport coffee, let alone an upgrade to business class. Clearly, in the airline industry, it’s all about volume, volume, volume.

Peacocks of the Group: Not every airline is keeping its promising outlook under wraps. JetBlue ($JBLU) strutted its stuff on Monday, with its share price taking off by more than 7% after the company upped its revenue forecasts for the second quarter.

• United Airlines ($UAL) jumped the gun last week, reaffirming their own Q2 forecasts and sending their shares up by over 5%.

• And in some welcome news for travelers, inflation’s grip on airfare prices is finally loosening, with a 5.8% drop in April’s CPI release. So, the next time you book a flight, you might just have a few extra dollars to spend on those overpriced snacks.

ARTIFICIAL INTELLIGENCE

Elon is Buying Chips for xAI at Tesla’s Expense🤖

Tesla's Stock Takes a Joyride—Into a Ditch: Shares of Tesla ($TSLA) took a nosedive on Tuesday morning, leaving the stock down over 29% year-to-date and earning it the dubious honor of being one of the worst performers in the S&P 500. The culprit behind this crash landing? Elon Musk has reportedly instructed chip maker Nvidia ($NVDA) to prioritize delivering AI chips to his other ventures, X and xAI, at Tesla’s expense, leaving it out in the cold.

• As a result, Tesla is now facing a significant delay in receiving over $500 million worth of processors, pushing the automaker’s timeline back by several months.

• This chip shortage is throwing a wrench into Tesla’s plans to develop supercomputers essential for its autonomous vehicles and robots. That's bound to ruffle a few feathers—and maybe some circuit boards!

• The revelation about Musk's chip-shuffling orders came to light thanks to a leak of internal emails from Nvidia. Looks like someone's got their wires crossed!

When Juggling Companies Goes Wrong: Musk's decision to juggle his various ventures has shareholders raising their eyebrows—and their voices. The potential conflicts of interest with Musk at the helm of multiple companies are becoming glaringly obvious, sparking fears that Tesla's performance is taking a back seat.

• xAI, Musk’s new AI startup closely tied to X, just raised a staggering $6 billion in a private funding round, valuing the company at a jaw-dropping $24 billion. While that's great news for xAI, Tesla shareholders are left wondering if their beloved electric car maker is being left in the dust.

MORE NEWS

Additional market-moving events🌎

The Soda Wars: In the battle for dominance of the soda market, Pespi have officially fallen to third place in the US behind Dr. Pepper, with their market share dropping to 8.3%. Coca Cola meanwhile, have over double Dr. Pepper's market share. (CNN)

Glitch in the Matrix: A NYSE technical glitch on Monday caused several stocks including Warren Buffett's Berkshire Hathaway to momentarily drop by 99% before recovering later in the day. (CNBC)

Washing Money: Epoch Times CFO Bill Guan has been charged for his alleged involvement in a $67 million global money laundering scheme. (CNBC)

World Domination: ARM have laid out their plans to capture 50% of the PC market within the next 5 years as Microsoft and its hardware partners prepare to launch a new batch of computers based on the British firm's technology. (Reuters)

EARNINGS

This Week’s Earnings Calendar📅

OUR PICKS

Our selections performance👾

On Monday the 11th of March, we released our “two superperformers” stock picks which we believe will provide significant outperformance compared to the S&P 500.

Here’s how the two stocks have performed since then:

• Evolution AB: 1,126.50 SEK (📉-14.20%)

• Hims & Hers Health: $20.57 (📈+42.16%)

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