04th February 2023 – 10th February 2023 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 4,090.46 | 11,718.12 | 20.53 | 33,869.27 | 2,250.37 | 15,910.69 |
| -1.11% | -2.41% | 12.00% | -0.17% | -1.29% | -0.55% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 17,856.50 | $1,876.40 | $22.01 | $86.52 | 82.49 | 88.09 |
| 0.01 | -0.07% | -1.74% | 8.39% | 0.00% | -1.10% |
Source: MarketWatch
Hello Saturday,
This week oil prices jump after Russia announces production cut, several US companies post fourth-quarter earnings, and companies continue to cut costs.
- Several companies post fourth-quarter and full-year 2022 earnings, including Uber, Mattel, PayPal, Lyft, and PepsiCo
- Credit Suisse posts its biggest loss since the 2008 financial crisis; buys Klein Group LLC for $175 million to spin off investment banking division as CS First Boston
- Google’s new AI chatbot Bard shows factually incorrect results in its product demo video, wiping off $100 billion of parent company Alphabet’s market cap
- Companies beyond the tech industry, such as Walt Disney and Exxon, announce plans to cut costs through spending cuts and workforce reduction
- The biggest companies in the pharmaceutical industry, such as Pfizer, Merck, and Novartis are actively looking to acquire new drugs to add to their ageing pipelines
Taking stock | Peace out 2022 | DisCredit Suisse | Two truths and a lie | Snip, snip | PharM&A | Invest wisely
Taking stock
All primary US market indices ended the rocky week in the red. S&P 500 and Nasdaq had their worst week since December and lost 1.11% and 2.41%, respectively. The Dow slipped 0.17% despite Friday’s gains. The stock market volatility is up because economic indicators regarding inflation and the recession are mixed, leaving investors uncertain of what’s coming.
Peace out 2022
Several companies posted the fourth-quarter and full-year 2022 earnings this week.
- Mattel posted fourth-quarter results on Wednesday after market close, which failed to beat analysts’ estimates as weak holiday sales were unable to offset slowing consumer demand. Shares of the company fell more than 9% in premarket trading on Thursday.
- On Wednesday, Uber’s shares rose 5% after the company’s fourth-quarter earnings beat estimates. Uber’s revenue for the quarter was up 49%, year-over-year, witnessing its strongest-ever quarter.
- On Thursday, PepsiCo reported its fourth-quarter earnings that beat Wall Street estimates and pushed the stock up more than 1%. This was mainly fueled by the company increasing prices for its drinks and snacks to combat inflation.
- Lyft’s fourth-quarter revenue of $1.18 billion was up 21% from its year-ago quarter. However, shares of the ride-sharing company plunged 31% after it issued weak guidance for its fiscal first quarter of 2023.
- PayPal’s fourth-quarter revenue came in slightly better than estimates, and its full-year revenue for 2022 increased by 8%, while the volume of payments grew by 9%.
- On Friday, in premarket trading, Yelp’s shares jumped 5% after its fourth-quarter revenue beat estimates and Earnings Per Share (EPS) met expectations.
DisCredit Suisse
Credit Suisse has been suffering rapid withdrawals from its major customers since the second half of 2022 as a result of a string of scandals and non-compliance issues. In the fourth quarter alone, the Swiss Bank saw outflows worth more than $120 billion. And this week, Credit Suisse posted its biggest annual loss since the financial crisis of 2008. Shares were down 14% on Thursday. In recent years, the bank has been increasingly underperforming.
Source: Financial Times
It had announced its plan to restructure and transform its business in October to return to profitability and stability. And in its earnings call this week, it announced buying the investment banking business Klein Group LLC for $175 million as part of its plan to spin off its capital markets and advisory activities into a separate business named CS First Boston. Credit Suisse intends to focus on wealth management, which is its core business with higher returns.
Two truths and a lie
Bard is Google’s much-hyped new AI chatbot tool, which is meant to rival OpenAI’s ChatGPT. The tool hasn’t been released to the public yet; however, it has already led Google’s parent company, Alphabet, to lose $100 billion in market capitalisation earlier this week.
On Tuesday, Google posted a product demo video on Twitter to promote Bard in which the chatbot is asked, “What new discoveries from the James Webb Space Telescope can I tell my 9-year-old about?” Bard responds with three bullet points, one of which turned out to be factually incorrect. While the AI said the telescope “took the very first pictures of a planet outside of our own solar system”, several astronomers on Twitter were quick to point out that the very first picture of an exoplanet was taken in 2004, and it wasn’t by the James Webb Space Telescope. On account of Bard’s rocky start, on Wednesday, the shares of Alphabet fell as much as 9%.
Snip, snip
It’s no longer only the tech industry that is seeing job cuts in an attempt to bring down costs. This Wednesday, Walt Disney announced that it would eliminate 3% of its workforce, around 7,000 jobs. This is part of its plan to cut down costs by $5.5 billion, $3.5 billion being content-related cuts and the remaining being non-content cuts.
The company’s shares rose 5% in after-market trading. Exxon Mobil Corp also announced plans to cut costs by $9 billion in 2023 and will merge some of its business units as part of this cost-cutting plan. The company has also been reducing its workforce since it suffered a historic loss in 2020.
Are your resumes updated?
PharM&A
The pharmaceutical industry is ready to make deals again. Pfizer Inc, Merck & Co., and Novartis AG said they are actively looking to acquire promising drugs to add to their ageing pipelines. A lot of the top-selling drugs of these pharma giants will be losing patent protection in the next few years. According to JPMorgan Chase & Co., pharma companies will lose about 24% of their global sales, which is about $110 billion, between 2023 and 2023 due to the loss of patent exclusivity. This year is likely to see a lot of action for M&A deals in the industry, with many of these companies focusing on drugs that can treat neurological, heart, and immune diseases.
Invest wisely
Just like companies regularly review their product portfolios to decide which lines to expand and which ones to do away with for increasing profits, you, as an investor, need to review your investment portfolio regularly. Taking a look at the performance of your assets and undertaking portfolio rebalancing so that your investments stay aligned with your financial goals and risk appetite is crucial. If this sounds tricky, Appreciate’s AI-based recommendations can help. You can not only build a smart, well-diversified portfolio with Appreciate but also access high-performing US stocks and exchange-traded funds in just a few clicks. Download the app today!
Warm regards,
Another week
in the markets
