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Pre-market on Thursday, the three major indexes all plunged.
Most growth tech stocks fell pre-market, with Microsoft dropping over 3% and Meta falling nearly 2%.
Most popular China concept stocks fell pre-market, with Li Auto falling nearly 9%, PDD Holdings and NIO Inc. dropping over 1%, while XPeng and JD.com saw slight increases.
Meta's quarterly revenue and earnings both exceeded expectations, but AI losses worsened with a warning of significant increase, leading to a 2% pre-market drop.
Meta Platforms, the parent company of Facebook. $Meta Platforms (META.US)$Overall performance and guidance for the third quarter exceeded expectations. However, due to continued significant losses in the metaverse and AI businesses, lower than expected active user growth, Meta's stock price fell 3% after hours on Wednesday. Reality Labs, responsible for metaverse and AI operations under Meta, incurred a high loss of $4.42 billion in the third quarter, with revenue at $0.27 billion. Meta warned that it anticipates the 'operating loss for this segment will continue to meaningfully increase'.
Despite the worsening losses, Meta CEO Mark Zuckerberg stated that the company will continue to invest heavily in infrastructure and other projects (such as the metaverse and AI glasses), believing these efforts are the core of the company's future, expecting "significant capital expenditures to grow in 2025". As of the time of publication, Meta's pre-market trading fell by 2%.
AI boosts Microsoft's Q3 Azure revenue growth by over 30%, but Q4 growth is expected to slow down with increased AI spending.
Third quarter $Microsoft (MSFT.US)$ Cloud business total revenue exceeded expectations with a year-on-year growth of 22% in the third quarter, AI contributed 12 percentage points to Azure's growth, higher than the second quarter; excluding the impact of exchange rates, Azure cloud revenue increased by 34% in the third quarter, slightly slower than the second quarter but still above expectations, with an expected further slowdown in Azure revenue growth to 31%-32% in the fourth quarter; capital expenditures accelerated in the third quarter, increasing by nearly 79% year-on-year, expected to increase sequentially in the fourth quarter.
In addition, in Microsoft's third-quarter financial report, it stated that it will disclose investment losses recorded due to its stake in OpenAI in the fourth quarter. Microsoft wrote in its latest U.S. Securities and Exchange Commission (SEC) filing: "We have invested in OpenAI Global, LLC ("OpenAI"), with total investment commitments of $13 billion, accounted for using the equity method." As of the time of publication, Microsoft's pre-market trading was down by over 3%.
Doordash surged by over 5%, achieving a profit in the third quarter with revenue growing by 25% year-on-year, exceeding expectations.
American dining delivery company $DoorDash (DASH.US)$ Announced third-quarter performance, revenue increased by 25% year-on-year to $2.71 billion, market expectation $2.66 billion; reversing losses to profits during the period, net profit recorded $0.162 billion, compared to a net loss of $73 million in the same period last year; earnings per share $0.38, market expectation $0.2.
Total order volume reached 0.643 billion, an 18% year-on-year increase. Total order value $20.002 billion, a 19% year-on-year increase. The company expects that the total order value of Marketplace applications in the fourth quarter will range between $20.6 billion and $21 billion, market expectation $20.64 billion; adjusted EBITDA will range between $0.525 billion and $0.575 billion.
Uber Technologies fell over 6% pre-market, forecasting that total bookings in the fourth quarter will be lower than expected.
$Uber Technologies (UBER.US)$ Today, before the US stock market opens, the financial report for Q3 2024 shows revenue of $11.188 billion, a 20% year-on-year increase; net income of $2.612 billion, compared to $0.221 billion in the same period last year. Despite Uber's record operating profit in Q3 2024, the company reported lower-than-expected ride bookings and issued a moderate performance forecast for the holiday season in its report. As of the deadline, Uber fell more than 6% pre-market.
Estee Lauder's pre-market decline expanded to 20%, with the company retracting its 2025 fiscal year outlook and lowering its dividend.
$Estee Lauder (EL.US)$ Pre-market trading widened its decline to 20%. The company's net sales in the first quarter adjusted to $3.36 billion, estimated $3.37 billion; adjusted earnings per share in the first quarter were 14 cents, estimated 9.2 cents. Estee Lauder expects adjusted earnings per share of 20-35 cents in the second quarter, market estimates is $1.05. In addition, Estee Lauder withdrew its outlook for the fiscal year 2025 and lowered its dividend.
Microstrategy announced that it will raise $42 billion in the next three years to buy more bitcoin.
$MicroStrategy (MSTR.US)$ Microstrategy announced its third-quarter performance on Wednesday, along with a bold plan to raise $42 billion over the next three years to purchase more bitcoin. MicroStrategy announced the so-called '21/21 Plan', which includes $21 billion in equity financing and $21 billion in bond issuance over the next three years. It is worth noting that MicroStrategy is the publicly listed company with the largest holdings of bitcoin globally, far exceeding companies like Tesla and Block that also invest in bitcoin.
