Snap ($SNAP) Tumbles Post Earnings Dragging Other Social Media Names Lower ($FB $TWTR)

Okay, very good morning. It's Friday the 22nd of October. Hope you're doing well. And before I begin with the normal briefing, don't forget to check out the latest Market Maker Amplify Me podcast episode. Just search for that title on things like Apple Podcasts, Spotify, Google Podcasts, and so on. You'll find it. Again, this week we've introduced a brand new series within the channel which is called Career Hacks, and we got the first inaugural episode out on Wednesday about how to prepare for a virtual assessment centre. So this is all geared towards students who are going through that really challenging application cycle at the moment. There's going to be a new episode every Wednesday going forward where we'll deep dive into some of these key issues like how to navigate a HireVue interview, how to really maximise a group exercise, things of that nature. This will accompany— and don't worry for any traders, investors and so on that follow the channel— still our weekly end of week wrap up of some of the major events. And Eddie and I are going to be jumping on that podcast, which will go out later today. So remember to check that out. And if you like it, really appreciate it. We're on the pursuit of 100 ratings on the rating for the, for the Apple platform. We're on 83 at the moment. So jump on there, help us out, help us bump up the rankings to get the word out to as many people as possible. We'd be much appreciated. But otherwise, look, let's have a quick look at what's going on today. And I'm going to talk about in this briefing a couple of things. We had a record close on the S&P, but then NASDAQ aftermarket weakness. So we'll look at some of those post-market earnings, particularly in the social media space on the back of Snap earnings, which I'll explain more in a moment. Also, the UK rate debate rages on after some interesting comments in an FT exclusive from the UK chief economist last night. We also talk about ECB policy from economist survey about what their intentions could be for their bond buying program. And then China Evergrande have kind of survived to fight another day, somewhat kicking the can down the road, having paid one of their bond coupons overnight ahead of a 30-day grace period lapsing, which would have been on Saturday. So quick look at the markets this morning across the different asset classes. So we had a positive close in the S&P about 0.3%, flat in the Dow, the Nasdaq actually up 0.6%. 6. But just focusing on the, the equity markets for a moment. So from an S&P perspective, just to have a look at this on a daily time frame, you can see here this is looking on a multi-month chart. So this trend line commencing from around March of 2021, and that's been a really strong area of support on the general move higher that we'd had in that trend channel going up on the kind of the pursuit of these all-time highs each time we've gone up here in the S&P. And the recovery that we've had this week has been really strong. I mean, this is kind of encapsulating Friday, really, when we initiated the commencement of this rally at 4365 type region. And really, we've just continued to push on. You can see here we've now had 7 consecutive days of gains. For the S&P 500 going all the way back here to the 13th. And that's the longest winning streak we've had for the index since June of 2021. Uh, the S&P 500 ended the longest period without then a record close since November of 2020, because again, it's been a very familiar occurrence, of course, in a post-pandemic environment. So where we're at right now is quite interesting from a technical perspective. Perhaps then a degree of some of that wind coming out the sails, so to speak, now that we've got that horizontally technical area of support— or excuse me, resistance— with that trend line as well, which has been well respected as an inflection, if you like, for price. What was support now turned resistance, as we saw back at the end of September, and probably expecting without any further catalysts that to act the same. And where we are at this moment in time One stock actually I was looking at that's kind of even more extreme and obviously had their earnings earlier this week was Tesla. I'll quickly bring them into shot. I don't have any new news to bring you on Tesla, but just, just looking at the brief history of time of how 2021 has played out for the, the electronic vehicle maker, and it's been quite incredible actually. The stock is up about 7% on the week. It's up about 65% or so from the lows that were seen just a few months ago. Um, and yeah, they posted record revenues and profits obviously just 2 days ago. We've had Bitcoin, um, continue to rally on the pricing in of the, the ETFs that have been launching this week, and the stock price back up to test $900, um, right up there, which was that, that previous high we had right at the beginning of the year. So obviously Cathie Wood's probably enjoying that, not so much as she would have done in the past, given a lot of exiting of that position. But I'd like to be a fly on the wall in Michael Burry's office at the moment, who obviously was looking to short that firm, which has seen a phenomenal bounce back of late. Otherwise, in terms of other asset