Breakfast | Netflix soared 5% after hours, Taiwan Semiconductor surged 13% intraday, NVIDIA hit a new high intraday

Market Overview

U.S. stocks opened high and fell, with the S&P hitting a new intraday high before turning lower, the Nasdaq approaching to erase a 0.9% gain, the Russell small-cap stocks falling for the first time in five days, and the Dow still hitting new highs. Taiwan Semiconductor rose more than 13% at one point, closing up nearly 10%, hitting both intraday and closing highs. NVIDIA's gains significantly narrowed, rising 3.8% at the highest before closing up 0.9%, hitting a new high intraday. Asml turned higher. Netflix's third-quarter report was positive, rising 4% after hours.

U.S. retail sales and initial jobless claims data were strong, pushing up U.S. bond yields. The 10-year U.S. Treasury yield rose more than 8 basis points, briefly breaking through 4.10%. The U.S. dollar hit an 11-week high.

The China concept stock index Nasdaq Golden Dragon fell 4% at one point, hitting a three-week low. Taiwan Semiconductor rose more than 13% at one point, closing up nearly 10%, hitting both intraday and closing highs. JD.com fell more than 4%. Offshore renminbi fell by a hundred points before approaching a turnaround.

The European Central Bank's interest rate cut boosted European stocks. The yen fell below 150. Bitcoin fell nearly 2%, breaking below $67,000.

U.S. EIA crude oil inventories unexpectedly decreased last week, halting a four-day decline in oil prices. Gold hit a new high. London zinc fell by 2.9%.

Stock News

Taiwan Semiconductor Soars 10%, Explosive Performance, Embarking on the Trillion-Dollar Market Cap Road

Taiwan Semiconductor's Q3 net profit surged by 54% year-on-year, gross margin hit a historical high, and AI demand remains strong. Conference call: Raised full-year revenue guidance to 30%, AI demand is real, and capital expenditure is likely to increase next year

The proportion of revenue from advanced processes in Taiwan Semiconductor's third quarter increased compared to the previous quarter, accounting for 69% of total wafer revenue, up from 67% in the previous quarter, with 3nm and 5nm processes contributing 52% of third-quarter revenue.

Taiwan Semiconductor stated in the conference call that the full-year growth forecast for 2024 has been raised to 30%, up from the previous forecast of 24%-26%. Capital expenditure in 2025 is likely to be higher than this year, with 2024 capital expenditure slightly above $30 billion, and also pointed out that the demand for the upcoming 2nm production is stronger than 3nm.

Netflix Surges Over 5% After Hours! Profits Exceed Expectations, Subscribers Unexpectedly Increase by Over 500,000

Netflix's third-quarter operating profit increased by over 50%, operating profit margin rose by over 30% to 29.6%, surpassing expectations, third-quarter revenue increased by 15%, fourth quarter is expected to increase by another 15%, 8% higher than analyst expectations, full-year guidance slightly raised, stating that the full-year growth rate is at the high end of the guidance range of 15%, next year's revenue growth is expected to be the highest at 13% compared to this year, but the operating profit margin of 28% is higher than this year; net subscriber additions in the third quarter decreased by 42% year-on-year, still 12% higher than analyst expectations, with net additions in the largest market of the U.S. and Canada falling 61% more than expected, net additions in the Asia-Pacific region far exceeding expectations at 2.28 million, a 21% year-on-year increase, reflecting strong content launches in Japan, Korea, and Thailand during the quarter; this week raised prices in Spain and Italy, and in the fourth quarter discontinued the ad-free basic plan in Brazil

Bank of America repurchases stocks, causing Buffett's stake to rebound above 10%

Documents disclosed on Thursday (October 17) showed that Berkshire Hathaway, under Buffett's control, sold 8.694538 million shares of Bank of America, cashing out $369.9 million; Berkshire implemented two cash-out transactions on October 15. Due to Bank of America's repurchase, Berkshire Hathaway's stake percentage was pushed back above 10%, crossing the regulatory threshold that requires rapid disclosure of information. Berkshire sold approximately $370 million worth of Bank of America shares this week. This is also the 16th round of asset disposal since mid-July. Berkshire's stake in the second largest bank in the United States has thus decreased to 9.97%.

NVIDIA hits historical intraday high, but closing gains narrow

Benefiting from Taiwan Semiconductor's strong performance, NVIDIA hit a historical intraday high again after four months.

