No better way to welcome a Tuesday than an obscure digital platform company continuing its unbelievable run with a one day return of 126% and a run up of 21,400% (yes, that the correct number) since it IPO’d mid July. No surer sign that something fishy is going on in the markets than when a company with revenues of <$26 million has a market cap higher than Pfizer, Coca-Cola, Disney among others… But, hey, markets are efficient right?
Markets flirted with positive returns today but finished the day broadly lower. European stocks led fell the most clocking a -1.6% while US Small Caps proved the most resilient losing only 1/10 of a percent.
Fixed income securities also saw fairly pronounced losses as the drop in yields that began mid July sharply reversed today.
Earnings from major companies also helped push markets down today. $CAT reported earnings this AM and highlighted weakening conditions overseas leading it to fall 5%+ during the session. Match Group ($MTCH), proving that even love is not recession proof, both missed on earnings and guided much weaker than expected leading to large AH losses. Speaking of recession proof, Airbnb ($ABNB) posted a record quarter and argued that the business would be resilient in the face of a slowing economy. I’m not sure I buy that argument but I applaud the confidence.
One last company specific note. Robinhood announced it is laying off 23% of its workforce as MAUs continue to crater. $HOOD is 48% this year… In an effort to support $HOOD, I say bring back the meme stocks!
Data Data Data Time
There was a slew of not-so-exciting data items that came out today, from housing to job openings. On the jobs side, openings saw their biggest drop since COVID first hit. Seeing openings decline shouldn’t be a surprise, but seeing them drop as dramatically as they did is a bit alarming.
Generally job openings and market returns are positively correlated to the tune of .4. Now we have been through periods when the converse was true, but more often than not jobs and market returns move roughly in tandem.
The second piece of less than great economic news comes to us from the housing market, where the average sale price for new homes dropped over 11% month-over-month; one of the largest drops in recent history. Now, part of this could be a rational decline after the insanity of a Covid driven housing market… But rising rates and a softening economy are certainly the primary drivers here.
In other, more esoteric economic news:
Inventories hit a 38 year high, so there’s a lot of excess stuff out there sitting unsold.
Gas prices have definitively taken a bite out of demand.
Speaking of expensive liquids, when will water be more expensive than gas in California?
What’s on Tap Tomorrow
Tomorrow doesn’t have the most exciting economic release calendar but there are a bunch of good earnings from the likes of $CVS, $MRNA, $ABC and $CDW among other major corporations.
Electric car myths dispelled
Remember, there’s a whole lot more to investment returns than company fundamentals
A look at ETF flows
Tiger Woods turned down $700 Million to leave the PGA