October 25, 2023

Stocks Soar as Corporate Giants Crush Wall Street Predictions

📰 News Organizations

  • Google Ad Growth Accelerates as Economic Outlook Improves. Alphabet reported third-quarter revenue of $77 billion Tuesday, up 11% from the same period last year. The results marked the third consecutive quarter of accelerating growth for the search giant.

  • Microsoft Profit Pops 27% as Azure Growth Accelerates. Microsoft’s Intelligent Cloud segment produced $24.26 billion in revenue, up 19% and above the $23.49 billion consensus. Azure revenue rose 28%, accelerating from 27% in the fiscal fourth quarter.

  • Snap Returns to Revenue Growth on Improved Ad Business. Sales increased 5.4% to $1.19 billion in the period ended Sept. 30, Snap said Tuesday in a statement. Analysts, on average, projected a revenue decline of 2%.

  • UAW Calls Strike on One of GM’s Largest Factories. The United Auto Workers expanded its strike again. About 5,000 unionized workers walked out of GM’s Arlington, Texas, assembly plant Tuesday morning.

  • Apple Announces ‘Scary Fast’ Oct. 30 Event to Roll Out New Macs. The company announced plans for a presentation next week, dubbing the showcase “Scary Fast.” The presentation is likely to be the company’s last product showcase of the year.

  • Spotify Reported A Surprise Profit For The Third Quarter. The Swedish music streaming giant posted a profit of around $68.9 million, driven by lower marketing spend and lower personnel costs and related costs.

  • Coca-Cola Earnings, Sales Rise, Boosted by Higher Prices. Coca-Cola reported higher earnings and revenue for the third quarter. The beverage giant lifted its outlook for the year in light of its performance so far but expects a stronger headwind from currency translation.

🐦 Twitter

  • China is on the verge of a BoP crisis. For weeks not the PBOC has held the line at 7.3 for weeks through the fix, intervention, and rate rises, but it is not working. Pressure is mounting for a more substantial FX move, likely on par with the stress seen in '15/16. Source.

  • Spreads on BBB CMBS (commercial-mortgage-backed securities) have moved up to 1,409 bps, their widest levels in over a decade. Bond investors are pricing in a wave of defaults to come. Source.

  • It is always significant when the percentage of available government positions increases compared to the total number of job openings. This phenomenon has been observed in past economic downturns, coinciding with a weakening labor market. Source.

  • About 53,000 U.S. home-purchase agreements were canceled in September, which equals 16.3% of homes that went under contract that month … highest percentage since October 2022 per Redfin. Source.

  • The term premium rises from the ashes. Bond yields continued their relentless march upward, with the US 10-year yield reaching 4.99% last week (and 5.02% Monday morning). This took the term premium to a new cycle high of 47 bps. Source.

  • The US government had a $2 trillion budget deficit for the fiscal year through September, a gap that's $1 trillion more than the prior year. Source.

Save and invest early. Not just because your money will compound for a longer time. But because saving money is hard while compounding money is easy.

Nick Maggiulli

📓 Online Publications

  • Rents are Not Falling Across the Board. The relative affordability of the Midwest compared with the rest of the country is attracting more renters. In Louisville, KY, and Richmond, VA, for example, the year-over-year rent increased 4.6 %, to a median of $1,199 a month in September.

  • Anywhere Tallies Another Profitable Q3 Despite Revenue Decline. Anywhere Real Estate reported revenue of $1.6 billion and a profit of $129 million for Q3, ending with $151 million in cash and cash equivalents.

  • Goldman: 2024 Housing Outlook. Sustained higher mortgage rates will have their most pronounced impact in 2024 on housing turnover. As a result, the firm expects the fewest annual existing home sales since the early 1990s at 3.8 million.

  • Bitcoin's Price Has Appreciated More Than 20% In The Last 7 Days. Some of that appreciation is due to speculation around the spot bitcoin ETF approval, but some of the global interest is being driven by the increasing global chaos and uncertainty.

🎧 Podcasts

  • Oil Companies Doubling Down on Fossil Fuels. Oil and gas companies are throwing money at energy sources that the world is trying to wean itself off of. Companies like Chevron and ExxonMobil are betting on the long-term demand for oil and gas. Source(5:55)

  • DOJ Investigates Tesla. The DOJ is investigating Tesla for potential exaggeration of vehicle range following customer complaints. Tests indicate Tesla's range figures were on average twice as far off from labeled values compared to other electric vehicles. Source(17:21)

  • Ackman Reverses Bet On Bonds. Bill Ackman reversed his bet against government bonds, anticipating increased investor interest due to their status as a safe asset amid global tensions, particularly the Israel-Hamas conflict. Source(7:12)

  • Musk Raises Cybertruck Production Concerns. Tesla’s Elon Musk warned of difficulties in ramping up production of the automaker's much-awaited Cybertruck electric pickup truck and announced that deliveries would begin on Nov. 30. Source(21:52)

  • Sustained Market Resilience. The resilience is attributed to ongoing liquidity sustained by central bank policies, dispelling the notion of decreasing liquidity. Strategies like diverse liquidity infusion methods have effectively upheld a higher liquidity level. Source(18:26)

  • Single-Family Rental Demand is Strong Right Now. Selma Hepp thinks we’ll continue seeing people staying in single-family rentals even longer or shifting from multi-family to single-family rentals because of the recent economic conditions. Source(23:14)