What You Need To Know For November 7th

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Welcome back! We have a very busy edition so let’s get into it!

The Main Story

The new President of the United States is Donald Trump - winning in a resounding fashion. While the “Trump Trade” has been live for a while, we highlighted last week what you should’ve expected, and it’s broadly played out thus far. Here’s a rundown on what’s played out by asset class yesterday:

Rates are Higher, Housing is Down: An inflationary environment driven by higher tariffs + larger deficit spending would keep rates higher, driving rates higher. By definition, that makes housing and home renovation less attractive, sending housing stocks and home improvement stores down on the day.

You saw a bit of Tariff shock, but not a lot: Some companies with large China exposure (Nike) and retailers (Target, Walmart) were pressured as a result of the potential for upcoming tariffs.

Onshoring Tailwinds: While a lot of this has been priced in, domestic companies that would benefit from onshoring (as opposed to globalization) were big winners yesterday.

Deregulation is Game on: Banks rallied hard, as well as any industries that are potential M&A beneficiaries (like we talked about last week). A pick up in deal flow is partly why Banks & Private Credit Lenders had a nice day. Corporate tax rates are also expected to go lower (as low as 15% potentially).

Elon Wins: Tesla was up 14.75% on the day (While the rest of ESG trades faded) due to a perception that Elon is going to benefit from being a big Trump supporter this election cycle. Elon is expected to take some sort of role where he will try to make the federal government more efficient, likely looking towards Twitter-LBO styled layoffs.

Crypto is Mooning: Trump is viewed as “friendly” towards Bitcoin, driving a rally in BTC and Alt-Coins.

What the Market may be missing: As of now, we don’t think the market is adequately focused on tariff risks. While this may be a negotiating tactic, Trump has weighed a 20% tariff on all imports and a 60% tariff on Chinese imports. The market is brushing this off…for now..

Earnings Corner 📜 

Trending Up 📈 

Apollo Global Management (APO) reported earnings that beat estimates, with revenue of $7.72B up 285% y/y (vs. $7.5B expected) and EPS of $1.85 (vs. $1.73 expected). The firm saw inflows of $72B and $79B to its asset management and retirement services divisions, driving total AUM to a record $733B. Apollo originated a record $62 billion across its credit solutions and equity businesses, as mgmt. continues to diversify away from the firm’s private equity roots. The stock was up 9.7% at Wednesday’s close.

Palantir (PLTR) reported earnings that beat estimates, with revenue of $726MM up 30% y/y (vs. $701MM expected) and EPS of $0.10 (vs. $0.09 expected). Mgmt. noted PLTR had “absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down.” They raised the Q4 and FY revenue outlook, with the latter now at $2.805B-$2.809B (vs. $2.742B-$2.750B previously). The stock was up 34% at Wednesday’s close.

Berkshire Hathaway (BRK) reported earnings that missed estimates, with revenue of $93B down 0.2% y/y and EPS of $4.68 (vs. $4.89 expected). Catastrophe losses weighed down insurance earnings, and Buffett announced a record cash pile of $325.2B, following a sell-off of large parts of BRK’s stakes in Bank of America and Apple. The stock was up 5.4% at Wednesday’s close.

CVS Health (CVS) reported earnings that missed estimates, with revenue of $95.43B up 6.3% y/y (vs. $92.75B expected) and EPS of $1.09 (vs. $1.51 expected). Mgmt. noted that elevated medical costs had squeezed the bottom line, causing them to hold off on providing a formal outlook. CVS named the former CEO of UnitedHealth Group as president of its Aetna health insurance unit. The stock was up 11.3% at Wednesday’s close.

Qualcomm (QCOM) reported earnings that beat estimates, with revenue of $10.24B up 9% y/y (vs. $9.9B expected) and EPS of $2.69 (vs. $2.56 expected). Mgmt. announced a 12% increase in handset chip sales, and projected Q1 revenue of $10.5B-$11.3B (vs. $10.59B expected). The stock was up 6.3% at Wednesday’s close.

Gilead Sciences (GILD) reported earnings that beat estimates, due to strong performance in the HIV, remdesivir, oncology, and liver disease segments. Mgmt. also raised guidance, driving the stock up 2.7% after Wednesday’s close.

Marriott International (MAR) reported earnings that missed estimates, as the hotel chain saw strong growth internationally but faced a challenging climate in North America. The stock was up 6.4% at Wednesday’s close.

Trending Down 📉 

Super Micro (SMCI) is facing a potential delisting over their accounting practices. They reported preliminary numbers Tuesday that were a big miss, with Revenue of ~$5.9B a miss from expectations of $6.45B, although Adj. Net Income of $0.75-$0.76 was in line with expectations. The revenue forecast of $5.5B-$6.1B for next quarter was well below estimates of $6.86B, likewise for EPS of $0.56-$0.65 (estimates were $0.83). But the big issue is accounting related, with auditor EY resigning and Super Micro having no timeline on providing accurate financials. Even before the Company sprung into AI driven popularity, they have had historically questionable accounting practices. This seems like a classic case of “tulip mania” playing out again..

Arm Holdings (ARM) reported earnings that beat estimates, with revenue of $844M up 5% y/y (vs. $808.4MM expected) and EPS of $0.30 (vs. $0.26 expected). Mgmt. lefts its FY revenue forecast of $3.8B-$4.1B unchanged, disappointing analysts. The stock was down 5.1% after Wednesday’s close.

Novo Nordisk (NVO) reported earnings that beat estimates, with revenue of 71.31B DKK up 21.4% y/y (vs. 71.87B DKK expected) and EPS of 6.12 DKK (vs. 5.92 DKK expected). The Danish pharma giant’s Wegovy weight-loss drug drove performance, with sales up 79% y/y. However, the stock was down 4.3% at Wednesday’s close.