Ted Lasso lied to us
Market recap and outlook
Indices closed out the week with their biggest gains in over two years, crypto is crashing, bonds may be back, and Twitter got locked out of its own account. Let’s dive into the market news some hoped you’d miss and this week’s market outlook.
Our Midterms Recap, pre-Nevada. 2022. Meme on Interwebs.
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Bad News Dumpster Dive
Market movers like to bury their news, so we've decided to excavate them. Boy geniuses and retiree-aged politicians won’t stop us from digging up dirty laundry, so here are this week's overlooked stories post-midterms.
- Nvidia is offering a new advanced chip in China that meets recent export control rules aimed at “keeping cutting-edge technology out of China's hands” (Reuters).
- Over 50 Tesla employees remain at Twitter, revamping its code (Fortune).
- EV startup Arrival doesn't have enough cash to survive the next year (Reuters).
- Apple’s production in China, once key to its ascent, is now a “vulnerability” (NYT).
- Zoom officially announces its video conferencing app is coming soon to Tesla (TechCrunch)
- AMC popcorn to be sold at grocery stores by 1H 2023, per Adam Aaron on their earnings call.
- Elon Musk files multiple form 4s, noting the sale of Tesla at least 19,014,422 shares on November 4th. He sold roughly $4 billion (The Washington Post).
- Redfin laid off 13% of staff and shut down its home-flipping business (Fortune).
- In confidential documents shared with merchants and brands testing TikTok’s commerce platform, TikTok discussed a new ranking system that evaluates creators by sales their content generates, and how fast they respond to messages.
- SoftBank’s tech-focused Vision Fund reported a $7.2 billion loss in Q2 amid a steep decline in startup valuations (Bloomberg).
- Disney plans to institute a targeted hiring freeze as well as some job cuts, according to an internal memo sent to executives (CNN).
- 97.7% of tokens launched on Uniswap were rugs, according to research. That amounts to only ~500 non-scams out of the ~20k tokens launched on Uniswap.
- Crypto.com will now be publishing its audited proof of reserves, CEO Kris Marszalek says in a tweet.
- The $1 trillion digital asset market faces a crisis akin “to the 2008 financial crash,” according to Binance chief Changpeng Zhao. CZ warned more companies might fail in the coming weeks.
- Nano Dimension’s (NNDM) top shareholder reportedly proposed to acquire the company (Bloomberg).
- American Axle (AXL) denied reports of active sale discussions (Press Release).
- Cano Health (CANO) gained as CVS (CVS), Humana (HUM) consider primary care M&A (Seeking Alpha).
- Chindata (CD) reportedly draws takeover interest from China Merchants (Bloomberg).
- Garrett Motion (GTX) reportedly working with an adviser to explore options including a sale (Bloomberg).
- Liberty Media (LSXMA) activist Breach Inlet Capital published a public letter to the board highlighting Liberty Braves (BATRK) spin-off rationale (Letter).
- Congressional candidates spent over $500,000 on golf for their respective campaigns.
- The U.S. is extending the Covid public health emergency through the spring of 2023 (CNBC).
- FCC commissioner Brendan Carr is doubling down on his call for the U.S. government to ban Beijing-based TikTok, describing the popular social media app as “digital fentanyl” (Fox).
- The Biden admin has ceased accepting applications for federal student loan forgiveness after a court rejected the plan. The suspension of the forgiveness program comes shortly after a federal judge in Texas rejected President Joe Biden’s executive action in August to cancel up to $20,000 in student debt for tens of millions of Americans (CNBC).
- France’s President Macron calls the US' inflation-reduction act “not friendly, and violates WTO rules” (Bloomberg).
- China eases Covid measures, cutting quarantine and scrapping flight bans (Reuters).
- British employers cut their hiring of permanent staff via recruitment firms for the first time in nearly two years in October (Bloomberg).
- Chinese regulators told the nation’s second-tier banks to dole out another 400 billion yuan ($56 billion) of financing for the property sector in the final two months of the year (Reuters).
- British finance minister Jeremy Hunt said he will have to raise taxes in next week's budget plan in order to fix the public finances and soften a potentially long recession (BBC).
- Confidence in the US housing market hit its lowest on record (Fannie Mae). There is currently a 38% chance the peak mortgage rate will be >7.5% by the end of the year.
- Prediction markets forecast a 97% chance the Fed raises rates to >4.25%, following the latest CPI print.
- U.S. likely headed for mild recession in 2023, former Boston Fed President Eric Rosengren says (CNBC).
- UK home buyers are pulling out of deals for new-build homes at their fastest rate since markets were roiled by the collapse of Lehman Brothers in 2008 (Reuters).
- UK retailers say sales growth slowed in October as a surge in prices pushed more consumers to focus on essentials instead of new clothing and household accessories (The Guardian).
- Canadian real estate lender Romspen has halted redemptions on its largest fund after a number of borrowers stopped making payments (BNN).
- Peak inflation in Europe "is almost within reach," European Central Bank member has said (Bloomberg).
News to know for the week ahead
Treasuries purchases may continue to pop. U.S. Treasury yields plunged on Thursday after data showed U.S. inflation cooled in October, supporting expectations the Federal Reserve could slow its tightening pace. The October CPI number prompted more buying of Treasuries than did the 9/11 terrorist attacks, or the Greenspan Fed’s surprising inter-meeting rate cut in response to the Long-Term Capital Management meltdown in 1998.
Congress will hold a marijuana hearing one week after five states voted on legalization ballot measures. House lawmakers will meet on the 15th to discuss cannabis reform issues at the federal and state level. The legislation would end federal marijuana prohibition while taking specific steps to ensure that businesses in existing state markets can continue to operate unencumbered by changing federal rules.
The market is not done pricing in a Fed pivot, and at which level that would occur. The median length of time between the peak in inflation and the first rate cut is 22 weeks, according to US hiking cycles going back to 1972. That would push up previously projected estimates of when the Fed may pivot to a more imminent date.
The crypto crash has led to a massive plunge in the shares of publicly traded companies with ties to bitcoin, such as Coinbase, Hive, Riot and bitcoin bank Silvergate. The strength of the US dollar has further hurt both precious metals and crypto. Bitcoin's descent from its 2021 peak rivals some of the biggest crashes in history.
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