>>> Intel beats by $0.26, reports revs in-line; guides Q4 EPS below consensus,

Intel beats by $0.26, reports revs in-line; guides Q4 EPS below consensus, revs below consensus (26.27 -0.94)
  • Reports Q3 (Sep) earnings of $0.59 per share, excluding non-recurring items, $0.26 better than the S&P Capital IQ Consensus of $0.33; revenues fell 15.4% year/year to $15.3 bln vs the $15.31 bln S&P Capital IQ Consensus.
  • Co issues downside guidance for Q4, sees EPS of $0.20, excluding non-recurring items, vs. $0.68 S&P Capital IQ Consensus; sees Q4 revs of $14-15 bln vs. $16.43 bln S&P Capital IQ Consensus.
  • "Despite the worsening economic conditions, we delivered solid results and made significant progress with our product and process execution during the quarter," said Pat Gelsinger, Intel CEO. "To position ourselves for this business cycle, we are aggressively addressing costs and driving efficiencies across the business to accelerate our IDM 2.0 flywheel for the digital future."

>>> Amazon reports Q3 results, revs in-line; guides Q4 revs below consensus (11

Amazon reports Q3 results, revs in-line; guides Q4 revs below consensus

  • Reports Q3 (Sep) earnings of $0.28 per share, includes a pre-tax valuation gain of $1.1 bln included in non-operating income from investment in Rivian Automotive, appears to not be comparable to the S&P Capital IQ Consensus of $0.21; revenues rose 14.7% year/year to $127.10 bln vs the $127.47 bln S&P Capital IQ Consensus.
    • Q3 operating income of $2.525 vs prior guidance of $0-3.5 bln.
    • AWS segment sales rose 27.5% yr/yr to $20.54 bln with segment operating margin of 26.3% vs 30.3% last year.
    • Advertising Services segment revenue grew +30% yr/yr CC (constant currency) to $9.55 bln vs +21% CC growth in Q2 and +25% CC in Q1.
  • Co issues downside guidance for Q4, sees Q4 revs of $140-148 bln vs. $155.37 bln S&P Capital IQ Consensus. Co guides to Q4 operating income of $0-4 bln, which is light of street ests.

>>> US Notable earnings/guidance movers: AMZN -18.5%, PTCT -14.7%, MPWR -11.4%,

Notable earnings/guidance movers: AMZN -18.5%, PTCT -14.7%, MPWR -11.4%, DECK -7.5%, EW -7.4%, FSLR -5.5%, AAPL -1.7% on downside; PINS +11.9%, DXCM +5.2%, INTC +4.2%, SKYW +3.8%, GILD +3.5%, TEX +3.5% on upside

  • Earnings/guidance gainers: PINS +11.9%, CWST +5.9%, DXCM +5.2%, INTC +4.2%, SKYW +3.8%, GILD +3.5%, TEX +3.5%, VRTX +3.5%, TMUS +3.1%, VICI +2.3%, CASH +1.6%, PXD +1.6%, SWN +1.2%
  • Earnings/guidance losers: AMZN -18.5%, PTCT -14.7%, MPWR -11.4%, MHK -8.4%, DECK -7.5%, EW -7.4%, LMAT -5.7%, FSLR -5.5%, COF -4.3%, EMN -3.4%, STAG -3.1%, SPSC -3%, COHU -1.8%, AAPL -1.7%, WY -1.4%, RMD -1.3%, FTAI -1.2%

>>> Apple beats by $0.02, beats on revs; iPhone miss expectations as CEO Tim Coo

Apple beats by $0.02, beats on revs; iPhone miss expectations as CEO Tim Cook cites supply issues; Macs well ahead of expectations; margins beat
  • Reports Q4 (Sep) earnings of $1.29 per share, $0.02 better than the S&P Capital IQ Consensus of $1.27; revenues rose 7.8% year/year to $90.15 bln vs the $88.77 bln S&P Capital IQ Consensus.
  • Co reports Q4 iPhone revenue of $42.6 bln vs. $43.4 bln ests and $38.9 last year.
  • Co reports Q4 Mac revenue of $11.5 bln vs. $9.4 bln ests and $9.2 bln last year.
  • Co reports Q4 iPad revenue of $7.2 bln vs. $7.8 bln ests and $8.3 last year.
  • Co reports Q4 wearables revenue of $9.7 bln vs. $9.0 bln ests and $8.8 bln last year.
  • Co reports Q4 services revenue of $19.2 bln vs. $20.4 bln ests and $18.3 bln last year.
  • Co reports Q4 gross margins of 43.2% vs. 42.3% ests and 42.2% last year.
  • "Our record September quarter results continue to demonstrate our ability to execute effectively in spite of a challenging and volatile macroeconomic backdrop," said Luca Maestri, Apple's CFO. "We continued to invest in our long-term growth plans, generated over $24 billion in operating cash flow, and returned over $29 billion to our shareholders during the quarter. The strength of our ecosystem, unmatched customer loyalty, and record sales spurred our active installed base of devices to a new all-time high. This quarter capped another record-breaking year for Apple, with revenue growing over $28 billion and operating cash flow up $18 billion versus last year."
  • Tim Cook told CNBC that supply constraints exist in the iPhone 14 Pro models. This quarter is eight days of iPhone 14 sales. He said he is slowing the pace of hiring.

