Inflation data is reassuring, the future is upward!
Wall Street is bracing for a roughly higher open, with July inflation data showing that price increases have peaked across the Atlantic. The Consumer Price Index was actually stable compared to the previous month, against the ‘Bloomberg’ consensus of 0.2%. On the year, US inflation reached 8.5%, against the 8.7% consensus, and 9.1% in June. Excluding food and energy, the consumer price index also slowed, rising 0.3% from the previous month, against consensus of 0.7% and 0.5% in June. Annual ‘core’ inflation came in at 5.9%, up from 6.1% consensus and 5.9% a month ago.
“Even if inflation eases somewhat, the Fed will look to go ahead with a 75 basis point hike next month as it is confident that the labor market can sustain another sharp increase,” the Fed warned. But before this information was released, David Madden, an analyst at Equity Capital. “We’re still a long way from (the Fed’s) 2% inflation target.”
Rates are clearly easing in the bond market with the 10-year American down 9.3 basis points to 2.684% while awaiting further feedback from Fed members. The dollar fell 1.3% against a basket of currencies. Bitcoin rose 1.65% to $23,688 in 24 hours on Coindesk.
A barrel of WTI crude for September delivery is currently set to lose just 1% below $90 on the Nymex. Gold rose 0.7% to $1,807 an ounce.
On the macroeconomic front, the Department of Energy’s weekly reports on wholesale inventories, US domestic oil inventories and the fiscal balance will also be released today. On the business side, the midweek August news is more sparse, even if Tesla and its iconic boss are still on speaking terms.
* You did not sell so many shares of Tesla here, Elon Musk! The automaker’s boss sold about 7.92 million shares for a total of $6.9 billion on Aug. 5, explaining that the proceeds could be used if he loses his legal battle against Twitter. “While (I hope it’s unlikely) that Twitter succeeds in forcing the deal to be finalized, and some of (our) financial partners don’t show up, it’s important to avoid an emergency sale of Tesla shares,” the billionaire wrote on Twitter. When asked by followers if he had sold Tesla stock and would buy back the stock if the Twitter deal didn’t happen, E. Musk replied, “Yes.”
Elon Musk gave up on his takeover of the social network in early July, ending weeks of suspense. Tesla’s boss, who threatened to cancel the $44 billion takeover deal due to the reign of obscurity over spam and “bot” accounts, finally carried out his threat in a specific way… To explain his decision, he accused Twitter of violating his contractual obligations. Significantly provides inaccurate or incomplete information about the number of fake accounts. Twitter rejected the allegations and filed a lawsuit against Elon Musk in Delaware for breach of contract, asking a US state court to compel the billionaire to complete the deal for $54.20 a month in stock. Tesla is up about 35% from this year’s lows, but still down about 20% since Jan. 1.
* Roblox plunged more than 15% after the close on Wall Street as the gaming platform announced that a key indicator of its sales fell unexpectedly for the second quarter in a row. The California firm recorded net bookings of $639.9 million in the second quarter, compared with $665.5 million a year ago and the $644.4 million expected by analysts. On an adjusted basis, Roblox suffered a loss of 30 cents per share, compared to consensus of 25 cents and 21 cents per title a year ago. Average daily active users increased 21% to 52.2 million, but average spending per daily user fell $12.25, down 21% from the prior year.
Industry companies, from console and chip makers to video game publishers, warn of a slowdown in the gaming world. As other forms of consumer entertainment, runaway inflation began to weigh on discretionary spending, challenging the notion of a “recession-proof” industry. “We’ve seen an impact in video games because of the shift in consumer discretionary spending, and it seems to be a little more pronounced in the free-to-play genre and mobile games,” he told Reuters chief Cory Barrett. of TMT Research in M.Sc.
* Coinbase fell more than 5% in post-trading on Wall Street last night after posting a record $1.1 billion loss in the second quarter and a 63% drop in revenue. The leading US cryptocurrency exchange, which posted a net profit of $1.6 billion a year ago, also saw its monthly active users fall to 9 million in the quarter, from 9.2 million in the previous three months. Coinbase, which has been hit hard by the decline in digital currencies, saw total transaction volume of $217 billion, down 30% year over year, while revenue hit $808.3 million, up from $854 million in consensus.
The company now expects to have 7 to 9 million average monthly users a year, and thus lowers the range of earlier forecasts. “We clearly recognize that these are difficult market conditions,” said Coinbase Chief Financial Officer Alecia Haas. The company laid off 18% of its workforce in June as a result of the crash in Bitcoin and other crypto prices.
* Wynn Resorts was still hit hard by the health situation in Macau, with the group suffering further losses in the second quarter. The casino operator posted a net loss of $130.1 million, or $1.14 per diluted share, compared with a net loss of $131.4 million, or $1.15 per diluted share, a year earlier. Consolidated loss per share was 82 cents versus $1.12 in the same period last year and the $10.2 consensus. Operating revenue totaled $908.8 million, compared with $990.1 million a year ago and the $968.8 million expected by analysts. Despite a strong performance in Las Vegas, Wynn Resorts continues to suffer from conditions in Asia. “In Macau, as the Covid-related travel restrictions continue to impact our results, we are confident that the market will benefit from the return over time,” said Wynn Resorts CEO Craig Billings.
* The Meta platform has raised $10 billion after the first bond issue in its history, an operation that will allow it to finance share buybacks and new investments, among other things. In late July, Meta posted its first quarterly revenue decline as recession fears and competitive pressures weighed on ad sales. Other tech giants such as Apple and Intel have also recently issued bonds, raising $5.5 billion and $6 billion, respectively.
* Wendy’s reported same-store sales growth in the U.S. fell short of market expectations due to inflation.