#USInflation #DisneyResults #BABA_Results

US Inflation Experiences a Modest Uptick while Core Inflation Continues to Slow Down

US Core Inflation Rates

What Happened?

Inflation in the United States experienced a modest uptick in July, marking a reversal from 12 consecutive months of decline. The broader measure of consumer prices climbed by 3.2% compared to the previous year, a slight increase from June’s 3% rise, which had been the lowest rate in over two years. Core inflation rate, which excludes food and energy costs, increased by 4.7% over last year, a slower pace than in June and the lowest level since October 2021.

Why did it happen?

The recent inflation trends can be attributed to a combination of factors. The supply chain disruptions and supply shortages that initially fueled a surge in inflation during 2021 have gradually eased over the past year. Consequently, upward pressure on goods prices has diminished. While energy costs saw a mere 0.1% increase, the main challenge lies in service sectors where wage costs constitute a significant portion of expenses.

Implications for the investors

Investors, economists, and the Federal Reserve monitor core inflation figures closely to gauge potential future price pressures. The recent data has shown core inflation moving in a favorable direction, reducing the pressure on Fed to continue with the rate hikes.

Despite concerns about higher than expected labor costs, the overall moderating pace of inflation, coupled with a resilient job market suggests the possibility of a successful “soft landing” scenario. The softening inflation data lend support to our assessment that the recent rate hike in July might mark the end of the current rate hiking cycle. However, since core inflation remains persistent, rates are likely to stay elevated for an extended period. We don’t anticipate the Fed cutting rates until 2024.

Disney Unveils its Q2 2023 Results

Disney Price Chart (Source: Google Finance)

Disney has unveiled its fiscal third-quarter results, revealing a mix of outcomes as it grapples with ongoing challenges in its streaming division and substantial restructuring expenses tied to content adjustments. Notably, the entertainment giant faced a decline in subscriber numbers over the last three months, with Disney+ subscribers dropping by 7.4% to 146.1 million – a figure surpassing Wall Street’s anticipated loss of 151.1 million subscribers. 

The company’s financials were impacted by $2.65 billion in one-time charges and impairments, contributing to a rare quarterly loss. Despite these challenges, Disney managed to surpass adjusted earnings per share expectations, reaching $1.03 per share compared to the estimated 95 cents per share.

In terms of revenue, Disney generated $22.33 billion, slightly below Wall Street projections of $22.5 billion. A bright spot emerged from the parks, experiences, and products division, which witnessed a 13% revenue increase to $8.3 billion during the quarter. Notably, international parks displayed resilience, while domestic parks, especially Walt Disney World in Florida, experienced reduced attendance and hotel bookings, mirroring a similar trend observed at Comcast’s Universal theme parks in the state.

The reported struggles in the streaming division and the significant one-time charges have raised questions about the strategic direction and efforts to rejuvenate growth. Amid these uncertainties, investors are keen to understand the company’s roadmap for regaining momentum and securing a more robust position in the highly competitive streaming landscape.

Alibaba Reports Strong Q2 2023 Financial Results with Focus on Reorganization

Alibaba Price Chart (Source: Google Finance)

Hangzhou-based tech giant Alibaba Group (NYSE: BABA) revealed its second-quarter financial performance, displaying solid growth driven by its ongoing reorganization efforts. The company reported a 14% YoY increase in revenue, reaching RMB234,156 million (US$32,292 million). 

Alibaba Implements New Organizational Structure for Long-Term Growth

Alibaba embarked on a new phase of organizational and governance restructuring, aiming to enhance innovation, competitiveness, and long-term growth. The reorganization has led to the creation of six major business groups, including Taobao and Tmall Group, Alibaba International Digital Commerce Group, Local Services Group, Cainiao Smart Logistics Network Limited, Cloud Intelligence Group, and Digital Media and Entertainment Group. Each group operates independently, fostering a high degree of autonomy. 

Alibaba Highlights Robust Performance Across Key Business Units

Alibaba’s diversified portfolio showcased strong performance across various segments. In the Local Services Group, revenue surged by 30% YoY to RMB14,450 million (US$1,993 million), driven by significant growth in Ele.me and Amap. Alibaba Cloud reported total revenue of RMB25,123 million (US$3,465 million), primarily driven by storage, networks, and AI computing-related products. 

Alibaba’s strong financial performance and ongoing reorganization underscore its commitment to adapting and thriving in a dynamic market landscape. The company’s strategic focus on autonomy within its major business groups positions it to seize new opportunities and enhance competitiveness. With robust free cash flow and a solid balance sheet, Alibaba remains well-positioned to navigate challenges and drive sustainable growth.