>>> US Close Dow +0.61% S&P -0.61% Nasdaq -1.63% Russell +0.11%

Closing Stock Market Summary

Today's trade was mixed as market participants reacted to a slew of earnings reports since yesterday's close. The S&P 500 tested its 50-day moving average (3,850) early on, but couldn't break meaningfully above that level. Ultimately, the major indices all closed near session lows. 

Aside from earnings news, other factors that moved the market today included a decision by the ECB to raise its key policy rates by 75 basis points each, an advance Q3 GDP report that showed the U.S. economy returning to expansion mode, and a 10-yr note yield that settled the session below 4.00%.

The 10-yr note yield fell eight basis points to 3.94% and the 2-yr note yield fell nine basis points to 4.33% as participants hold onto the notion that the Fed may take a less aggressive rate-hike approach coming out of its November 1-2 FOMC meeting.

Like the performance of the three main indices, the advance-decline line reflected a mixed market. Advancers led decliners by an 11-to-10 margin at the NYSE and decliners led advancers by roughly the same margin at the Nasdaq. 

Meta Platforms (META 97.94, -31.88, -24.6%) suffered a huge loss following its disappointing earnings report. Other mega cap stocks exhibited similar weakness, namely Apple (AAPL 144.80, -4.55, -3.1%) and Amazon.com (AMZN 110.96, -4.70, -4.1%), which weighed on the S&P 500 (-0.6%) and Nasdaq Composite (-1.6%).

Meanwhile, the Dow Jones Industrial Average (+0.6%) was able to maintain a positive position thanks to earnings-driven gains in Caterpillar (CAT 212.14, +15.18, +7.7%), Honeywell (HON 196.49, +6.22, +3.3%), Merck (MRK 99.74, +1.33, +1.4%), and McDonald's (MCD 265.11, +8.50, +3.3%). 

Roughly half of the S&P 500 sectors closed in the red. The poor performance from Meta Platforms drove the S&P 500 communication services sector (-4.1%) to last place today. The information technology (-1.3) and consumer discretionary sectors (-0.7) also struggled as their respective mega cap components, Apple and Amazon.com, weighed on sector performance. 

Industrials (+1.1%), led by Honeywell and Caterpillar, sat atop the leaderboard for the 11 sectors.

Separately, the U.S. Dollar Index made a sizable move today, up 0.8% to 110.61 with EUR/USD -1.2% to 0.9962. This followed the ECB's decision, which stoked concerns of an economic slowdown.

Exxon Mobil (XOM), Chevron (CVX), AbbVie (ABBV), Colgate-Palmolive (CL), Booz Allen Hamilton (BAH), NextEra Energy (NEE), and Grainger (GWW) are set to report earnings ahead of Friday's open.

Looking ahead to Friday, market participants will receive the following economic data:

  • 8:30 ET: September Personal Income ( consensus 0.3%; prior 0.3%), Personal Spending (consensus 0.4%; prior 0.4%), PCE Prices ( consensus 0.3%; prior 0.3%), Core PCE Prices ( consensus 0.4%; prior 0.6%), and Q3 Employment Cost Index ( consensus 1.2%; prior 1.3%)
  • 10:00 ET: September Pending Home Sales (Briefing.com consensus -5.1%; prior -2.0%) and final October University of Michigan Consumer Sentiment survey ( consensus 59.6; prior 59.8)

Reviewing today's economic data:

