Delta expects earnings to nearly double in 2023 (3 min read)
Delta Air Lines forecast revenue to be 15% to 20% higher and earnings to nearly double to $6 per share next year. While most industries warned of economic weakness ahead, Delta and other airlines see profitability as travel demand rebound along with consumers’ willingness to pay for higher fares. With a boost in revenue, Delta plans on paying down more debts in the next two years. Their stocks rose 2.8% on Wednesday while the broader market fell.
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Tesla stock drops as Goldman cuts price target, maintains 'Buy' rating (3 min read)
Goldman Sachs downgraded the price target of Tesla stock to $235 from $305 but kept its Buy rating intact. It believes that Tesla is still well positioned for long-term growth as an EV cost structure and full solution leader. New battery cells, IRA credits, and a potential new vehicle platform in the coming years may also help Tesla reduce cost and boost profitability. However, Goldman described Elon Musk’s presence at Twitter and foray into political topics has resulted in Tesla’s brand becoming more polarizing.
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Federal Reserve hike rates by 0.5%, sees higher rates in 2023 (3 min read)
The Fed raised the key rates by 0.5% on Wednesday, bringing it to a range of 4.25% - 4.5% and at the highest level since 2007. While the hike was lower than the last one, Fed Chairman Jerome Powell said ongoing increases are necessary in 2023 with no intention of pausing any time soon. Their latest forecast for peak interest rate is 5.1% in 2023 before coming down to 4.1% in 2024, both higher than the previous forecast in September.
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U.S. SEC votes to advance stock market overhaul proposals (2 min read)
The SEC voted on new trading rules on Wednesday aimed at boosting transparency and fairness for retail stock orders. The proposals include requiring retail stock orders to be sent to auction before execution, a new standard for brokers to show they got the best price possible, and lower trading increments and access fees on exchanges. These changes will be up for public comments before regulators finalize the rules.
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SEC Strikes Back in Grayscale Suit Over GBTC ETF Conversion (3 min read)
The SEC filed the first brief last week defending itself for rejecting GBTC’s conversion into an ETF. Grayscale said the SEC’s approval of bitcoin futures ETFs while denying spot bitcoin ETFs was arbitrary. However, the SEC argues that the two products are not the same and the main reason for rejecting spot ETF application is due to the lack of regulatory oversight of the spot market. As the lawsuit progresses, GBTC is trading at a record 47% discount to its value.
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Dividend Yield Is 2022’s Upside Outlier For Equity Factor Returns (2 min read)
Among the common US equity factors, dividend yield is the only positive performer this year with a return of 1.7% while the S&P 500 lost nearly 15%. Large cap value came close but still slightly in the negative year to date. The equity factor with the steepest slide is large cap growth where it dropped roughly 25%. However, the overall trend for these equity factors seems to be on the rise for the first time in many months based on the price action in moving averages.
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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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