vestact posted: " Market Scorecard US markets slumped on Friday, snapping a three-day winning streak. Even with the decline, the S&P 500, the Dow, and the Nasdaq ended the week with solid gains, offering a respite to investors who have seen a lot of red in thei" Vestact - Money with a dash of funny
US markets slumped on Friday, snapping a three-day winning streak. Even with the decline, the S&P 500, the Dow, and the Nasdaq ended the week with solid gains, offering a respite to investors who have seen a lot of red in their portfolios this year. A stretch of earnings reports last week have given investors confidence to wade in and scoop up beaten-down stocks. Netflix and Tesla were two of the S&P 500's best-performing stocks for the week.
According to Factset, S&P 500 companies are beating second-quarter earnings estimates by a 3.6% margin, which is below the five-year 8.8% average. With about a fifth of the companies in the index having reported, 10 companies have issued earnings guidance for the third quarter that is below consensus estimates, while one has offered a forecast ahead of Wall Street's projections.
In company news, American express shares rose 2% after the financial services company reported a 31% rise in revenues, thanks to a return of international travel. Elsewhere, Snap posted its weakest quarterly growth in sales as a public company after it warned of a slowdown in digital ad spend, and removed all guidance for coming quarters, sending its shares down 39% on the news.
On Friday, the JSE All-share closed up 0.24%, the S&P 500 fell 0.93%, and the Nasdaq dropped 1.87%.
Our 10c Worth
Byron's Beats
High fuel prices are hurting logistics companies worldwide. The timing couldn't be better for Amazon's delivery of their electric Rivian vans. According to The Verge, Rivian are now ready for a nationwide rollout.
Amazon plans to have 100 000 Rivian vehicles on the road by 2030. Not only are the vehicles more efficient but they are also much easier to drive. The exterior cameras link to a big screen on the dashboard, giving the driver 360-degree visibility.
Take away fuel costs and Amazon delivery will be even more competitive. OPEC's margins are now Amazon's opportunity.
Michael's Musings
The leading school of thought about central banks, interest rates and economic growth is that central banks can't actually do much to influence long-term economic growth. Yes, policymakers can massage short-term changes, but ultimately, the economy's underlying structure will determine growth rates. It is why central banks target price stability. Stable prices increase confidence, which results in higher economic investment and growth.
Due to human emotions of fear and greed, economic cycles of boom and bust are normal. We are apparently facing an inevitable global recession. Fear not, tough times create opportunities. Here is what John Tamny, writing for Forbes, had to say:
"The seeds of actual recession are planted during the good times, while the seeds of recovery are planted during the bad. Translated for those who need it, during good times some of us develop bad habits, make lousy hires, commit capital less carefully, and all manner of other things inimical to progress. It's during recessions that we fix what we were doing wrong.
Equally important, not every individual or business develops bad habits, makes lousy hires, commits capital less carefully, and all manner of other things inimical to progress during the good times. Translated for those who need it, real recessions lay the seeds of powerful economic expansion given the basic truth that the prudent go on buying sprees during downturns. That's when they can acquire human, physical, and financial capital on relative cheap."
US social media companies lost over $72 billion in market cap on Friday, as disappointing revenues from Snap Inc. raised concerns about the outlook for digital advertising. Usually, Snap is a leading indicator of advertising spend on digital channels for the quarter.
As we wrote in the intro, Snap Inc. plummeted 39% during the trading session, Facebook fell 7.6%, and Google slipped about 5.6%. This significant drop is the second time in two months Snap has fallen hard. At the end of May, the company revised its guidance lower, resulting in a 43% share price drop. Hopefully, Google and Facebook will report better-than-expected numbers in the next few weeks.
UEFA is in the process of figuring out its US media rights partners for the next six years. Paramount and Univision, its current US broadcast partners pay a combined $145 million a year - Champions League US rights could fetch $2.5 billion.
Signing Off
Asian markets are down this morning. Japan, Hong Kong and mainland China stocks fell, while South Korea is in the green. China's property shares also bucked the trend, after news that officials are planning a fund to support struggling developers.
It is a significant week ahead with many US tech companies reporting numbers and the Fed announcing an interest rate change. US equity futures wavered in early trade, sapped by a dimming economic outlook. The Rand is trading at R16.84 to the US Dollar.
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