  • Q3 GDP-Adv. 2.6% (consensus 2.3%); Prior -0.6%; Q3 Chain Deflator-Adv. 4.1% (consensus 5.3%); Prior 9.0%
    • The key takeaway from the report is that it ends a two-quarter streak of negative GDP prints. It also suggests the economy held up well in the third quarter as it started to acclimate to rising interest rates. Real final sales of domestic product, which excludes the change in private inventories, increased a solid 3.3%.
  • Weekly Initial Claims 217K (consensus 220K); Prior was revised to 220K from 214K; Weekly Continuing Claims 1.438 mln; Prior was revised to 1.383 mln from 1.385 mln
    • The key takeaway from the report is that the initial claims data suggest the labor market continues to hold up well, which of course is something that will continue to draw the Fed's attention.
  • September Durable Orders 0.4% ( consensus 0.6%); Prior was revised to 0.2% from -0.2%; September Durable Orders Ex-Transportation -0.5% ( consensus 0.2%); Prior was revised to 0.0% from 0.2%
    • The key takeaway from the report is that it revealed some softening in business spending, which was evident in the 0.7% decline in nondefense capital goods orders excluding aircraft.

Dow Jones Industrial Average: -11.9% YTD
S&P Midcap 400: -15.9% YTD
S&P 500: -20.1% YTD
Russell 2000: -19.6% YTD
Nasdaq Composite: -31.0% YTD

Le Monde : l’Etat va prendre en charge une partie des factures des petites entr

Electricité : l’Etat va prendre en charge une partie des factures des petites entreprises et des collectivités, annonce Elisabeth Borne

Les hôpitaux, universités et associations de plus de dix personnes seront également aidés à partir du mois de janvier 2023, dans le cadre de cet « amortisseur électricité » mis en place par le gouvernement.

Depuis plusieurs semaines, les organisations patronales et les collectivités réclament de nouvelles aides face aux factures d’énergie qui explosent. Jeudi 27 octobre, lors d’une conférence de presse à Matignon, la première ministre, Elisabeth Borne, le ministre de l’économie Bruno Le Maire, le ministre de la cohésion des territoires Christophe Béchu ainsi que la ministre de la transition énergétique Agnès Pannier-Runacher, ont annoncé trois nouveaux dispositifs pour contenir les prix de l’énergie pour ce public :

Le premier, baptisé « amortisseur électricité », visera à prendre en charge une partie de la facture d’électricité pour « les TPE qui ne bénéficient pas du bouclier tarifaire, les PME, les associations [de plus de 10 salariés], les collectivités territoriales et les établissements publics » (universités, hopitaux,etc.). Il concernera « les contrats [professionnels] portant sur 2023, y compris pour ceux déjà signés » a précisé Bruno Le Maire. Cet amortisseur doit permettre « d’alléger la facture d’électricité des TPE et des PME de 120 euros par megawatt heure en moyenne », a-t-il ajouté. Ce mécanisme, « mis en place pour un an et effectif dès le premier janvier », selon Agnès Pannier-Runacher, sera automatiquement décompté de la facture d’électricité de l’entreprise. Il ne sera déclenché que lorsque le prix du kilowattheure sera entre 325 euros et 800 euros, « ce qui évitera que le budget de l’Etat soit exposé à la volatilité du marché » a ajouté Bruno Le Maire.
Le gouvernement va également « simplifier et amplifier les aides ciblées, déjà en vigueur pour les entreprises », notamment de plus grandes tailles et via la simplification des guichets de demande d’aides à partir du 15 novembre.
S’agissant des collectivités, il présentera un amendement au projet de loi de finances prévoyant « la prolongation et l’amplification du filet de sécurité pour l’année 2023 ».
Selon Matignon, ces nouvelles mesures portent l’effort total du gouvernement à « 12 milliards d’euros » pour soulager les budgets des entreprises et les collectivités, lourdement grêvés par la hausse des coûts de l’énergie.

Des aides financées grâce à une taxe exceptionnelle

Le gouvernement cherche avant tout à obtenir une baisse structurelle des prix de l’énergie à l’échelle européenne mais la première ministre a précisé qu’il était « indispensable de donner de la visibilité à tous les acteurs ».

« Nos entreprises et nos collectivités ne pouvaient pas attendre [d’éventuels mécanismes européens], a-t-elle ajouté. Aussi, pour faire baisser leurs factures, nous avons décidé de leur redistribuer l’intégralité des recettes de la taxation exceptionnelle des énergéticiens introduite dans le projet de loi de finance ».

Trois milliards proviennent par ailleurs d’une enveloppe déjà provisionnée pour les aides existantes et qui a été très peu utilisée. Enfin les 1,5 milliard d’euros restants ont été budgétés pour le filet de sécurité destiné aux collectivités. Ces nouvelles aides ne creuseront donc pas le déficit, selon Mme Borne.

