August 4, 2023

Amazon's E-Commerce Sales Soar as Apple's iPhone Sales Lag

📰 News Organizations

  • Apple Sees Third Straight Quarter of Falling Sales. The iPhone maker posted sales of $81.8 billion. Apple missed analysts' estimates of $88.8 billion in sales but beat expectations of $18.8 billion in net income. Meanwhile, Apple said revenue in its services unit reached a new all-time high of $21 billion, driven by more than one billion paid subscriptions.

  • Amazon Reports Sales Growth of 11%. Sales in Amazon’s cloud unit climbed 12% in the second quarter to $22.1 billion. Advertising also continues to be a booming business for Amazon, with quarterly revenue jumping 22% in the period to $10.7 billion. For the third quarter, Amazon expects 9% to 13% growth.

  • Saudis Extend 1 Million-Barrel Oil Cut. In effect, the Kingdom’s production for the month of September 2023 will be approximately 9 million barrels per day. It adds to 1.66 million barrels per day of other voluntary production declines that some members of the OPEC+ are putting in place until the end of 2024.

  • Warner Bros. Discovery Revenue Falls as Max Sheds Subscribers. The company’s direct-to-consumer segment, which includes the Max and Discovery+ streaming services, lost 1.8 million subscribers since the end of last quarter amid fierce competition for viewers.

  • Qualcomm Sales And Forecast Come Up Light As Smartphone Chip Sales Fall 25%. Qualcomm is exposed to the slumping smartphone industry because it makes the processors of most high-end Android devices. Shipments of new devices are expected by analysts to decline in 2023.

  • Moderna Shares Rise On Better Covid Vaccine Outlook Despite Sharp Drop In Sales. The Massachusetts-based company expects $6 billion to $8 billion in sales from its Covid shot this year, driven by potential U.S. demand for 50 to 100 million doses in the fall.

  • Bud Light Owner Ab InBev Beats Forecasts In Quarter Dominated By Boycott. AB InBev said its second-quarter revenue in the U.S.—its largest market—dropped 10.5%. The company attributed the big profit drop to losing market share as well as spending more on marketing.

  • Shopify Falls on Investor Growth Concerns Despite Revenue Beat. Shopify reported an adjusted 14 cents per share on $1.69 billion in revenue but shares dropped as investor concerns about long-term growth outweighed the e-commerce platform’s outlook for the current quarter.

🐦 Twitter

  • The average interest rate on 48-month new car loans in the US has moved up to 7.59%. That's the highest we've seen since 2007. Source.

  • Delinquency rates on credit card loans from small lenders are now at an all-time high of 7.1%. That's above the 6.0% peak in 2008 and up sharply from 3.8% in 2020. Source.

  • Treasuries haven’t been this ineffective as a stock hedge since the 1990s. The one-month correlation between the two assets is now at its highest reading since 1996. Source.

  • Top 10 home builders are shrinking square footage to lower prices and offset higher mortgage rate squeeze: LGI Homes, CEO: "Percentage of closings coming from homes smaller than 1,500 square feet went from 19% in Q2-2022 to 27% in Q2-2023." Source.

  • The US Treasury selloff has been driven by long-dated notes, not those most sensitive to Fed policy. This suggests two things: traders expect inflation to stay higher for longer and they question whether the Fed is truly going to raise rates high enough to achieve 2% inflation. Source.

  • The market has broadened out in recent weeks. As of last week, 89% of the S&P 500 index traded above their 50-day moving average. That’s a properly overbought condition. Source.

What we are witnessing today with the BOJ arguably stands as one of the most significant macro events in recent times and is a roadmap for the broader global economy. Ultimately central banks of highly indebted economies have no choice but to become the ultimate buyers of their own government debt.

Tavi Costa

📓 Online Publications

  • Coinbase Sets Public Launch of ‘Base’ Layer 2 Blockchain for Next Week. Users will be able to bridge their ETH to Base starting August 9, with the official launch of the main network. The announcement comes as Coinbase is scheduled to report second-quarter earnings.

  • IRS Rules Staking Rewards Are Immediately Taxable. The IRS published its Revenue Ruling 2023-14, mandating that stakers report rewards accrued as income when they gain control over said assets. Web3 advocates are pushing back against the ruling.

  • Hong Kong Debuts Retail Crypto Trading With HashKey And OSL. Hong Kong is expanding cryptocurrency trading exposure to individual investors with local digital asset firm HashKey being the first to successfully obtained all necessary licensing along with another firm, OSL.

  • Tether Reports $850M Profit In Second Quarter. Tether Holdings Limited reported $850M in second-quarter profits. Most of Tether’s profits come from its Treasury bills, said the company’s CTO, Paolo Ardoino. Treasury bills make up roughly 64% of Tether’s assets.

  • JPMorgan Says DeFi Ecosystem 'Stalling'. The analysts said growth has stalled over the past year due to several challenges, including the collapses of Terra and FTX, and the U.S. regulatory crackdown, which eroded investor's confidence and led to an outflow of funds.

🎧 Podcasts

  • Investors Turn Gloomy Over Europe's Economic Outlook. The euro has fallen against the dollar over the past two weeks, and European stocks have dipped recently. Economic indicators in the eurozone are deteriorating as the European Central Bank raises interest rates. And higher prices are still a threat. Source(0:48)

  • Luxury Sector Slows After Post-Pandemic Spending Spree. Prada and LVMH said that their sales in the US had contracted by about 1 percent. Richemont sales down about 2 percent, and Burberry’s down 8 percent, as customers choose to buy luxury goods abroad while traveling. Source(2:54)

  • Bank of America Sees a Soft Landing. BofA’s economists became the first at a major Wall Street Bank to reverse their earlier prediction, saying the US won’t have a recession in the next year. BofA pointed to solid consumer spending, inflation cooling to 3% last month, and the labor market has remained strong. Source(2:20)

  • The Economy Shows No Signs Of Slowing Down. Jim Bianco thinks that with continuous growth and potential inflationary pressures, recent data indicate concerns about inflation's resurgence, amid a strong labor market supporting wages, and the possibility of further rate hikes beyond 2023. Source(5:02)

  • Serious Delinquency Rates Declined By .55% From .59%. Jason Hartman says that the low delinquency rate, high credit scores, and significant down payments reflect the strong state of the housing market. He says there's virtually no data that supports a housing crash at all. Source(9:32)