Facebook and Google face skeptics on Wall Street this week amid digital ads collapse (4 min read)
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Investors are shifting their focus to the big online ad businesses this week after Snap reported disappointing Q3 results that sent their stock prices another 28% lower. Companies with a big digital ad focus like Meta, Alphabet, Twitter, and Pinterest are reporting their earnings this week. The economic downturns and fear of recession had many advertisers pulled back from spending. Apple’s IOS privacy update also made it harder for companies to target ads. The online advertising space faces multiple challenges and Snap was the first to report the damage in Q3.

Meta shareholder writes critical open letter saying company needs to slash headcount and stop spending so much money on ‘metaverse’ (2 min read)

A Meta shareholder wrote an open letter to the company suggesting a 20% cut on headcounts and limiting the heavy spending on the metaverse technology. The letter is the latest sign that investors are losing confidence in the company’s performance. Meta stock is down over 61% this year, much lower than its industry peers. Investors are concerned that the spending on the metaverse could add up for a decade before it comes to fruition. The big spending on the metaverse also came amid losing users and advertising businesses. Meta didn’t immediately respond to the open letter.

U.S.-listed Chinese stocks drop 20% after Beijing’s power reshuffle (2 min read)
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Shares of Chinese companies listed in the US dropped sharply after leader Xi Jinping secured an unprecedented third term and packed his team with loyalists. The Invesco Golden Dragon China ETF that tracks Chinese companies in the US plunged 20% and reached a new 52-week low. China indexes also tumbled and Hong Kong’s Hang Seng Index dropped to its lowest level since 2009. China has implemented tight regulation on the tech sector and strict “Zero-Covid” lockdowns under Xi’s leadership that have severely impacted their economy and markets. Under Xi’s continuous leadership, non-state-driven companies are becoming more unfavorable.

The housing market decline is not a 'bubble 2.0' due to a key difference from the last crash, says Glenmede (1 min read)

The current US housing market downturns will likely contribute to the broader economic slowdown, but it will not be the core reason for the recession like it was in the 2008 financial crisis. The current housing crisis is driven by underinvestment as opposed to irresponsible lending that caused the previous crisis. The ratio between average home price and household income, and the quality of borrowers have vastly improved since. Although the current housing crisis will not spark a recession, it might be a sign that the economy is heading towards one.

Weekly ETF Flows Steady (1 min read)

The US ETF inflows continued at a steady rate last week. The majority of the inflows were in US equities, especially in the S&P 500 ETFs. The weeks prior had been mostly in fixed income ETFs as investors were looking for shelter in short-term bonds against rising interest rates. This year’s ETF inflows have been resilient despite turmoil in the financial markets. Year-to-date inflows were at $453 billion while the same time last year was at $692 billion. More on the list of top ETF inflows, outflows, and performers are available in the article.

First Trust’s New Equity Income ETF Begins Trading (1 min read)
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First Trust launched a new equity income fund called Cboe Vest Rising Dividend Achievers Target Income ETF (RDVI). Unlike a normal equity income ETF, RDVI utilizes a dividend plus options strategy. It invests in stocks in the Nasdaq US Rising Dividend Achievers Index while earning premiums from writing options on stocks in the S&P 500 or ETFs that track the S&P 500. The goal is to provide an alternative form of consistent income. However, the new launch might not be at the most appropriate time as the equity market has lost more than 22% this year.

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Thomas

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