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Evergrande Jitters Escalate

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Good evening, everyone. Today was a terrific Thursday in the market of stocks. 🥂

The Russell 2000 led the way for the second straight day, ripping 1.82%. The S&P 500, Dow, and Nasdaq all increased 1% or more. 

Oil prices climbed for the third consecutive session, boosted by rising gasoline demand and a drop in US crude stockpiles. 🛢️

Commodities are crankin’ – oat futures ascended 4% to new highs, zinc futures zipped 3.16% to blue skies, and lead futures leaped 2.6%. 🚀

Crypto continues to stabilize. Bitcoin brewed a 3.4% gain while Harmony hopped 16%.

Salesforce soared 7.2% after exceeding earnings and sales expectations. Here’s the press release. 📈

Eargo shares nose-dived 68.3% after the hearing aid manufacturer announced that the company is under investigation by regulatory authorities for insurance fraud. $EAR sits at IPO lows.

Chinese real estate developer China Evergrande Group is down more than 40% this month as jitters about the company’s debt situation continue to escalate. More on this below. 

$PAVM popped 14.4%, $DATS flew 20.35%, and $XTZ.X fluttered 14%.

Here are the closing prints:

S&P 500 4,448 +1.21%
Nasdaq 15,052 +1.04%
Russell 2000 2,259 +1.82%
Dow Jones 34,764 +1.48%

Data

Jobless Claims Jump

Weekly unemployment claims rose this week, one sign that the economy isn’t back to normal just yet.

First-time jobless claims amounted to over 351,000 this week, which is up 16,000 from the week before. Analysts expected 320,000. The number of continuing claims (people who are already collecting unemployment) is up 181,000 to 2.84 million.

Yesterday, Federal Reserve Chairman Jerome Powell indicated that the Fed wants to see more progress with employment before raising interest rates or beginning robust tapering. 🤷

Throughout the pandemic, initial and continuing claims have been in decline. However, over the last few months, these numbers have remained relatively stable, suggesting the employment recovery is all but over.

The number of people claiming unemployment benefits is expected to fall in coming days and weeks as enhanced unemployment benefits end. According to Bank of America, over seven million people are expected to lose enhanced unemployment completely; three million more will lose supplemental income ($300/week) on top of their paychecks.



Earnings

FedEx’s Logistical Nightmare 🎁 👻

FedEx’s Logistical Nightmare 🎁 👻 Featured Image

Though financials are always interesting, FedEx gave investors something bigger to chew when the company reported its Q2 earnings earlier this week.

The logistics giant indicated that it is redirecting more than 600,000 packages a day due to a lack of staff for processing. FedEx President and COO Raj Subramaniam said the company is unable to find workers. The workers FedEx did find demanded higher wages. 

The lack of workers at critical sorting and logistics facilities meant FedEx had to send packages to third-parties or last-mile delivery companies. These costs added up, tacking on $450 million more in quarterly costs compared to last year.

Given that labor woes and supply chain troubles have become a staple of the COVID pandemic, it’s no surprise FedEx has run into some processing issues. Some analysts have suggested the holiday season will be a nightmare, so it may be wise to get ahead of that. 🎁

FedEx reported revenue of $22 billion, a marginal surprise. However, the company posted EPS of $4.37, which is 11.2% less than analysts’ expectations ($4.92).

$FDX stock closed down 10.3%. It was the stock’s biggest selloff since the COVID crash. 😬


Events

Facebook’s Staffing Switch-Up

Facebook’s Staffing Switch-Up Featured Image

It’s no secret that Facebook has been under fire recently. 🔥 🚨 To add to the bad press, the tech giant’s CTO, Mike Schroepfer, announced that he would step down from his position next year.

Schroepfer wrote that “This is a difficult decision because of how much I love Facebook and how excited I am about the future we are building together.” Schroepfer shared (on his Facebook profile, the irony 😅) that he will be spending more time with his family and participating in philanthropy. He says will return to the company part-time in 2022. 🤔

The company promoted the company’s head of hardware, Andrew (“Boz”) Bosworth, to become Facebook’s new CTO. Bosworth is a former Harvard professor and his promotion will likely advance Facebook’s growing interest in hardware (Smart Ray Bans, video calling, and virtual reality). A leaked memo from a 2020 Facebook company meeting quotes Bosworth’s view on social media use:

“While Facebook may not be nicotine I think it is probably like sugar. Sugar is delicious and for most of us there is a special place for it in our lives. But like all things it benefits from moderation.”

Apparently, Facebook’s staff has mixed feelings about Bosworth. Facebook declined to comment on the staffing switcheroo. $FB closed +0.80%.


China

Preparing For The Worst

Preparing For The Worst Featured Image

Earlier this week, China Evergrande Group startled investors all over the world as news emerged that the property giant was at risk of defaulting.

The company built and sold apartments and other developments to the public, but generated excessive amounts of debt in the process. The company’s $300 billion in debt is equal to 2% of China’s GDP. Ouch. Evergrande is the most indebted property developer in the world, at the moment. Its downfall could prompt massive turmoil in China, which could boil over into the broader market like it did earlier this week. 

Beijing, which has a history of bailing out “too big to fail” corporations, might not be bailing out this goliath. Instead, Beijing could look to protect individual homebuyers and “smaller banks that could be destabilized by a default,” according to CNBC. Suppliers and investors might be left out in the cold. 

It’s still not clear whether or not Evergrande paid its $83.5 million interest payment on a dollar-denominated bond due today. However, Reuters reported that some [investors had] given up hope of getting a coupon payment by the deadline. The company will have up to 30 days to pay before going into default. There are even more obligations awaiting Evergrande next week.

The company has been quiet today, but Chinese officials are supposedly preparing for the fallout. $3333.HK is down 40.4% this month. 👎


Crypto

$AMC Embraces $DOGE.X

$AMC Embraces $DOGE.X Featured Image

After AMC’s CEO Adam Aron conducted an informal Twitter poll on accepting Dogecoin as an option for ticket purchases, the company is supposedly considering ways to offer $DOGE.X as a payment option.

Over 140,000 Twitter users (or 77% of poll participants) indicated that AMC should accept DOGE. 👏 The poll also became Aron’s highest-read tweet ever by a landslide. 😂

Last week, the company announced that it would also accept legacy cryptos like Bitcoin, Bitcoin Cash, and Litecoin alongside Ethereum for purchases at AMC. The absence of the world’s biggest memecoin sent Dogecoin stans into a flurry, prompting the company to explore a Doge-centric offering appealing to the retail crowd.

Fascinated by the public’s response, Aron said “Now we need to figure out how to do that… Stay tuned.” 💪