Analysts View Apple as a Safe Haven

MARKET MOVERS

• Analysts view Apple as a ‘safe haven’ and ‘bright spot’ in tech following another strong quarter. The technology giant reported results that surpassed analysts’ estimates. Revenue for iPhone fell short of expectations but rose 10% year over year. Credit Suisse’s Shannon Cross said the stock is a safe haven* and a relatively safe port in the storm. At the same time, Apple continues to offer solid cash flows and recurring revenues.

• Fast-fashion juggernaut Shein’s sales close in on Zara and H&M. Online retailer Shein is on track to generate revenue of $24 billion this year. The company’s gross merchandise value is projected to grow by 50% to $30 billion* in 2022. In Shein’s case, the vast majority of merchandise on its website and app is inventory owned by the company, making its GMV a rough proxy for its sales and growth rate.

• Google launches cloud node engine for Ethereum developers. The tech giant Google said Thursday it will be launching a cloud-based node engine for Ethereum projects. The company said its Google Cloud Blockchain Node Engine will be a “fully managed node-hosting service that can minimize the need for node operations,” meaning that Google will be responsible for monitoring node activity and restarting them during outages.

• Twitter CEO and CFO fired after Elon Musk purchase. He began his reign by unceremoniously firing at least four executives, including CEO Parag Agrawal. Musk has a daunting challenge ahead. He’s overpaying for a social media company at a time when social media companies are getting slammed by dwindling ad budgets,* and Twitter specifically is struggling to retain its power users.

• Mortgage rates surpass 7%. The 30-year broke 7% for the first time since April 2002, Sam Khater, chief economist at Freddie Mac, said in a statement, “leading to greater stagnation in the housing market.” Khater added that consumer confidence is weakening and that many buyers are choosing to wait to see where the market will go, “pushing demand and home prices further downward.” Read more here.

WHAT TO WATCH

• Real Estate won’t get better. Austin Texas, Dallas Texas, Nashville Tennessee, and Phoenix Arizona are down big from May/June. They will not rebound in Q4 either and “settle” because if you’re down in Q3 that means Q4 will get worse since* it is seasonally a bad time for Real Estate in general. As layoffs come through and demand deteriorates people will begin to move in and live together to cut costs.

• Analysts remain confident in Amazon long term despite disappointing quarterly results. Analysts remain a believer in the company’s long-term trajectory and its cloud computing business despite the results. They are convinced in a multi-year operating income margin expansion* story for Amazon on the back of improved eCommerce margins, fewer International losses & higher profit margin mix contribution from AWS, and advertising.

• Credit Suisse says sell AMC, predicts stock headed to 95 cents. Movie theaters’ post-pandemic recovery may soon (or already) be over, and that could have consequences for AMC Entertainment, according to Credit Suisse. The firm sees little appetite* among the major studios to ramp their medium-to-high budget releases beyond the levels already expected for 2023 as consumers become more accustomed to films arriving on streaming.

• Amazon and Apple warn of a possible slowdown in holiday spending. While demand for iPhones is holding up well, consumers seem likely to cut back* on almost everything else. Amazon said it expects fourth-quarter sales of between $140 billion and $148 billion, compared with consensus forecasts of more than $155 billion. Executives said inflation was hitting consumer spending, especially in Europe.

• Credit Suisse announced a radical restructuring plan. It includes shrinking the lender’s investment bank and selling off parts of its securitized products business, which is really profitable. Thousands of employees will lose their jobs. The restructuring will be backed by the Saudi National Bank. Its investment will also make it the largest shareholder in Credit Suisse. Source(4:40)