Hurricane Milton

Storm of the Century!

Milton has caused the largest evacuation since Irma in 2017.

We are wishing the best for everyone in Florida this week, as Hurricane Milton crosses through the state. At the time of writing (Wednesday evening), Milton was a category 4 hurricane that was close to making landfall in the Tampa area. Several tornado warnings sprouted up throughout Florida Wednesday.

Forecasters have warned that Milton could generate a storm surge of more than 10 feet. President Biden called it “the storm of the century” yesterday, with winds projected to exceed 145 MPH. Rainfall totals are expected to reach 8-12 inches. 

This storm also led to the largest evacuation this week since Hurricane Irma in 2017. 31,000 people took refuge in one of the state’s 149 general population shelters, as room for 200,000 more still remained.

What’s the Latest:

This is the worst-case scenario, of how Milton may affect the insurance market.

1,500+ gas stations were reported empty during Milton.

Business

Nightmare Before Christmas

Spirit Halloween to open 10 Spirit Christmas Shops.

After being struck with Halloween Spirit, a certain retail chain will soon have Christmas spirit as well. The part-time store Spirit Halloween is planning to stick around a little bit longer and serve the same purpose for Christmas, with the opening of 10 new Spirit Christmas stores.

These 10 stores will be opened throughout the Northeast, in New Jersey (4 locations), New York (3 locations), Connecticut (1 location), Massachusetts (1 location) and Pennsylvania (1 location) - some of which are already Spirit Halloween locations.

The chain of stores are owned by Spencer Gifts, which opened its first pop-up store in the Bay Area in 1983. Currently there are hundreds of the Halloween version, which move into vacant storefronts throughout the country to sell halloween costumes and decorations for a few weeks. Seems only natural that they would do the same thing for Christmas, a holiday that probably features even more people decorating their homes. 

Along with holiday items, the Spirit Christmas stores will also offer free family photographs with Santa Claus. The photo opps are even available to book already, despite there being no exact open dates yet for the stores. 

One location in New Jersey will open on October 18th (great, just another example of someone skipping ahead to the Christmas holiday…), while the other nine will open sometime in November.

Around the Water Cooler:

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Politics

No More Ghost Guns

Supreme Court to uphold Biden’s plan to crack down on “Ghost Gun” kits.

The Supreme Court appears likely to uphold President Biden’s plan to crack down on “ghost gun” kits. Based on the oral arguments, it appears the majority might be in favor of the Biden administration in this effort and leave the new rules in place.

These rules would regulate the kits the same as other firearms, which would mean manufactures and sellers of the kits would have to obtain licenses, as well as marking the products with serial numbers, require background checks and maintain records. Just as if you were purchasing any other fireman. 

The restriction was issued in 2022 by the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, after stating that ghost guns are regularly used by violent criminals because of how difficult they are to trace. 

The new regulation clarifies that the parts used to make ghost guns fit within the definition of “firearm” under the federal Gun Control Act. Therefore, the government has the power to regulate them the same way they do firearms. 

These regulations are currently in effect, with the Supreme Court refusing (with a 5-4 decision) to block it last year. 

The Gun Control Act states that these regulations apply to “any weapon… which will or is designed to or may readily be converted to expel a projectile by the action of an explosive.” It also covers the “frame or receiver of any such weapon.” The frame or receiver is the part of the firearms that house other components, including the firing mechanism.

The Biden administration has referred to this as an “urgent public safety and law enforcement crisis posed by the exponential rise of untraceable firearms.”

It was pointed out in court that ever these restrictions went into effect, the market for ghost guns “essentially collapsed.” New York City alone has seized hundreds of ghost guns and related parts, according to Manhattan District Attorney Alvin Bragg.

Still, some have argued that hard-to-trace guns, like these ghost kits, can still pre privately manufactured or purchased on the secondary market, despite these restrictions. So this won’t completely put an end to them.

Regardless, it appears to be another win for the Biden Administration in the gun realm, after the court upheld a federal law in June that bans people with domestic violence restraining orders from possessing firearms.

Around the Hill:

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🔥 Teamsters president goes scorched earth on Dem Party!

