Equity markets are in the spotlight as softer-than-expected Producer Price Index data fuels investor optimism about potential Federal Reserve rate cuts. This development comes ahead of the highly anticipated Consumer Price Index report, scheduled for release Wednesday morning. However, SEI Chief Investment Officer Jim Smigiel joinsannounced plans to shut down its TV studioWe are giving you the ultimate investing playbook to help tune out the noise and make the right moves for your money.
So let's take a look at the major averages as we heard from those market participants, some bullishness, some optimism about the economy coming back here sparked in part by a better than estimated PP I wholesale inflation reading this morning coming in milder than estimated the Dow taking off up about 389 points.I also want to point out small caps are participating today as well.
That company has been experiencing some turmoil and there's a lot of relief being baked into the stock reaction.You do not see that a lot for a company like Starbucks, especially when investors still have a lot of questions about the path for Starbucks.Yes, we get a big new CEO announcement, but it doesn't necessarily provide all of the answers that we've been wondering about what's going to happen with the stock.
So call us skeptical uh with today's move, we think there's a lot of today, a lot of uh Pollyanna, maybe a little bit more of that uh uh Pixie dust from Starbucks. We think that this cycle, we're going to get a pivot from the fed, the fed wants to cut, they're going to deliver a cut.We think it's going to be more shallower than the market expects.
Uh But uh we don't see this kind of big acceleration that is going to require four and 84 cuts to the end of the year and eight cuts in the next 12 months.Given that base case, first and foremost, I know it's super boring and people are probably tired of hearing me say it is diversification.We are still fading away this concentration in the S and P. We see a little bit of renewal in this.I mean, these are massive changes in market cap.
Starbucks share surging today after the coffee chain named Brian Nichol as its next chairman and CEO Nichol who had been the CEO of Chipotle since 2018 will join Starbucks on September 9th.You can see down about 6% joining us now is Peter Salah BT IG managing director to break it all down, Peter.What do you think Brian Nichol can bring to Starbucks here?
So some of the changes that you mentioned, I'm curious, like what are some of the things he's done at Chipotle that maybe not directly transferable, but are the things that are going to be the most useful for him when he goes over to Starbucks. They're going to be have to be on throughput and they're going to have to be in China, in our opinion, if he's going to really move the needle on earnings here.So I have to wonder if that's something he's also gonna tackle in terms of quality.
But, uh, my, my sense is that the board have confidence that the board will figure that out in short order. Um, and, and the cash on cash returns you know, when you're talking about 60 70% cash on cash returns, uh in our opinion, you know, that the business is very healthy.But, you know, again, I think they will find a way to replace them and move forward.First of we're watching NVIDIA, as we talked about earlier, the stock is climbing today despite a new threat from overseas rival, Huawei.
So, I just don't know when you read this report this morning, how much more investors learned other than, of course, someone else is coming into the market. So sort of playing the two sides of it, which we've seen a lot of athleisure companies do and it seemed to work for other people.So interesting to see this reaction initially, by the way, the stock went down in part because they did not change their full year margin uh forecast here.
That was interesting to me that says, well, if Brian Nichol can leave Chipotle and go to Starbucks because Starbucks is struggling. But when you look at how true social so has moved or I should say DJ T, which Jones true social has moved.And as the betting odds for Donald Trump to win the presidency have come down, that's how the stocks moved in the market perception from last night.
Um You recently wrote about crypto and sort of the increasing visibility both on the campaign trail and just generally um around it.
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