Following the release of Li Auto Inc's third-quarter financial report, pre-market trading in the US dropped over 9%.
$Li Auto (LI.US)$ Unaudited financial performance for the third quarter of 2024 was disclosed, with total revenue for the third quarter of 2024 amounting to RMB 42.9 billion ($6.1 billion), an increase of 23.6% from the third quarter of 2023's RMB 34.7 billion, and an increase of 35.3% from the second quarter of 2024's RMB 31.7 billion.
In the third quarter of 2024, Li Auto Inc's vehicle sales revenue was RMB 41.3 billion ($5.9 billion), an increase of 22.9% from the third quarter of 2023's RMB 33.6 billion, and an increase of 36.3% from the second quarter of 2024's RMB 30.3 billion. As of the time of publication, Li Auto's pre-market trading is down over 9%.
Global macro
The inflation data most favored by the Federal Reserve, the 'September core PCE annual rate', remained unchanged from the previous month and rebounded slightly month-on-month.
At 8:30 p.m. on Thursday Beijing time, the U.S. released the September PCE price index. In September, the U.S. core PCE price index recorded an annual rate of 2.7%, unchanged from the previous month, and a monthly rate of 0.3%, a slight rebound from the previous month (0.2%). U.S. short-term interest rates futures narrowed their earlier declines after the economic data was released, with the market expecting the Fed to cut interest rates by 25 basis points in November and December respectively.
In addition, the number of initial jobless claims in the United States for the week ending October 26 was 0.216 million, below the expected 0.23 million, with the previous value revised from 0.227 million to 0.228 million.
The planned layoffs in the United States for October continue to decline, stabilizing the job market before the election.
Challenger job data shows that the number of job cuts announced in the United States in October hit a three-month low, once again indicating a strong job market heading into the presidential election next week. The number of announced job cuts by enterprises by October this year totals 664,839, up 3.7% from the same period in 2023. This number is the highest level since 2020, with a total of about 2.16 million job cuts announced in the first 10 months of that year. Although the economy is the voters' top concern, they are more worried about high and persistent prices than the job market.
Bank of Japan Governor: Will not be affected by political turmoil, will continue to raise interest rates if the economic and price outlook can be achieved.
On the morning of Thursday, October 31st, the Bank of Japan's latest interest rate decision was to 'stand pat.' Bank of Japan Governor Kikuo Iwata reiterated the upward inflation risks for the fiscal year 2025, saying that the current political situation will not have a significant impact on prices, with forex having a greater impact on prices than before. A 3% wage growth rate implies a clearer prospect for rate hikes, and the overall process of exiting loose policies is expected to be smooth.
The cost of hedging the US dollar has soared to its highest level in nearly two years before the election.
As traders prepare for significant post-election market volatility next week after the US presidential election, the cost of hedging the US dollar has now soared to the highest level in nearly two years. Measured by the Bloomberg Dollar Spot Index one-week indicator, it rose to the highest point since December 2022 this Wednesday, when concerns about economic recession briefly swept through the financial markets. The current situation indicates that traders are preparing for significant fluctuations in the US dollar against major non-US currencies such as the euro, yen, renminbi, and Mexican peso, thereby increasing the cost of options to hedge against such exchange rate volatility.Implied volatilityBridgewater Associates founder Ray Dalio: Both US presidential candidates are unsettling! Dalio points out that Republican presidential candidate Trump is "more capitalist" than Democratic candidate Harris, making him more favorable to the domestic capital markets. However, he warns that regardless of which party takes office, there will be enormous budget deficits. He adds that the two candidates have major differences in tax policies, and highlights Trump's plan to increase income by imposing more tariffs, which could lead to price hikes, but also depends on how much income is transformed into internal productivity.
Ray Dalio, founder of Bridgewater Associates: Both US presidential candidates are unsettling!
Dalio pointed out that Republican presidential candidate Trump is “more capitalist” than Democratic candidate Harris, making him more favorable to the domestic capital markets. However, he warned that regardless of which party is in power, there will be huge budget deficits. He also mentioned that the two candidates have significant differences in tax policies, and highlighted Trump's plan to increase revenue by imposing more tariffs, which could result in price increases, but also depends on how much revenue translates into internal productivity.
Bilibili rose more than 3% pre-market trading and was upgraded to "buy" by UBS, which raised its EPS estimate per share.
Reminder for US Macro Events
(All in Peking Time)
19:30 USA October Challenger Job Cuts
20:30 USA September Personal Spending MoM
20:30 USA September Core PCE Price Index MoM
20:30 USA September Core PCE Price Index YoY
20:30 USA Initial Jobless Claims up to October 26th
21:45 USA October Chicago PMI
Editor/Rocky