DHUnplugged #726: Election Hysteria
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Can we get this election over with already?

Markets pricing in a perfect gridlock scenario.

Earnings season rolling along – good and bad news for stocks.

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Warm-Up

• Yields - Highest in months - ahead of Fed decision (tomorrow)
• Drones - will they deliver?
• October ends on a down note

Markets

• Optimism (Hysteria) ahead of (final) Election results
• Oil on the move again - Middle East tensions
• Mixed results from earnings - but still a generally good look for the main players
• What does Berkshire know?
• Big DJIA Announcement

AH - Chili Competition this weekend - reining champion - have to defend the title...

Employment Situation

• ADP said private companies hired 233,000 new workers in the month, better than the upwardly revised 159,000 in September and far ahead of the Dow Jones estimate for 113,000.
• Nonfarm payrolls were up just 12,000 in October (Briefing.com consensus 120,000)
• Nonfarm private payrolls decreased by 28,000 (Briefing.com consensus 105,000) -- These numbers were depressed by the Boeing strike and likely by the effects of Hurricanes Helene and Milton, yet with forecasts suggesting those influences could lop off something on the order of 100,000 positions, the view to October, coupled with sizable downward revisions to the August and September payroll figures, connotes softness in hiring activity.
• Unemployment rate stood at 4.1% - no change

US GDP

• Gross domestic product increased at a 2.8% annualized rate in the third quarter, below the 3.1% estimate and the 3.0% reading Q2.
• Consumer spending and federal government outlays were two of the biggest contributors to GDP growth.
• The release comes with the Federal Reserve poised to lower interest rates further despite the seemingly strong economy and inflation that remains above target.

Palantir Earnings -Back-to-back quarters delivered beats on its top and bottom lines in Q3 and forecasted upbeat Q4 revenue figures.

• PLTR's top line continued to accelerate, advancing by 30% yr/yr to $725.52 mln, supporting its improving profitability, with non-GAAP EPS expanding by 43% yr/yr to $0.10. Total customer count continued to grow nicely, up 39% yr/yr and 6% sequentially to 629.
• U.S. government revenue has been ramping up in recent quarters. However, in Q3, the segment took a giant step forward, growing revs by 40% yr/yr and 15% sequentially to $320 mln, a seven-fold increase compared to the prior year and the best growth rate over the past 15 quarters.
• The commercial side was the showcase in Q3. Like U.S. government, U.S. commercial revs shifted into a higher gear, registering 54% growth yr/yr, up from the +33% delivered last quarter, to $179 mln

AMD Earnings

• Just not good enough
• AMD reported third-quarter results on Tuesday, with earnings in line with forecasts and revenue that slightly beat expectations.
• Here's how the company did, compared to LSEG estimates for the quarter ending Sept. 28:
• Earnings per share: 92 cents adjusted vs. 92 cents expected
• Revenue: $6.82 billion vs. $6.71 billion expected
• AMD said its important data center business doubled in sales for the second quarter in a row, but overall revenue guidance for the fourth quarter was in line with consensus expectations.
• Stock down

Microsoft Earnings

• Microsoft’s revenue grew 16% in its fiscal first quarter, faster than analysts had anticipated.
• Revenue from Azure and other cloud services was up 33%, surpassing estimates.
• Guidance for revenue growth fell short of expectations.

Amazon Earnings

• Could have been the best of the bunch
• Revenue increased 11% in the quarter to $158.9 billion, topping the $157.2 billion estimate of analysts surveyed by LSEG. Earnings of $1.43 topped the average analyst estimate of $1.14.
• Sales in the Amazon Web Services cloud business increased 19% to $27.4 billion, coming in just shy of analysts’ estimates, according to StreetAccount. That was an acceleration from 12% a year ago, but trailed the rate of growth at rivals Microsoft and Googl
• Amazon Ad growth  grew faster than Googles (18.7%)
• Amazon forecast revenue in the current quarter to be between $181.5 billion and $188.5 billion, which would represent growth of 7% to 11% year over year.

Ford Earnings

• Ford guided to the low end of its previously announced 2024 earnings forecast as it slightly topped Wall Street’s third-quarter expectations.
• The automaker now expects adjusted earnings before interest and taxes, or EBIT, of about $10 billion, down from a range of between $10 billion and $12 billion.
• Ford’s third-quarter results were led by its “Pro” commercial and fleet business as well as its traditional operations, known as “Ford Blue.”
• Stock Drops

DJIA Announcement

• INTEL OUT
• NVDIA IN 6X more point movement
• Divisor will change a bit, but still a very big influence in comparison

Bankruptcy

• TGI Fridays -CLOSED
• TGI Fridays franchisees are worried that they could be on the hook for $49.7 million in outstanding customer gift card obligations if the company's bankruptcy doesn't go smoothly, an attorney for franchisees said Monday. -- Can we talk about the biggest scam going...

More Food News

• Chipotle misses revenue estimates as same-store sales growth disappoints
• Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG: --- Earnings per share: 27 cents adjusted vs. 25 cents expected ---- Revenue: $2.79 billion vs. $2.82 billion expected
• The company's food and beverage costs increased during the quarter, in part due to Chipotle's decision to re-emphasize generous portions after social media-fueled backlash over the size of its burrito bowls this summer.

Drones

• Tech Amazon gets FAA approval for new delivery drone as it begins tests in Arizona Published Tue, Nov 5 202412:11 PM EST
• Amazon says it has received approval from the Federal Aviation Administration to fly its newer, smaller delivery drones, including beyond the visual line of sight of pilots.
• The company is planning to ramp up deliveries in a city west of Phoenix, Arizona.
• The Prime Air drone program has been slowly moving forward more than 10 years after Amazon founder Jeff Bezos first conceived of the idea.

Boeing Saga

• Seems that the union is onboard to sign a contract
• 38% pay increase (over several years)
• Boeing will now be able to resume production, key to its recovery since the bulk of the aircraft price is paid when they are handed over to customers. But getting up to target production rates, particularly for the 737 Max, Boeing’s cash cow, will take time.
• But, is the company out of the woods (Stock down 40% YTD)

Meanwhile

• Warren Buffet is selling stocks
• Cash on the rise - selling Apple and BOA
• No Buybacks of Berkshire Hathaway Either
• The Omaha, Nebraska-based conglomerate saw its cash fortress swell to a record $325.2 billion by the end of September, up from $276.9 billion in the second quarter, according to its earnings report released over the weekend.

New 401k Limits announced

• In its release Friday, the agency increased the employee deferral limit to $23,500, up from $23,000 in 2024. The change applies to workplace plans, including 401(k)s, 403(b)s and most 457 plans, along with the federal Thrift Savings Plan. - Across plans, the average 401(k) deferral rate was an estimated 7.4% in 2023, according to the same report. The combined savings rate), including employer contributions, was 11.7%, Vanguard found.

 

 

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