Friday – November 18, 2022
TOP NEWS
• After Elon Musk’s ultimatum, Twitter employees start exiting
Hundreds of Twitter employees are estimated to have decided to quit the beleaguered social media company following a Thursday deadline from new owner Elon Musk that staffers sign up for “long hours at high intensity,” or leave.
• How FTX bought its way to become the ‘most regulated’ crypto exchange
Before it collapsed this month, FTX stood apart from many rivals in the largely unsupervised crypto industry by boasting it was the “most regulated” exchange on the planet and inviting closer scrutiny from authorities.
• POLL-Fed to lift rates by 50 basis points, but peak policy rate may be higher
The Federal Reserve will downshift in December to deliver a 50-basis-point interest rate hike, but economists polled by Reuters say a longer period of U.S. central bank tightening and a higher policy rate peak are the greatest risks to the current outlook.
• Zuckerberg says WhatsApp business chat will drive sales sooner than metaverse
Meta Platforms Chief Executive Mark Zuckerberg told employees on Thursday that WhatsApp and Messenger would drive the company’s next wave of sales growth, as he sought to assuage concerns about Meta’s finances after its first mass layoffs.
• From Apollo to DZ Bank, funds snap up bargains in UK pension scramble
Credit funds at Blackstone, Apollo, DZ Bank and Astra Asset Management picked up bargains from UK pension funds during their scramble for cash, and some say pension schemes are still offloading assets as pressures persist.
BEFORE THE BELL
Wall Street futures edged up, though gains were limited by hawkish comments from more U.S. Federal Reserve officials. European shares rose as investors snapped up beaten-down miners. Japan’s Nikkei posted first weekly drop in four, hurt by declines in growth shares amid higher long-term bond yields. The dollar eased, while gold prices were little changed. Oil prices fell and was on track for a second weekly decline, pressured by concern about weakening demand in China and further interest rate rises by the Fed.
STOCKS TO WATCH
Results
• Applied Materials Inc: The chip tools maker on Thursday forecast first-quarter revenue above market estimates, on hopes that easing supply chain constraints will help it meet pent up demand from chipmakers ramping up production. Chief Executive Gary Dickerson said that the company is slowing the “rate of spending growth in the near term amid geopolitical and macroeconomic challenges.” Applied posted revenue of $6.75 billion for the fourth quarter ended Oct. 30, compared to analysts’ average expectation of $6.45 billion. Applied said the outlook includes an expected impact of the recently announced U.S. export regulations and ongoing supply chain challenges.
• Gap Inc: The company beat Wall Street estimates for quarterly sales and profit on Thursday, helped by steady demand from affluent consumers for its formal clothing and dresses despite a surge in inflation, sending its shares up about 10% in extended trading. Gap’s Banana Republic, an affordable luxury brand, posted an 8% rise in sales, while its Old Navy brand that has been struggling with out-of-fashion clothes reported a 2% increase. It expects fourth-quarter net sales to be down in mid-single digits, compared with analysts’ expectations of a 0.6% decline. “We did see strong volume in October slow a bit in the end and a little bit of a slow start to November,” finance chief Katrina O’Connell said on a post-earnings call.
• JD.com Inc: The e-commerce firm posted an 11.4% rise in third-quarter revenue, beating analysts’ estimates as COVID-19 lockdowns in China led more consumers to shop online. Revenue grew to 243.5 billion yuan in the three months ended Sept. 30, compared with a Refinitiv consensus estimate from 22 analysts of 242.81 billion yuan. Net income attributable to ordinary shareholders was 6 billion yuan, compared with a net loss of 2.8 billion yuan a year earlier. Excluding one-off items, JD.com earned 6.27 yuan per American Depository Share.
Moves
• Visa Inc: The company on Thursday named its president, Ryan McInerney, as its new chief executive officer to steer the company through a challenging period for the payments industry as consumers tighten their belts. McInerney will take the helm in February, replacing Alfred Kelly Jr, who has been CEO since 2016. Kelly, who has been Visa’s chairman since 2019, will become executive chairman of the board.
In Other News
• Activision Blizzard Inc & Alphabet Inc: Google has struck at least 24 deals with big app developers to stop them from competing with its Play Store, including an agreement to pay Activision Blizzard about $360 million over three years, according to a court filing on Thursday. Google also agreed in 2020 to pay Tencent Holdings’s Riot Games unit, which makes “League of Legends,” about $30 million over one year, the filing stated. Among others that signed with Google, as of July, were gamemakers Nintendo and Ubisoft Entertainment, meditation app Calm and education app company Age of Learning, according to the court papers.
