Monthly Market Debrief

Market Snapshot

Well, it’s rare for us to have some red on the chart, but October was not the best month. Election-year Octobers are often bad for the US stock market, with an average S&P 500 return of -0.3% since 1928. The CPI report is continuing to slowly go down, but when food and energy are removed, the CPI increased in September from 3.2% to 3.3%. Since food and energy prices tend to be more volatile and responsive to international events (war), they report the CPI with “All Items” and “All Items Less Food and Energy.” A .1% uptick isn’t extremely concerning, but investors are overanalyzing every data point right now. 

In other news, Intel (featured in last month’s debrief) is getting dropped from the Dow Jones Industrial Average. Replacing it is everyone’s favorite stock, NVIDIA. The all powerful deciders of the DJIA believe NVIDIA is a better representative of the semiconductor industry. To their credit, they held onto Intel much longer than some people recommended. Leonardo DiCaprio was trying to get Intel out of the index since it turned 22, allegedly.

Company Highlight - Spirit Airlines

Okay, I know a 0% change in Spirit’s stock for October made you wonder why I picked it. Spirit Airlines’ October was exactly like a rollercoaster. Ups and downs but ending exactly where it started. 

*Honestly, that’s a top 3 analogy for me.

Spirit has struggled to recapture its market during the post pandemic travel boom. While other airlines, like Delta, are surging in 2024, Spirit hasn’t reported a profit in 5 out of 6 earnings reports. 

In 2022, Spirit, Frontier Airlines, and JetBlue were in a love triangle that fell apart when the Justice Department blocked the $3.8 billion merger between JetBlue and Spirit.

Frontier doesn’t move on easily and this month reported it was in talks with Spirit again, which shot the stock up 18%. This report came after an earlier report in October that Spirit was debating a bankruptcy filing which plunged the stock 37%.

Do you see the rollercoaster?

So why does Frontier want to buy a failing airline? With Spirit’s billions of dollars of debt coming due next year, Frontier might capitalize on the good bones of Spirit with a buyout, debt restructuring combo deal. The entire airline industry is struggling to get airplanes with Boeing and Airbus delaying deliveries. A deal with Spirit will come with working airplanes, which is pretty important if you are an airline company. 

A deal is unlikely, but not impossible. After the excitement settled, the Spirit stock ended exactly where it started. Bankruptcy or merger details will come out later this year as refinancing deadlines come due for Spirit.

What We’re Listening To:

Podcast: Master Plan. This series goes in depth on the legalized corruption in the US political system. It starts with Watergate and works its way to today detailing laws and regulations that encourage billions of dollars of dark money to flow into political coffers.

Debrief on Deck

Next week, we are going to try and answer the question “who pays tariffs.” Not to spoil anything, but you pay them, just indirectly. Who pays them directly? Let’s find out next week.