• Raymond Kanyo, CFA

MarketBites: Digital Ad Headwinds Prevail

MARKET PERFORMANCE:
 

Portfolio Manager Commentary:


The stock market gave up some of this week's gains after disappointing earnings and weak economic data added to recession fears. Treasuries rallied while the dollar retreated.


Snapchat and Twitter posted weaker than expected results, which raised concern about online ad spending (Twitter also blamed Elon Musk for missing their revenue target...🤔). Meta and Alphabet both sold off on the news, however, it remains to be seen if their businesses are being impacted in a similar fashion. The two firms both possess more robust ad platforms than Snapchat and Twitter with potentially more value to offer to clients.


Economic data showed that US business activity contracted in July for the first time in two years. The slowdown in the US economy is helping pare bets of aggressive interest rate hikes by the Federal Reserve. Next week, the guessing game will be over as the Fed is expected to announce its monetary response to combat inflation. The market expects the Fed to raise rates by 0.50%.

Chart of the Day:

Housing affordability is worse than prior to the 2008 housing bubble, yet home prices are not collapsing. Why is that? Among other things, the lack of home availability is one reason. After '08, a lot of homebuilders went bankrupt and others just stopped building houses at their prior rates. US housing inventory is finally seeing a slight increase, which could help reduce pricing. However, another 1 million homes would need to come on the market just to reach 2015 levels.


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