Wall Street Breakfast Podcast: Li-Cycle Fall Sparks Alert

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The collapse of Li-Cycle (LICY) is called a potential warning for the broad electric vehicle sector. (00:26) Nvidia (NVDA), AMD said to make chips for Microsoft (MSFT) amid Intel (INTC) dominance. (01:59) Halloween spooks? Consumers watch as cocoa prices hit 44-year high. (02:56)

This is an abridged transcript of the podcast.

Li-Cycle Holdings Corp. (NYSE:LICY) sank nearly 46% Monday after announcing that it is pausing construction work on its Rochester Hub project.

The company said construction is pending until a comprehensive review of the go-forward strategy for the project is completed.

Li-Cycle (LICY) warned that it has recently experienced escalating construction costs, and expects the aggregate cost for the current scope of the project to exceed its previously disclosed guidance.

Li-Cycle said in a statement that in conjunction with the project review, it “continues to work closely with the U.S. Department of Energy with respect to the previously announced $375 million loan commitment through the Advanced Technology Vehicles Manufacturing program for the project.”

YTD Li-Cyle (LICY) is down 74%.

Weighing in on the development, Morgan Stanley said the electric vehicle industry could be entering a period of dislocation for announced and in-progress highly capital intensive projects that rely on large quantities of attractively priced external capital.

Analyst Adam Jonas said higher interest rates, rising cost of capital, and a slowing EV market could expose a number of projects and business models that may struggle to bridge the gap to self-funding status.

The team highlights Fisker (NYSE:FSR), Lucid Group (LCID), QuantumScape (NYSE:QS), and FREYR Battery (NYSE:FREY) as electric vehicle stocks that could be impacted negatively by significant external funding for project financing needs.

Nvidia (NASDAQ:NVDA) and AMD (AMD) could sell PC chips using architecture from Arm Holdings (ARM),

According to a report from Reuters, citing a person familiar with the matter, the Arm-based chips from Nvidia and AMD could be available on the market as soon as 2025.

The report explains that this is part of Microsoft’s effort to help chip companies build Arm-based processors for Windows PC’s. The vast majority of Windows-based PCs run on processors designed and created by Intel (INTC).

Microsoft (MSFT) is also taking aim at Apple (AAPL), which first introduced a Mac with a chip using Arm architecture three years ago.

Qualcomm (QCOM) has made Arm-based chips for laptops for several years. According to Reuters, Qualcomm was granted an exclusive license by Microsoft to make Windows-compatible chips until 2024.

AMD, Microsoft and Nvidia declined to comment.

As Halloween approaches, it looks like candies could become more expensive as hotter and drier weather is tightening the global cocoa supply.

Cocoa futures (CC1:COM) in New York jumped as much as 2.5% to $3,786 per metric ton on Monday, the highest level seen in over 44 years.

El Niño rages on in countries that produce the key ingredient for chocolate, resulting in poor crop growth. The weather pattern is expected to last until March 2024, and there is a chance it will intensify between November and January.

The International Cocoa Organization estimates that the 2022/23 season has already seen a deficit of ~100K tons of cocoa.

Related stocks – Hershey (HSY), Mondelez (MDLZ), Barry Callebaut (OTCPK:BYCBF), and Nestle (OTCPK:NSRGY) , Lindt & Sprungli (OTCPK:LDSVF)

Other articles to look out for on Seeking Alpha:

Barclays reports Q3 earnings; warns of big cost cuts as profits dip

Smartsheet to build data hosting facility in Australia

Oxy Petroleum plunges as Exxon, Chevron megadeals remove potential buyers

On our catalyst watch for the day,

  • The Women’s Wear Daily Apparel & Retail CEO Summit will feature a long list of notable speakers, including the CEO’s of Macy’s (M) Prada (OTCPK:PRDSY) Abercrombie & Fitch (ANF) Saks and Neiman Marcus Group.

  • NeuroBo Pharmaceuticals (NRBO), Akero Therapeutics (AKRO), and Sagimet Biosciences (SGMT) will all present at the H.C. Wainwright 7th Annual NASH Investor Conference.

  • The two-day Robin Hood conference begins in New York. The event will feature stock picks and investing discussions. Participants include Stanley Druckenmiller, Paul Tudor Jones II and OpenAI’s Sam Altman among others.

  • Anthropic Co-founder and Chief Scientist Jared Kaplan will be one of the speakers at the Bloomberg Technology Summit. Amazon (AMZN) recently disclosed that it will invest up to $4B in the artificial intelligence (AI) startup.

  • Qualcomm (QCOM) will update on its innovation plans as part of the company’s Snapdragon Summit.

U.S. stocks on Monday closed out a seesaw-session with a mixed performance.

Wall Street’s major averages opened lower, and then largely fluctuated through the day. The Nasdaq (COMP.IND) ended 0.27% higher. The S&P 500 (SP500) slipped 0.17%. The Dow (DJI) retreated 0.58%.

Of the 11 S&P sectors, eight ended in negative territory. Communication Services, Tech and Consumer Discretionary were the three gainers.

Energy led the losers. The sector was in focus following a second mega-merger in the oil and gas industry in less than two weeks, after Chevron (CVX) agreed to buy Hess (HES) in an all-stock transaction valued at $53B.

The 10-year yield was down 7 basis points to 4.85%. The 2-year yield (US2Y) was down 2 basis points to 5.06%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. The Dow is up 0.3%, the S&P 500 is up 0.5% and the Nasdaq is up 0.6%. Crude oil is up 0.7% at more than $86 a barrel. Bitcoin is up 12.2% and above 34,000.

In the world markets, the FTSE 100 is down a fraction and the DAX is up 0.3%.

The biggest movers for the day premarket: Barclays PLC (NYSE:BCS) is down 3.5% after the company’s Q3 profits were lower than anticipated. And Logitech International (NASDAQ:LOGI) is up 11% after exceeding expectations in Q2 and upgrading the FY2024 projection.

On today’s economic calendar,

  • 9:45 PMI Composite Flash

  • 1:00 PM Money Supply

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