News

US markets (S&P 500 Index +2.6%) have produced a significant rally to begin October. A weaker than expected US ISM Manufacturing survey has driven a big fall in global interest rates overnight.  The US 10-year rate is almost 20bps lower, at around 3.65%, with similar-sized moves seen in Europe. 

US markets (S&P 500 Index -1.5%) closed lower on Friday to register their worst month since March 2020, down -9.3%. It appears that the markets are coming around to the fact that the Fed will be holding interest rates higher for longer. There are also signs of financial stress building, highlighted by the actions of the Bank of England last week.  Utilities (-2.0%) and Technology (-1.9%) stocks, led the market down on the day, with Consumer Discretionary (-1.8%) and Consumer Staples (-1.85) following closely. 

Shares of Nike Inc fell sharply in aftermarket trading after missing on gross margin expectations. GM narrowed to 44.3% and mgmt reiterated that GM may decline another ~50bps this fiscal year. Revenue grew – up 10% on a currency neutral basis; Nike Direct sales were up 16% cur. neutral and Nike Online grew 23% cur. neutral. Inventory grew 40%. Diluted EPS were down 20% YoY (0.93), slightly beating analyst’s estimates.

US markets (S&P 500 Index -2.9%) gave back yesterday’s rally to close lower on Thursday at a new 2022 low. All sectors ended in the red, led by Consumer Discretionary (-3.4%). Apple’s (-4.9%) woes continued for another day after being excluded from yesterday’s rally. Weighing on Apple today was news that the company let go its Procurement Chief, Tony Blevin, after he made an off-colour joke in a TikTok video. 

US markets (S&P 500 Index +2.0%) mounted a broad-based comeback on Wednesday, recovering from their 2022 low. Biogen (39.9%) shares soared following upbeat trial results of its new Alzheimer’s drug which is now projected to be a ‘blockbuster’. Home Depot (+5.0%), Boeing (+4.7%), and Walt Disney (+3.7%) were also stand out performers on the day. 

We initiate coverage of Meta Platforms Inc (NASDAQ: META) with a SELL rating. Meta Platforms is the owner of Facebook, Instagram, and WhatsApp. We trust our readers are familiar enough with all three platforms – they are amongst the most widely used in the world – 2.87 billion people use one of Meta’s core products daily.

We think private equity is correct: music catalogues are an extremely valuable asset class. However, we prefer Warner Music Group and Universal Music Group as ways to “play” this, simply because they already own a lot of catalogues and are in the business of producing more at an up-front cost with the artists they’ve signed. Private equity and Hipgnosis is in the business of paying more aftermarket, which can hike up the price significantly — we prefer to own it at the source.

US markets (S&P 500 Index -0.2%) closed lower for a sixth straight day on Tuesday, setting a new low for 2022. Only the Energy (+1.2%) sector ended in the green to any significant degree. Financials (-0.3%) closed lower just as news broke that 16 Wall Street firms (including the major banks) had settled with the SEC, for approximately $2 billion, for failures in their record keeping.

US markets (S&P 500 Index -0.8%) fell on Monday to reach their lowest close this year. The S&P 500 is now approximately 24% off its 2022 peak. Rate hikes, bond yields, inflation, and now a strengthening USD (+0.9%) is contributing to the rout in stocks, as US multinationals become less competitive in the global market.