Weekly Financial Market Insights 📈
W2 - CPI Inflation Decelerates For 6th Straight Month, Microsoft Investing $10B Into OpenAI, Layoffs Announced By Goldman Sachs & Coinbase, Tesla Cuts Prices, and TSMC + Delta + JPMorgan Earnings
Sunday Morning Markets ☕
Trading Week 2, covering Monday, Jan 9 through Friday, Jan 13. Your weekly financial markets update, in less than 5 minutes.
The Week In Review ⏪
CPI drops 0.1%, while core-CPI jumps 0.3%, in line with expectations.
Layoffs announced this week from Goldman Sachs, Coinbase, and Wells Fargo.
Microsoft reportedly investing $10B into ChatGPT’s parent OpenAI.
Tesla cuts its prices across the board in a bid to spark demand.
China sees heightened price pressure as they reopen their economy.
Binance announces a contrarian plan to expand headcount 15-30% this year.
FTX finds $5B of liquid assets including cash, crypto, and other securities.
Earnings from TSMC, Delta Airlines, JPMorgan, UnitedHealth, Bank of America.
US Markets 🇺🇸
Consumer prices fell 0.1% in December and rose 6.5% for the year, in line with expectations. This reading marks the sixth consecutive report with decelerating inflation. Excluding food and energy, core CPI rose 0.3% as services inflation continues to remain sticky. Here’s the breakdown:
Microsoft to invest $10B into OpenAI, the creator of ChatGPT, at a $29B valuation. Microsoft would reportedly get 75% of OpenAI’s profits until it makes all of its investment back, after which the company would own a 49% stake.
Goldman Sachs is laying off over 3k employees in the company’s largest restructuring since the Great Financial Crisis of 2008. IPO issuance and M&A deal volume plunged 94% last year due to the suddenly inhospitable markets.
Wells Fargo is stepping back from the housing market amid regulatory pressure and the impact of higher interest rates, despite being one of the largest players in the space. Executives noted that the shift will result in a fresh round of layoffs for the bank’s mortgage operations.
JPMorgan sues withfrank.org founder for fraud after she allegedly created over four million fake accounts on the student aid platform before selling the site to JPMorgan for $175m in September 2021.
Tesla cuts prices in the US and Europe in a bid to drive sales after a soft year-end of deliveries. Here are some of the price cuts:
Model 3 RWD: $43,990 (-6%)
Model 3 P: $53,990 (-14%)
Model Y Long Range: $52.990 (-20%)
Model Y P: $56,990 (-23%)
Lucid produced more vehicles than expected this year as the company quickly ramps up its output. Q4 volume expanded 53% vs the previous quarter. The report shows 7,180 completed vehicles vs guidance for 6K - 7K.
Rest of World 🌏
China reports massive increase in COVID deaths after the WHO criticized Beijing for its lack of transparency. China said nearly 60,000 people with COVID-19 had died in hospitals since it abandoned its zero-COVID policy last month.
China’s inflation gauges show heightened price pressure as the economy deals with the reopening. Consumer prices came in hotter than expected, rising 1.8% for the year. Meanwhile, wholesale deflation eased to 0.7% in December from 1.3% in the previous month.
Consumer inflation in Japan’s capital hits 4%, above consensus expectations of 3.8% and marking the 7th straight month above the BoJ’s target. Core CPI rose 2.7% and accelerated its pace of gain.
Crypto ⚡
Coinbase to slash another 20% of its workforce after already cutting 18% back in June. The company expects a $500m EBITDA loss this year but says the layoffs will help reduce operating expenses by 25% in Q1.
Crypto.com also cuts 20% of its staff as the industry continues to deal with lower transaction volume and other effects of the ongoing crypto winter. Crypto.com has seen its CRO token drop by nearly 96% this year.
FTX has recovered $5B of liquid assets including cash, crypto, and other securities. FTX’s new CEO, John J. Ray, previously attested that at least $8 billion of customer assets were unaccounted for.
Binance plans a 15-30% hiring spree in 2023, despite the dramatic crypto downturn. Quite a contrarian move considering this comes just weeks after its competitors Coinbase, Huobi, and Kraken all announced 20% RIFs or greater.
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Earnings Reports 💰
Taiwan Semiconductors ($TSM) — Report
Revenue: $19.9B vs $20.4B expected and $15.7B year ago (+27% YoY)
EPS: $1.82 vs $1.78 expected and $1.15 year ago (+58% YoY)
Segment Breakdown:
Smartphone: $7.6B (+9% YoY)
HPC: $8.4B (+44% YoY)
IoT: $1.6B (+13% YoY)
Automotive: $1.2B (+90% YoY)
DCE: $0.4B (-16% YoY)
Other: $0.8B (+69% YoY)
Q1 Guidance: Sales of $16.7B - $17.5B (USD) with operating margin of 41.5% - 43.5%
Market Reaction: +6.4%
—
Delta Airlines ($DAL) — Report
Revenue: $13.4B vs $12.7B expected and $9.5B year ago (+42% YoY)
Adjusted EPS: $1.48 vs $1.35 expected and $0.22 year ago (+573% YoY)
Metrics:
Passenger: $10.9B (+50% YoY)
Cargo: $0.2B (-18% YoY)
Other: $2.3B (+19% YoY)
Guidance:
Q1 EPS of $0.15 - $0.40 on sales growth of +14% - 17% vs. 2019
FY23 EPS of $5 - $6, on sales growth of 15 - 20% YoY
Market Reaction: -3.5%
—
JPMorgan Chase ($JPM) — Report
Revenue: $34.5B vs $34.2B expected and $29.3B year ago (+18% YoY)
EPS: $3.57 vs $3.11 expected and $3.33 year ago (+7% YoY)
Metrics:
Consumer & Community Banking: $15.8B (+29% YoY)
Corporate & Investment Banking: $10.6B (-9% YoY)
Commercial Banking: $3.4B (+30% YoY)
Asset & Wealth Management: $4.6B (+3% YoY)
Corporate: $1.2B (+317% YoY)
FY23 Guidance: ”a mild recession in the central case”
Market Reaction: +2.5%
—
Other Reports
Week Ahead 📅
Monday
US Holiday. Martin Luther King Jr. Day 🇺🇸
Germany - ZEW Economic Sentiment (JAN) 🇩🇪
China - Industrial Production (DEC) 🇨🇳
Tuesday
Canada - CPI Inflation (DEC) 🇨🇦
UK - Unemployment (DEC) 🇬🇧
Germany - CPI Inflation (DEC) 🇩🇪
Australia - Westpac Consumer Confidence (JAN) 🇦🇺
Earnings Reports: Morgan Stanley, Goldman Sachs, Charles Schwab, United Airlines 💰
Wednesday
US - PPI Inflation (DEC) 🇺🇸
US - Retail Sales (DEC) 🇺🇸
UK - CPI Inflation (DEC) 🇬🇧
Eurozone - CPI Inflation (DEC) 🇪🇺
Japan - BoJ Interest Rate Decison 🇯🇵
Earnings Reports: Prologis, Kinder Morgan💰
Thursday
US - Building Permits (DEC) 🇺🇸
US - Philadelphia Fed Manf. Index (JAN) 🇺🇸
US - Jobless Claims (DEC) 🇺🇸
UK - Consumer Confidence (JAN) 🇬🇧
Japan - Inflation Rate (DEC) 🇯🇵
Earnings Reports: Netflix, Procter & Gamble💰
Friday
US - Existing Home Sales (DEC) 🇺🇸
UK - Retail Sales (DEC) 🇬🇧
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