October 26, 2023

Meta Reports Record Sales as Ad Rebound Continues

📰 News Organizations

  • Meta Reports Record Sales as Ad Rebound Continues. Meta reported better-than-expected results for the third quarter as revenue increased 23%, the fastest rate of growth since 2021. For the fourth quarter, Meta expects revenue of $36.5 billion to $40 billion.

  • Apple Raises TV Streaming Price to $9.99. Streaming companies are pushing for more revenue after racking up billions of dollars of losses. The higher costs risk alienating customers who could cancel their subscriptions.

  • Apple Plans AirPods Overhaul With New Low- and High-End Models. The company readies updates to entry-level, Pro and Max models. The changes will include a revamped version of Apple’s entry-level AirPods in 2024 and a new Pro model the following year.

  • Shell Will Cut 200 Jobs in Clean Energy Division. The company will switch some of the jobs in question to other divisions within Shell’s more than 90,000 employee workforce, and an additional 130 roles will be put “under review” throughout 2024.

  • General Motors Halting EV Plans. GM is moderating the acceleration of EV production to protect their pricing, adjust to slower near-term growth in demand, and implement engineering changes that will bolster profits.

  • Cruise’s Driverless-Car Permits Suspended in California. The DMV said that Cruise’s vehicles aren’t safe for public operation and the company has misrepresented information related to the safety of the technology of the vehicles, representing another setback for GM.

🐦 Twitter

  • We are on the verge of witnessing a substantial surge in the cost of debt as we brace for a significant wave of debt refinancing in the next 12 to 24 months. Sovereign institutions are also facing a comparable scenario. Source.

  • Gold stock investors still haven't noticed that gold is no longer following Treasuries lower. In fact, Treasuries are down again today and gold is up $14 to $1,985. The last time gold prices were this high, gold stocks were over 20% higher. Source.

  • The S&P 500 has held up pretty well given the fact that only 14% of constituents are trading above their 200 dma. That's around where we've seen previous rallies, but stocks still feel like they're on a knife's edge with weak breadth. Source.

  • Eye on earnings: Q3 season is underway and earnings are set to improve. So far, 86 companies have reported, with 74% beating estimates by an average of 622 bps. Despite this, we are not seeing much of a bounce in the estimated growth rate so far. Source.

  • $SPX Bullish Percent Index back below the 30% level, which initiates another buy signal. A break back above 30% suggests improving breadth and likely more bullish price action. Source.

  • On rolling one-month basis, large- and mid-cap equity ETFs have accounted for nearly 34% of inflows ... gov’t bond ETFs in higher demand with nearly 39% share of inflows. Source.

It is not that gold "is" more valuable, but that people "think" it is more valuable. People panic out of stocks and into cash, which is why the stock market makes spike bottoms. But they panic out of cash & into gold, which is why gold prices make spike tops.

Tom McClellan

📓 Online Publications

  • New Home Sales increase to 759,000 Annual Rate in September. As expected, new home sales were up year-over-year in September, and it is fairly certain there will be more sales in 2023 than in 2022 - although mortgage rates close to 8% will likely slow sales.

  • Zillow Continues To Double Down On Its Mortgage Business. This time Zillow is compelling its Flex teams to send leads back to Zillow Home Loans – or risk getting kicked out of the program, all in an effort to meet its revenue goals.

  • October Vehicle Sales Forecast: 16.0 million SAAR, Despite Shutdowns. Sales are showing surprising strength in October despite the inventory hits taken at Ford, GM and Stellantis. Still, industry inventory at the end of the month will be lower by an estimated 5%.

  • Texas Instruments' Earnings Report Hurting TSMC. Texas Instruments' Q3 results, released after market close, are unsettling the semiconductor industry. Missing sales targets and offering worse-than-expected guidance, the company's performance is affecting market expectations.

  • Understanding Investing Regime Change. It’s very reasonable to presume that more expensive money means higher costs of financing those consumer and commercial purchases; this will probably crimp total retail sales, and could negatively impact corporate profits.

🎧 Podcasts

  • Alphabet's Third-Quarter Earnings Did Not Sit Well With Investors. Alphabet's recent earnings report disappointed investors as its cloud division narrowly missed sales forecasts even though advertising revenue exceeded expectations. Source(0:58)

  • Companies On The Hunt For Geopolitical Advice As Tensions Rise. Companies across the world are seeing this as a shift towards a more unstable world. Companies are thinking carefully about their exposure in their supply chains and in their target markets. Source(6:26)

  • Bitcoin Surges Above $35,000. Bitcoin's recent surge to $35,000 for the first time since May 2022, is fueled by a gain of over 100% this year, outperforming stocks. The excitement is attributed to the potential approval of a spot Bitcoin ETF by BlackRock. Source(6:37)

  • Davos in the Desert. Top names in Wall Street are meeting in Saudi Arabia. The big draw is Crown Prince Mohammed bin Salman. He holds the purse strings to a Saudi government sovereign wealth fund called the Public Investment Fund, worth about $700 billion. Source(17:05)

  • Crypto Market Sees Weakened Correlation. The correlation between crypto and the NASDAQ has notably weakened. Crypto price is now driven more by crypto-specific news than general macroeconomic factors but a recoupling remains a possibility. Source(22:23)