Weekly Financial Market Insights 📈
Trading Week 40 ... British Pensions Nearly Collapse, OPEC+ Major Supply Cuts, Tesla Misses Targets, Updates on Twitter Case, US Unemployment Rate Drops, and McCormick + Constellation Earnings
Sunday Morning Markets ☕
Your weekly financial markets update, in less than 5 minutes. Covering Monday, Oct 3 through Friday, Oct 7.
The Week In Review ⏪
Oil prices surge over 14% this week and are now 18% off their lows with the culmination of the Nord Stream Pipeline explosions last Monday, OPEC+ major output cuts, and the depletion of the US Strategic Petroleum Reserve (SPR). Add in a relatively strong job report on Friday and we saw yields heading higher, with the 2Y-10Y inversion hitting 43 bps.
US manufacturing PMI missed estimates while job openings plunged, Poshmark gets acquired for $1.2B, The Bank of England said British pensions were hours away from collapse, Binance’s BNB chain gets hacked for $500m, and Celsius’ founders cashed out over $40m before shutting off customer withdrawals — all that and more on this week of Sunday Morning Markets.
US Markets 🇺🇸
ISM Manufacturing PMI falls to 50.9, missing expectations of 52.0, and down from August’s reading of 52.8. Hawkish monetary policy has sent manufacturing activity to a two-and-a-half-year low, as new orders drop 4.2 percent to 47.1.
Unemployment rate falls to 3.5% as the labor force participation rate edged lower. Nonfarm payrolls increased +263K compared to consensus estimates of +255K. Average hourly earnings jumped 0.3% during the month and 5% during the year, in line with estimates.
Job openings plunge by 1.1 million in August, providing a sign that the labor market may be loosening. The number of available jobs totaled 10.1m, a 10% drop from the 11.2m reported in July.
Elon Musk agrees to buy Twitter for $52.40 per share according to a filing on Tuesday. Twitter shares closed up more than 22% on the news. Sources say a deal could happen as soon as next week. (TWTR 0.00%↑)
Poshmark to be acquired for $1.2B by the South Korean internet giant, Naver. The all-cash deal prices $POSH shares at $17.20. The company went public in 2021 for $42 a share, but since then, the stock has fallen sharply alongside the rest of the tech industry. (POSH 0.00%↑)
Tesla misses Q3 delivery target causing shares to sink double digits this week. Tesla reported 343K vehicle deliveries during the quarter, missing expectations of 365K. However, total production still increased 41% over the year to 364.7K vehicles. (TSLA 0.00%↑)
Rivian’s Q3 production jumps 67% from last quarter as the company produced over 7K trucks. Rivian confirmed that it still expects to meet the goal of 25K vehicles produced this year. (RIVN 0.00%↑)
Rest of World 🌏
OPEC+ cuts daily output by 2m barrels, curbing supply in an already tight market. The U.S. called the surprise decision shortsighted. Saudi Arabia said the cut was necessary to respond to rising interest rates in the West and a weaker global economy.
BofE says pension funds were “hours from disaster” before the central bank stepped in to buy long-dated government gilts. The plunge in bond values leading up to the intervention caused panic for Britain’s £1.5 trillion liability-driven investment funds (LDIs).
Apple may be forced to change chargers in Europe after lawmakers approved a new law that would require electronic devices to use a common charger. If passed, all mobile phones, tablets, and cameras sold in the EU must be equipped with a USB-C charging port by the end of 2024 (AAPL 0.00%↑).
Crypto ⚡
$570m stolen from BNB Chain as hackers were able to exploit cross-chain bridges and withdrew nearly 2m tokens from the network. The company said it had worked with network validators to pause new blocks on BSC, suspending all transactions while a team investigates the breach.
Celsius’ top 3 execs cashed out $42m before bankruptcy. Ex-CEO Alex Mashinsky, ex-CSO Daniel Leon, and CTO Nuke Goldstein pulled BTC, ETH, USDC, and CEL holdings from their accounts before the company suspended all customer withdrawals.
A16z leads $40m funding round for Golden, a Web3 data protocol that uses tokens to incentivize users to submit accurate information. The Golden protocol is currently in testnet, with the mainnet launch planned for Q2’23.
SEC fines Kim Kardashian $1.26m for promoting EthereumMax without disclosing the $250,000 payment she received for posting promotional content. Kardashian also agreed not to promote any cryptocurrencies for three years.
WazirX lays off 40% of employees as the Indian crypto exchange is forced to make adjustments to survive the bear market. WazirX daily trading volumes have declined over 99% from their peak last October.
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Earnings Reports 💰
McCormick & Company ($MKC) — View report
Revenue: $1.6B vs $1.59B expected and $1.55B year ago (+3% YoY)
EPS: $0.69 vs $0.72 expected and $0.80 year ago (-14% YoY)
Gross Margin: 35.5% vs 38.7% year ago (-320 bps)
Guidance for FY’22: Reaffirmed outlook of comparable sales to increase 2% and EPS to be in the range of $2.64 - $2.69, compared to $2.80 in 2021.
Market Reaction (24hrs after report): -1.2%
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Constellation Brands ($STZ) — View report
Revenue: $2.66B vs $2.51B expected and $2.37B year ago (+12% YoY)
EPS: $3.17 vs $2.88 expected and $2.38 year ago (+33% YoY)
Segment Breakdown:
Beer: Sales of $2.14B, up 15% YoY — Operating margin +326 bps YoY
Wine & Spirits: Sales of $0.52B, up 1% YoY — Operating margin -38 bps YoY
Guidance for FY’23: Operating cash flow of $2.6B - $2.8B. FCF of $1.3B - $1.4B. EPS of $11.20 - $11.60 vs $10.99 year prior.
Market Reaction (24hrs after report): -4.2%
—
Tilray ($TLRY) — View report
Revenue: $153.2m vs $157.4m expected and $168.0m year ago (-9% YoY)
EPS: ($0.13) vs ($0.17) expected and ($0.08) year ago (-63% YoY)
Adj EBITDA: $13.5m vs $12.7m year ago (+6% YoY)
Segment Breakdown:
Cannabis: Sales of $58.6m, -17% YoY
Distribution: Sales of $60.6m, -10% YoY
Beverage: Sales of $20.7m, +34% YoY
Wellness: Sales of $13.4m, -10% YoY
Guidance for FY’23: Reaffirms $70m - $80m of Adj EBITDA and be FCF+
Market Reaction (24hrs after report): -18.7%
Week Ahead 📅
Monday
NAB Business Confidence (Sep) 🇳🇿
Tuesday
UK Claimant Count Change (Sep) 🇬🇧
Wednesday
PPI Inflation (Sep) 🇺🇸
UK Manufacturing Production (Aug) 🇬🇧
Earnings Reports: PepsiCo ($PEP), Infosys ($INFY) 💰
Thursday
CPI Inflation (Sep) 🇺🇸
German CPI Inflation (Sep) 🇩🇪
Earnings Reports: Taiwan Semiconductor ($TSM), Wells Fargo ($WFC), Blackrock ($BLK), Progressive ($PGR), Delta Airlines ($DAL), Dominoes Pizza ($DPZ) 💰
Friday
Retail Sales (Sep) 🇺🇸
UMich Consumer Sentiment (Oct) 🇺🇸
Earnings Reports: UnitedHealth Group ($UNH), JPMorgan Chase ($JPM), Morgan Stanley ($MS), Citigroup ($C) 💰
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Until next Sunday…