Market 05/09: Jobless claims highest in 9 months

Auction USD 25 billion 30Y Treasury auction favorable

Today's auction results:

• High Yield: 4.635% (market yield: 4.642%| previous session: 4.671%)

  → Stop-through: 0.7bps - quite favorable

  (previous session tail 1 bp, 6-month average tail 0.3bps)

  • Bid success rate at High Yield: 9.00% (previous session: 58.23%)

• Bid-to-cover: 2.41 (slight increase from previous session: 2.37)

• Competitive award components:

  • Dealers (dealer): 15.35% (lower than previous session: 17.34%)

  • Foreign bidders: 64.86% (higher than previous session: 64.38%)

    => along with this week's auction situation: foreign demand returns!

  

Fed official Cook's remarks

• Businesses have ample revenue to cope with debts.

• Financial companies are well-positioned to withstand shocks.

• Commercial real estate risks are rising but manageable.

• Increase in private credit does not affect the financial system's resilience.

• Household spending remains strong, but delinquency rates are rising.

Initial jobless claims rise to highest in 9 months

Initial jobless claims (seasonally adjusted) rise to 231,000 in the previous week (> forecast 212,000), highest since August.

→ Sign that labor market is cooling.

• Continuing claims rise to 1.785 million.

China: Trade value rebounds

• Export value rebounds at +1.5% y/y in April (while March fell -7.5% y/y).

• Import value also rises to +8.4% y/y - far exceeding forecast +4.8% y/y and March's -1.9% y/y decline.

→ Export recovery brings in foreign currency, import recovery brings hope for domestic spending demand recovery.

• Chinese stocks continue to rise - extending this week's rally.

Company earnings reports: Airbnb, ARM, Robinhood, Warner Bros.

Airbnb ER: Profit beats estimates but cuts Q2 revenue forecast

• GBV (Gross Booking Value) up +12% YoY, reaches 22.9 billion USD.

• Nights booked: up +9.5% YoY, reaches 133 million USD.

• Revenue up +18% YoY $2.1 billion (beats by $80 million).

• Operating profit: 5% (+5% YoY).

• EPS: 0.41 USD (> estimate 0.18 USD).

• Free cash flow FCF: up +21% YoY, reaches 1.9 billion USD.

• Expected strong increase in travel demand ahead of peak summer season, especially for events like the Olympics in Paris.

Q2 FY2024 guidance:

• Revenue 2.71 billion USD (expected 2.74 billion USD).

ARM ER: Stock drops after dismal revenue forecast

• Revenue: up +47% YoY, reaches 928 million USD.

• Licensing revenue: up +60% YoY, reaches 414 million USD.

  • …thanks to multiple high-value AI chip licensing deals signed.

• Royalty revenue: up +37% YoY, reaches 514 million USD.

• Gross profit: 887 million USD (> expected 840 million USD).

• Adjusted EPS: 0.36 USD (expected 0.30 USD).

FY2025 revenue guidance: 3.8 - 4.1 billion USD (expected 3.99 billion USD).

Q2 FY2024 guidance:

• Revenue: 875-925 million USD (expected 868 million USD).

• Adjusted EPS: 0.32-0.36 USD (expected 0.31 USD).

Robinhood ER: Record revenue thanks to crypto

• Net income: 157 million USD (previously loss of 511 million USD).

• EPS: 18 cents (expected 6 cents).

• Revenue: 618 million USD (expected 549 million USD).

  • …crypto trades brought in 126 million USD revenue (~20%).

• Robinhood reports holding 26 billion USD in crypto in Q1 this year.

Warner Bros. Discovery ER: Revenue misses estimates despite streaming revenue growth

• EPS: -0.40 USD (< expected: -0.23 USD).

• Revenue: down -7% YoY, reaching 9.96 billion USD (< expected: 10.22 billion USD).

• Online users (DTC): 99.6 million, up 2 million from Q4.

Roblox ER: Stock down 20% due to weaker player spending forecast

• Revenue: up +22% YoY, reaching 801 million USD.

• Bookings: up 19% YoY, reaching 923.8 million USD.

• Adjusted EBITDA: Loss of 6.9 million USD.

• Full-year bookings forecast: 4 - 4.10 billion USD (expected 4.14 - 4.28 billion USD).

• Q2 bookings forecast: 870 - 900 million USD, below estimates.

  • …due to concerns over reduced player spending in video games amid high inflation.

Crypto market: Trump accepts campaign donations in crypto

1. Donald Trump accepts crypto as an asset for presidential campaign fund donations.

2. Global crypto trading volume down 44% in 1 month, from 9.12 trillion USD to 6.58 trillion USD due to Middle East tensions and net outflows from US Bitcoin ETFs.

• Emerging markets record huge Bitcoin ownership rates:

  • Turkey has the highest ownership rate: 8.3%.

  • Followed by Vietnam (7.9%), Nigeria (7.6%), and Venezuela (7.4%).

  • US ranks 7th with 6.2%.

FYI: Large companies ramp up stock buybacks

• Companies ramping up stock buybacks (buyback) after earnings season.

  • S&P 500 companies bought back 181.2 billion USD in stock, up 16% YoY.

• S&P 500 group expected total buybacks to reach 925 billion USD this year (+13% YoY) and 1.075 trillion USD in 2025 (+16% YoY).

Some other news:

1. Tesla faces questions over misleading info on self-driving capabilities, while both Autopilot and Full Self-Driving systems are not fully autonomous.

   • If true, this could constitute fraud and stock manipulation.

2. BoE decides to keep interest rates at 5.25% as expected, signals cuts ahead.

   • Sweden's central bank also cut rates => wave of rate cuts in Europe may pressure Fed to cut rates this year.

3. Real wages in Japan (after inflation adjustment) down 2.5% YoY in March:

   • => declined for 2 consecutive years due to inflation > nominal wage growth.

4. Amazon enters the 5G market in Europe through Telefonica Germany:

   • expected ~1 million customers using Amazon Web Services (AWS) services by the end of this month.

5. Boeing 737 skids off runway near Senegal's capital Dakar, 11 injured.

6. Retail sales growth rate is recovering compared to the same period last year. → Signs that consumer spending and corporate revenue remain strong.