classes— and then I'll have a quick move back to stocks to talk about those earnings— we've just had FX markets pretty quiet overall, not really too much to mention there. But we've just had gold break out on the upside. Bit of added momentum here through the range break of really what's been the, the weak cap that we saw tested yesterday in the overnight APAC session. So just a bit of breakout here, um, in the gold price, up about $12 this morning. Otherwise, WTI crude still within a relative period of consolidation given the big run-up that we've had on the longer time frames. And so That level up at around 8316 has been a pretty good area of resistance over the last couple of sessions throughout the week. On the downside, any downward movement be looking around the 8110 handle S1 and the double bottom of the weekly lows at 8079 as an area of support to see that range hold, all things being equal at this moment in time. Back to the equity market then, just quick look at the NASDAQ, and this will lead us into some of those aftermarket earnings. You can, as you can see here more, much more pronounced in aftermarket trades. So this would have been 9 PM last night, quite a dramatic sell-off here in the NASDAQ future. And the rationale behind that was, was, was multiple. And so one of the main things to start with was Snap. Now Snap in itself is not particularly a big name, but just bear with me and check out the numbers. So their Q3 adjusted EPS was 17 cents, all sounds good. That was above consensus of 8 cents. Their revenues were $1.07 billion, not so good. Analysts were looking for $1.10 billion. Um, it was their outlook. They see Q4 adjusted EBITDA at a range of $135 million to $175 million. The Street was looking for $300 million. The company then, as you can see here, revenues missing expectations after Apple's iPhone privacy changes disrupted its advertising business. And then the company also warned that global supply chain interruptions and labor shortages reduces the short-term appetite to generate additional customer demand through advertising. Big problem for Snap and other social media names. To give you a bit of context, their shares got absolutely decimated in aftermarket trade. I think at one point They were down in excess of 25% at the close. Then they were down about 22%, 22% that is, in aftermarket trade. That did reverberate out to other social media names. Facebook were down about 6%, albeit then at the close they were down about 4.4%. And Twitter shares were down as well, about 5% as well. And Twitter, of course, now going to have to tackle the, the Truth Social, the new Trump media company that's going to be coming out. As of course, always never too far from the action is our friend Donald. So Intel was the other company that definitely is worth mentioning as well. So Intel had their earnings after market. This is the world's largest chipmaker, of course, and their shares were down about 9% in aftermarket. Their adjusted EPS was a beat, $1.71 against $1.11, but their revenues missed, $18.1 billion against $18.24. And for their outlook, they see Q4 adjusted EPS at $0.90. The Street was looking for $1.02. Revenues they see broadly in line with expectations at $18.3 billion. So a soft outlook then really weighing on their shares and consequently why the Nasdaq looks a little bit different from the setup generally of what you're seeing in the S&P and other stock indices. Sticking with the, the news, UK rate debate kind of rages on. And this came out last night as an FT exclusive: UK inflation is likely to rise, quote, close to or even slightly above 5% earlier next year. And that's according to this chap here, who, if you don't recognize him, he is one of the new Monetary Policy Committee members Hugh Pill, who's the chief economist who replaced Andy Haldane, he said the central bank would have a live decision on whether to raise interest rates at its upcoming November meeting. And you remember there's a lot of focus on that. A lot of the big banks like GS, for example, are expecting the Bank of England to move rates higher irrespective of not doing anything in normal sequence with their quantitative easing program as yet. The markets aggressively priced that in, in terms of the general disconnect we've had of a slightly less assured sterling in the FX market compared to a rates market which seems intent on pricing in aggressively rate hikes in the immediate future coming from the BoE. One thing I would always say when you see these types of headlines, which sounds pretty sensational in a hawkish manner, is don't forget to read the article. It's easy to get duped. Obviously, media companies— you can throw FT in that bucket as well— it's in their interest to generate clicks and interest. And obviously, taking out a sensational element from a speech is always going to provide that type of ability. And so when you actually read the article, it's worth noting that Pill advised traders not to get too engrossed in the exact timing of any rate rise, saying, quote, there may be a bit too much excitement in the focus on rates right now. So if I was just to give you the headline, you'd be thinking, my goodness, they're actually going to pull the trigger in November. But then follow that up with some of the context of what he said, and actually