Weekly Financial Market Insights 📈
FTX Goes Bankrupt, Meta Lays Off 11K Employees, CPI Inflation Weaker Than Expected, Elon Dumps $4B In Tesla Shares, and Disney + Palantir + Activision + Rivian Earnings
Sunday Morning Markets ☕
Trading Week 45, covering Monday, Nov 7 through Friday, Nov 11. Your weekly financial markets update, in less than 5 minutes.
The Week In Review ⏪
FTX implodes & announces bankruptcy. Allegations of misuse of customers’ funds as US agencies scramble to investigate. Crypto asset prices plunged.
US CPI inflation came in below expectations. Equity markets rallied hard on hopes of a more dovish Fed policy.
Layoffs continue. Meta cuts 11K employees. Redfin, Salesforce, and Zendesk all announced RIFs. Disney plans hiring freeze and job cuts.
Elon sells another $4B in Tesla shares after officially buying Twitter.
Biden Administration stops accepting applications for student loan forgiveness after a federal judge ordered the program to end.
US Markets 🇺🇸
CPI inflation came in weaker than expected as prices rose 0.4% during the month of October, and 7.7% over the last year. Core-CPI increased 0.3% for the month and 6.3% on an annual basis, also lower than expectations. Markets soared following the report.
Meta lays off 13% of its workforce or about 11K employees as the company looks to significantly reduce operating expenditures after reporting much slower growth in Q3. The markets liked the news as Meta shares rallied 19% this week.
Redfin lays off 13% of employees and shuts down its iBuyer division. “We plan to keep increasing our share of the market, but that market in 2023 is likely to be 30% smaller than it was in 2021. The June layoff was a response to our expectation that we’d sell fewer houses in 2022; this layoff assumes the downturn will last at least through 2023.”
Elon sells another $4B in Tesla shares after closing his $44B acquisition of Twitter. According to an SEC filing, Musk has sold nearly $22B worth of Tesla shares in 2021, and over $15B so far in 2022.
Student loan forgiveness struck down by a federal judge in Texas. The Biden Administration has stopped accepting applications for federal student loan forgiveness and is “seeking to overturn those orders.”
Rest of World 🌏
The shipping cost of containers has fallen 73% from its peak last September to $2,773 per 40-foot container, according to The World Container Index. As international shipping cancellations continue to surge, container depots are filling up.
Inflation in China plunged and goes negative for the first time in two years as the producer price index fell by 1.3% in October from a year ago. China’s consumer price index only increased by 2.1%, well below expectations.
The UK economy contracted by 0.2% in the third quarter, signaling what could be the start of a lengthy recession. The Bank of England is forecasting the country’s longest recession since records began.
Australian consumer sentiment hit 2-year low as rising inflation, high-interest rates, and laggard wage growth greatly weighed on spending power in the country. The index slumped to a historically low level of 78.
Crypto ⚡
Binance liquidates FTT holdings after rumors surface that FTX may have liquidity issues. FTX CEO, Sam Bankman-Fried tweeted early Monday morning that "FTX is fine. Assets are fine." The tweet has since been deleted.
Binance announces LOI to buy FTX. Binance CEO “CZ” tweeted “FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com”.
Binance backs out of the FTX deal leaving the crypto exchange on the brink of collapse. “The issues are beyond our control or ability to help,” Binance said in a tweet and noted reports of mishandled customer funds and U.S. agency investigations.
FTX searches for new funding to make their users whole. The exchange also announced it would be winding down its sister trading firm, Alameda Research. SBF tweeted “FTX US Customers Funds Are Fine”.
FTX files chapter 11 bankruptcy for over 130 of its affiliated companies including Alameda Research, FTX.com & US. SBF stepped down as CEO and has been replaced by John J. Ray III.
Feds recover $3.4B in stolen bitcoin from over a decade ago on the illegal Silk Road marketplace. The seizure marks the second-largest in crypto history. James Zhong pled guilty to wire fraud after he used a sophisticated scheme to trick the withdrawal systems on the crypto marketplace.
