PayPal Earnings
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Earnings season is at the tail-end and one of the names that has been tracked in the report was Square. It just so happened that PayPal reported earnings last night and they came in quite strong.
This will be the topic of the post today and we’re going to get into these items as well.
- Housing Recap (little rally)
- Fed Pause & Data
- PayPal Earnings Review
Housing Recap
This week housing names rallied a bit but our view that we share with Business Insider remains the same.
- Likely a technical bounce
- MBA Purchase index about to break 1995 levels
- Fed Pause maybe a key head-fake for the market
- NAIL ETF with a nice reversal
Fed Pause & Data
The longest hiking cycle was 874 days with Volker after May 1981 rate hikes as they combatted inflation. The issue we have today that is making it harder is reckless government spending.
- Emphasis place on impacts of tightening policy on the housing sector and business investment.
- Not “closed the book” on inflation so approaching this month-to-month (will make trading volatile)
- NOT thinking about rate cuts but policy will be driven by: 2% inflation target, supply/demand balance in labor market (key point) & broader financial conditions
The market seems to like this so far but this is also a new trading month and a brutal October trading month so maybe a technical bounce more than a fundamental change in investor sentiment.
PayPal Earnings
This was not at all on my radar (Square was and is) but in our Trading & Portfolio Management Mastermind for DeltaOne members last night, we found it. As we were scanning potential ideas based on an investment screen this came to light.
It just so happened earnings were released and they were great.
The company made a big mistake last year with the $2,500 misinformation policy they tried to enact.
What an absolute silly move and it cost shareholders tremendous value-destruction in the process.
In August they added Alex Chris and he said something on the earnings call that sounded good.
“Our cost base is too high and it is slowing us down. The Company’s focus has not been clear”
I agree.
Final Word.
- Glad to book gains on housing shorts. Will revisit.
- Fed Policy will make the markets tricky for the forseeable future (buy and hold not going to work).
- PayPal on the radar now an going into the report
Next Lesson
Final Quarter of 2024 Stock Market
Stock Market Stimulus
The Main Event is Here
About the Author
Daniel Bustamante is the founder, managing partner, and CIO of Bustamante Capital L.L.C., a multi-strategy hedge fund management firm based in San Juan, Puerto Rico. He has over 10 years of experience in the financial industry, specializing in equities, futures, and event-driven trading strategies.
He is also the founder of TheLongVol.com, a blog and newsletter that shares his insights on his investing process, travel, and other private investments. He has been featured in Bloomberg, Arizona Business Journal, Business Insider, Yahoo! Finance, Forbes, Seeking Alpha, and other publications over his career on Wall Street.
