Mission 45.24 Target

The Briefing Room: Macro Minute

Last week, the markets showed signs of cautious repositioning as the S&P 500 and Nasdaq closed down by 1.6% and 1.8%, respectively. This pullback hints at potential profit-taking and the anticipation of elevated volatility as Election Day approaches. Even Gold, typically a safe-haven asset, saw a relatively flat week, though it recorded a strong 3.5% gain for October. This cooling off across assets suggests a shift in sentiment, as investors brace for the dual impact of election uncertainty and economic policy shifts.

Election Volatility and the “Trump Trade” vs. “Kamala Trade”

As the election nears, we’re witnessing familiar dynamics where traders attempt to hedge or capitalize on anticipated outcomes. Institutions and individuals alike are positioning portfolios to express their expectations, leading to distinct “Trump” or “Kamala” trades. Historically, Trump has favored tariffs and protectionist policies, reminiscent of Reagan’s 1980s stance on Japanese imports. In a parallel to Reagan’s limits on Japanese cars, Trump’s focus is now on restricting Chinese EVs from the U.S. market, driven by a similar desire to protect American industries.

If Trump continues with tariff-heavy policies, we could see an environment that fuels stagflation—a mix of rising prices (inflation) and slowed economic growth. Tariffs, especially on essential goods, tend to increase costs across the board, while also reducing global trade, potentially slowing growth. However, regardless of who takes office, the U.S. market’s long-term appeal remains intact. This short-term volatility could even present a “Buy the Rumor, Sell the News” opportunity, giving investors a chance to pick up high-quality companies at discounted prices.

Earnings and the Fed: A Perfect Storm?

This week, the market will also be flooded with a deluge of earnings reports—nearly 5,000 companies are set to disclose their performance, including key names across multiple sectors. Combined with the upcoming Federal Reserve rate decision on Thursday, this wave of data has the potential to amplify volatility, making the case for holding cash or reducing exposure for those who want to sidestep a possible shakeout in their portfolios.

With election tension, earnings season, and a Fed announcement all converging, the market is primed for heightened sensitivity. For those with positions at risk, some standard portfolio trimming and risk management might be prudent. This week may be one for laying out simpler, lower-risk strategies and ensuring portfolio flexibility to react to any dramatic market moves.

Novum Cognitio:

Debrief: Revisiting Past Intel - Twilio ($TWLO)

Let’s circle back to Twilio ($TWLO), a name we covered in the Agent’s Report just over a month ago (Prior Agent Report) . Back then, Twilio was showing early signs of turning the corner on profitability, but last week’s earnings report delivered an impressive 18% earnings beat and 3% revenue beat, reinforcing the narrative that the company is on track toward sustainable profitability. The market has responded enthusiastically, pushing $TWLO up +33% since our initial coverage.

Twilio’s 2024 Guidance Revisions

Twilio has not only shown strength in its recent quarter but has also raised its guidance, signaling confidence in its longer-term growth:

•Organic Revenue Growth: Raised to 7.5% - 8% YoY, up from the previous estimate of 6% - 7%.

•Non-GAAP Income from Operations: Now expected at $700 million - $710 million, an increase from the previous $650 million - $675 million range.

•Free Cash Flow: Projected to reach $650 million - $675 million, reflecting disciplined cash management.

Twilio’s guidance revision points to improved operating income margins, as the company continues to optimize costs and move closer to profitability. This enhanced outlook underscores Twilio’s transformation from a growth-at-all-costs company to one focused on efficiency and financial discipline.

Long-Term View and Portfolio Strategy

I remain bullish on $TWLO in the long term, but as they say, “You can’t go broke locking in profits.” Following this earnings surge, I’ve trimmed my position slightly to lock in gains and add some cash to the portfolio. In a market where volatility is increasingly the norm, securing profits on a high-performing stock can help manage risk while keeping dry powder for future opportunities.

Twilio’s turnaround story remains compelling, and I’ll be watching closely for continued operational improvements. As they build out higher-margin services and streamline their cost structure, $TWLO has the potential to become a more resilient and profitable business over the coming years.

Novum Cognitio: New Knowledge - Globalstar ($GSAT)

Globalstar ($GSAT) recently announced a significant expansion of its partnership with Apple, securing a $1.1 billion satellite services deal to support a new Mobile Satellite Services (MSS) network. The announcement sparked a nearly 30% rally in $GSAT’s stock price. Adding to the excitement, Apple has also agreed to acquire a 20% equity stake in Globalstar through a $400 million investment in Class B shares, solidifying a strategic alliance and giving Globalstar a notable valuation boost.

This deal positions Globalstar as a unique investment opportunity in the satellite and space sector. While it’s not a direct equivalent, Globalstar could be seen as a public-market “Beta Trade” for investors seeking exposure to the space industry—similar to SpaceX, which remains private and broader in scope. This partnership emphasizes the economic value of satellite technology, particularly in the growing integration of space assets into mainstream commercial applications.

Potential for M&A and Strategic Importance

Apple’s deeper involvement with Globalstar hints at an intriguing long-term possibility: M&A potential. Given Apple’s equity stake and reliance on Globalstar’s technology, the relationship could eventually evolve into a full acquisition. Globalstar is becoming an integral player for Apple, particularly as the tech giant aims to bolster its satellite capabilities. This partnership raises the prospect of Globalstar’s technology being so critical to Apple’s ecosystem that the company may look to fully acquire it, assuming regulatory hurdles don’t stand in the way.

Technical and Growth Outlook

From a technical perspective, $GSAT has been in a multi-year basing period—a sign of long-term consolidation that often precedes significant moves. With this partnership acting as a catalyst, $GSAT could finally be primed to break out of its base and trade closer to its intrinsic value. Notably, the company boasts an impressive 3-year revenue CAGR of 22%, reinforcing the growth story.

This deal positions Globalstar at the intersection of technology, telecommunications, and space, transforming it into a unique play for those looking to invest in the space economy. With Apple’s backing and expanding use of its satellite services, $GSAT has the potential to accelerate its growth trajectory, making it a compelling stock to watch in the coming quarters.

Target Acquisitions

$DELL

📈 Taking the stairs up, finding a local bottom of 87, 102, 112, and most recently 118 on its journey back up. Competitors in the space has struggled, lets see if $DELL can take away some of that market share with their AI Enterprise product and head towards the Golden ratio

$SPY

📉 I think with all the volatility and profit taking and position movements we end up with a upcoming net loss on the S&P confirming yet another mean reversion post a expansion of 10% or more like what happened in April and later Early August.

The Field Report

One of the F1 greats, Lewis Hamilton gets to drive Senna’s 1990’s Championship winning car in Brazil. A huge moment for the sport for keep the name of Senna alive in todays motorsport. Give this 3.5 Liter V10 a watch, a glimpse into perfection of a prior era

“Acquire empirical knowledge & apply it with integral focus”

Thank you for your time

Nedrick H.M

EquityAgent ∫︎