Archive

US Cuts 10% of All Flights,

at 40 major airports in response to the government shutdown and the lack of air traffic controllers. The drastic plan sent airlines scrambling to make significant reductions in flights in just 36 hours, and passengers flooded airline customer service hotlines with concerns about air travel in the coming days. It will be a big hit for the economy and the stock market. The Volatility Index hit $20.

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Apple Cuts Deal with Google.

Apple plans to use a 1.2 trillion-parameter artificial intelligence model developed by Alphabet's Google to help power a revamp of its Siri voice assistant. The companies are finalizing a deal that would have Apple pay about $1 billion a year for access to Google's technology. The iPhone maker will use Google's Gemini model as a stopgap until its own systems are ready, Bloomberg reported. The model's 1.2 trillion parameters, a measure of AI model complexity, would dwarf Apple's current systems.

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Snap Shares Rocket 25% on Perplexity Deal.

AI startup Perplexity will pay Snap $400 million over one year in cash and equity, with revenue contributions expected from 2026. The integration will offer verifiable answers to users' questions within the Snapchat app.

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Robinhood Beats,

but the shares fell 3%, topping third-quarter profit estimates on Wednesday as retail traders shrugged off bubble fears, and the online brokerage announced the retirement of its longtime finance chief. The results suggest that small investors seized opportunities presented by the momentum in the markets and drove up trading volumes in crypto, options, and equities. Buy (HOOD) on dips.

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UPS Deliveries Slow Worldwide,

in the wake of the shutdown of its Kentucky hub after a fatal crash. It looks like an engine fell off after takeoff. No pilot can beat that.

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ADP Adds 42,000 Jobs.

Private employment increased by 42,000 jobs last month after an upwardly revised decline of 29,000 in September, the ADP National Employment Report showed on Wednesday. Economists polled by Reuters had forecast private employment would rise by 28,000 jobs after a previously reported drop of 32,000 in September.

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China Rushes to Top Up Oil Reserves,

taking advantage of multiyear low prices caused by the current glut. China has spent months building up its oil reserves. That might come in handy in the wake of the new sanctions the U.S. recently imposed on Russian crude. During the first nine months of the year, the world’s second-largest economy imported on average more than 11 million barrels of oil a day, an amount above the daily production of Saudi Arabia, according to official customs data. Analysts estimate 1 million to 1.2 million of those barrels were stashed in reserves each day.

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S&P Global Services PMI Comes in Weak,

at 54.8, down from 55.2. U.S. services sector activity picked up in October amid a solid increase in new orders, but subdued employment pointed to lackluster labor market conditions against the backdrop of economic uncertainty stemming from tariffs on imports. Not a major data point, but we’ll take whatever crumbs we can get during the government shutdown.

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Hedge Funds Dumping Stocks at Fastest Rate in Two Years.

Data compiled by Bank of America shows hedge funds and other large investors are dumping tech stocks at the fastest pace since July 2023. Specifically, the bank looked at net buying and selling activity within the sector on a weekly basis as a percentage of market capitalization. BofA added that net technology single-stock sales topped $5 billion last week, by far the (SPY) sector with the most selling. Those sales have been reflected in the broader market’s recent moves.

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AMD Beats,

but the stock falls anyway. The company earned an adjusted $1.20 per share on revenue of $9.25 billion. Sales increased 36% from this time last year. Analysts polled by LSEG had expected earnings of $1.16 per share and $8.74 billion in revenue. But the company sees an adjusted gross margin of 54.5% for its current quarter, meeting Street Account’s consensus of 54.5%.

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Palantir Beats, but the Stock Tanks,

repeating the pattern of previous tech announcements. Palantir shares slid roughly 9% on Tuesday even after the software company beat Wall Street estimates for the third quarter and offered upbeat guidance. Investors have grown increasingly wary of lofty valuations in AI-linked names. Palantir's stock, which was up 173% for the year heading into Tuesday's trading, has a forward price-earnings ratio of 228X. EO Alex Karp ranted against short sellers, calling out specifically Michael Burry after a filing revealed the investor of "The Big Short" fame had bets against the artificial intelligence software company. 

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Bank of America Downgrades Gaming Stocks,

DraftKings (DKNG) and FanDuel owner Flutter Entertainment (FLUT), warning that online sports betting faces a rocky road ahead as competition from prediction markets grows and regulatory uncertainty mounts. BofA cut its rating for DraftKings and Flutter from buy to hold and slashed its price targets for the stocks by 23% and 27%, respectively. The bank now has a price of $250 per share for Flutter, suggesting 8% upside from Monday’s close. It sees DraftKings hitting $35 per share, indicating about a 14% gain from current levels.