you could easily interpret that as the opposite. He said the these things might occur. Inflation might be a little bit more punchy, and the November discussion certainly is live, but don't get too obsessed about the exact timing. And there's probably too much excitement going on, which you could construe as saying the opposite, as in, look, lower the bar of expectations here, you're getting a bit too, a bit too aggressive on that pricing. So yeah, that's the latest there. As far as sterling is concerned, it's been not too much buy-in in either direction. Both major pairs, EURUSD up an even 10 pips at the moment with the Dixi just softening a little bit during the overnight session and as Europe has come into the market, but overall currency is pretty flat. Elsewhere, ECB policy. This is generally saying that on Bloomberg that the bank will change its bond buying program before the pandemic purchases run out in March. And this is according to a latest survey of economists polled by Bloomberg. Policymakers will increase the pace of their standard tool next year Remember, we have the Asset Purchase Program, APP, and then on top of that, bolted on over the last 18 months or so, has been the PEP, the Pandemic Emergency Purchase Program, and it's that one that they're looking to end by March. But to smooth things over, do they need to ramp up a little bit the flexibility and size of the APP just to smooth over the, the removal of that additional stimulus program? That's essentially what they're talking about. You can see that a little bit more clearly here of what that would look like then, which is their bond buying pace and the PEP being in red. And so what economists are generally expecting is then you could see what had been a regular purchase size of €20 billion in bonds every month might just perk up a little bit to around double that figure to smooth over the more dramatic collapse then of the support of which the European Central Bank has been been providing markets going forward. No policy shifts are expected generally at next week's Governing Council meeting. Again, don't forget we've got several months still to run until we get the kind of conclusion of the— but this is typically, as we know, how monetary policy communication works. They're talking about it now, so it's very much bedded in by the time we get closer to that event at the end of Q1 of next year. The other thing then is China. China Evergrande lives to fight another day. They've basically paid a bond coupon before this weekend's deadline, according to people familiar with the matter. The company wired some $83.5 million payment ahead of expiry of a 30-day grace period, which was due on Saturday. Um, a bit of context here: Evergrande needs to pay interest on another $4 notes this year ahead of then quite a hefty wall of maturing debt next year with some $7.4 billion coming due on onshore and offshore bonds. Again, the one they paid overnight was just a, a paltry $83 million, um, so bigger challenges still yet to come. And a lot of analysts, what I've been reading this morning, is kind of viewing this as somewhat just kicking the can down the road for the somewhat inevitable. So Their shares were up overnight. Some slight reprieve was seen in, in Chinese equities. Not enough really to translate into anything meaningful though for the European open. And as I said, at this point in time, with the US equities and the S&P hitting that record 7 consecutive days of gains, the longest streak since the summer of 2021, perhaps just a little bit of a break on that move. Now, as I showed you in the technical setup of the S&P, we've got to that pinnacle, if you like, So it wouldn't be a surprise to see a little bit of consolidation, if not profit taking, going into the weekend, if I'm quite honest. Looking at the calendar for today, yeah, busy morning. And really, this is a central focus for the day, which is the flash service manufacturing PMI numbers. So 8:15 France, 8:30 Germany, and then you've got the US figures coming out at 2:45. Not forgetting, of course, the UK service PMI number at 9:30 as well. So They're really the main calendar-fixed events that you're looking out for. Analysts generally, um, as with Germany and France being in the spotlight this morning, suggesting forecasts that the bloc's manufacturing activity cooled to a 9-month low amid ongoing supply-related issues, and the services sector growth further retreated from the 15-year peak that was recorded in the summer in July. So perhaps some slight moderation, albeit all figures expected to be well above expansionary territory for the time being. Speaker-wise, there are a few you should be aware of, and you've got Fed's daily voter speaking at 3, Fed's Powell partaking in a panel discussion on post-COVID policy challenges as well an hour later at 4 PM London time. Bigger US earnings to be aware of: Amex and Honeywell. And then in Europe, you've got Renault, the carmaker, as well. But that is it. So again, don't forget to check out the podcast that'll be coming out late morning London time. Eddie and I are going to have a chat about a number of different highlights from the week. So I'd love to, love to get some feedback on that and get you involved. And otherwise, I will see you on Monday. Have a great weekend. Take care.