Bank of America: NVIDIA occupies 80-85% of the AI chip market share, raising its 2025 earnings per share (EPS) estimate from $4.81 to $4.87, lowering the 2026 estimate from $4.90 to $4.47, and lowering the 2027 estimate from $4.72 to $4.67. The company maintained a buy rating and raised its price target. Analysts pointed out NVIDIA's strong free cash flow generation capability, as well as expanded enterprise partnerships with companies like ServiceNow and Microsoft.

Geopolitical Situation

Israeli Foreign Minister says Hamas leader Sinwar is dead

According to CCTV International News, the Israeli Foreign Minister stated that Hamas leader Yahya Sinwar has died in an Israeli military strike. According to CCTV, on August 6 this year, Hamas issued a statement saying that Sinwar became the leader of the Hamas political bureau, succeeding Ismail Haniyeh, who was assassinated in Iran on July 31.

Macro Information

U.S. retail data in September exceeds expectations

U.S. retail sales in September increased by 0.4% month-on-month, exceeding expectations, indicating strong consumer demand. Excluding automobiles and gasoline, retail sales increased by 0.7%, surpassing the expected 0.3% and significantly higher than August's 0.2% growth. The data indicates strong consumer spending, with almost no substantial signs of economic downturn in the U.S.

However, Michael Green, Chief Strategist at Simplify Asset Management, stated that the strong retail data is mainly due to seasonal adjustments, and the stock market's rise reflects investors' optimism. He said, "If comparing this year and last year on a non-seasonally adjusted basis, the data is basically flat. So can it be called stronger data? Not necessarily. But the market clearly chooses to interpret it positively."

Last week, the number of initial jobless claims in the U.S. unexpectedly dropped to 241,000, and the impact of hurricanes will continue for several weeks. After the release of U.S. retail sales and initial jobless claims data, traders lowered their expectations of a rate cut by the Federal Reserve. Bloomberg stated that the number of weekly initial jobless claims has been low recently, partly because the number of Americans losing their jobs is relatively low

Japanese increased holdings of US Treasury bonds in August, while Chinese holdings approached the lowest level since 2009

Japan, the top "creditor" of the United States, increased its holdings of US Treasury bonds in August for the first time in four months, with a growth of $13.5 billion. This marked the end of a nine-month low in total holdings, amidst a more than 2% rebound in the yen and easing pressure on the local currency. On the other hand, China reduced its holdings by $1.9 billion, marking the sixth consecutive month of decline within the year.

Several major banks will once again lower deposit rates starting from Friday, with some banks reducing fixed deposit rates by 25 basis points

Starting from October 18th, several state-owned banks will once again lower the RMB deposit rates, affecting various types of deposits including current and fixed-term deposits. This marks the second time within less than 3 months since the last adjustment in July, and the sixth voluntary rate cut by major banks since September 2022.

Current US stocks are the most expensive in decades, Buffett selling stocks to hoard cash is a warning signal

Greenlight Capital's Einhorn stated in a letter to investors that the fund's performance has significantly lagged behind the market this year and may continue to underperform in the future. Mr. Buffett once again sold off most of his stock portfolio and hoarded cash, indicating that now is not a good time to heavily hold stocks, although this does not necessarily mean that the stock market will decline in the short term.

Yen appreciation drags down Japanese exports, seeing the first decline in ten months in September

Japanese exports in September fell by 1.7% year-on-year, lower than the expected 0.5% growth and significantly below the revised 5.5% increase in August. Analysts point out that the soft global demand is causing concerns among policymakers, as this sustained weakness could pose challenges to the Bank of Japan's "ultra-loose monetary policy" exit strategy.

ECB cuts interest rates for the third time as scheduled, by 25 basis points!

With rapid inflation decline, the European Central Bank (ECB) has cut interest rates for the third time this year to support the struggling economy in the region.

On Thursday, October 12th, the ECB announced its latest interest rate decision, lowering the deposit facility rate from 3.5% to 3.25%, marking the third rate cut in this cycle. Additionally, the main refinancing rate was reduced from 3.65% to 3.4%, and the marginal lending facility rate from 3.9% to 3.65%, all in line with market expectations.

The ECB reiterated its commitment to data-driven decision-making in its statement, without committing to a specific rate path in advance. It adjusted its language on inflation, now expecting inflation to return to 2% next year, previously projected for the second half of 2025.

Key Economic Calendar Preview

China will release data on GDP, retail sales, industrial value added, urban fixed asset investment, national real estate development investment, urban survey unemployment rate, and residential sales prices in 70 large and medium-sized cities. The State Council Information Office will hold a press conference on the national economic situationThe China People's Bank main forum of the 2024 Financial Street Forum Annual Meeting was held in the afternoon, with the theme "Improving the modern central bank system to enhance macroeconomic governance"