FT : China can use its leverage with Russia to prevent a nuclear war

China can use its leverage with Russia to prevent a nuclear war
Beijing is uniquely positioned to help broker an agreement

Will Putin use nuclear weapons in Ukraine? This billion-dollar question matters not only to Kyiv and Europe, but also to China. So far Beijing has trodden a careful line between Russia, its strategic partner, and Ukraine, which is a significant trading partner. During September’s Samarkand summit, Vladimir Putin thanked China for its “balanced position” on the Ukraine conflict.

But if Moscow decides to use tactical nuclear weapons against Ukraine, China can hardly maintain such a position any more. A joint declaration between Beijing and Kyiv in December 2013 agreed that China will not use or threaten to use nuclear weapons against Ukraine and, more importantly, will provide security assurances in the event of any such threat by a third party.

Putin’s intensifying rhetoric is therefore raising the stakes for Beijing. He said last month he would be ready to defend the “territorial integrity” of Russia “by all means.” If his military is struggling on the battlefield — which it is in areas such as Kharkiv, where Ukrainian forces are retaking lost territory — then the likelihood of Russia deploying tactical nuclear missiles only increases.

China has so far refrained from providing any military assistance to Russia. But given Beijing’s huge influence on Moscow, it is uniquely positioned to do more to prevent a nuclear conflict.

First, Beijing should tell Moscow to honour the five nuclear powers’ joint statement in January that “nuclear war cannot be won and must never be fought”. Russia has the largest nuclear arsenal in the world and threatening Ukraine — which chose to give up its nuclear weapons — has already tarnished its reputation. It would be all the more appalling if Putin followed through on his threat against Ukrainian citizens, who he had previously described as “practically one people” with Russians.

Second, Beijing should make clear to the Kremlin that using nuclear weapons on the battlefield would put China in a very difficult situation. Beijing has maintained a policy of “no first use” of nuclear weapons for more than half a century. While other defence policies have changed, this has held firm and China prides itself on having nuclear strategies which are the most stable, sustainable and predictable among nuclear powers.

The last thing Beijing wants now is a sour relationship with European capitals. At a time when the US is ramping up its competition with China, it is particularly important that Europe does not always take America’s side. Putin has admitted that Beijing had “questions and concerns” about Russia’s invasion — but if he uses nuclear weapons, then Beijing’s response will go far beyond questions and concerns. Could China remain neutral in the event of international protests against Moscow? And could Beijing abstain from a UN Security Council vote condemning Russia for its actions?

Finally, Beijing could play a significant role in brokering a deal between Russia and Nato. For example, Nato could promise to halt any further expansion in exchange for Moscow agreeing not to use nuclear weapons. Such a compromise would save face on both sides. During the 1962 Cuban missile crisis, US President John F. Kennedy and Soviet leader Nikita Khrushchev reached a similar agreement: the Soviets would dismantle their ballistic missiles in Cuba in exchange for a US pledge not to invade Cuba again. Secretly, America also agreed to dismantle all of the Jupiter medium-range ballistic missiles which had been stationed in Turkey for possible use against Russia.

Since Moscow’s primary concern has been Nato expansion, Putin might find this option worth considering. It would be worth thinking about for Nato too. The alliance’s expansion in the face of the Kremlin’s warnings has helped push Europe to the brink of a nuclear conflict. Putin is right to conclude this is a war between Russia and the west rather than between Russia and Ukraine. As a goodwill gesture, Nato could pledge not to use nuclear weapons first against Russia or within Moscow’s sphere of influence.

In a 2018 documentary, Putin asked, “Why do we need a world without Russia in it?” The answer should be, “But where is Russia without the world?” If Putin now opens a nuclear Pandora’s box that was kept closed even during the cold war, it would be a moment of infinite stupidity. China can help the world by simply telling Putin: don’t use nuclear weapons, Mr President.