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Earnings Reports 💰
Activision Blizzard ($ATVI) — View report
Revenue: $1.8B vs $1.7B expected and $2.1B year ago (-14% YoY)
Non-GAAP EPS: $0.68 vs $0.51 expected and $0.89 year ago (-24% YoY)
Operating Margin: $485m or 27.2%, vs 39.8% year ago (-1,259 bps)
Segment Breakdown:
Product Sales: $231m vs $423m year ago (-45% YoY)
In-Game, Subscriptions: $1,551m vs $1,647m (-6% YoY)
Guidance: No guidance given.
Market Reaction (24hrs after report): +1.3%
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Palantir ($PLTR) — View report
Revenue: $478m vs $475m expected and $392m year ago (+22% YoY)
Adj. EPS: $0.01 vs $0.03 expected and $0.04 year ago (-75% YoY)
Adj. EBITDA: $87m vs $119m year ago (-27% YoY)
Remaining Perf. Obligations: $1,300m vs $874m year ago (+49% YoY)
Guidance for Q4:
Sales of $503m - $505m
Income from operations of $78m - $80m
Market Reaction (24hrs after report): -11.5%
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Disney ($DIS) — View report
Revenue: $20.2B vs $21.4B expected and $18.5B year ago (+9% YoY)
EPS: $0.30 vs $0.56 expected and $0.37 year ago (-19% YoY)
Disney+ Subs: 164.2m vs 118.1m year ago (+39% YoY)
Segment Breakdown:
Media & Entertainment: $12.745B (-3% YoY)
Parks & Experiences: $7.425B (+36% YoY)
Guidance: No guidance given.
Market Reaction (24hrs after report): -13.2%
—
Rivian ($RIVN) — View report
Revenue: $536m vs $554m and $1m year ago (+53,500% YoY)
EPS: ($1.88) vs ($1.83) expected and ($12.21) year ago (+85% YoY)
Adjusted EBITDA: ($1.31B) vs ($0.73B) year ago (-80% YoY)
Other Notes: Produced 7,363 units during the quarter, and delivered 6,584.
Guidance for FY22: Produce 25K units. ($5,450m) adj EBITDA, lowered CAPEX guidance to $1.75B.
Market Reaction (24hrs after report): +17.4%
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Other Reports:
Week Ahead 📅
Monday
Japan - GDP (Q3) 🇯🇵
China - Industrial Production (Oct) 🇨🇳
India - CPI Inflation (Oct) 🇮🇳
Earnings Reports: Tyson Foods, Nu Holdings, Monday.com, DLocal 💰
Tuesday
US - PPI Inflation (Oct) 🇺🇸
UK - Unemployment Rate (Oct) 🇬🇧
Germany - ZEW Economic Conditions (Nov) 🇩🇪
Earnings Reports: Walmart, Home Depot, Sea Ltd 💰
Wednesday
US - Retail Sales (Oct) 🇺🇸
Canada - CPI Inflation (Oct) 🇨🇦
UK - CPI Inflation (Oct) 🇬🇧
Australia - Unemployment Rate (Oct) 🇦🇺
Japan - Balance of Trade (Oct) 🇯🇵
Earnings Reports: Nvidia, Cisco, Lowe’s, Target, Grab Holdings 💰
Thursday
US - Philadelphia Fed Manf. Index (Nov) 🇺🇸
US - Building Permits (Oct) 🇺🇸
Eurozone - CPI Inflation (Oct) 🇪🇺
Earnings Reports: Alibaba, Applied Materials, Palo Alto Networks, NetEase, BJ’s Wholesale, Macy’s 💰
Friday
US - Existing Home Sales (Oct) 🇺🇸
UK - Retail Sales (Oct) 🇬🇧
Earnings Reports: JD.com, Footlocker 💰
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