Weekly Financial Market Insights 📈
Amazon Lays Off 10K Employees, US Housing Indicators Hit Decade Lows, PPI Inflation Weaker Than Expected, BlockFi Files For Bankruptcy, and Walmart + Home Depot + Target + Nvidia Earnings
Sunday Morning Markets ☕
Trading Week 46, covering Monday, Nov 14 through Friday, Nov 18. Your weekly financial markets update, in less than 5 minutes.
The Week In Review ⏪
Layoffs in tech continue. Amazon cuts 10K jobs, as well as Cisco, Roku, UiPath, Carvana, and Asana.
Producer price inflation was weaker than expected for October.
Republicans win majority in the house, splitting the congress.
Housing market continues to tumble. Home sales decline for 9th straight month, as homebuilder sentiment hits decade low.
FTX contagion worsens. BlockFi files for bankruptcy. Genesis halts loan redemptions and new loan originations.
US Markets 🇺🇸
Amazon lays off 10K employees in corporate and technology roles that began this week. The cuts are the largest in the company’s history and primarily impact Amazon’s devices organization, retail division, and human resources, according to the report.
Wholesale prices rose less than expected as inflation continued to ease. The Producer Price Index (PPI) came in at 0.2% during the month of October, below expectations of 0.4%, and 8% during the year.
Republicans take control of the House ousting Democrats from key positions of power and complicating President Biden’s legislative hopes for the remainder of his term. Congress will now be split as Republicans have a majority in the House, while Democrats have a majority in the Senate.
Household debt soars at fastest pace in 15 years due to hefty increases in credit card usage and mortgage balances. Outstanding credit card balances rose more than 15% from the same period in 2021, the largest annual jump in more than 20 years.
Homebuilder sentiment drops to a decade low as builders continue to add more incentives to sell through existing inventory. The drop in November is the 11th straight monthly decline and the lowest level since June 2012.
Home sales declined for the ninth straight month in October, as higher interest rates and surging inflation kept buyers on the sidelines. Sales of previously owned homes plunged 28.4% year-over-year, to the lowest level since December 2011.
Hundreds of Twitter employees resign on Thursday after Elon Musk issued an ultimatum telling them they would need to be willing to commit to a “hardcore” work environment. “Entire teams representing critical infrastructure are voluntarily departing the company”
Elizabeth Holmes sentenced to 11 years in prison after the Theranos founder was convicted on four counts of criminal fraud. Former operating chief, Ramesh “Sunny” Balwani, was found guilty of 12 criminal fraud charges. His sentencing is set for next month.
Rest of World 🌏
President Biden & Chinese President Xi Jinping meet for the first time in person since Biden took office. Tensions between the U.S. and China have escalated over the last several years due to geopolitical issues in Taiwan, the war in Ukraine, and the ability for American companies to sell high-end tech to Chinese businesses.
FBI director says Tiktok poses national security threat and favors banning the platform in the US. Director Wray noted the risk that the Chinese government could harness the video-sharing app to influence users or control their devices.
Protests in Iran continue to spur up violence as authorities moved aggressively to disperse demonstrations. Rights groups say that at least 300 people have been killed, and the UN said 14,000 had been arrested.
Crypto ⚡
BlockFi prepares to file for bankruptcy within days of the FTX fallout. The crypto lender paused client withdrawals, citing uncertainties with FTX, while saying it had adequate liquidity and was exploring options with outside advisers.
Crypto lender, Genesis, halts redemptions and new loan originations as the FTX contagion spreads. In turn, the crypto exchange, Gemini, paused all withdrawals on its interest-bearing Earn accounts as a result of Genesis’ changes.
SBF gained “unauthorized access” to FTX systems to obtain digital assets belonging to the company and transferred them to the custody of the Bahamian government, an emergency filing shows. FTX then immediately removed trading, withdrawals, and also moved digital assets to cold wallets.
Grayscale Bitcoin Trust trades at 43% discount to net asset value as the FTX contagion spreads. The added pressure comes after Genesis Capital – a corporate sibling to bitcoin trust manager Grayscale Investments – halted customer withdrawals from its lending unit this week.
