This Week: Midterms & Thursday CPI Data

Good Morning Everyone!

Busy week with midterms on Tuesday, an inflation report Thursday and earnings from Disney, AMC, Palantir, Beyond Meat.

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Prices as of 4 pm EST, 11/4/22; % YTD

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MARKET UPDATE

38 trading days left in 2022 and we get 2 major events this week

• Midterms

• CPI

Higher rates have been death for long duration assets (technology and growth stocks)

• QQQ did hold the October lows

• SPY slightly above October lows

$3 trillion of market cap has been lost over the past 12 months (Microsoft, Amazon, Apple, Google, Meta).

• Microsoft MSFT -33%

• Amazon AMZN -48%

• Apple AAPL -8%

• Google GOOGL -42%

• Meta META -73%

• This group’s market cap has shrunk from $9 trillion 12 months ago to just $6 trillion

• Where did this go? Fixed Income? Cash? Energy (only S&P 500 sector up over 1 year)?

Crude 92.45 flat

• China’s trade data for October disappointed with both imports and exports missing consensus

Berkshire Hathaway

• Bought $1.05 billion of stock during the quarter

• Bought back $1 billion in Q2 and $3.2 billion in Q1

• Berkshire is trading at 1.4 times Q3 book value

• Auto insurance weak. GEICO loss ratio was 97% vs. last quarter of 88.4%

• Railroad BNSF below expectations on lower freight volumes and higher fuel and labour

• Q3 pretax loss from Hurricane Ian was $3.4 billion

Meta META +4%

• WSJ reports on rumours that layoffs are coming this week

• Zuck says Meta will likely be smaller in 2023 than 2022

• Goal may be to cut at least $3-4 billion in operating expenses

• Barry Diller on CNBC this morning thinks: TikTok will eventually be banned in the U.S.

Apple AAPL -2%

• Plans to produce at least 3 million fewer iPhone 14

• Aim to make 87 million devices vs. 90 million

• Softer demand and supply problems at Zhengzhou due to Covid-19 lockdowns

Microsoft MSFT

• News out that MSFT’s $69 billion purchase of Activision Blizzard is facing scrutiny from regulators

• $3 billion break-fee

Earnings

• BioNTech BNTX

• Palantir PLTR

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CRYPTO UPDATE

Binance to liquidate FTX token holdings

• Binance to sell $529 million of FTT FTT/USD (FTX’s token) due to “recent revelations”

• FTX experiencing high volume of withdrawals based on on-chain flows

• FTX offered to buy tokens from Binance at $22

  • Current price = $22.30

Digital asset flows

• Digital asset investment products saw minor outflows of $15.6 million last week

• Bitcoin snaps 7-week inflows streak…outflows of $13 million

• Short-Bitcoin 3-weeks consecutive outflows totaling $28 million

• Flows remain relatively muted (past ~2 months)