Weekly Financial Market Insights 📈
Home Sales Fall For 10th Straight Month, PCE Inflation Drops To 5.5%, Binance Acquires Voyager Digital, SBF Extradited To US, Elon To Step Down As Twitter CEO, and Nike + FedEx + Micron Earnings
Sunday Morning Markets ☕
Trading Week 51, covering Monday, Dec 19 through Friday, Dec 23. Your weekly financial markets update, in less than 5 minutes.
The Week In Review ⏪
PCE inflation falls to 5.5% in November, down from 6.1% last month.
Home sales fall for 10th straight month, down another 7% in November.
Elon to resign as Twitter CEO upon finding a replacement.
Meta & Epic Games both settle lawsuits for $725m and $520m, respectively.
Bank of Japan shocks markets after raising YCC limits.
The EU sets a price cap on natural gas at €180/MWh.
SBF extradited to the US after other FTX executives plead guilty.
US Markets 🇺🇸
The Fed’s favorite inflation measure cooled in November as the PCE index rose just 0.1% (0.3% est.) during November and 5.5% (5.3% est.) for the year. Core CPI rose 0.2% (0.2% est.) on the month and 4.7% (4.7% est.) annually.
Home sales tumbled 7% in November marking the 10th consecutive monthly decline. Sales were down 35% YoY, while the median sales price rose 3.5% to $370,700. Average time on market rose to 24 days, up from 18 days a year ago.
Tesla to freeze hiring, lay off 10% next quarter according to Electrek. The move comes as investors raise concerns over Musk's distraction with managing Twitter. Tesla shares are now down nearly 70% year-to-date.
Elon Musk is searching for a new Twitter CEO after running a poll on Twitter asking users if he should step down. “I will resign as CEO as soon as I find someone foolish enough to take the job! After that, I will just run the software & servers teams”
Epic Games fined $520m in FTC settlement for violations of the Children’s Online Privacy Protection Act (COPPA). The fine represents a significant settlement for a company that brought in over $9B between 2018 and 2019.
Meta to pay $725m to settle a privacy lawsuit that claimed the social media giant gave third parties access to user data without consent. The lawsuit was prompted in 2018 after Facebook disclosed that the information of 87m users was improperly shared with Cambridge Analytica.
Rest of World 🌏
Bank of Japan shocks global markets after tweaking its yield curve control policy to allow the yield on the 10Y government bond to move 50bps to either side of its 0% target. Global equity markets plunged as the Yen rallied.
European Union sets a price cap on natural gas prices after two months of intense negotiations. The cap will be activated if gas contracts exceed €180/MWh for three working days in a row. A Kremlin spokesman called the measure an attack on market pricing and was “unacceptable”.
German producer prices fell for first time in two years as the PPI index drops 4.2% in November due to a sharp decline in wholesale energy costs. Hopes continue to rise that inflation in Europe’s largest economy could be peaking.
Crypto ⚡
Sam Bankman-Fried now in FBI custody after being extradited from the Bahamas. Caroline Ellison, the former CEO of Alameda Research, and former FTX co-founder Gary Wang plead guilty to fraud charges.
Binance.US to buy Voyager Digital’s assets for $1B just weeks after the planned FTX deal fell through. The new agreement paves the way for potential resolution for the platform’s 1.7m users.
Bitcoin miner, Core Scientific, files for bankruptcy and announces a deal with some of its lenders to restructure its debt. Miners are struggling to stay afloat as rising energy prices increase costs, while low bitcoin prices slash revenue.
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Earnings Reports 💰
Nike ($NKE) — View report
Revenue: $13.3B vs $12.6B expected and $11.4B year ago (+17% YoY)
Adjusted EPS: $0.85 vs $0.65 expected and $0.83 year ago (+2% YoY)
Segment Breakdown:
North America: $5.8B, up 30% YoY
Europe, Mid. East, Africa: $3.5B, up 11% YoY
Greater China: $1.8B, down 3% YoY
Asia & Latam: $1.6B, up 19% YoY
Guidance: No guidance given in report.
Market Reaction: +12.2%
—
FedEx ($FDX) — View report
Revenue: $22.8B vs $23.7B expected and $23.4B year ago (-3% YoY)
Adjusted EPS: $3.18 vs $2.82 expected and $4.83 year ago (-34% YoY)
Segment Breakdown:
Express: $10.9B, down 6% YoY
Ground: $8.4B, up 2% YoY
Freight: $2.5B, up 8% YoY
Guidance: Expects FY23 Non-GAAP EPS to be ~$13.00-$14.00 vs est. $14.08. Reduced CAPEX outlook to $5.9B, from $6.3B.
Market Reaction: +3.4%
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Micron ($MU) — View report
Revenue: $4.1B vs $4.1B expected and $7.7B year ago (-47% YoY)
Adjusted EPS: ($0.04) vs ($0.02) expected and $2.16 year ago (-102% YoY)
Free Cash Flow: ($1,528m) vs $671m year ago (-328% YoY)
Guidance: Q2 non-GAAP EPS of ($0.52) - ($0.72) on sales of $3.6B - $4. Announced plans to reduce headcount by 10% in 2023.
Market Reaction: -3.4%
—
PayChex ($PAYX) — View report
Revenue: $1.19B vs $1.18B expected and $1.11 year ago (+7% YoY)
Adjusted EPS: $0.99 vs $0.96 expected and $0.91 year ago (+9% YoY)
Segment Breakdown:
Management Solutions: $895m, up 8% YoY
PEO & Insurance: $273m, up 4% YoY
Interest on Funds: $22m, up 54% YoY
Guidance: FY23 adj. EPS growth of 12-14% on sales growth of 8%
Market Reaction: +3.4%
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Other reports
Week Ahead 📅
Monday
Christmas Holiday. Markets Closed.
Tuesday
US - Wholesale & Retail Inventories (NOV) 🇺🇸
US - Dallas Fed Manufacturing Index (DEC) 🇺🇸
Japan - Industrial Production (NOV) 🇯🇵
Wednesday
US - Pending Home Sales (NOV) 🇺🇸
Earnings Reports: Cal-Maine, FuelCell Energy 💰
Thursday
US - Jobless Claims 🇺🇸
UK - BoE Consumer Credit (NOV) 🇬🇧
Friday
US - Chicago PMI (DEC) 🇺🇸
UK - National Housing Prices (DEC) 🇬🇧
Spain - Inflation Rate (DEC) 🇪🇸
China - NBS Manufacturing PMI (DEC) 🇨🇳
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