Dec 25, 2024

She's a Brick and I'm Drowning Slowly

Brick cheese, as we all know, is an American cheese from the state of Wisconsin, first made by John Jossi around 1877. "Brick," meanwhile, is a song by American alternative rock group Ben Folds Five, about the singer's girlfriend getting an abortion the day after Christmas, so it's both festive and timely. Just like this newsletter. Also, I'm sorry if you're depressed over the holidays. Today's Cheddlines you need2know endeavor to lift your mood with all the effectiveness of a double dose of Lexapro, a $500 windfall, and a hot yoga class with that really sexy instructor, Barry:

Her mom and dad went down to Charlotte.

—Matt Davis, Need2Know Chedditor

Quote of the Day

"I don't see streaming as the enemy of the big screen...I think it's complementary and additive." — Paul Dergarabedian

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1. What's in Store for IPOs in 2025? Billions of Dollars!

Thirty percent more companies went public on the Nasdaq index this year compared to the year before, and Jeff Thomas, chief commercial officer and global head of listings at Nasdaq, attributed the market's relative dormancy in 2022 and 2023 to rising interest rates and declining valuations. But 2024 saw a turnaround, with Nasdaq hosting 160 IPOs, representing 80% of eligible U.S. IPOs, and raising over $21 billion from investors. That's a lot of billions—twenty-one of them, in fact!

"We saw a lot of activity from private equity sponsors that were trying to bring some of their companies to market," Thomas said. "We saw a nice resurgence with biotechs here in the second half and we expect to see more of that heading into 25 after the J.P. Morgan Health care conference."

Among the "notable" IPOs in 2024 was Lineage Logistics, Thomas said. It's a glamorous-sounding cold storage real estate investment trust company, which raised $4 billion. Looking ahead to 2025, Thomas expects continued activity from private equity sponsors. He also expects the return of venture-backed tech companies to the IPO market, with a strong pipeline of billion-dollar-valued companies (or "unicorns") seeking capital. While acknowledging the current abundance of private capital for AI startups — they don't need to list because they can raise the money from private investors — Thomas believes that the AI landscape will eventually see application companies following semiconductor and device companies in going public.

The trend of "Great Delisting," where companies from overseas relist in the U.S. due to superior valuations and access to the American market, is also expected to persist. Thomas cited favorable interest rate trends, deregulation, and the depth of the U.S. capital markets as key factors. Despite uncertainties surrounding potential tariffs and policy changes, Thomas emphasized Nasdaq's commitment to maintaining strong connections with issuers and advocating for their priorities in Washington.

"We're in a bit of an uncertain period here as we're moving through the transitional phase," Thomas acknowledged. "And so that's where what we try to do during those periods is stay incredibly well connected to our issuers, keep them up to date on everything we're hearing, make sure we understand their priorities, and then act as an advocate for them in DC."

I think that means it'll probably all be alright on the stock market no matter what happens in Washington. Fingers crossed, eh? #NotFinancialAdvice Read More

2. Optimists Primed for Small Business Transformation in 2025

The aftermath of the recent elections has brought a refreshing wave of optimism among small business owners across the country. The Small Business Optimism Index increased by eight points in November, reaching 101.7—its highest level since June 2021. The Uncertainty Index also fell 12 points to 98 in November.

Optimism is not only reflective of current sentiments but also translates into future business expansion plans: The survey highlighted that the percentage of small business owners who believe it is a good time to expand their business rose by eight points to 14. One might also note that means 86 percent of small business owners apparently have zero ambition, but only if one were feeling churlish. Call your bank manager! Get a loan! Buy a new truck or something! Hey, speaking of ambitions to become a small business… Read More

From @cheddar

Could Toyota's basketball-playing robot be the future of the game? 🤖🏀 CUE just set a world record for the longest basketball shot by a humanoid robot. Did it go in? Guess you're gonna have to watch the 'gram.

Follow @cheddar on Instagram!

3. Nordstrom Family Is Buying Back Nordstrom, Including $2 Billion in Debt

The century-old department store giant Nordstrom is set to return to its family roots. In a substantial $6.25 billion deal, family members of the founding Nordstrom lineage, in concert with a Mexican retail group, have agreed to acquire the esteemed retailer, thereby privatizing the company.

Nordstrom shareholders are poised to receive $24.25 in cash for each share of common stock they hold, culminating in an aggregate payout of approximately $4 billion. Astute readers will note: That's the same as cold storage real estate investment trust company Lineage Logistics raised when it listed on the Nasdaq this year! It's almost as if money just moves around and around in the American economy and loses any sense of real meaning. Although tell that to the 2,500 people Nordstrom has had to lay off over recent years thanks to its underperformance. That's hardly an abstract situation.

The offer represents a 42% premium over the company's stock price as of March 18, just before rumors of the acquisition began circulating in the media. The transaction will also see the acquiring party assuming over $2 billion of Nordstrom's debt, underscoring the significant financial commitments entailed in this deal. In other words, the company hasn't been doing terribly well, of late, and is saddled with a lot of unpaid bills.

The transition to private ownership is expected to furnish Nordstrom with the latitude necessary for revitalization and innovation, free from the leering gaze of public market scrutiny. That's market speak for them being able to take risks no stock market investor would countenance.

