Market Munch 🍪| 29 July 2022
Apple and Amazon give Wall Street some breathing room, the US enters a technical recession, and German inflation unexpectedly accelerates. 🔥
Good morning Munchers!
Here is your daily dose of the news that matters, from Wall Street to Dalal Street - in 5 minutes and 14 seconds.
Let’s dive in.
What’s hot, what’s not?
Market Commentary
Markets across the board finished green as some of the biggest index constituents reported stellar earnings.
American GDP came in at -0.9%. This was expected, so markets went up on the news.
Crypto was on a ripper yesterday - ETH and Bitcoin both were up double-digits. Finally.😮💨
IMPORTANT EARNINGS RELEASES TODAY -
- EXXON MOBIL, CHEVRON, PROCTER&GAMBLE, ABBVIE, COLGATE, ASTRAZENECA, PHILLIPS, AON all before market open.
- MIZUHO after market close.
Story Roundup
1 - US GDP surprises us with a technical recession.😬
The technical definition of a recession is two successive quarters of negative economic growth - and that is where we are!
US 2Q GDP came in yesterday at -0.9%, and with 1Q GDP at -1.6%, this puts us in ‘textbook recession’.
However, it’s important to note that a lot of people saw this coming, so it has a muted to nonexistent impact on markets.
Unemployment in the world’s largest economy is still at very healthy levels (3.6%).
An ‘official’ recession is declared by the NBER (National Bureau of Economic Research) - not the textbooks.
Let’s see how this one plays out. 🙏
2 - Wall Street reassured by Amazon’s strong earnings. 🛒
Amazon stock was up almost 10% as they look forward to “reporting double-digit quarterly revenue” since pandemic szn has passed.
Overall revenue increased 7% and stood at $121.2bn, outpacing expectations.
Their cloud services saw some very healthy demand - growing 33% from a year ago.
Amazon also managed to succeed where everyone else failed - with their ad-business growing almost 18% over the last year to $8.8bn.
Their ad-model is built around promoting products - so it’s safer than those of Facebook and Snap.
An interesting thing to note is that Amazon clocked a net operating loss - owing to a investment in EV carmarker Rivian that has now turned sour. It cost them about $3.9bn. 😬
3 - Apple gives markets a breath of fresh air. 🍎
Maybe the supply chain isn’t as bad as we thought.
Apple stock is up about 4% as they’ve managed to weather what seems to be the worst of a supply crunch.
Their revenue rose around 2% from this time last year, even though earnings per share fell 8%.
This April, we were warned that overall setbacks and disruptions to normal supply would cost Apple about $8bn - as they had to delay product launches this year. The realized losses only came to about $4bn.
Tim Cook said that “the situation on supply is improving” - so if nothing catastrophic happens, they expect the next quarter to be better than this one in terms of supply.
Quite the resilience!💪
4 - Germany surprises markets with sudden inflation increase🔥
Despite slowing to 8.1% last month, inflation in Europe’s biggest economy accelerated again.
This puts pressure on the ECB to keep hiking rates - despite mounting recession fears in the eurozone.
July’s inflation surprise was mainly driven by food inflation and energy inflation - standing at 14.8% and 35.7% respectively.
A 50bps rate hike in September seems to effectively be “locked in” according to economists.
If I could buy calls on inflation, I’d go all in🥵
5 - 170km long, 200m wide and 500m tall twin skyscrapers to be built in Saudi.🫰
9 million people living in 34 square kilometers - here’s all you need to know about Saudi’s latest urban utopia.
This city’s one unlike any other you’ve seen - it’ll be car free, carbon neutral, and will have a temperate climate in the middle of the desert.
You can go from end-to-end - from 0 to 170km in less than 20 minutes too.
The announcement comes as Saudi tries to diversify away from oil - being one of the most oil-reliant economies in the world.
I won’t say much more - this video does the city a much better service.
My only question is, who’s gonna clean the mirrors?
Aaaand that’s a wrap.
Thanks a ton for reading. Hope you enjoyed it. Any feedback is open - positive or negative. Hit my line at aryaansh.rathore@gmail.com or https://www.linkedin.com/in/aryaansh/.
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