Good morning investors!
The CPI report showed inflation cooled further in October and the market really liked the news. The S&P ended the day up nearly 2% as investors believe the rate hiking cycle is finally over.
Another inflation report, the producer price index, will be released later this morning which should confirm yesterday’s data. We also get retail sales data and earnings from Target shortly.
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Market Recap
It was a green day for the major indexes, while Bitcoin, treasury yields and oil prices ended lower.
Cooling inflation boosts hopes Fed done with rate hikes
U.S. consumer prices were unchanged in October as Americans paid less for gasoline, and the annual rise in underlying inflation was the smallest in two years, bolstering the view that the Federal Reserve was probably done raising interest rates. In the 12 months through October, the CPI climbed 3.2% after rising 3.7% in September. Excluding the volatile food and energy components, the CPI increased 0.2% amid higher costs for rental housing. The core CPI advanced 4.0% on a year-on-year basis in October, the smallest gain since September 2021, after increasing 4.1% in September. The softer-than-expected inflation readings reported by the Labor Department's Bureau of Labor Statistics (BLS) on Tuesday pushed U.S. Treasury yields lower and sparked a stock market rally. Read more
Home Depot shares rally on earnings beat, even as home improvement sales level off
Home Depot’s quarterly sales declined 3% from the year-ago period, but topped Wall Street’s expectations as customers chipped away at more modest projects and home repairs. The company indicated caution about the coming months and narrowed its full-year outlook. It said it now anticipates sales will fall by 3% to 4% from the prior year, compared with a previous expectation of a 2% to 5% decline. Home Depot expects earnings per share to slide by 9% to 11%, compared with prior guidance of a 7% to 13% drop. Yet shares of the company rose nearly 6% as Home Depot said many trends had started to normalize after years of upheaval following the pandemic. Read more
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Alphabet pays Apple 36% of Safari search revenue, Sundar Pichai confirms
Alphabet GOOG 0.00%↑ CEO Sundar Pichai on Tuesday confirmed that Google pays Apple AAPL 0.00%↑ 36% of Safari search revenue, under the terms of a default search agreement that is core to the Justice Department’s antitrust claims. Pichai was testifying in a separate lawsuit filed against Google by Epic Games, the maker of Fortnite. An expert witness testifying on Google’s behalf in Washington, D.C., antitrust proceedings revealed the 36% figure in open court on Monday, apparently by accident. An attorney for Epic asked Pichai if the detail presented by Google’s witness was accurate. “That’s correct,” Pichai responded. Read more
Snap shares jump on deal with Amazon that lets users buy products without changing apps
Snap SNAP 0.00%↑ shares rose 8% on Tuesday after the company confirmed a deal with Amazon AMZN 0.00%↑ that lets users buy products from the online retailer without leaving the app. The agreement follows a similar deal between Meta and Amazon and is designed to make purchasing easier for Snap users. “Customers in the U.S. will see real-time pricing, Prime eligibility, delivery estimates, and product details on select Amazon product ads in Snapchat as part of the new experience,” an Amazon spokesperson said in a statement. “In-app shopping with Amazon is available for select products advertised on Snapchat and sold by Amazon or by independent sellers in Amazon’s store.” Read more
Airbnb acquires AI startup for just under $200 million
Airbnb has made its first acquisition as a public company, in a deal valued at just under $200 million. The startup is called Gameplanner.AI, which has been in “stealth mode” since its founding in 2020. Startups in stealth mode operate out of the public eye for various reasons, such as to protect intellectual property or avoid distractions. Gameplanner.AI will accelerate some of Airbnb’s AI projects. Airbnb CEO Brian Chesky has said that generative AI will radically change the platform and that he wants to use it as a “travel concierge” that learns about users over time and enhances their travel experiences -- for example, matching users with the right rooms or homes. Read more
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Thank you for taking the time to read today’s newsletter. Until next time investors!
Chris
CMG Venture Group
Disclaimer
I am not a licensed financial advisor or financial professional. This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.
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