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NIO Experiences a Decline Due to Unexpected Inflation Numbers

At the time of publication:

NIO’s stock has hit a roadblock around the $9 mark, right at the 21-day simple moving average. This slowdown comes after the release of the September US Consumer Price Index (CPI) report, which revealed a slight uptick in headline inflation.

Nio’s stock is struggling to recover from a 17% drop, a consequence of its decision to raise $1.5 billion from convertible bonds. Before the CPI data was released, equity futures, including the NASDAQ 100, saw a 0.4% rise. However, these gains were halved when the inflation figures came in higher than expected. US Treasury yields also rose following the inflation data, with the 2-year yield increasing by more than 1%.

Nio (NIO) stock started Thursday’s 12 regular session 2.5% lower. It remained stuck below the $9 price level, hovering near the 21-day Simple Moving Average (SMA). Initially, NIO shares had shown a nearly 1% increase before the market opened, but the September CPI data revealed higher inflation than anticipated.

In the premarket, NASDAQ 100, S&P 500, and Dow Jones futures had all rallied as many expected the week’s positive momentum to continue. However, these gains were cut in half after the US CPI data was released. NASDAQ 100 futures saw their gains reduced from 0.4% to 0.2%. As the regular market opened, some indices saw reductions, resulting in a mixed market. The NASDAQ Composite rose by 0.4% in the first half-hour, while the Dow Jones dipped by 0.2%.

News about Nio’s stock: Elevated Headline Inflation Spells Trouble for Equities

The core inflation, a measure that excludes volatile energy and food prices, met consensus expectations. Economists correctly predicted that the September core CPI would rise by 0.3% on a monthly basis and by 4.1% annually.

However, the headline inflation exceeded expectations slightly. The monthly headline CPI came in at 0.4%, surpassing the 0.3% forecast. Similarly, the annualized headline CPI was reported at 3.7%, instead of the expected 3.6%. This increase is likely attributed to rising oil prices during August and September.

This development is generally considered unfavorable for equities, as higher inflation readings might prompt the Federal Reserve (Fed) to consider further interest rate hikes. However, this possibility has seemed less likely in the past week, as several Fed officials have indicated that fighting inflation may not require immediate rate hikes. They have suggested that keeping rates steady at the 5.25% to 5.5% range, where they have been since July, is sufficient.

On Tuesday 10, San Francisco Fed Bank President Mary Daly stated that the recent uptick in Treasury yields could be viewed as an alternative to rate hikes, as it is expected to reduce spending and investment. Fed Vice Chair Philip Jefferson, Dallas Fed Bank President Lorie Logan, and Atlanta Federal Reserve Bank President Raphael Bostic have also expressed similar sentiments in separate statements.

In a separate development, Nio’s stock has faced challenges the week (9-15 oct) as Huawei-backed Aito announced receiving 50,000 orders for its M7 electric SUV. Aito now poses as a new competitor in the Chinese EV market, causing shares of Li Auto (LI) and XPeng (XPEV) to also retreat in response to this announcement.

Phillip Morris International Inc. 2023 Outlook

Fair Value103.00 USD | Market Cap155.12B USD

Strategic Direction and Prospects for the Future

Philip Morris International (PMI) has set an ambitious goal to expeditiously replace conventional cigarettes with less dangerous alternatives. Their intermediate-term objectives demonstrate a strong commitment to this aim, as they anticipate substantial growth over the next three years. By 2025, PMI aims to generate more than half of its revenue from non-combustible products, an ambitious goal that, if achieved, could signal a turning point in the tobacco industry. This strategic approach is aligned with environmental, social, and governance (ESG) principles and has the potential to achieve lucrative growth in the medium term.

The Advantage of Heatsticks

The availability and use of heatsticks, cigarette-like sticks used in the iQOS device, will be essential to PMI’s success in its shift to heated tobacco products. Heatsticks are taxed less than regular cigarettes, giving PMI a favorable economic environment. Heatsticks have a net revenue per pack that is 2.4 times that of conventional cigarettes, with an excellent gross margin that is around 10 percentage points higher, at roughly 75%. While selling and administrative costs may be slightly higher at present, increased heatstick manufacturing could theoretically match premium cigarette earnings before interest and tax (EBIT).