• Amazon.com Inc: The online retailer said on Thursday there would be more role reductions as its annual planning process extends into next year and leaders continue to make adjustments. “Those decisions will be shared with impacted employees and organizations early in 2023”, said Andy Jassy, who became the company’s Chief Executive Officer in 2021, in a letter to Amazon employees. Jassy added the company was in the middle of an annual operating planning review where it was making decisions about what should change in each of its business. Separately, Australian soap opera Neighbours will return to the screen in 2023 after a deal with Amazon revived the show that launched the career of stars such as Margot Robbie, Kylie Minogue and all three Hemsworth brothers.
• BHP Group Ltd: The company has delivered a A$9.6 billion bid for copper and gold producer OZ Minerals as the mining major moves to take advantage of rising global demand for metals used in clean energy and electric cars. The bid was recommended by the OZ Minerals board in the absence of a higher offer. BHP has said its revised offer is its “best and final” in the absence of a competing proposal. OZ Minerals decided to grant BHP exclusive due diligence for a month starting from Nov. 21.
• BioNTech SE & Pfizer Inc: The drugmakers said their Omicron-tailored shot produced higher virus-neutralizing antibodies in older adults against the emerging subvariant BQ.1.1 than its original vaccine. Antibody levels against the BQ.1.1 variant rose nearly 9 times in older adults who received the Omicron shot compared to a 2-fold increase in participants with the original shot, according to data posted on the online archive bioRxiv. Pfizer and BioNtech said the bivalent shot also produced an immune response against newer Omicron subvariants including BA.4.6, BA.2.75.2 and XBB.1.
• Credit Suisse Group AG: The Swiss arm of the lender’s investment bank will be largely unaffected by the restructuring plan the bank announced last month, said Jens Haas, head of investment banking Switzerland. “We will retain our full footprint here in Switzerland, so from a client perspective and a market perspective, certainly nothing will change,” he told Swiss newspaper L’Agefi. “Investment Banking Switzerland will become a part of the Swiss Bank division – which had already been the case before this year,” Haas said.
• Dave Inc: Entrepreneur Mark Cuban-backed company said on Thursday none of its customers were exposed to FTX and it has not launched any products in partnership with the beleaguered cryptocurrency exchange. “We have not launched any products in partnership with FTX and no customers are exposed through Dave,” the company spokesperson said in a statement to Reuters. “The note issued to FTX is not due for repayment until March 2026. No terms contained in the note trigger any current obligation by Dave to repay prior to the maturity date.”
• Deutsche Bank AG: The bank’s Chief Executive Christian Sewing warned of the “danger” of European reliance on foreign banks, equating the threat to the region’s dependence on outsiders for energy that has sparked crisis on the continent. “We urgently need to change course here if we do not want to rely primarily on foreign banks to finance Europe’s future,” Sewing said at a banking conference. “And nobody should take this danger lightly,” he said.
• KKR & Co Inc: The private equity firm is seeking buyers for Canadian oil and gas producer Westbrick Energy to cash in on high energy prices, in a potential deal valued at around C$1.5 billion to C$2.0 billion, two sources familiar with the matter said on Thursday. Majority owner KKR aims to strike a deal by the end of the year, one of the sources said, adding that KKR could still retain the company if it does not receive suitable offers. In a statement, Krispy Kreme said it did not agree with the Labor Department findings, but agreed to settle without admitting wrongdoing.
• Krispy Kreme Inc: The company agreed to pay $1.19 million to settle U.S. Department of Labor charges it failed to properly pay overtime to several hundred workers, the agency said on Thursday. Payments will go to 516 workers, in amounts ranging from about $100 to nearly $14,000, according to a filing in the federal court in Louisville, Kentucky.
• Meta Platforms Inc: The company’s Chief Executive Mark Zuckerberg told employees on Thursday that WhatsApp and Messenger would drive the company’s next wave of sales growth, as he sought to assuage concerns about Meta’s finances after its first mass layoffs. “We talk a lot about the very long-term opportunities like the metaverse, but the reality is that business messaging is probably going to be the next major pillar of our business as we work to monetize WhatsApp and Messenger more,” he said. In his remarks to employees, Zuckerberg played down how much the company was spending in Reality Labs, the unit responsible for its metaverse investments. Within Reality Labs, the unit was spending over half of its budget on augmented reality (AR), with smart glasses products continuing to emerge “over the next few years” and some “truly great” AR glasses later in the decade, Zuckerberg said.
• Moody’s Corp: The U.S.-headquartered credit rating firm is shutting its China consulting business and is laying off people associated with the unit in multiple locations across the country, two people with knowledge of the matter said. Moody’s started winding down the business, Moody’s Analytics, in China this week, the people said on condition of anonymity as they are not authorised to speak to media. The move, first announced internally on Monday, has affected more than 100 employees across Moody’s Beijing, Shanghai and Shenzhen offices, one of the sources said.
• Netflix Inc & Orange SA: Vivendi’s Canal Plus TV arm is in exclusive talks to buy the film and pay TV operations of Orange in a dea
