Coffee With Greta: UK’s Truss Is Out
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Good morning friends!
Futures are mixed as traders digest the latest batch of Q3 earnings.
Let’s get right to it!
U.K. Prime Minister Resigns
U.K. Prime Minister Liz Truss resigned from her position today after implementing a failed tax-cutting budget that rocked financial markets.
In a statement, Truss said, “We set out a vision for a low-tax, high-growth economy that would take advantage of Brexit. I recognize though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party. I have therefore spoken to His Majesty the King to announce that I am resigning as leader of the Conservative Party.”
Truss had faced pressure from her own party to step down with reports saying more than 100 MPs had written letters of no confidence in the prime minister.
On September 23, her finance minister announced a “mini-budget” that included a series of unfunded tax cuts.
That plan caused extreme turmoil in the British bond market and imploded the value of the pound.
Most of the policies have since been reversed by the new finance minister.
Tesla Slips As Q3 Revenue Falls Short
Tesla (TSLA) shares are falling 5.7% ahead of the open after reporting mixed Q3 results.
Here’s how the electric automaker’s results compared to analysts’ expectations:
- Adjusted EPS: $1.05 vs $0.99 expected
- Revenue: $21.45 billion vs $21.96 billion expected
Automotive gross margins were unchanged from Q2 at 27.9%.
CEO Elon Musk was upbeat about Tesla’s future on the earnings call.
He said, “I can’t emphasize enough we have excellent demand for Q4 and we expect to sell every car that we make for as far into the future as we can see. The factories are running at full speed and we’re delivering every car we make, and keeping operating margins strong.”
The automaker reiterated its previous guidance saying, “Over a multi-year horizon, we expect to achieve 50% annual growth in vehicle deliveries.”
IBM Tops Q3 Expectations
IBM (IBM) shares are up 4.2% in premarket trade after beating Q3 expectations on the top and bottom line.
Here’s how the tech company’s results compared to analysts’ expectations:
- Adjusted EPS: $1.81 vs $1.77 expected
- Revenue: $14.11 billion vs $13.51 billion expected
The company hiked its full-year revenue forecast following that beat.
The CEO said, “With our year-to-date performance, we now expect full-year revenue growth above our mid-single digit model.”
American Airlines Returns to Profitability
American Airlines (AAL) shares are up 1.4% ahead of the open after topping Q3 estimates.
Here’s how the airline’s results compared to analysts’ expectations:
- Adjusted EPS: $0.69 vs $0.56 expected
- Revenue: $13.46 billion vs $13.42 billion expected
Revenue hit a record-high during the quarter and was up 13% from 2019 levels.
That jump came even as American flew 10% less as travelers paid higher prices.
The airline forecast total Q4 revenue will be up 13% compared to 2019 with adjusted EPS between $0.50 and $0.70.
Weekly Jobless Claims Drop to 3-Week Low
Weekly jobless claims dropped to a 3-week low last week as the impact of Hurricane Ian fades away.
The Labor Department reported 214,000 Americans filed initial claims for unemployment benefits last week.
That was down by 12,000 from the previous week and lower than economists’ expectations for an increase to 230,000.
Existing Home Sales Expected to Fall
The National Association of Realtors reports existing home sales for September at 10:00 a.m. ET.
Economists expect that report to show sales slowed last month to a seasonally adjusted annual rate of 4.70 million units from 4.80 million in August.
The housing market has slowed rapidly in recent months as mortgage rates hit the highest levels seen in more than 20 years.
Upcoming Earnings
Here are the key companies set to report earnings after the market close today:
- Snap (SNAP)