Happy Friday Folks! The market ended its short-lived gravy train yesterday with the S&P’s posting of a 53bp loss by the close. While inflation has cooled briefly, going below 30 points for the majority of the week, there are now only 3 trading sessions until the next FOMC meeting and we’re sure that traders will be rushing to place more bets before its kick-off!
Markets in Review
In the premarket today, major indices are largely down with the Dow, S&P and Nasdaq regressing 2, 54 and 100 bps at time of writing. The charge down in equities was mainly lead by the overweighted technology, communications and consumer cyclical sectors with heavy down days being posted by FAANG stocks all round. Regardless, this week’s price action has left investors feeling a little more confident in the market than before with the share of bearish investors falling from 56.2% to 45.7% as of Wednesday.
Short: First Solar, Inc. (FSLR-NASDAQ) | Timeline: 2 days
First Solar, Inc. (FSLR), which provides photovoltaic (PV) solar energy solutions internationally, reported earnings yesterday after the market close, and it’s safe to say they’ve had an extremely challenging Q3. The company missed estimates by 97.57% and 15.07%, respectively, while also reporting a negative loss per share of -0.46 as chip shortages continue to disrupt the market. (Full Story) Referring to the chart, FSLR has had quite the year so far after popping roughly 75% from their Q2 report - battling at new highs for the following couple of months. Though beneficial to some, these levels have become unsustainable. With negative news and an extremely overbought Stochastic RSI, the stock is likely to continue oscillating through this downward price channel.
Zooming out...
META’s Big Bust
Meta, once the darling of pandemic bulls everywhere, has been faltering as of late. The company reported dismal Q3 earnings this week which has sent the company’s stock tumbling below prices last seen in 2016. All on a YoY basis for the quarter, total revenue has declined by 4.5%, operating income has fallen by 45.6%, debt has doubled from $13.2B to $26.5B and liabilities have grown by 51.3%. Most alarmingly, FCF has dropped by 96.8% from last year, from $9.78B to $317M. While some of this lackluster performance can be attributed to the company doubling down on the Metaverse, not much outside of extremely poor management can explain such drastic declines in only a year’s time. Toronto’s Housing Stall Once one of the world's biggest by transaction volume, Toronto’s real estate market has taken a recent dive. Although Toronto represents the hottest housing bubble in the world according to a recent UBS report, home sales have slowed by 96%, while condo sales have dropped by 89% on a YoY basis. To contextualize that, in September of 2022 only 289 condo units, and 45 single-family homes were sold in the city of Toronto.
While at first seeming like potentially great news for young individuals who are pining for home ownership, they too will still be caught by Toronto’s high prices, no matter the market volume. Even as sales have cratered, prices still remain higher than a year ago, as condos and single-family homes have increased by 11.8%, and 17.8% respectively.
Many real estate investors are feeling the crunch as they are unable to transfer their inventories. Also feeling the crunch, the city of Toronto, this due to the millions that the city previously made from land transfer taxes. For over a decade, the city raked in over $500M a year from these taxes, however, due to the slow market in 2022 that figure is now nearly non-existent.
Making headlines...
Musk Is Said to Take Twitter CEO Role, Reverse Lifetime Bans
The billionaire appointed himself chief executive officer, dismissed senior management and immediately began reshaping strategy at one of the world’s most influential social media platforms as his $44 billion take-private deal closed. (Full Story)
Europe’s First Lithium Mine Agrees to Merge With SPAC
A unit of Australian miner European Lithium Ltd. has agreed to go public on Nasdaq through a merger with blank-check company Sizzle Acquisition Corp. (Full Story)
Another Cathie Wood Fund Exits Sea After $175 Billion Selloff
Funds managed by Cathie Wood are exiting the beleaguered Southeast Asian e-commerce giant Sea Ltd. one by one. (Full Story)
China Faces Tough Choices in Currency Defense as Yuan Weakens
After a months-long effort to prop up the yuan, the People’s Bank of China has cycled through most of its policy tools, leaving it with some tough choices. (Full Story)
Chart of the Day: Microsoft still trades at one of its most expensive valuations ever.
“People often remark that I'm pretty lucky. Luck is only important in so far as getting the chance to sell yourself at the right moment. After that, you've got to have talent and know how to use it.” - Frank Sinatra
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