Weekly Financial Market Insights 📈
Layoffs From DoorDash and Kraken, Black Friday Sales Hit Record, Powell Says Smaller Rate Hikes Ahead, Covid Protests In China, and Intuit + Crowdstrike + Salesforce + Snowflake Earnings
Sunday Morning Markets ☕
Trading Week 48, covering Monday, Nov 28 through Friday, Dec 2. Your weekly financial markets update, in less than 5 minutes.
The Week In Review ⏪
The labor market continues to show resilience as:
Nonfarm payrolls +263K
Average hourly earnings +0.6%
Personal income +0.7%
Fed Chairman Powell hinted at a smaller 50bps hike at the next FOMC meeting.
Black Friday & Cyber Monday volume hits new all-time record.
ISM Manufacturing PMI signals a contraction in economic activity.
Doordash, AMC, and Kraken all announce significant layoffs.
Protests break out across China as citizens revolt against strict Covid restrictions.
BlockFi files for Chapter 11 bankruptcy protection.
US Markets 🇺🇸
PCE inflation was lower than expected in October. Prices rose 0.2% during the month and 5% during the year, slightly lower than expected. Meanwhile, personal income jumped 0.7% for the month, well ahead of the 0.4% estimate.
Nonfarm payrolls surge +263K during the month, well above the consensus estimate of +200K as the labor market continues to show strength. Average hourly earnings jumped 0.6% for the month, nearly double what was expected.
Powell says smaller interest rate hikes ahead and signals 50bps hike likely for December FOMC meeting. He gave mixed signals like “Despite some promising developments, we have a long way to go in restoring price stability” and "we don't want to over-tighten, that's why we are slowing down".
Black Friday online sales hit a new record as consumers spent over $9.12B shopping this year. Buy Now Pay Later volume increased by 78% vs the previous week as consumers continue to grapple with inflation.
ISM manufacturing PMI slips to 49, the lowest level since the pandemic started, and back in contractionary territory. New orders dropped 2 points to 47.2%, while the employment gauge fell 1.6 points to 48.4% as some companies said they were resorting to hiring freezes and even layoffs.
DoorDash lets go of 1,250 employees as part of a broader cost-cutting initiative. CEO Tony Xu offered 17 weeks severance and 2023 vesting as part of the severance package. DoorDash shares are down over 60% year to date.
AMC Networks plans significant layoffs as CEO Christina Spade steps down after less than three months on the job. AMC Networks had more than 1,700 full-time employees and plans to lay off about 20% of their workforce.
Rest of World 🌏
Protests break out across China as citizens revolt against strict Covid restrictions and other zero-Covid policies. Nearly three years of controls have dragged down the economy, causing youth unemployment to hit nearly 20%.
China’s manufacturing activity contracts in November as Covid restrictions continue. The PMI, a key gauge of manufacturing activity, came in at 48.0, down from October's 49.2 and well below the 49.0 reading expected by analysts.
Eurozone inflation shows signs of slowing but still remains at staggering levels. The initial reading came in at 10% for the month of November, down from October’s 10.6% and below the expectation of 10.4%. The markets are now pricing in a 50bps rate hike from the ECB at this month’s meeting.
European Union places price cap on Russian oil at $60 per barrel. The announcement comes after the G-7 nations agreed back in September to impose a limit on Russian crude in an effort to constrain the Kremlin’s sale of oil.
Crypto ⚡
BlockFi files for Chapter 11 bankruptcy as the FTX fallout continues to spread. In the filing, the company indicated that it had more than 100,000 creditors, with liabilities and assets ranging from $1B to $10B.
Crypto exchange Kraken lays off 1,100 employees as the company points to slowing macroeconomic and geopolitical factors being the driving forces behind lower crypto volumes. This RIF represents 30% of Kraken’s workforce.
Brazil approves use of Bitcoin as payment after passing a regulatory framework for crypto. The new rules recognize Bitcoin as a digital representation of value that can be used as a means of payment and as an investment asset in the country.
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Earnings Reports 💰
Intuit ($INTU) — View report
Revenue: $2.6B vs $2.5B expected and $2.0B year ago (+29% YoY)
Adjusted EPS: $1.66 vs $1.20 expected and $1.53 year ago (+8% YoY)
Segment Breakdown:
Small Biz & Self Employed: $1,988m, up 38% YoY
Consumer: $150m, up 25% YoY
ProConnect: $34m, up 31% YoY
Credit Karma: $425m, up 2% YoY
Guidance: Lowered FY23 sales guidance to $14.04B - $14.25B and non-GAAP EPS to $13.59 - $13.89
Market Reaction (24hrs after report): +7.3%
—
Crowdstrike ($CRWD) — View report
Revenue: $581m vs $575m expected and $380m year ago (+53% YoY)
Adjusted EPS: $0.40 vs $0.32 expected and $0.17 year ago (+135% YoY)
Annual Recurring Revenue: $2.34B vs $1.51B year ago (+55% YoY)
Free Cash Flow: $174m vs $124m year ago (+40% YoY)
Guidance: Q4 revenue of $619m - $628m and non-GAAP EPS of $0.42 - $0.45
Market Reaction (24hrs after report): -14.8%
—
Salesforce ($CRM) — View report
Revenue: $7.8B vs $7.8B expected and $6.9B year ago (+14% YoY)
Adjusted EPS: $1.40 vs $1.22 expected and $1.27 year ago (+10% YoY)
Operating Income: $460m or 5.9% vs 0.6% year ago (+532 bps)
Free Cash Flow: $115m vs $238m year ago (-52% YoY)
Guidance: Q4 sales of $7.93B - $8.03B and non-GAAP EPS of $1.35 - $1.37
Market Reaction (24hrs after report): -8.3%
—
Snowflake ($SNOW) — View report
Revenue: $523m vs $539m expected and $334m year ago (+56% YoY)
Adjusted EPS: $0.11 vs $0.05 expected and $0.03 year ago (+267% YoY)
Other Notes: Remaining performance obligations of $3.0B, up 67% YoY. Customers contributing >$1m in ARR over the last twelve months to 287, up 94% YoY.
Guidance: Q4 product revenue of $535m - $540m with operating margin of ~1%
Market Reaction (24hrs after report): +7.8%
—
Other Reports:
Week Ahead 📅
Monday
US - ISM Non-Manufacturing PMI (Nov) 🇺🇸
Australia - RBA Interest Rate Decision 🇦🇺
Tuesday
US - Balance of Trade (Oct) 🇺🇸
Canada - Balance of Trade (Oct) 🇨🇦
Canada - Ivey PMI (Nov) 🇨🇦
China - Balance of Trade (Nov) 🇨🇳
Australia - GDP Growth Rate (Q3) 🇦🇺
Earnings Reports: AutoZone, MongoDB, SentinelOne 💰
Wednesday
Canada - BoC Interest Rate Decision 🇨🇦
Germany - Industrial Production (Oct) 🇩🇪
India - RBI Interest Rate Decision 🇮🇳
Earnings Reports: Brown Forman, Cambell Soup Co, C3.ai 💰
Thursday
US - Jobless Claims (Dec) 🇺🇸
China - Inflation Rate (Nov) 🇨🇳
Earnings Reports: Costco, Oracle, Lululemon, Chewy, Docusign💰
Friday
US - PPI Inflation (Nov) 🇺🇸
US - UMich Consumer Sentiment (Dec) 🇺🇸
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