MLKN - Wall Street Breakfast Podcast: Retail Theft

2023-09-27 06:52:22 ET

Summary

• Retail theft increased by almost 20% in 2022, resulting in significant losses for retailers.
• OpenAI, backed by Microsoft, is discussing an existing share sale that could value the company at $90B.
• Intel's German plant is facing challenges in finding enough staff.

Listen below or on the go on Apple Podcasts and Spotify

Retail theft jumped almost 20% in 2022. (00:25) Microsoft-backed ( MSFT ) OpenAI said to discuss existing share sale , valuing it at $90B. (01:37) Intel ( INTC ) German plant reportedly having difficulty hiring . (02:20)

This is an abridged transcript of the podcast.

Retail theft jumped in 2022 by nearly 20% from a year earlier, according to the National Retail Federation.

When taken as a percentage of total retail sales in 2022, shrink accounted for $112.1B in losses, up from $93.9B in 2021, according to the 2023 National Retail Security Survey.

The news comes the same day that Target (NYSE: TGT ) said it would close nine stores in major U.S. cities amid increased violence and organized retail crime.

Organized retail crime remains a significant concern due to heightened levels of violence. Retailers reported being forced to close a specific store location (28%), reduce operating hours (45%) or reduce or alter in-store product selection (30%) as a direct result of retail crime.

Retailers from Target (TGT), Dick’s Sporting Goods (NYSE:DKS), Lowe’s (NYSE: LOW ) and Macy’s (NYSE: M ) have been pointing to a rise in crime as a factor in reduced earnings and noted that the issue could continue to cut into their financial results.

The top five areas affected by organized crime in the past year were Los Angeles, San Francisco/Oakland, Houston, New York and Seattle.

OpenAI , the artificial intelligence company backed by Microsoft (NASDAQ:MSFT), has reportedly spoken with investors about an existing share sale that could value the company at as much as $90B.

The company has told investors it expects to generate $1B in revenue this year and "many billions" more next year, The Wall Street Journal reported , citing people familiar with the discussions. At the $90B level, it would triple the valuation of the company set earlier this year, the news outlet added.

The share deal would allow employees to sell existing shares and not issue new shares, though terms of the deal could change, The Journal explained.

OpenAI did not immediately respond to a request for comment from Seeking Alpha.

Intel (NASDAQ: INTC ) announced a historic €30B investment in Germany in June to build two semiconductor facilities as part of its manufacturing expansion plan in Europe.

However, it's having significant trouble with staffing .

Intel ( INTC ) says it needs 3,000 people to staff the plant by the end of the decade. However, there’s only two in the apprentice program for chip making technicians this year, The Wall Street Journal reported .

A chamber-of-commerce official told the Journal, the company is set to have an initial class of 20 that starts training next year. Nearby universities are also starting degree programs in advanced semiconductors, but these programs will take time to ramp up.

Other headlines to look out for on Seeking Alpha:

DuPont opens new adhesives manufacturing facility in China

Costco drops after the close; Co. beat quarterly profit, sales estimates

Jabil to divest Mobility business to BYD Electronic for $2.2B

China Evergrande chairman reportedly under police watch, stock drops 19%

On our catalyst watch for the day,

• The two-day META Connect conference will begin. Meta Platforms ( META ) CEO Mark Zuckerberg will be a keynote speaker at the event, which will be focused on virtual, mixed and augmented realities and AI. Morgan Stanley called the event a potential share price mover. The firm is looking for new user-facing AI tools to be unveiled. And if you follow Mark Zuckerberg on social media, he’s been hinting at dropping something big today.

U.S. stocks on Tuesday slumped, after economic data showed confidence in the economy falling to its lowest level since May amid a clear message from the Federal Reserve of higher rates for longer.

The Nasdaq ( COMP.IND ) retreated 1.57%, its lowest close since May 31.

The S&P 500 (SP500) declined 1.47%, while the Dow ( DJI ) slid 1.14%. Both averages posted their lowest close since June 7 and June 6, respectively.

The 11 S&P sectors ended in a sea of red, with Utilities falling over 3% and Consumer Discretionary falling over 2%.

The 10-year yield (US10Y) was up 1 basis point to 4.55%, while the 2-year yield (US2Y) was flat at 5.13%.

The economic calendar on Tuesday showed the Conference Board's gauge of consumer confidence in September falling to 103, lower than the consensus figure of 105.8 and the 108.7 reading in August.

Additionally, investors received data on the housing market. New home sales retreated 8.7% M/M in August.

Finally, the Richmond Fed manufacturing survey for September surprised to the upside.

Traders are also keeping a close eye on any updates in negotiations in Congress over the stopgap spending bill, as an October 1 deadline for the end of current funding for federal operations is fast approaching.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. The Dow is up 0.2%, the S&P 500 is up 0.3% and the Nasdaq is up 0.3%. Crude oil is up 1.1% at more than $91 a barrel. Bitcoin is up 0.8%.

In the world markets, the FTSE 100 is down 0.2% and the DAX is down 0.1%.

The biggest stock movers for the day premarket: MillerKnoll (NASDAQ: MLKN ) is up 19% after the company topped expectations in Q1 with significant gross margin expansion.

On today’s economic calendar, at 830 am durable goods and at 1030 am EIA petroleum inventories.

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