August 6, 2023
Apple Relinquishes $3 Trillion Crown as Sales Fall
📰 News Organizations
The U.S. Economy Added 187,000 Jobs In July. It actually represented a modest gain from the downwardly revised 185,000 in June. Health care, social assistance, financial activities, and wholesale trade were the leading sectors for job creation.
Amazon stock rockets 11% after a blowout quarter. On Friday, the stock had its best day since Nov. 10, 2022, when shares rose 12% after it reported blowout second-quarter results. Analysts cheered stabilizing AWS growth, improving retail margins, and progress on cutting costs.
Alphabet dumps more than 90% of its stake in Robinhood. The Google parent has pared back large positions in multiple publicly traded firms, including the trading platform Robinhood, 23andMe and Duolingo. The company sold off more than 4.3 million shares of the trading platform.
Maersk Beats Expectations Despite 72% Profit Plunge On Falling Container Rates.The shipping giant warned of a deeper pullback in global shipping container demand and now expects volumes to fall by as much as 4% versus a previous worst-case scenario of 2.5%.
KKR in Advanced Talks to Buy Simon & Schuster for Roughly $1.65 Billion. Paramount put Simon & Schuster on the sales block for a second time earlier this year after an earlier sale to Penguin Random House was blocked by a federal judge last year.
Apple Relinquishes Historic $3 Trillion Crown as Sales Fall. Apple dropped to a market capitalization of $2.88 trillion after the outlook for the fourth quarter sparked worries over tepid demand. The day’s decline represented a drop of more than $120 billion in lost market value
The number of newly listed homes on the market is down 21% compared to last July. Compared to the 5-year average, there were nearly 30% fewer newly listed homes in July 2023. This is why higher interest rates haven't collapsed the housing market. Supply is scarce at best. Source.
The implied demand for oil just surged to all-time highs. It was the largest weekly increase in 26 years. It is worth noting that US oil production remains ~7% below pre-pandemic levels with total operating rigs starting to contract for the first time in 3 years. Source.
Amazon's AWS revenue over the last 12 months ($85 billion) was higher than the revenue of 460 companies in the S&P 500. From $3 billion to $85 billion in less than 10 years (>40% annualized growth). Source.
A factor in the latest bond selloff is the Fed's balance sheet, which has been shrinking. It's now at the lowest levels since July 2021, falling $800 billion since its 2022 peak. But there's still a really long way to go to get back anywhere close to pre-pandemic levels. Source.
Consumer price inflation is creeping higher again on a month-over-month basis, driven in part by higher gas prices, according to the Cleveland Fed's forecast. Source.
📓 Online Publications
Airbnb Soars to Most Profitable Second Quarter on High Nightly Rates. The company’s net income increased to $650 million for the quarter, a 72% increase over last year’s Q2. Customers booked 115.1 million nights on Airbnb—an 11% increase versus a year ago but short of analysts’ expectations.
Doom-and-Gloom Headlines Are Overblown. Despite recent corrections in the housing market with existing-home sales declining, there is no evidence of a long-term downturn, according to NAR data. The market remains competitive, with more than three offers for every listing on average, and many homes selling above the list price.
Opendoor Rebounds With Profitable Q2 Despite Steep Revenue Decline. The iBuyer sold fewer homes and brought in less cash than it did during the same period in 2022, but it still managed to land in the black to the tune of $23M, according to Q2 earnings on Thursday.
ISM® Services Index Decreases to 52.7% in July. Economic activity in the services sector expanded in July for the seventh consecutive month as the Services PMI® registered 52.7 percent. Above 50 indicates expansion, and below 50 in contraction.
Zillow Released New 'Listing Showcase' Product. Mike DelPrete thinks this product represents an effort to shift from lead sales to exposure sales. It offers a pay-to-play premium product per listing, which has the potential to be a lucrative revenue stream benefiting agents, consumers, and Zillow's overall profitability.
Debt Spiral Intensifies as Rates Climb. David Friedberg says the increasing need to sell two trillion dollars of treasuries highlights the debt spiral problem caused by rising interest rates and fiscal spending. Additionally, reduced foreign participation in buying U.S. treasuries indicates a decline in the U.S. currency as a reserve. Source(52:10)
The Yield Curve is Quickly Uninverting. The concerning factor is the escalating debt as a percentage of GDP, which cannot be overlooked. Fitch's rating downgrade of the United States reflects expected fiscal deterioration, a growing government debt burden, and weakened governance reliance compared to double-A and triple-A rated peers. Source(54:45)
US Roundtrip Fare Down 11% Compared to 2022 and 2019. International travel demand is Up and airlines focused on the domestic market are feeling the effects. Travel to Europe is projected to surge by 55% and international airfare and hotels are up 10% and 14% respectively. Source(10:54)
The Key Signal is The Absence of Inversion in the Yield Curve. Andreas Steno Larsen says this signifies a steepening trend. Early signs of the spread between 10 and two-year Bonds in the U.S. indicate a potential steepening yield curve, historically associated with recessions, making it a crucial indicator to watch for a possible rebound or recession. Source(3:09)