Weekly Financial Market Insights 📈
Trading Week 36 ...Twitter Trial Updates, Europe's Energy Crisis, ECB Rate Hikes, Poolin Halts Withdrawals, and UiPath + Nio + Zscaler + DocuSign Earnings
Sunday Morning Markets ☕
Your weekly financial markets update, in less than 5 minutes. Market coverage for Monday, September 5 - Friday, September 9.
Last Week ⏪
An energy crisis in Europe looms as Russia’s Gazprom shuts down Nord Stream 1 indefinitely, and OPEC+ cuts their output by 100,000 barrels per day. Russia made additional moves to lessen its dependency on western currencies (USD & EUR) by now accepting payments in Rubles, Yuans, and even some cryptocurrencies as settlements for oil sales with friendly countries.
Europe, Canada raise policy rate 75bps, as the Federal Reserve is expected to follow suit at their meeting on September 21st, US jobless claims hit 3.5 month low, mortgage applications continue to see weakness, PoolinWallet suspends crypto withdrawals as they sort out liquidity issues — all that and more in this week of Sunday Morning Markets…
US Markets 🇺🇸
Jobless claims fall to 3.5 month low of 222K, a sign of strength in the labor market even as the U.S. economy softens. New claims have dropped four weeks in a row. The number of people already collecting unemployment benefits, meanwhile, rose by 36K to 1.47m.
US trade deficit sinks by $10B to a nine-month low as surging inflation has raised concerns that consumers will pull back, causing firms to become more cautious with inventory levels. The decline this month was almost entirely due to a massive decline in imports.
Markets pricing in 90% chance of 75 bps hike for FOMC meeting on September 20th and 21st. CME’s FedWatch tool has a 90% chance of a 75bps hike and a 10% chance of a 50bps hike at the time of print.
Refi mortgage applications fell 83% versus the year prior as 30-year fixed-rate mortgages rose above 5.9%. Mortgage applications to purchase a home were 23% lower than the same week one year ago.
Musk can use whistleblower claims, but the judge won't delay Twitter ($TWTR) trial. It is expected to begin on Oct. 17, earlier than the mid-November date Musk’s team requested in its latest push.
CVS to buy Signify Health ($SGFY) for ~$8B or $30.50 per share. Signify offers patient care through virtual and in-person visits, using technology and analytics to power its service. The deal marks a big push by CVS into the in-home health care space.
Rest of World 🌏
Russia halts the flow of Nord Stream 1 indefinitely. Russia’s Gazprom originally shut down the oil pipeline for maintenance to take place between Aug 31st - Sept 3rd but recently announced flow would not resume after the 3rd due to an oil leak. European lawmakers have repeatedly accused Russia of weaponizing energy exports in an attempt to drive up commodity prices.
OPEC+ cuts oil production by 100K barrels per day, surprising energy markets during a time of considerable turmoil. Oil prices have fallen around 25% since early June after touching multiyear highs in March. A new supply of oil from Iran may hit markets if Tehran can secure a renewed version of its nuclear deal.
China to buy Russian gas with Rubles and Yuans instead of dollars. The shift is part of a push by Russia to reduce its reliance on the US dollar, euro, and other hard currencies in its banking system and for trade. Russia continues to forge closer economic ties with China and other non-Western countries.
ECB raises its key policy rate by 75bps taking the deposit rate above 0% for the first time since 2012 in an attempt to tame surging inflation. The ECB noted it expects to continue raising rates to dampen demand, prioritizing the fight against inflation even as the eurozone heads towards a recession.
Yen plunges to weakest levels in 24 years. Two powerful forces are moving the currency lower: the widening interest rate differential between the US and Japan and Japan’s trade and current account deficit.
Crypto ⚡
PoolinWallet suspends withdrawals after the company announced Monday that it’s trying to preserve assets and stabilize liquidity. Poolin is one of the largest Bitcoin mining pools in the world.
Binance removes USDC as a tradable asset on its platform and will automatically transition customers’ funds into BUSD, the company’s native stablecoin. Currently, BUSD is the third largest stablecoin with a market value of $19B, behind USDC’s $52B and USDT’s $68B.
Russia exploring stablecoin settlements with friendly nations, in a move to reduce its dependence on the US dollar and Euro. Russia has previously taken a hard stance against the use of digital currencies, with President Vladimir Putin signing a law banning digital payments in July.
