The Peak of Mount Inflation
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Hi all,
This week we saw a multitude of key events and economic data releases that contributed to major market moves: US Equities, Gold, EURUSD and Cable rose while crypto and US treasury yields fell drastically. We’ll be taking a deeper dive into this as we focus on the following hot topics:
- FTX’s Collapse
- Latest US Inflation Readings
- Ryanair
- The Metaverse
Bankman-Fried Gets Fried: FTX’s Downfall
On Friday, November 11th, Sam Bankman-Fried’s cryptocurrency empire, FTX, officially filed for bankruptcy following a liquidity crisis as it was unable to meet customer withdrawals. This happened one day after Binance (another crypto exchange) ditched its initial plans to bail out FTX due to concerns about FTX’s business practices, among other reasons. The collapse of such a big player in the crypto space caused a massive sell-off in Bitcoin and Ethereum which dropped 20% and 23% respectively by the end of the week.
Crypto 10 Index, source: TradingView
US Inflation Cools Down
On Thursday, US CPI was reported as 7.7% YoY in October, which was below economist expectations of 8%. Core CPI was also reported at 6.3% YoY, below September’s figure of 6.6% and more importantly, below economist expectations of 6.5%. These figures signalled to investors that the Fed might slow down interest rate hikes which caused US equities to skyrocket: the SPX finished the week 6% higher while the Dow and NASDAQ finished the week 4% and 8.8% higher respectively. On the other hand, lower interest rate expectations caused the dollar to weaken, as EURUSD and GBPUSD both rose 4%. Investors are now finding it probable that a 50bps interest rate hike is on the cards at the next Fed meeting.
Ryanair’s Recovery
On Monday, Ryanair released its earnings report which showed the budget airline’s record-breaking profits of €1.4bn from April to September. This strong recovery from their Coronavirus-era earnings (a loss of €100mn in the same period last year) was fueled by a record number of passengers. Ryanair has stated that it’ll be going strong compared to its competitors in the coming months, offering 10% more seats while most of its EU competitors have cut back capacity by up to 20% this winter. Because of their earnings release and strong stance going forward, Ryanair’s stock price finished the week 7.6% higher.
The Metaverse is Stabilizing
On Wednesday, Meta laid off 11,000 of its workers in what was the largest staff cut in the company’s history. This was in an attempt to save costs (and save face) following a second-in-a-row quarterly drop in revenue last month which caused a massive sell-off, leading to an $89bn drop in the firm’s market value. Between the announcement of the staff cut and the weekend market close, Meta shares increased by more than 11%.
Meta Platforms YTD Share Price, Source: MarketWatch
Thanks for tuning in!
Muhammad
Disclaimer
This communication is for informational and educational purposes only and should not be taken nor used as investment advice, as a personal recommendation, or solicitation to buy or sell any financial instrument. This material has been prepared without considering any particular recipient’s investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or structured product are not, and should not be taken as, a reliable indicator of future performance. I assume no liability as to the accuracy or completeness of the content of this publication.