Snap plunges more than 20% on third-quarter revenue miss (3 min read)
Snap’s stocks dropped more than 20% in the extended trading after reporting Q3 results that were weaker than expected. The company’s revenue grew only 6% from a year ago and it's the first time seeing a single digit growth since debut in 2017. They expect the year-to-year revenue growth to continue to decline in Q4 as Apple’s privacy update has slowed their advertising revenue. Their net loss also surged, partly driven by the layoff costs from the restructuring plan to cut costs. Despite the struggles, daily active users still managed to exceed expectations.
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Tesla valuation reaching $4 trillion is 'quite a bit of a stretch,' analyst says (2 min read)
Elon Musk made a bold prediction in the recent earnings call by saying Tesla can potentially be worth more than Apple and Saudi Aramco combined. This would put Tesla’s worth to about $4 trillion from its current market cap of $652 billion. Most analysts say that valuation may not happen for eons, if at all. Tesla reported earnings beat but a revenue miss in Q3, reflecting concerns that demand might be coming down. The company also said they are facing challenges with deliveries. Twitter's buyout deal continues to concern some investors as well. Tesla’s stocks fell more than 6% on Thursday.
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Existing home sales fall to a 10-year low in September, as mortgage rates soar (2 min read)
Existing homes sales dropped another 1.5% in September and are currently at the slowest pace since 2012. This is the eighth consecutive month of sales decline and about 23% lower than a year ago. The main driver for the drop in sales are the rapid rising mortgage rates. The 30-year fixed home loan is at 7% while at the start of this year was only at 3%. This also reduced the number of homes for sales and put pressure on the sales price. Lower end market where homes priced between $100,000 to $250,000 dropped the most in sales.
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BOJ conducts emergency bond buying to underpin debt market, but yields keep rising (3 min read)
The Bank of Japan conducted an emergency bond buying operation in an attempt to put a floor under bond prices as yields rise above the highest level since 2015. However, it had almost no effect as yields continued to rise. Demand for bonds is weak as the Yen is near the 32 year low against the dollar. Japan was among one of the few outliers who did not raise interest rates this year which has caused the Yen to drop sharply. Most strategists believe Japan’s negative interest rate policy will remain unchanged for now as the country is trying to boost the fragile economy.
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Time for a 40/60 ETF Portfolio Instead of 60/40? (4 min read)
Traditional 60/40 portfolios consist of 60% equities and 40% fixed income. This strategy has been time tested and provided a solid return since the 1980s. However, 2022 has yielded the worst return for this classic strategy. With interest rates continuing to rise and likely to stay elevated in the near future, a 40/60 portfolio instead might be more suitable in the current environment. Zacks research shared a sample ETF model that follows a 40/60 portfolio. More on the sub-asset classes, allocation, and an ETF example for each are available in the article.
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VanEck Taps Green Infrastructure With New ETF (2 min read)
VanEck launched the VanEck Green Infrastructure ETF (RNEW) on Thursday. RNEW provides exposure to the green energy infrastructure space. It invests in US companies that have at least 50% of its revenue coming from sustainable infrastructure activities, production, or distribution of green energy. There are many infrastructure ETFs available on the market but very few focus on green energy. VanEck believes RNEW can help investors diversify from the traditional infrastructure investments or simply for those looking to enter the sustainable investing space.
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That's it for today! You can reply to this email if you have any comments or feedback.
Thanks,
Thomas
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