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


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


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)

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