Morning Download 

Personal finance + economics + markets

Good morning investors! After the Tesla debacle, we will continue to report earnings as all eyes are now on big tech companies set to announce next week.

Fun fact: 2021 holds the record for the most number of IPOs – 1,035.

Today we cover:

• Fed Chair Jerome Powell thinks inflation is too high.

• The SEC drops the case against Ripple Labs.

• Investing in an IPO.

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📊 Economy and News 

US weekly jobless claims come out lower than expected

Jobless claims data is in and it isn’t as expected.

What? Weekly jobless claims totaled a seasonally adjusted 198,000, down 13,000 from the previous week and lower than the estimated figure of 210,000.

What does it mean? This indicates that the market is right and one of the reasons why inflation has remained strong.

There are concerns that a still-tight labor market could put pressure on prices, which might result in more hikes next year.

Claims have been falling for a while now mainly due to layoffs and some more are expected in the coming months.

Global hits:

• It appears that Hamas did not use crypto to fund its activities.

• Meta and TikTok have six days to respond to Europe's utimatum and share information on the response to the Israel-Hamas conflict.

• Taiwan Semiconductor, the world's biggest semiconductor manufacturer, saw its largest profit decline in about five years.

📈 Stocks

S&P 500 4,278.00 (-0.85%)
DJIA 33,414.17 (-0.75%)
NASDAQ 14,783.13 (-0.85%)
VIX 21.40 (11.34%)
* Prices as of Oct 20th, 12:20 AM UTC

More positive earnings

Union Pacific impressed with earnings per share of $2.51 on revenues of $5.9 billion. This was higher than the estimated figure of $2.41 in earnings; however, the company missed revenue estimates of $6 billion.

On the downside, the outlook does not look very good, implying little to no growth. As a result, the company is focused on cost management and gaining efficiencies, particularly in operating and safety metrics.

Another company that did well was CSX Corp. , which reported earnings per share of $0.42 on revenues of $3.57 billion. The company beat revenue estimates (vs. 3.55 billion) but was slightly lower when it came to EPS (vs. $0.43).

The company’s operating ratio rose from 59.5% a year ago to 63.8% in the current quarter.

Both railroads had low expectations and they performed well in the quarter. However, with their stock prices up marginally over the last three years, it doesn’t seem like these two stocks are going to offer very high returns in the near future.

More: Amazon has started delivering medicines via drone and Google will now make phones in India.

🔐 Crypto

Bitcoin $29,237.20 (1.64%)
Ethereum $1,582 (0.34%)
Total market cap $1.11T (2.94%)
* Prices as of Oct 20th, 12:20 AM UTC

Good news for investors

The SEC has decided to drop its abetting and aiding claims against Ripple Labs executives (Brad Garlinghouse and co-founder Chris Larsen) in its lawsuit alleging the blockchain company violated US securities laws.

In December 2020, the SEC accused Ripple of illegally raising more than $1.3 billion in an unregistered securities offering by selling XRP.

Larsen and Garlinghouse have harshly criticized the SEC calling it biased and trying to push a political agenda.

What’s next: According to the agency, the next step is for both sides to appear in front of a judge and find the appropriate penalty for Ripple.

💵 Personal Finance

How to benefit from IPOs

IPOs allow investors to enjoy great perks. In recent times, companies such as Airbnb and CureVac BV offered great results. The former soared 114.7% above the IPO price and the latter offered up to 596% return from the offer price.

An IPO can be an easy way to improve your financial situation. Here are some of the benefits of investing in an IPO:

• You get a chance to make quick money in the form of listing gains.

• Prices are usually low at the time of an IPO, thus offering easy entry.

• Companies offer a lot of information at the IPO stage, thus making the decision easier.

However, not all IPOs are successful. Robinhood, for example, failed despite being a big name. Its shares fell 10% within minutes of the bell ringing. Some other companies to have faced a similar fate include Uber, Etsy, and Omeros.

So, how to choose the right IPO to invest in? Here are a few pointers to remember:

• Understand the business model and look at the company's long-term prospects. Ensure the model is sustainable and don't blindly follow big names.

• Choose a company that has proven itself and has strong supporters and brokers.

• Do not look solely at the past when gauging a company, rather look at its growth potential.

• Ensure the price is right as not all IPOs are justified and some companies are known for starting ‘expensive’.

Despite all this, you may still face some challenges. Remember to be cautious because the stock market is unpredictable.

Are you ready to invest in an IPO? Here are some upcoming IPOs:

• Abivax on Nasdaq between $11.60 and $13 per share (this week)

• Mach Natural Resources LP on NYSE between $19 and $21 per share (next week)

• Biolingus on Nasdaq between $15 and $16 per share (date not announced)

For more, check this amazing video covering how to invest in an IPO:

💰 Be a Better Investor

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.