5 charts from the past week that tell an interesting story in markets and investing…
1) Bonds Breaking Down?
Long-term bond yields are creeping up, with 30-year treasuries at their highest levels since June. Why are yields rising? The combination of rising inflation expectations, a recovering economy, and the prospect of trillions more in debt to come (via the next stimulus bill).
As bond prices move in the opposite direction to yields, the Long Duration Treasury ETF closed below its 200-day moving average for the first time this year. $TLT
2) Netflix Expectations Miss
Netflix stock sold off this week despite reporting revenues that were up 22.8% over the last year, its 30th consecutive quarter of >20% YoY growth.
Investors were said to be disappointed with subscriber growth which slowed during the quarter to 2.2 million net adds versus expectations of 3.57 million.
Netflix subscribers are still up an impressive 16% year-to-date (with a quarter to go) to 195 million, but with the stock up over 60% on the year heading into earnings, there was little tolerance for any disappointment.
3) We’re Not in Kansas Anymore
Tesla reported record revenues and deliveries in the 3rd quarter with sales up 15% over the past year (trailing 12 months).
Meanwhile, the stock is up over 750% in the last year, leading to an explosion in its valuation. A year ago, Tesla was trading at less than 2x sales. We’re not in Kansas anymore…
An interesting aside: Tesla has been profitable every quarter this year, but without “regulatory credits” (see here for what that means) it would have reported net losses.
4) Snapping to All-Time Highs
Snapchat surged higher this week on revenue and user numbers that trounced expectations. The stay-at-home economy has been a boon for chat.
Revenues were up 52% over the past year, the highest growth rate since Q2 2018. $SNAP
Daily Active Users jumped to 249 million, a 19% increase over the prior year.
Snapchat is not yet profitable…
…but few investors seem to care, with its stock hitting record highs and a market cap of over $60 billion. That’s more than 5x higher than where it stood at the lows in March.
5) Housing Boom 2.0
The Boom in the housing market continues with record low mortgage rates and record high stimulus leading to a surge in demand.
Existing Homes Sales and Building Permits are at their highest levels since 2006/2007…
… and Homebuilder Confidence (US Housing Market Index) has never been higher.
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And that’s it for this week. Thanks for reading.
Have a great weekend everyone!
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