META: Beats Earnings

Meta announced third-quarter results that surpassed expectations, with a 23% rise in revenue, marking the quickest growth rate since 2021. Meta is seeing faster growth in its core digital ads business as clients rebound from a tough 2022. Sales jumped from $27.71 billion a year earlier. Net income rose 164% to $11.58 billion, or $4.39 a share, from $4.4 billion, or $1.64 a share, a year earlier. Meta indicated that its 2023 expenses are projected to be between $87 billion and $89 billion, a reduction from its earlier estimate of $88 billion to $91 billion. For 2024, the expenses are expected to be between $94 billion and $99 billion.

Meta has focused on decreasing their expenses, primarily in their workforce. They have cut almost 25% of their staff from this time last year, which was a demand from Wall Street. Meta's Reality Labs unit, specializing in virtual and augmented reality tech, reported operating losses of $3.74 billion for the quarter. Since the beginning of the previous year, the division has incurred nearly $25 billion in losses, even after launching its Quest 3 headset and introducing other products. Meta plans to focus on developing and investing in its AI technology.

Earnings:

• Earnings per share: $2.99 adjusted vs. $2.65 expected

• Revenue: $56.5 billion adjusted vs. $54.4 billion expected

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FORD: Strikes Deal with Union

The United Auto Workers union and Ford Motor have come to a preliminary agreement that will conclude a strike that lasted almost six weeks. This initial agreement, first reported by CNBC, features a 25% wage hike throughout the agreement's duration. This means the maximum wage will exceed $40 an hour, with entry-level salaries witnessing a 68% rise to surpass $28 an hour. Additionally, the agreement reintroduces cost-of-living adjustments, provides a three-year trajectory to the highest wages, and grants the right to strike if there are plant shutdowns.

The deal also comprises other notable improvements in benefits. The provisional agreement still needs the endorsement of local UAW leaders, followed by a simple majority approval from Ford's 57,000 union-affiliated employees. Union workers will return to work today. The union stated that the benefits from this agreement are worth over four times the benefits gained from the 2019 contract. Additionally, the base wage hikes surpass what Ford employees have been granted in the previous 22 years.

GDP: Numbers Are In

GDP increased by 4.9% annually for the third quarter, better than the 4.5% consensus estimate from Wall Street. GDP rose at a 2% pace in the first quarter and 2.4% in the second quarter. This was the most significant rise since Q4 2022 and represents the 5th quarter in a row of GDP increase. Initial jobs claims came in at 210K vs. 207K expected.

The Federal Reserve has been using interest rates to attempt to cool the economy, but GDP continues to increase. This is the first reading of the third quarter GDP, and numbers can be adjusted in the future.

Numbers:

• GDP: 4.9% vs. 4.5% est.

• Jobless claims: 210,000 vs. 207,000 est

• Personal consumption: Rises at 4.0%

Headlines You Need To Know: 🎙

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• Mercedes-Benz share prices fall as profit falls

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• Xi is looking for someone to blame for China’s property crisis

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• Southwest slows 2024 growth as demand moderates

• Turkey's central bank raises key interest rate to 35%

• With interest rates up, get ready for financial drama

ENRON: One of the Largest Frauds in U.S. History

This company became one of the biggest accounting frauds in American history. Enron was an energy trading and utility company based in Houston, Texas. They were formed in 1986 following a merger between two energy companies. After the merger, Kenneth Lay became the CEO of Enron. At that time, Lay took a completely different spin on the company, rebranding it into an energy trader and supplier. During the 1990s, they became a Wall Street darling and were one of the most hyped stocks throughout the decade.

In 1992, they were the largest natural gas provider in North America. Everyone wanted to own or be associated with Enron. In fact, Enron had a very close relationship with Former President George HW Bush and future President George W. Bush. In the early 2000s, the ship began to sink, causing Kenneth Lay to resign from CEO and Jeffrey Skilling to take over.

However, Skilling eventually resigned, causing Lay to take over. Within 5 days into Lay’s second tenure, a whistleblower reported that Enron was involved in massive accounting fraud. The stock price began to sink, and the feds swarmed in. Enron filed for a $65 billion bankruptcy, which was the largest at that time. Kenneth Lay was convicted on ten felony counts that would have put him in prison for 50 years. Unfortunately, he died of a heart attack six weeks after his conviction. Jeffrey Skilling is out of prison now after his 14-year prison sentence. You won’t believe this, but he is looking to launch another energy company.

Chart of the Day

💰 Bankruptcies Jump

Rising bankruptcies appear to be correlated with rising interest rates.

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