To The Moon

Selective US Stocks Analysis 

US consumer prices increased less than expected in October and underlying inflation appeared to have peaked, which would allow the Federal Reserve to dial back its hefty interest rate hikes. The consumer price index rose 0.4 per cent last month after climbing by the same margin in September, the Labour Department said on Thursday. Economists had forecast the CPI would advance 0.6 per cent. In the 12 months through October, the CPI increased 7.7 per cent after rising 8.2 per cent on the same basis in September. It was the first time since February that the annual increase in the CPI was below 8 per cent. The annual CPI peaked at 9.1 per cent in June, which was the biggest advance since November 1981. Annual inflation is slowing as last year’s big increases drop out of the calculation. The Fed last week delivered a fourth consecutive 75-basis-point interest rate hike and said its fight to lower inflation to the US central bank’s 2 per cent target would require borrowing costs to rise further. It, however, signalled it may be nearing an inflection point in what has become the fastest rate hiking cycle since the 1980s. Though fuel prices increased after three straight monthly declines, goods inflation is slowing as demand rotates back to labour-intensive services and fractured global supply chains recover. Retailers are also sitting on excess merchandise, forcing them to offer discounts to clear shelves. Excluding the volatile food and energy components, the CPI increased 0.3 per cent last month after gaining 0.6 per cent in September. The so-called core CPI is being driven by surging rents as soaring mortgage rates price out prospective buyers. The core CPI increased 6.3 per cent in the 12 months through October. The core CPI jumped 6.6 per cent on a year-on-year basis in September. The inflation boost from services is coming from wages amid tight labour market conditions. A second report from the Labour Department on Thursday showed the number of Americans filing new claims for unemployment benefits increased moderately last week. Initial claims for state unemployment benefits rose 7,000 to a seasonally adjusted 225,000 for the week ended Nov 5. Economists had forecast 220,000 applications for the latest week.

Chinese electric vehicle maker Nio on Thursday reported a loss of $577.9 million for the third quarter, significantly wider than a year ago, despite strong revenue following a 29% increase in vehicle sales. Nio’s third-quarter earnings report showed revenue came in at $1.83 billion, up 32.6% from the third quarter of 2021. Adjusted loss per share was 30 cents, versus 6 cents per share in the year-ago period. Cash at quarter end stood at $7.2 billion, down from $8.1 billion as of June 30. Nio said on Oct. 1 that it delivered 31,607 vehicles in the third quarter, up 29% from the third quarter of 2021 and a record for the company. Nio’s gross margin was 13.3%, slightly improved versus the 13% margin it reported in the second quarter, but down from 20.3% a year ago. Nio said the year-over-year margin decline was due to lower sales of regulatory credits, higher costs that have squeezed margins on its vehicles, and higher spending on its charging and service networks. CEO William Bin Li said in a statement that the company has seen strong interest in its new ET5 sedan, which he expects “will support a substantial acceleration of our overall revenue growth in the fourth quarter of 2022.” The ET5, the company’s second sedan, began shipping in September. With the ET5 now available, Nio is working to increase production and shorten customer waiting times, Li said. Nio said that investors should expect it to deliver 43,000 and 48,000 vehicles in the fourth quarter, generating total revenue between RMB17,368 million ($2.4 billion) and RMB19,225 million ($2.7 billion).

AstraZeneca raised its full-year earnings outlook on Thursday after strong sales of its key cancer drugs helped it beat quarterly profit and revenue forecasts, driving its shares to a 2-1/2 month high. The Anglo-Swedish company said it managed to grow its business in China despite protracted COVID lockdowns and was no longer pursuing U.S. approval for its COVID-19 vaccine. AstraZeneca is seen as a bellwether for the pharmaceutical sector in China, which accounted for about 16% of the company's total revenue last year. Sales in China have been hurt by lower drug prices while COVID lockdown measures have kept some patients from being diagnosed and seeking care. Despite the headwinds, the company generated 8% sales growth in the region on a constant currency basis in the quarter, whereas it had expected a decline, chief executive Pascal Soriot said on a media call. Geopolitical challenges are growing in the region due to tensions between China and Taiwan, though Soriot said that had not affected the company so far. "We haven't experienced any of those difficulties some industries actually may experience," he said. Better-than-expected sales of AstraZeneca's cancer medicines, including Tagrisso, Imfinzi and Enhertu, helped the company's quarterly revenue beat, with sales of its broader oncology portfolio rising 24%. AstraZeneca, which reports its results in dollars, raised its adjusted earnings per share forecast for 2022 to grow by a "high twenties to low thirties percentage", even though it expects a strong U.S currency to be a drag on full-year revenue and profit. Previously, it had forecast adjusted EPS growth in the "mid-to-high twenties percentage".