MARKET PULSE
Oil Fell 8%. Central Banks Are Still Raising Rates.
Sweden's central bank raised its key rate to 2% from 1.75% on Wednesday, its first increase in more than two years. The Bank of England is expected to raise its rate to 4% from 3.75% today, its first increase since August 2023.
Brent and U.S. crude each dropped more than 8% on Wednesday, to their lowest settlements since Aug. 31.
South Korea's Kospi fell 5.3% overnight, led by chipmakers. Early Thursday, Nasdaq-100 futures were down about 0.5% and Dow futures were up about 0.6%.
Investor Signal
Central banks are still tightening against the inflation they already have. One day of cheaper oil has not changed expectations for the Bank of England. Its vote split and new forecasts will show how much weight it puts on energy. Cleveland Fed President Beth Hammack, who voted for a U.S. hike in October, also speaks today. If officials keep pointing to strong activity, borrowing costs stay high for floating-rate borrowers, including those in private credit.
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CHIPS WATCH
Qualcomm's Phone-Chip Sales Fell 26%. Its Profit Forecast Missed Estimates.
Qualcomm (QCOM) was down about 9% before the open. Its phone-chip sales fell 26% to $5.14 billion in the September quarter, below estimates. Adjusted earnings of $2.17 a share were about in line.
Its revenue forecast for this quarter, $10.4 billion to $11.2 billion, has a midpoint above estimates. Adjusted earnings of $2.15 to $2.35 a share have a midpoint below them. Qualcomm flagged higher input costs, including memory.
Data-center demand has pushed up memory prices for phone makers. Brokerages also cited lost modem sales to Apple (AAPL).
Arm Holdings (ARM) beat its own forecast range, with revenue up 27% to $1.44 billion. Royalties, which Arm earns on chips shipped, rose 8% even as data-center royalties doubled. Its shares were about 4% lower before the open, and both stocks had fallen 10% to 11% last Friday.
Investor Signal
The AI buildout is raising costs for the chips inside phones. Qualcomm expects more revenue but less profit than analysts forecast this quarter, which points to costs rather than demand. Arm's slow royalty growth, even with data-center royalties doubling, suggests phone volumes are soft too. Phone makers' production plans and memory prices will show whether the squeeze lasts past this quarter.
AD TECH WATCH
AppLovin Guided Well Above Estimates. Snap Missed on Users.
AppLovin (APP) was up about 19% before the open. Third-quarter revenue rose 55% to $2.18 billion. Its fourth-quarter revenue forecast has a midpoint about 6% above the roughly $2.25 billion analysts expected. It also added $3.2 billion to its buyback.
Snap (SNAP) was down about 9%. Revenue rose 14% to $1.72 billion, just below estimates, and daily active users of 495 million missed the 499 million expected. Snap swung to a $56 million profit. Starting in 2027, it will make monthly users, 977 million last quarter, its main audience measure.
Investor Signal
Both companies sell ads, but investors graded them on different numbers. AppLovin was rewarded for its forecast, while Snap's better profit could not offset the user miss. Snap says daily use has been a stable share of monthly use, and that share is now about half. If that ratio slips after the switch, the larger monthly count would be hiding weaker engagement.
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PREDICTION MARKETS WATCH
A Judge Let Kalshi's Stock Perps Trade but Doubted the CFTC's Authority.
A federal judge in Manhattan refused to halt single-stock perpetual futures. A group backed by Cboe Global Markets (CBOE) and Citadel Securities sued to stop them this week. The contracts trade on Kalshi, Bitnomial and Coinbase's (COIN) derivatives exchange.
Judge Valerie Caproni found the group likely to succeed in arguing that the CFTC exceeded its authority. She wrote that the contracts, which never expire, "appear to satisfy the definition of a swap." She said the Securities and Exchange Commission regulates swaps. She denied the request because the group had not shown imminent harm.
Kalshi's first four stock perpetuals track Qualcomm (QCOM), McDonald's (MCD), Amgen (AMGN) and Costco (COST), with leverage of up to 4.9 times.
Investor Signal
The contracts can trade, but their legal basis is now in doubt. The CFTC's response is due Friday. A preliminary injunction would halt the stock contracts, a setback for Kalshi and Coinbase. The order does not cover the bitcoin perpetual the CFTC approved for Kalshi in May.
PRIVATE CREDIT WATCH
Blue Owl Added No New Problem Loans. Its Old Ones Are Marked Lower.
Blue Owl Capital Corp. (OBDC), a private-credit fund, said 2.9% of its portfolio at cost was on non-accrual at Sept. 30. Non-accrual means borrowers have stopped paying interest. The share was 2.0% in March.
At fair value, those loans were 0.8% of the portfolio, down from 1.0% in March. Chief Executive Craig Packer said no new borrowers went on non-accrual in the quarter. Net asset value rose to $14.32 a share from $14.26, mainly on higher marks and buybacks, but stayed below March's $14.41.
Investor Signal
The cost figure counts what was lent to borrowers who stopped paying, and fair value counts what those loans are worth now. Since March the first has risen and the second has fallen, so the unpaid loans are carried at a smaller share of what was lent. A December hike would raise the fund's income and its borrowers' interest bills together. Other lenders' quarterly filings this month will show whether their marks moved the same way.
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CRYPTO WATCH
Trump Media Moved Its Pledged Bitcoin. Noteholders Can Demand Up to $1 Billion on Nov. 30.
Wallets that Arkham labels as Trump Media & Technology Group's (DJT) note collateral sent about 4,259 bitcoin, worth roughly $340 million, to Crypto.com late Wednesday. Trump Media's second-quarter filing listed 4,260.73 bitcoin as collateral for its $1 billion of 0% convertible notes due 2028.
The company hasn't explained the move. Crypto.com is one of its custodians, so a transfer there doesn't by itself mean a sale.
A Nov. 2 filing says noteholders can require Trump Media to buy back the notes for cash on Nov. 30. If refinancing and other steps fall short, it may sell bitcoin to pay. The notes convert at $34.72 a share, and the stock closed at a record low of $4.49 on Wednesday.
Investor Signal
With the stock at about 13% of the conversion price, converting makes little sense, so the cash option is the one that matters. Trump Media can refinance, pay from cash or sell bitcoin. Its choice is a test for other companies that bought bitcoin with convertible debt and trade far below conversion prices.
CLOSING LENS
Oil fell 8% on Wednesday. The costs behind this morning's biggest moves did not. Central banks are still raising rates, memory prices weighed on Qualcomm's forecast, and Trump Media's noteholders can demand cash. AppLovin showed the other side, turning growth into buybacks.
The Bank of England's decision and Hammack's remarks come today. Together they will show whether cheaper oil changes how central banks weigh inflation.
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