JASPER’S MARKET SQUAWK 10-11-2022

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JASPER'S MARKET SQUAWK 10-11-2022

Markets turn on Midterms uncertainty

Key US indices declined yesterday as results from the polls in Georgia remain at odds. The S&P 500 and the DJIA closed 2.08% and 1.95% lower, with the Nasdaq hit the most, recording a 2.48% loss.

Key factors for today:

• Midterms split sent equities down, with tech primarily impacted by new layoffs bout


• Crypto markets bloodbath continues after Binance pulls out of FTX deal


• EIA and API show inventory builds, suggesting a slowdown


• Meta added to ‘bad boss’ list after announcing plans to cut a 6th of its workforce

US equities disappointed by electoral results

US stocks fell as the result of the Senate contest remained doubtful and could be prolonged to December 6 with a run-off for the seat representing Georgia. The dollar initially advanced but later traded mixed as investors weighed the policy implications of Republicans controlling the House by a small margin.

Bitcoin at a 2-year low after rescue deal falls through

BTC and ETH had stabilised on Wednesday over reports that Binance would take over FTX, but after initial due diligence, it appears the deal will likely fall through. BTCUSD plummeted below the 16k handle, whereas ETHUHSD slid shy of the 1k handle. Both appear to be in a correction to the upside, as the low has been bought.

Crude down 3.60% on EIA build

Crude oil prices fell to $86/bbl after data showed a build in inventories, stoking concerns about oversupply in the market a day after the API report. The EIA reported a double the expected stockpile, sending the prices of crude lower for the third consecutive session. Next support lies at $82/bbl.

Tech firms continue to cut chunks of workforce

Facebook’s move to cut 11K in a move to reduce headcount to cut costs after a bad bet on the Metaverse. This amounts to around 13% of its workforce. Stripe also laid off 14% of its workforce, but Twitter has opened the revolving door to nearly 50% of its staff. Surprisingly, Meta Platforms holds firm above $100 with double digits in focus.

Germany pushes back on EC debt plan

German Finance Minister Linder said that EU plans to deal with debt are unrealistic. He said Germany had no plans to raise taxes, contrary to recent rumours.

Further signs of the end of QT?

The Polish central bank unexpectedly left the interest rate unchanged, despite nearly half of analysts expecting a 25bps hike. The PCB is now another central bank disappointing analysts expecting hikes, citing slowing growth.

Movers and shakers

• Disney -13% missed estimates by a wide margin; forecast that next year’s revenue would grow in high single-digits; content spend a little over $30B


• Digital Turbine +21% after beating earnings estimates and forecasting sequential improvements for the next quarter


• Desktop Metal -17% beat estimates on the top and bottom line, but investors were disappointed about the guidance cut and lower profitability ratio


• Bumble BMBL -16% earnings were above expectations, but general disappointment in the tech sector exaggerated concerns over the company as it once again did not provide guidance


• CarParts.com +14% grew earnings and revenue and showed healthy growth in margins

On the docket

• BOE’s Tenreyro speaks


• US CPI inflation is expected to offer some clarity about Fed’s plans in the next FOMC


• Mexico expected to hike rates to 10% on yet another 75bps round

The post JASPER’S MARKET SQUAWK 10-11-2022 appeared first on Key To Markets Blog.

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