The success of this plan, however, depends on the current taxing systems remaining in place. PMI would face increased tax pressure if heatsticks were taxed at the same rate as cigarettes in most jurisdictions. Nevertheless, PMI’s pricing strategy of heatsticks below cigarettes is not only a business plan but also a way to encourage smokers to switch to lower-risk products. It may also discourage governments from raising taxes to bridge the price gap between heatsticks and cigarettes.

Challenges in Achieving Volume Targets

PMI’s goal of achieving a heatstick volume of 140 billion to 160 billion in 2023 is ambitious, especially considering its withdrawal from the United States and Russia, which has made this target unattainable. The company is likely to rely heavily on new product development to drive further customer adoption. PMI is expected to reformulate its disposable heated tobacco product, TEEPS, in the near future, which could play a crucial role in achieving its goals.

Bullish and Bearish Views

Bulls say:

– PMI is the world’s largest publicly traded tobacco company, with a 23% global market share (excluding the United States and China), giving it significant pricing power. 

– The successful commercialization of iQOS in the United States, which is not currently factored into the stock price, could provide PMI with additional volume and revenue. 

– PMI’s focus on premium brands and consumer loyalty to Marlboro positions it advantageously in the market’s highest-priced segments.

Bears say

– Tobacco companies face persistent threats from lawsuits and stringent regulatory constraints, which could have a negative financial impact. 

– Because most of PMI’s net sales are in foreign currencies and about a quarter of its input costs are in US dollars, a strengthening of the US dollar could have a negative impact on profit growth. 

– Uncertainties about the tax and regulatory environment for cigarette alternatives exist, which could have a significant impact on the company’s future profitability.

The Intersection of Climate Change and Political Shifts 2024

Significant Election Concerns for ESG Investors in 2024

As the 2024 United States election cycle gains momentum, there is a noticeable increase in the intensity and volume of discussions revolving around climate change. Three significant climate-related issues have come to the forefront: the anti-ESG (Environmental, Social, and Governance) backlash, the investment implications of climate-related events, and the impending climate regulations proposed by the Securities and Exchange Commission (SEC).

Anti-ESG Backlash

Within the realm of sustainable investing, climate-related investments are a key component, alongside ESG and impact funds. These investment avenues have been on a steady growth trajectory since the 1990s. However, their popularity has attracted political attention. Several US state legislatures have introduced measures to prohibit state entities from engaging with asset managers offering ESG funds or integrating ESG analysis into their investment processes.

While the outcomes of these efforts have varied, it is likely that this campaign will persist, especially in the lead-up to the 2024 election. ESG investing seems to have become a symbol of how investors have influenced the direction of financial markets over the past two decades. Nevertheless, the rising demand for sustainable funds reflects broader shifts in the global economy. Investors should not be discouraged by attempts to limit their investment choices for political reasons.

Investment Impact of Climate Events

Climate change is increasingly manifesting itself through dramatic weather events and subtler transformations, such as the melting Arctic ice cap and water scarcity in the Southwestern and Western US. Assessing investment risks associated with climate change involves considering both physical risk (damage to assets from events like flooding and wildfires) and transition risk (financial impacts on companies as the economy shifts away from fossil fuels).

Climate change affects nearly every industry to some extent, and a company’s financial prospects may depend on how well it adapts to the changing energy landscape. Investors can proactively select companies poised to benefit from these trends or avoid those likely to be adversely affected. Sustainable investment strategies, including low carbon, ex-fossil fuels, and climate transition funds, offer options to align investments with climate-related views.

Pending SEC Climate Regulation

The regulatory aspect of climate policy in the US relates to proposed SEC disclosure rules. The SEC aims to safeguard investors, maintain fair markets, and promote capital formation. Recognizing that climate risk equates to investment risk, proposed regulations would compel companies to publicly report their current carbon emissions and future plans systematically. This would enhance transparency and provide investors with more meaningful data to evaluate climate risk.

Additionally, the SEC is considering rules governing fund managers offering “green” or “sustainable” investment products to ensure accurate naming and alignment with sustainability objectives. While these rules may entail some costs, the SEC believes the benefits, particularly increased transparency on financially relevant matters, justify them.

A decision on the proposed rules is expected in the upcoming fall.


In summary, the intersection of climate change and politics is becoming increasingly relevant for ESG investors as the 2024 US election approaches. Despite challenges, such as political opposition and the complex nature of climate-related investment decisions, there are diverse sustainable investment strategies available for aligning portfolios with climate-related goals.

Moreover, impending SEC regulations seek to enhance transparency and accountability in climate-related reporting and fund management.

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