Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
You can access both of our platforms from a single Saxo account.
Layoffs are coming to Meta and Apple cuts iPhone production
Peter Garnry
Chief Investment Strategist
Summary: Meta did not do well with investors during and after the Q3 earnings release with large institutional investors concluding that Zuckerberg is not listening to investor concerns over its capital expenditure plans for next year and ballooning operating expenses. But the Wall Street Journal is writing that Meta is planning a large layoff to regain credibility with investors sending shares up 3% in pre-market trading. Apple is announcing a cut to iPhone production of 3 mn units as demand is declining due to inflationary pressures. Apple shares are down 1% in pre-market trading.
Is Mark Zuckerberg finally listening to investors?
Institutional investors were disappointed by Meta’s Q3 earnings but even more disappointed during the investor talks after the Q3 release as the key takeaway was that CEO Mark Zuckerberg is acting like a absolute monarch listening to no one. As result Meta’s slide continued last week below $100 and ending just above $90 on Friday. The Wall Street Journal reported yesterday that Meta is planning to lay off thousands of employees to send the signal to investors that it is serious about preserving profitability while maintaining its aggressive bet on the metaverse. Investors are reacting to this unconfirmed news sending the shares 3% higher in pre-market trading.
Zuckerberg is clearly getting to the conclusion that something has to happen with Meta’s share price down 76% from the peak and the 12-month P/E ratio plunging to around 10 which 40% below the S&P 500. If Meta can prove that it can stabilize operating income through layoffs while maintaining growth in its core business and show more promising progress on its metaverse bet, then the P/E ratio could recover back to the S&P 500 average. In this event, the stock has a 60% gain potential, but such a move is not risk-free for investors. The key risks for Meta is the competition from TikTok, lack of monetization of WhatsApp, higher energy costs running datacenters, cash compensation pressures due to employee stock options losing value, and institutional investors continuing selling their shares.
Apple’s services will shield the worst from hardware demand fall
Another US technology company in focus today is Apple announcing that it is cutting its iPhone production target by 3mn units which is roughly 1.5% of its annual volume. While this is a small figure it is still a big change for Apple that is used to see volume grow and the company has recently hiked prices on its services to offset the weakness in its hardware division. The Services segment has recently seen its gross profit decline for two straight quarters which is the first time for Apple and part of the explanation is higher energy costs running its datacenters. This explains the recent price hikes on its services such as TV streaming, music etc., and the move will help Apple to offset the downturn in hardware, and because its strong market position Apple is in a good place to preserve margins by hiking prices.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer