Weekly Financial Market Insights 📈
Trading Week 43 ... Elon Musk Buys Twitter, Meta Shares Plunge 20%, Europe and Canada Hike Rates, President Xi Wins Unprecedented Third Term, and Amazon + Apple + Alphabet + Microsoft + Meta Earnings
Sunday Morning Markets ☕
Your weekly financial markets update, in less than 5 minutes. Covering Monday, Oct 24 through Friday, Oct 28.
The Week In Review ⏪
Apple, Amazon, Alphabet, Microsoft, and Meta all released their quarterly results. Their shares were down 8.4% on average this week.
Elon Musk now officially owns Twitter. His first move was to fire the existing chief executives.
Global PMIs plunge, falling well short of expectations.
ECB & BoC both hike interest rates in their continued effort to combat inflation.
President Xi paves the way for an unprecedented third term as leader of China.
US Markets 🇺🇸
Meta shares plunge 24% after an awful earnings report where the company announced a 28% increase in headcount and a $9.4B loss on the Metaverse so far this year. The stock now trades at levels first seen in 2016 when it had less than $20B in annual sales. Today the company has 6x as much revenue but investors price in the many headwinds facing the company. ( META 0.00%↑ )
Alphabet has worst trading day since the COVID crash in March of 2020. Shares closed down more than 9% after the company released Q3 earnings that missed on the top and bottom lines as revenue growth slowed to 6% from 41% a year earlier. ( GOOG 0.00%↑ )
Elon Musk now officially owns Twitter as the deal was finalized on Friday. Twitter CEO Parag Agrawal, CFO Ned Segal, and Head of Legal Policy Vijaya Gadde were all fired, The Washington Post reported. Elon noted he plans to take Twitter public again in a few years. ( TWTR 0.00%↑ )
PCE Inflation rose 0.5% in September and 5.1% from a year ago, in line with expectations. The report comes as the Fed is prepared to enact its sixth interest rate increase of the year at its policy meeting next week. Personal spending rose 0.6%, more than expected amid the rise in prices.
US Composite PMI falls to 47.3 as manufacturing and services both dropped during the month to 49.9 and 46.6, respectively. "The US economic downturn gathered significant momentum in October, while confidence in the outlook also deteriorated sharply," noted Chris Williamson, Chief Economist at S&P Global.
US GDP accelerates to 2.6% in Q3, higher than expectations of 2.3%. The growth came in large part due to a narrowing trade deficit, which economists expected and considered to be a one-off occurrence that won’t be repeated in future quarters.
Amazon adds Pay With Venmo as a payment option at checkout. The feature launches Tuesday and will become available to U.S. users by Black Friday on Nov. 25. ( AMZN 0.00%↑ , PYPL 0.00%↑ )
Rest of World 🌏
ECB hikes interest rates 75 bps and scales back support for European banks. President Lagarde said the so-called “normalization” process is not finished and more rate hikes are expected.
Chinese tech stocks plunge as Xi tightens grip on power and control. The moves come after President Xi Jinping paved the way for an unprecedented third term as leader and packed the Politburo with loyalists. The Chinese Tech ETF KWEB is now down 44% YTD and 80% from ATH.
Tesla cuts the price of its cars in China as CEO Elon Musk said he sees elements of a recession in China. The starting price for the Model 3 sedan was reduced by 5% to ¥265,900 ($36,615). The price tag for the Model Y is now 9% less starting at ¥288,900.
Canada slows the pace of rate hikes amid recession fears. The Bank of Canada raised interest rates by 50 bps to 3.75%, lower than the 75 bps expected. While officials retained hawkish language around combating inflation, the surprise move will raise questions about the appetite to further damage the economy.
Crypto ⚡
Crypto Exchange FTX is creating a stablecoin said CEO Sam Bankman-Fried in an interview. He also ruled out the potential acquisition of the popular trading app Robinhood but hinted that an announcement is coming soon.
Crypto Exchange Huobi delists its native HUSD stablecoin. In August, the stablecoin briefly lost its dollar peg after its issuer closed “several accounts” due to regulatory concerns. It delisted HUSD on Friday and began converting assets to USDT on a 1:1 basis.
The Central Bank of Turkey plans to launch a CBDC next year. The proposal was mentioned in the executive branch's annual plan presented on Monday. “The Digital Turkish Lira system will be integrated with digital identity and FAST,” the report stated.