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There’s a Bidding War Going on for Metsera (MTSR),

between Pfizer and Novo Nordisk in a step up in the obesity market. Novo's revised offer brings the deal value to about $10 billion, while Pfizer is now willing to shell out $8.1 billion.

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Starbucks Sell China Subsidiary,

to Boyu Capital in a deal that values the business at $4 billion - one of the largest divestments of a China unit by a global consumer company in recent years. The Seattle-based coffee chain said the funds from investment firm Boyu will help it jump-start growth in the world's second-largest economy, where local rivals like Luckin and Cotti now offer lattes for 9.9 yuan ($1.40) - less than a third of Starbucks' prices. Avoid (SBUX).

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Chile’s Codelco Announced Record Profits,

off the back of the copper boom, which reached all-time high prices. The state-owned company posted a pre-tax profit of $606.9 million in the nine months to September, slightly below the $612.2 million reported in the same period last year. The miner said its own output totaled 937,000 metric tons, up 2.1% from the same period last year.

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Amazon Rockets an incredible 10%,

with $209 billion in Q3 revenues. Store revenues were $67 billion. Adds grew by 22% to $17 billion YOY. The company announced a $38 billion deal with OpenAI for the ChatGPT developer to access hundreds of thousands of Nvidia's (NVDA)’s AI chips through its cloud computing infrastructure. Buy (AMZN) on dips.

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Netflix Announced 10:1 Share Split,

sending the shares up $45. When you own great companies, all the surprises are to the upside. Investors were suddenly reminded that the company is still growing at a prodigious rate. The streaming giant previously split its stock 2-for-1 in 2004 and 7-for-1 in 2015.

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US Manufacturing Falls for 8 Consecutive Months,

The Institute for Supply Management’s manufacturing index eased 0.4 points to 48.7, according to data released Monday. Readings below 50 indicate contraction, and the measure has been stuck in a narrow range for most of this year.

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Kimberly Clark Buys Kenvue,

maker of Tylenol, for $40 billion. Kimberly-Clark shares dropped sharply after the announcement, while Kenvue jumped 17.5%. The company is paying a hefty 46% premium for the former Johnson & Johnson unit that has had a turbulent year. Kenvue ousted its CEO in July and has been under fire from the White House over unproven claims that Tylenol use during pregnancy can cause autism in children. Avoid (KMB) as it is a low-margin business.

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Tesla Sales Resume Fall in October,

in a number of European countries, including Spain, the Netherlands, and Nordic markets, the latest sign that the U.S. electric vehicle maker's struggles on the continent continue. Tesla had seen sales rise in a number of European markets in September after falling for most of this year due to increasing competition to its aging lineup from newer EV models. Avoid (TSLA).

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Fed Cuts Interest Rates by 25 Basis Points.

More importantly, the Fed is ending quantitative tightening or letting its existing bond holdings mature without replacing them with new buys. Weirdly, it was a data-free statement due to the government shutdown. Let the money printing begin!

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Alphabet Beats,

taking the stock up 5%, Meta and Microsoft disappoint. Google parent Alphabet (GOOGL) reported third-quarter revenue and earnings on Wednesday that surpassed Wall Street's expectations following several AI deals involving its cloud segment. The stock jumped more than 5% Thursday morning following the results. Meta (META) and Microsoft (MSFT) shares dropped after earnings because expenses are rising faster than revenues due to their massive AI capex.

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Home Prices are Lagging Inflation,

which means that homeowners’ net equity is falling. Home prices nationally rose 1.5% in August compared with the same month last year, down from the 1.6% annual gain recorded in July, according to the S&P Cotality Case-Shiller U.S. National Home Price NSA Index. While home prices aren't yet falling, they're weakening — rising at a slower pace than the current 3% rate of inflation. That means that housing wealth eroded in real terms for the fourth consecutive month, according to the index.

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Pending Home Sales Rise were Flat

in September, on a signed contract basis and up 0.9% YOY, according to the National Association of Realtors. Sales rose in the West. Inventories climbed to a five-year how as the market is held back by a rising Unemployment Rate.

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US Nuclear Generation Set to Soar.

As surging demand driven by data centers strains grids across the country and a wave of tech companies signs deals to source power from the zero-carbon resource. The consumer brownouts are coming.  A flurry of announcements in nuclear energy investments - most recently an $80 billion U.S. government partnership with the owners of Westinghouse Electric - underscore the rising interest in the sector. The power industry is grappling with increasing electricity demand from energy-intensive data centers, rising temperatures, and electrification. Buy (CCJ) on dips.

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