🦢Black Swan Street Weekly Stock Market Summary (Oct. 16th - Oct. 20th 2023)

Welcome to Black Swan Street!

Welcome to Black Swan Street, the financial newsletter that simplifies finance like cheat codes simplify GTA - ‘right, a, right, left, right, rb, right, left, a, y.’

If you know, you know.

It was an action-packed week, so let’s just get into it:

• Interest Rates Aren’t Done📈

• Chart of the Week📊

• Earnings Summary💰

• Headline Roundup🗞

• Next Week In The Stock Market🔮

Read time: 7 minutes

Interest Rates Aren’t Done📈

A couple of weeks back, we covered how interest rates were reaching scary levels…

Well, it’s only gotten worse.

This week, we saw interest rates continue to reach new highs.

United States 10-Year Treasury Yield hits 4.98%. The 10-year yield is used as a proxy for mortgage rates and is also seen as a sign of investor sentiment about the economy.

United States Prime Rate hits 8.5%. The United States Prime Rate is the interest rate that banks charge their best, most creditworthy customers.

The average 30-Year Fixed Rate Mortgage hit 8.03%. I think we all know what a mortgage rate is: The rate charged for a home loan. We haven’t seen 8% mortgage rates since the year 2000. In fact, just less than three years ago, the average rate on a 30-year mortgage was 2.6%.

Why is this alarming?

The S&P 500 isn’t following suit. The S&P 500 is less than 600 points from all-time highs. The underlying economic conditions in the United States (and globally) when compared to the S&P 500 don’t match up at all.

Something has to give.

Chart of the Week📊

This is the United States annual surplus or deficit visualized.

• A deficit occurs when the federal government’s spending exceeds its revenues

• A surplus, the opposite. Government revenues exceed spending

For fiscal year 2023, the federal government has spent $1.52 trillion more than it has collected.

To pay for a deficit, the federal government borrows money by selling U.S. Treasury securities. Pair a high deficit with high levels of interest rates, and you got a recipe for disaster.

Earnings Summary💰

In-Depth Earnings Dive:

Headline Roundup🗞

• Novo Nordisk to buy hypertension drug from KBP Biosciences for $1.3B - YF

• Vista Outdoors to sell its sporting products business to Czechoslovak Group for $1.91B in cash - MW

• Rite Aid files for bankruptcy - YF

• LinkedIn plans to layoff more than 660 people - MW

• Snapchat shares jump as leaked 2024 user target exceeds Wall Street expectations - YF

• U.S. Retail Sales MoM: 0.7%, from previous 0.8%, and above 0.3% forecast

• Wyndham rejects $7.8B takeover bid from Choice Hotels - FB

• Rolls-Royce cutting up to 2,500 jobs - FB

• International Paper to cut about 900 jobs - MW

• Biden administration to cut China off from shipments of advanced artificial intelligence chips designed by Nvidia and others - YF

• Greece is prepairing a to selll a 20% stake in the National Bank of Greece, which has a ~$5.3B market value, next month as part of a divestment plan for the country’s lenders - BBG

• Nokia to cut up to 14k jobs amid ‘market uncertainty’ - FB

Next Week in the Stock Market🔮

Earnings Calendar Next Week:

What the Swan is watching:

Tuesday: Coca-Cola, Microsoft, Verizon, Google, Visa, Halliburton, General Electric, General Motors, Waste Management, 3M, Texas Instruments, Snapchat, Spotify, Raytheon

Wednesday: Boeing, Meta, T-Mobile, IBM, O’Reilly, General Dynamics

Thursday: Amazon, UPS, Valero, Intel, Mastercard, Chipotle, Ford, Southwest Airlines, Comcast, Merck, Capital One

Friday: Exxon Mobil, Chevron, AbbVie, Phillips 66, AutoNation

Economic Calendar Next Week:

The Swan’s Picks🦢

🎮Minecraft hits the history books: Everyone’s favorite childhood game just hit the record books. Minecraft has officially become the first video game to sell 300 million copies. Others have crossed this number before, like Super Mario, selling more than 800 million games across its series, while Tetris sold more than 520 million (but these sales numbers are as a series). Minecraft is the first to do solo, as one game.

🏰Disney turns 100: This week, Disney marked its 100th anniversary. Yay. Kinda. Disney shares have taken a hit over the past year. YTD, Disney shares have declined -3.77%; over the past year, shares have dropped -12.04%.

🛩United Airlines switching up the boarding flow: United Airlines plans to now let economy passengers with window seats board first, in order to cut down on boarding times. This change will take place starting October 26th.

❌Roblox laying down the hammer on remote work: Roblox CEO, David Baszucki, tells employees “come to the office three days a week or take a severance package. Harsh. Roblox isn’t the only company though. Companies such as Apple, Tesla, Disney, and Google are reverting back to an ‘in-person’ or at least a ‘hybrid’ workplace setting.

The Wrap-Up🔄

That’s all we got this week!

We hope you found this edition of Black Swan Street useful. This week, as you saw, we took a more quantitative approach.  

What did you think about it? ⬇

Black Swan Street Review of the Week ❤️