Weekly Financial Market Insights 📈
Trading Week 39 ... FTX Acquires Voyager, Russian Annexations, Hot Inflation Data, DocuSign Layoffs, Meta Hiring Freeze, Apple Production Cuts, and Nike + Paychex + CarMax Earnings
Sunday Morning Markets ☕
Your weekly financial markets update, in less than 5 minutes. Covering Monday, Sept 26 through Friday, Sept 30.
Last Week ⏪
Another bloody week for equities concluded the worst month since March 2020, and marked the third consecutive quarterly decline — something markets haven’t seen since 2008. Inflation and labor data came in hotter than expected this week, causing treasury yields to continue their march higher. Apple, Meta, and DocuSign's actions painted a gloomy picture for the future, as they each made adjustments for slower growth and weaker demand.
Russia annexes parts of Ukraine, the Nord Stream pipelines experience multiple gas links, the Bank of England buys bonds to ease the chaos in their credit markets, Robinhood launches their Web3 app, and FTX acquires the bankrupt Voyager Digital — all that and more on this week of Sunday Morning Markets…
US Markets 🇺🇸
PCE inflation accelerated more than expected in August. Core inflation rose 4.9% on an annual basis and 0.6% on a monthly basis. Food prices rose 0.8% while energy prices slid 5.5%. Housing and utility prices were up 1% while health care rose 0.6%.
US Jobless Claims hit five-month low as the labor market remains rock solid despite unprecedented tightening from the Federal Reserve. New claims during the week totaled 193K, down from 209K the week prior and well below estimates of 215K.
Meta announces hiring freeze and potential layoffs in an attempt to rein in costs. In May, the company froze hiring for engineers and data scientists. In June, they asked managers to identify the weakest performers. Now the company will freeze hiring across most teams, and may include layoffs.
DocuSign lays off 10% of its workforce as part of a major restructuring plan. As of January, DocuSign had nearly 7,500 employees, and it said the restructuring plan is designed to support the company’s growth and profitability objectives and improve its operating margin.
Apple cuts back on its iPhone production after demand for the new iPhone 14 came in lower than expected. Apple has told suppliers not to follow through on plans to increase iPhone production output.
ETFs launching to track trades from members of Congress. Subversive Capital filed to establish two ETFs that will follow how Democrat and Republican members of Congress are trading. “NANC” will track Democratic trades. “KRUZ” will track Republican trades.
Rest of World 🌏
Russia annexes parts of Ukrainian territory in a major escalation of their seven month long invasion. Ukraine then immediately countered with a surprise application to join the NATO military alliance. Putin vowed to protect newly annexed regions by “all available means,” a nuclear-backed threat at a Kremlin signing ceremony where he also railed at the West.
Nord Stream gas pipelines suffer major leaks as countries scramble to investigate the cause. Russia halted all gas supplies to Europe via Nord Stream 1 in August, blaming sanctions for causing technical difficulties – which Europe says is just a pretext to stop supplying gas.
BoE intervenes in the bond market after the historic sell-off. The Bank of England will suspend the planned start of its gilt selling next week and begin temporarily buying long-dated bonds in order to calm the market.
German inflation soars to double digits for the first time in decades as consumer prices rose 10.9% over the year through September, much higher than expected, driven by high energy and food prices.
German business climate index collapses to lowest level in more than two years. Business confidence in Germany worsened considerably in September as companies turned more pessimistic due to the energy crisis. 'German economy is slipping into recession,' Ifo president says.
Apple shifts iPhone 14 production to India as the technology giant looks to reduce its dependency on China, marking a major shift in its manufacturing strategy. Apple could make 25% of all iPhones in India by 2025, JPMorgan said.
Crypto ⚡
FTX to buy Voyager Digital’s assets for $1.4B after winning the bankruptcy auction. The bankrupt crypto lender has hinted at a possible transition of its customers over to FTX.
Robinhood releases beta for its Web3 wallet to 10,000 users. Named the Robinhood Wallet, the Polygon-based application allows users to trade over 20 cryptocurrencies supported by the DEX aggregator 0x, without fees. The wallet will also allow users to connect to dapps and earn yield on assets.
Jack Maller’s Strike raises $80m in a new series-B funding round that was led by Ten31. The fresh capital will be used to enhance Strike's payment network for merchants and consumers. Several big e-commerce companies use Strike's app, including Blackhawk, NCR, and Shopify.
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Earnings Reports 💰
Nike ($NKE)
Revenue: $12.69B vs $12.29B expected and $12.25B year ago (+4% YoY)
EPS: $0.93 vs $0.92 expected and $1.16 year ago (-20% YoY)
Regional Breakdown:
North America: $5.51B, +13% YoY (+13% excluding FX)
Europe, Middle East, Africa: $3.33B, +1% YoY (+17% excluding FX)
China: $1.68B, -16% YoY (-13% excluding FX)
Asia & Latin America: $1.54B, +4% YoY (+10% excluding FX)
Inventory: $9.7B, up 44% from year prior. Plans to discount material in order to sell through stagnant inventory.
Guidance: No guidance given.
Market Reaction (24hrs after report): -12.8%
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Paychex ($PAYX)
Revenue: $1.21B vs $1.18B expected and $1.08B year ago (+11% YoY)
Adj. EPS: $1.03 vs $0.97 expected and $0.89 year ago (+16% YoY)
Operating Income: $496m vs $443m year ago (+12% YoY)
Segment Breakdown:
Management Solutions: $906m, +12% YoY
PEO & Insurance Solutions: $283m, +8% YoY
Interest on Held Funds: $18m, +24% YoY
Guidance: FY’23 Adj. EPS to grow in the range of 11% to 12%.
Market Reaction (24hrs after report): +3.6%
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CarMax ($KMX)
Revenue: $8.14B vs $8.55B expected and $7.99B year ago (+2% YoY)
EPS: $0.79 vs $1.40 expected and $1.72 year ago (-54% YoY)
Gross Profit Margin: 9.1% vs 10.2% year ago (-110 bps)
Guidance: No guidance given.
Important Notes: Bought 343K vehicles from consumers and dealers, down 8.1% vs year ago. 323K of these vehicles were from consumers, down 11.5% from year ago. 20K of these vehicles were through MaxOffer, up 130.4% from year ago.
Market Reaction (24hrs after report): -24.5%
Week Ahead 📅
Monday
ISM Manf PMI (Sep) 🇺🇸
German Manf PMI (Sep) 🇩🇪
UK Manf PMI (Sep) 🇬🇧
RBA Interest Rate Decision (Oct) 🇦🇺
Tuesday
Job Openings (Aug) 🇺🇸
Wednesday
Nonfarm Employment (Sep) 🇺🇸
UK Composite PMI (Sep) 🇬🇧
Thursday
Jobless Claims 🇺🇸
Canada Ivey PMI (Sep) 🇨🇦
Earnings Reports: Constellation Brands ($STZ), McCormick ($MKC) 💰
Friday
Nonfarm Payrolls (Sep) 🇺🇸
Unemployment Rate (Sep) 🇺🇸
Canada Employment Change (Sep) 🇨🇦
Earnings Reports: Tilray ($TLRY) 💰
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Until next Sunday…