Coinbase backs lawsuit against US Treasury Department following the Tornado Cash sanctions. Coinbase will be footing the bill for the lawsuit brought forth by six users of the blacklisted crypto-mixing service.
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Earnings Reports 💰
UiPath ($PATH)
Revenue: $242.2m vs $230.7m and $195.5m year ago (+24% YoY)
Non-GAAP EPS: ($0.02) vs ($0.11) and $0.01 year ago (-300% YoY)
ARR: $1,044m vs $725m year ago (+44% YoY)
Guidance:
Q3: Rev of $243m - $245m and non-GAAP op. loss of ($30m) - ($25m)
FY: Rev of $1,002m - $1,007m and non-GAAP op. loss of ($15m)
Important Notes: Net-new ARR of $66.2M. Dollar-based net retention rate of 132%. Stock-based compensation = 36% of revenue, 45% of gross profit.
Market Reaction (24hrs after report): -11.2%
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Nio ($NIO)
Revenue: $1.537B vs $1.459B expected and $1.201B year ago (+22% YoY)
Non-GAAP EPS: ($0.19) loss vs ($0.17) expected and ($0.03) year ago (-538% YoY)
Gross Margin: 13% vs 18.6% year ago (-560 bps YoY and -160 bps QoQ)
Vehicle Deliveries: 25,059 vs 21,896 year ago (+14% YoY and -3% QoQ)
Guidance for Q3: Revenues of $1.918B - $2.03B, (31% - 38.7% YoY). Total deliveries between 31K - 33K vehicles (26.8% - 35% YoY)
Important Notes: Vehicle margin falls to 16.7% for the quarter, from 20.3% in the same quarter a year ago. Nio has delivered 20,729 vehicles so far in July and August. Finished the quarter with $8.1B in cash reserves.
Market Reaction (24hrs after report): +2.2%
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Zscaler ($ZS)
Revenue: $318.1m vs $305.5m expected and $197.1m year ago (+61% YoY)
Non-GAAP EPS: $0.25 vs $0.21 expected and $0.14 year ago (+79% YoY)
Free Cash Flow: $74.7m vs $27.7m year ago (+170% YoY)
Guidance:
Q1’FY23: Revenue of $339m - $341m, non-GAAP EPS of ~$0.26
FY23: Revenue of $1.49B - $1.50B, non-GAAP EPS of ~$1.16 - $1.18
Important Notes: Calculated billings grew 57% YoY to $520.4m. Deferred revenue grew 62% YoY to $1.02B. GAAP net loss of $97.7m was 21% worse than the $81.0m loss a year ago. Stock-based compensation = 37% of revenue, 47% of gross profit.
Market Reaction (24hrs after report): +21.9%
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DocuSign ($DOCU)
Revenue: $622.2m vs $602m expected and $511.8m year ago (+22% YoY)
Non-GAAP EPS: $0.44 vs $0.42 expected and $0.47 year ago (-6.4% YoY)
Free Cash Flow: $105.5m vs $161.7m year ago (-37% YoY)
Guidance:
Q3: Revenue of $624m - $628m, non-GAAP op. margins of 16% - 18%
FY: Revenue of $2,470m - $2,482m, non-GAAP op. margins of 16% - 18%
Important Notes: Gross billings were $647.7m, an increase of 9% YoY. Subscription revenue increased 23% YoY to $605.2m. Professional services decreased 11% YoY to $17.0m. Stock-based compensation = 23% of revenue, 29% of gross profit.
Market Reaction (24hrs after report): +10.5%
Week Ahead 📅
Monday
UK Manf Production (July) 🇬🇧
Earnings Reports: Oracle ($ORCL), Braze ($BRZE) 💰
Tuesday
US CPI Inflation (Aug) 🇺🇸
German ZEW Economic Sentiment (Sept) 🇩🇪
Earnings Reports: Core & Main ($CNM) 💰
Wednesday
US PPI Inflation (Aug) 🇺🇸
UK CPI (Aug) 🇬🇧
Thursday
Jobless Claims 🇺🇸
Retail Sales (Aug) 🇺🇸
Philadelphia Fed Manf. Index (Sept) 🇺🇸
Empire State Manf. Index (Sept) 🇺🇸
BoE Interest Rate Decision 🇬🇧
Friday
UMich Consumer Sentiment Index (Sept) 🇺🇸
Eurozone CPI (Aug) 🇪🇺
Earnings Reports: Manchester United ($MANU) 💰
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Until next Sunday…