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Earnings Reports 💰
Home Depot ($HD) — View report
Revenue: $38.9B vs $38B expected and $36.8B year ago (+6% YoY)
EPS: $4.24 vs $4.12 expected and $3.92 year ago (+8% YoY)
Operating Margin: $6.1B or 15.8% vs 15.7% year ago (+8 bps)
Important Notes: Number of customer transactions -4% YoY to 410m. Average ticket size +9% YoY to $89.7
Guidance for Q4: Comparable sales +3% YoY. Diluted EPS growth in mid-single digits.
Market Reaction (24hrs after report): +0.9%
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Walmart ($WMT) — View report
Revenue: $152.8B vs $147B expected and $140.5B year ago (+9% YoY)
EPS: $1.50 vs $1.32 expected and $1.45 year ago (+3% YoY)
Operating Margin: $2.7B or 1.8% vs 4.1% year ago (-236 bps)
Segment Breakdown:
Walmart: $104.8B vs $96.6B (+8% YoY)
Walmart International: $25.3B vs $23.6B (+7% YoY)
Sams Club: $21.4B vs $19.0B (+13% YoY)
Guidance for Q4: Sales growth +3% and EPS -3% to -5%.
Market Reaction (24hrs after report): +6.7%
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Target ($TGT) — View report
Revenue: $26.5B vs $26.4B expected and $25.7B year ago (+3% YoY)
Non-GAAP EPS: $1.54 vs $2.16 expected and $3.03 year ago (-49% YoY)
Operating Margin: $1.02B or 3.9% vs 7.8% year ago (-398 bps)
EBITDA: $1.71B vs $2.67B year ago (-36% YoY)
Guidance for Q4: Low-single-digit decline in sales, and op margin rate of ~3%
Market Reaction (24hrs after report): -13.1%
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Nvidia ($NVDA) — View report
Revenue: $5.93B vs $5.82B expected and $7.1B year ago (-17% YoY)
EPS: $0.58 vs $0.70 expected and $1.17 year ago (-50% YoY)
Operating Margin: $601m or 10.1% vs 37.6% year ago (-2,747 bps)
Segment Breakdown:
Data Center: $3.83B, up 31% YoY
Gaming: $1.57B, down 51% YoY
Professional Visualization: $0.2B, down 61% YoY
Auto: $0.25B, up 86% YoY
OEM: $0.07B, down 69% YoY
Guidance for Q4: Sales of $6B, plus or minus 2%
Market Reaction (24hrs after report): -1.6%
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Other Reports:
Week Ahead 📅
Monday
US - Chicago Fed National Activity Index (Oct) 🇺🇸
Germany - PPI Inflation (Oct) 🇩🇪
Earnings Reports: Dell, Zoom, Agilent 💰
Tuesday
Canada - Retail Sales (Sep) 🇨🇦
Australia - S&P Manufacturing PMI (Nov) 🇦🇺
Earnings Reports: Medtronic, Analog Devices, Autodesk, Dollar Tree, Baidu, HP, Best Buy, Dicks Sporting Goods, Warner Music Group 💰
Wednesday
US - Durable Good Orders (Oct) 🇺🇸
US - New Home Sales (Oct) 🇺🇸
US - FOMC Meeting Minutes 🇺🇸
US - Jobless Claims 🇺🇸
EU - S&P Manufacturing PMI (Nov) 🇪🇺
Germany - S&P Manufacturing PMI (Nov) 🇩🇪
Earnings Reports: Deere & Co, Food Truck Alliance 💰
Thursday
US - Market Closed for Thanksgiving Holiday 🇺🇸
Germany - Ifo Business Climate (Nov) 🇩🇪
UK - Consumer Confidence (Nov) 🇬🇧
Friday
Germany - Consumer Confidence (Nov) 🇩🇪
Germany - GDP (Q3) 🇩🇪
Earnings Reports: Pinduoduo 💰
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