Oct 20, 2022 TradeUP Thursday Latest news and bulletin updates
Dow Jones 28,755(+0.15%)
S&P 500 3,520(-0.13%)
(Opening price as of 10/20/2022 compared to last close)
Netflix adds 2.4 million subscribers in Q3, reversing a decline
Liz Truss announces resignation after 6 weeks in office
Yields on 10-year Treasuries advance three basis points to 4.16%
Biden announces sale of 15 million barrels of reserve oil
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Airline fares surged 42% this year, the highest on record and 5 times higher than overall inflation
Airline fares rose 0.8% in September and were up a massive 42.9% on an annual basis. Flight ticket prices have climbed much faster than overall inflation during the pandemic recovery as demand and cost remain resilient in the industry.
Airline executives said that the rebound travel demand over the summer didn’t immediately cool off, even as inflation and fears of a recession affect consumer spending in other areas. Delta posted a profit of $695 million for 3Q22 last week, and CEO Bastian said that the higher price tags haven’t kept passengers away, as consumers give priority to spending on travel and experiences over certain goods—one reason airlines are on a different trajectory than other sectors of the economy. United Airlines said it earned $942 million in profit in the third quarter on Tuesday, and CEO Kirby said that despite growing concerns about an economic slowdown, the ongoing Covid recovery trends continue to prevail. American Airlines raised its 3Q22 revenue guidance last week, saying it expects 3Q22 revenues to be up 13% compared with the same quarter in 2019, before the Covid-19 pandemic disrupted global travel.
Both Delta and United Airlines have posted their 3Q22 earnings. Even though investors have been nervous about a short rebound due to economic uncertainty and higher costs, both companies have projected operating margins to surpass pre-pandemic levels in the final quarter of the year.
Airlines remain constrained by rising fuel costs and limited supply of flights, which in turn push up flight prices for travelers. Delta’s fuel bill for 3Q22 rose by nearly 48% from 2019 to $3.32 billion, and United spent nearly $3.8 billion on jet fuel, up 63% from the same quarter just before the pandemic began. Meanwhile, disruption in flights and airports, shortage in workforce, as well as higher service costs may still interfere with normal operations in the upcoming holiday season and may even force airlines to trim flights to prevent more problems for travelers.
Are you planning on traveling by air this holiday season? How are the ticket prices looking?
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#1. Netflix adds 2.4 million subscribers in Q3, reversing a decline
• Netflix shares closed 13% higher on Wednesday following the company's huge 3Q22 earnings report. The platform delivered a beat on both the top and bottom lines, in addition to 2.41 million net subscriber additions — crushing estimates of 1 million.
• Netflix will soon introduce a lower-priced service with ads in a bid to attract more customers, while Wall Street still seems split on how it will work in the future.
#2. Liz Truss announces resignation after 6 weeks in office
• The resignation comes after her tax plan and economic policies triggered market turmoil and her own party turned on her. The UK Conservative Party will hold a leadership election within a week.
• UK asset prices were volatile on Thursday, with British pounds standing 0.4% higher against the dollar after her announcement. UK government bond prices also rallied, pushing yields down. However, gains in both bonds and sterling quickly moderated.
#3. Yields on 10-year Treasuries advance three basis points to 4.16%
•Yields jumped across the curve Wednesday amid firmer global inflation readings, corporate deal hedging flows, and a poorly received US 20-year bond auction.
• DoubleLine Capital Chief Investment Officer Jeffrey Gundlach said on Twitter that US treasury yields may peak between now and the end of 2022 as they reach multi-year highs.
#4. Biden announces sale of 15 million barrels of reserve oil
• Biden promised to purchase oil to refill the Strategic Petroleum Reserve once the price hits $70 a barrel.
• Biden also said oil companies should ramp up production and cut prices at the pump instead of buying back stocks and paying dividends.
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