It's going to be all-or-nothing, and who'll be at the helm? Erik and Pete Nordstrom, that's who. The fourth generation of Nordstroms! I'm sure that as wealthy heirs to a retail fortune they possess the right qualities to steer their family's company through the next chapter of tricky times. Aren't you? Especially since they're the chaps who steered the company onto the rocks in the first place.

Founded in 1901 as a singular shoe store, Nordstrom has burgeoned into a retail powerhouse with an extensive footprint across the United States. With 381 Nordstrom and Nordstrom Rack stores currently operational across the U.S., and amid fluctuating market sentiments, how will this monumental shift influence their strategic direction in the years to come? My guess is they'll close all the Nordstrom Racks and turn the Nordstroms into higher-end luxury outlets in a handful of major cities, paring back the costs and hoping for the luxury dollar. It won't work, and then they'll probably go public again to raise more money. The Nordstrom brothers will never get fired because they're wealthy heirs to the company name, but a lot of other people will. We're captive on the carousel of time, aren't we? Read More

4. What Was Behind the 2024 Box Office Comeback?

The box office year was a lot like my journalistic career, starting with a dismal outlook and ending with a triumphant surge. Sure, winning awards for your reporting on police corruption may be glamorous and edgy, but my editors back then refused to allow me a single cheese pun, ergo it felt meaningless. And ma, look at me now!

We spoke with Paul Dergarabedian, senior media analyst at Comscore, about the unexpected twists and turns, seemingly scripted by a Hollywood genius, that shaped the year's movie landscape.

"In the middle of June, the year-to-date box office was down 27.5% versus the previous year," Dergarabedian said. Strikes and work stoppages had thrown the release calendar into disarray, leaving theaters struggling. But the tide turned dramatically in the second act. A string of summer hits, including "Inside Out 2," "Despicable Me 4," and "Deadpool and Wolverine," breathed life back into the box office.

But wait! "Then in the post-summer period, it got rather slow again," Dergarabedian noted, "But then Thanksgiving, we had a record Thanksgiving... $425 million powered by 'Wicked' and 'Gladiator 2.'"

This third-act surge, fueled by unexpected successes, drastically altered the year's outcome. "We went from down 27.5% in the midyear to down under 5%," Dergarabedian explained. "We're now on track to wind up at $8.5 billion plus...something unthinkable just a few weeks ago."

The rise of streaming platforms has undeniably impacted the movie industry, but Dergarabedian doesn't see it as a threat. "I don't see streaming as the enemy of the big screen...I think it's complementary and additive," he said. He cited the success of "Moana 2" as an example of how streaming can drive theatrical viewership.

Animation emerged as a dominant force in 2024, too. "2024 can be looked at as the year of the animated film," Dergarabedian said. Animated films accounted for a significant portion of the box office revenue, with hits like "Despicable Me 4" and "Inside Out 2" drawing families back to theaters.

Looking ahead to 2025, Dergarabedian is optimistic. "I think we're going to have a really strong year," he predicted, citing upcoming releases like "Captain America 14," "Mission Impossible Chapter 432" and "Superman: The Latest Reboot," none of which is "Citizen Kane 2," but whatevs. Dergarabedian isn't one of these haters you may have heard about.

Dergarabedian also weighed in on the awards season, suggesting that "Wicked" and the Bob Dylan biopic "Complete Unknown" could be strong contenders. And finally, he addressed the curious trend of collectible popcorn buckets, themed to accompany major movies. "Some of these cost $25, $26, maybe more. They sell out," he marveled. The buckets have become a unique and profitable aspect of the moviegoing experience, further distinguishing theaters from home viewing, with its plain, lifeless, depressing popcorn buckets. He's not wrong, either. A "Dune 2" sandworm popcorn lid now goes for upward of $800 on eBay, in large part because people think it looks a bit naughty.

Despite the challenges of the past few years, Dergarabedian believes the future of movie theaters is bright, assuming you're happy to go and see sequels of animated films and reboots of superhero movies that you didn't really love the first time.

"This is no flash in the pan," he said. "I think the future looks really bright for movie theaters, for sure." Read More

5. There's a Santa Claus Rally Afoot on the Stock Market

Wall Street has given investors an early Christmas present that looks set to continue through the end of the year. In the final, truncated trading session before the Christmas holiday, the stock market lit up like a well-decorated tree, signaling the commencement of the much-anticipated "Santa Claus" rally, named for the imaginary bringer of presents to well-behaved Christian children.

The S&P 500 soared on Christmas Eve, finishing the session up over 1.1%, while the tech-heavy Nasdaq Composite went up 1.4%. The rally's front-runners included tech stocks, with AI chip powerhouse Nvidia leading the charge. Markets closed their doors early at 1 p.m. ET for the Christmas holiday but left investors with much to celebrate. This end-of-year rally is particularly heartening, considering the tumultuous journey markets have endured, especially after last week's Fed-induced nosedive. Most of my 401(k) losses have recovered themselves, in fact. Nearly. It's a Christmas miracle! (Nearly!)

Wall Street finds itself in a rare moment of reflection and reassessment as it contemplates the interest rate trajectory for the upcoming year. The Federal Reserve's efforts toward achieving a soft landing seem mostly successful, though the ghost of inflation future continues to haunt the U.S. economy. If I could predict that future I'd be lying on a beach somewhere by now—and no, not face down and blue—but I'm sure 2025 is going to be a fantastic year on the stock market, which is like driving along the freeway and remarking, "Hey, we haven't had an accident yet!" #NotFinancialAdvice. Read More