>>> USResearch Calls

Research Calls

  • Upgrades:
    • AGNC Investment (AGNC) upgraded to Overweight from Equal Weight at Barclays; tgt lowered to $9
    • Annaly Capital Mgmt (NLY) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $19
    • Ferrari (RACE) upgraded to Buy from Hold at HSBC Securities
    • Huazhu Group (HTHT) upgraded to Buy from Outperform at Daiwa Securities; tgt lowered to $34
    • Medpace (MEDP) upgraded to Neutral from Sell at UBS; tgt raised to $238
    • Pinduoduo (PDD) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $70
    • Portland Gen Elec (POR) upgraded to Neutral from Underperform at Credit Suisse; tgt raised to $46
    • Renasant (RNST) upgraded to Outperform from Mkt Perform at Raymond James; tgt $41
    • ServiceNow (NOW) upgraded to Outperform from Market Perform at MoffettNathanson; tgt $549
    • Vertiv (VRT) upgraded to Outperform from Market Perform at Cowen; tgt raised to $20
  • Downgrades:
    • Ageas SA/NV (AGESY) downgraded to Hold from Buy at Berenberg
    • Amedisys (AMED) downgraded to Mkt Perform from Outperform at Raymond James
    • Arco Platform (ARCE) downgraded to Neutral from Buy at Goldman; tgt lowered to $12
    • Cano Health (CANO) downgraded to Neutral from Outperform at Credit Suisse; tgt lowered to $5
    • Century Communities (CCS) downgraded to Neutral from Buy at B. Riley Securities; tgt lowered to $44
    • Dassault Systemes (DASTY) downgraded to Underweight from Neutral at JP Morgan
    • Eagle Bancorp Montana (EBMT) downgraded to Neutral from Buy at Janney
    • Evercore (EVR) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt raised to $109
    • FormFactor (FORM) downgraded to Hold from Buy at Stifel; tgt $30
    • JBT Corp (JBT) downgraded to Mkt Perform from Outperform at William Blair
    • Masco (MAS) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $47
    • Meta Platforms (META) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $105
    • Meta Platforms (META) downgraded to Market Perform from Outperform at Cowen; tgt lowered to $135
    • Meta Platforms (META) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
    • Seagate Tech (STX) downgraded to Neutral from Buy at UBS; tgt lowered to $55
    • Silicon Labs (SLAB) downgraded to Hold from Buy at Needham
    • Taylor Morrison Home (TMHC) downgraded to Neutral from Buy at BTIG Research
    • Thermo Fisher (TMO) downgraded to Hold from Buy at The Benchmark Company
    • Thor Industries (THO) downgraded to Hold from Buy at The Benchmark Company
    • V.F. Corp (VFC) downgraded to Underweight from Neutral at JP Morgan; tgt $29
  • Others:
    • Arcellx (ACLX) initiated with a Buy at Needham; tgt $31
    • IDEAYA Biosciences (IDYA) initiated with a Buy at Citigroup; tgt $26
    • JD.com (JD) initiated with a Buy at CMB International; tgt $78.5
    • Mercury (MRCY) initiated with an Outperform at Raymond James; tgt $55
    • Mobileye Global (MBLY) initiated with a Hold at Spin-Off Research; tgt $25

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • SNBR -28.6%, WOLF -25.1%, META -22.2%, ALGN -19%, FORM -17.1%, AMED -14.6%, WST -10.7%, CS -10.6%, SLP -10.4%, LC -9.4%, TROX -8.6%, TIGO -7.1%, DTE -7%, ACGL -6.2%, STM -6.2%, BW -6.1%, BC -5.6%, SWK -5.2%, UPWK -4.9%, LH -4.4%, NOC -4.3%, AN -4.3%, FISV -4.2%, CNMD -4.1%, TECK -4.1%, CCS -3.6%, DLR -3%, INVH -3%, AMBP -3%, GL -2.9% (also co-CEOs both stepping down; names 2 new co-CEOs), VFC -2.9%, BMRN -2.9%, JBT -2.4%, CYH -2.2%, CHDN -2.2%, IP -2.2%, CLB -2.1%, FTI -2%, BOOT -1.8%, LIN -1.8%, NTGR -1.7%, F -1.7% (also resumes modest share repurchase program; to wind down Argo AI investment), LAZ -1.6%, ASX -1.5%, EQT -1.3%, OSTK -1.3%, INFA -1.2%, MO -1.1%, SAVE -1%, QS -1%, BAX -1%

Other news:

  • TSHA -6.9% (prices offering of 14.0 mln shares of common stock at $2.00 per share)
  • APO -1.0% (CS nearing sale of its securitized-products group to APO and PIMCO, according to WSJ)

Analyst comments:

  • ARCE -2.7% (downgraded to Neutral from Buy at Goldman)
  • JBT -2.4% (downgraded to Mkt Perform from Outperform at William Blair)
  • PDD -3.1% (upgraded to Overweight from Equal Weight at Barclays)