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Earnings Reports 💰
Microsoft ($MSFT) — View report
Revenue: $50.1B vs $49.7B expected and $45.3B year ago (+11% YoY)
EPS: $2.35 vs $2.31 expected and $2.27 year ago (+4% YoY)
Segment Breakdown:
Productivity & Business: $16.5B, +9% YoY
Cloud: $20.3B, +20% YoY
Personal Computing: $13.3B, +0% YoY
Guidance for Q2: Sales of $52.4B - $53.4B, operating margin ~40%
Market Reaction (24hrs after report): -7.7%
—
Alphabet ($GOOG) — View report
Revenue: $69.1B vs $70.7B expected and $65.1B year ago (+6% YoY)
EPS: $1.06 vs $1.26 expected and $1.40 year ago (-24% YoY)
Segment Breakdown:
Search Ads: $39.5B, +4% YoY
Youtube Ads: $7.1B, -2% YoY
Network Ads: $7.9B, -2% YoY
Other Services: $6.9B, +2% YoY
Cloud: $6.9B, +38% YoY
Other Bets: $0.2B, +15% YoY
Guidance: No guidance given.
Market Reaction (24hrs after report): -9.6%
—
Meta Platforms ($META) — View report
Revenue: $27.7B vs $27.4B expected and $29.0B year ago (-4% YoY)
EPS: $1.64 vs $1.86 expected and $3.22 year ago (-49% YoY)
Operating Income: $5.7B or 20.4%, vs 35.9% year ago (-46% YoY)
Important Notes: 3.71B MAUs and 2.93B DAUs, both up 4% YoY. Headcount up 28% YoY.
Guidance: Expects OPEX for Reality Labs to be higher in 2023 vs 2022.
Market Reaction (24hrs after report): -24.6%
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Apple ($AAPL) — View report
Revenue: $90.1B vs $88.8B expected and $83.4B year ago (+8% YoY)
EPS: $0.28 vs $0.21 expected and $0.31 year ago (+4% YoY)
Operating Margin: $24.9B or 27.6% vs 28.5% year ago (+5% YoY)
Guidance: No guidance given.
Market Reaction (24hrs after report): +7.6%
—
Amazon ($AMZN) — View report
Revenue: $127.1B vs $127.5B expected and $110.8B year ago (+15% YoY)
EPS: $0.28 vs $0.21 expected and $0.33 year ago (-10% YoY)
Segment Breakdown:
North America: $78.8B, +20% YoY
International: $27.7B, -5% YoY
AWS: $20.5B, +27% YoY
Guidance for Q4: Revenue $140B - $148B vs $155.1B expected
Market Reaction (24hrs after report): -6.8%
—
Other Reports:
Week Ahead 📅
Monday
Eurozone CPI (Oct) 🇪🇺
China Caixin Manufacturing PMI (Oct) 🇨🇳
RBA Interest Rate Decision 🇦🇺
Earnings Reports: Stryker Corp ($SYK), Aflac ($AFL)💰
Tuesday
S&P U.S. Manufacturing PMI (Oct) 🇺🇸
ISM U.S. Manufacturing Index (Oct) 🇺🇸
JOLTS Jobs Openings & Quits (Sep) 🇺🇸
UK Manufacturing PMI (Oct) 🇬🇧
Earnings Reports: Eli Lilly ($LLY), Pfizer ($PFE), Advanced Micro Devices ($AMD), Sony Group ($SONY), Airbnb ($ABNB), Uber ($UBER), Electronic Arts ($EA)💰
Wednesday
FOMC Interest Rate Decision 🇺🇸
Fed President Powell Press Conference 🇺🇸
German Unemployment Change (Oct) 🇩🇪
German Manufacturing PMI (Oct) 🇩🇪
Earnings Reports: Qualcomm ($QCOM), CVS Health ($CVS), Estee Lauder ($EL), Booking Holdings ($BKNG), eBay ($EBAY), HubSpot ($HUBS)💰
Thursday
U.S. Jobless Claims 🇺🇸
UK Composite PMI (Oct) 🇬🇧
BoE Interest Rate Decision 🇬🇧
Earnings Reports: Toyota ($TM), ConocoPhillips ($COP), Starbucks ($SBX), Amgen ($AMGN), PayPal ($PYPL), Marriott ($MAR)💰
Friday
U.S. Non-Farm Payrolls (Oct) 🇺🇸
Canada Employment Change (Oct) 🇨🇦
Canada Ivey PMI (Oct) 🇨🇦
Earnings Reports: Berkshire Hathaway ($BRK), Enbridge ($ENB), Honda Motor ($HMC), DraftKings ($DKNG)💰
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