Finance

Long-Term Interest Rates Move Up

This is fine…

The Federal Reserve cut rates three weeks ago, and yet long-term interest rates have still moved upward since! Almost like that wasn’t the fix all…

With these rates moving upwards in recent weeks, it has also driven up mortgage rates and other consumer and business borrowing costs. Part of this is because of the strong September jobs report we discussed earlier this week. That data prompted bond investor to change their tune on the likelihood of further aggressive monetary easing in the months ahead. 

The 10-year U.S. Treasury yield reached a recent low of 3.64% on September 17th, the day before the Fed announced its rate cut. However, as of Tuesday this week, that rate was up to 4.05%. As if the cut has had the opposite effect of expectations. 

Additionally, the average 30-year fixed-rate mortgage was down to 6.11% on September 17th and now, as of Monday, was up to 6.62%.

Why is this? Well, the Fed controls short-term interest rates. However, the longer-term rates are set in global bond markets, based on investors’ anticipation of what will happen to Fed policy, growth and inflation in the future. 

But it’s not all bad news. These increases are driven by a sense that the economy might be more resilient than it seemed a few months ago, and that the risk of a recession might be more distant now.

This data, along with the positive jobs report for September, might signal that the Fed doesn’t need to cut rates that much more. However, if the market remains resilient, there could be a risk of inflation reigniting.

From the Street:

➗ Fed Officials were divided on what to do with rates in September.

💰 Gold prices drop for the sixth straight day.

Tech

Roblox is Falling

As Hindenburg Questions Data

Roblox Corp. shares slumped this week after Hindenburg Research said it was betting against the betting platform.

The stock fell 9.4% on Tuesday, hitting the lowest level since early August. The company’s stock has now shed more than 15% so far this year. In fact, it has dealt with 14 separate moves greater than 5% in the past 12 months alone, with the biggest drop (26%) coming five months ago. This despite management proclaiming it would grow at 20+% annually for the next few years in November 2023 at their Investor day. However, the stock has far from met analysts’ expectations.

Hindenburg Research has accused the company of inflating their metrics, as they track the total number of users, not unique numbers. Therefore, their total can include bots and those with multiple accounts.

Hindenburg also expresses concern regarding Roblox’s inability to generate a profit, noting that insiders continued to sell shares since its IPO in 2021. An investor who bought $1,000 worth of Roblox’s shares at the IPO in March 2021 would now be looking at an investment worth $573. 

What to Know:

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Sports

House v. NCAA

A settlement gains preliminary approval.

With conference realignment, the transfer portal, and name, image and likeness, college sports has already endured momentous changes in the last handful of years. However, the greatest change might still be coming down the pike. 

What is being described as the “most significant settlement in college sports history” has received another boost, after Judge Claudia Wilken granted preliminary approval of a proposed settlement in the House, Hubbard and Carter antitrust cases this week. This opens a door to the potential reshaping of the way college athletic departments operate. 

The House settlement is focused on three things: 1.) nearly $2.8 billion in back pay to athletes dating back to 2016 over lost name, image and likeness revenues to be paid over 10 years (which would be $280 million annually). 2.) A revenue-sharing formula that allows schools to pay athletes directly. The most highly contested college athletics talking point for decades. NIL was supposed to be an olive branch. And 3.) eliminating limitations on scholarships in favor of roster limits.

These three things would change college sports, as we know them, for good and essentially complete the transition from amateur sports to professional. Though employment status (and a union/CBA) would still be lacking in this settlement, which is still a big chip.

The NCAA would shoulder around $1.1 billion in damages for the back-pay, while schools would be responsible for the remaining $1.65 billion. The (what once was) Power Five would be responsible for 40% ($664 million) of that $1.65 billion, and then the 27 remaining D-1 conferences would pay the other 60% ($990 million) through distribution reductions and other measures.

Football and men’s basketball players are, understandably, expected to receive the bulk of the $2.8 billion in back pay.

As part of the revenue sharing, schools would share up to 22% of the average (now) Power Four school’s media, ticket and sponsorship revenues directly with the athletes. That percentage is projected to be around $20 million per school for the next school year. 

Wilken did voice concern over the restricting of what/how much athletes could earn.

A final hearing for the settlement’s approval is now scheduled for April 7th (which is also the same day as the men’s college basketball national championship). Athletes will also have until February to opt out or object to the terms of this proposal. 

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