Politics
No Republican tidal wave of support. It looks like democrats will keep control of the Senate and Republicans take the House. Notably Trump endorsed candidates performed poorly and given Ron DeSantis’s strong showing this could mark the end for Trump in politics. Let’s see if Trump goes ahead with his announcement next Tuesday where many believe he will run for president again. From a market perspective if the results play out as described the impact for equities is probably neutral, with more oversight on Democrat spending.
US Stocks
to cut 13% of workforce or 11,000 employees.
- 11k layoffs from both Family of Apps and Reality Labs
- Cutting discretionary spending
- Extending hiring freeze through Q1
- Shrinking Real Estate footprint
- AI and Reality Labs capex still a priority
You can read to full letter to staff here: https://www.cnbc.com/2022/11/09/meta-to-lay-off-more-than-11000-thousand-employees.html
Disney
Single digit revenue growth on top line. Bottom line short of expectations. But 14.6 million sub growth on quarter, for total of 235 million, bigger than Netflix, profitability planned by 2024. Price increases coming in December US $11 or $8 without ads. Post covid bounce in parks, unlikely to have similar next year.
Roblox
Year Over Year Growth in Daily Active Users, Hours Engaged and Bookings, but miss on the top and bottom line and lower Average Bookings per DAU. While disappointing this stock is a play on the metaverse expansion and if that trend continues to growth RBLX will do well.
Upstart
Weak guidance on higher interest rates is crushing loan demand and this AI driven loan platform revenue. The CEO also mentioned higher defaults rates among the lower income consumer. The outlook short and medium term doesn’t look promising for this name.
CPI today
I have provided many graphs over the last few weeks how CPI is peaking. In advance of another important US CPI print today here are two additional pieces of information.
The article outlines how companies especially in apparel and homeware have huge inventory build ups and are likely to heavily discount into the yearend adding to deflation momentum.
“Mountains of merchandise are parked in places like Southern California. The vacancy rate for warehousing space in the greater Los Angeles area -- home to the two largest ports in the US -- sits at 0.2%, compared with the typical 4% to 6% this time of year, according to Port of Los Angeles Executive Director Gene Seroka.”
Negative PPI in China is important as they are a major exporter to the west and this should start to feed into Western supplier pricing.
Chinese backed state media suggest “war readiness”, in an additionally worrying sign of a potential future Taiwan invasion.
https://english.news.cn/20221108/9c3ee201f1b146dda91f5f2d89e6f4cf/c.html