Chapter 1: What is the main topic discussed in this episode?
public.com presents the rundown your daily market update in 10 minutes my name is Zaid Admani and today is Wednesday April 29th in today's episode we'll break down why the UAE just quit OPEC and what it means for oil prices We'll also tell you why Starbucks' turnaround plan is picking up steam. Then stick around to the end of the show to find out about Disney's big decision about ESPN's future.
We got a great show for you today. Let's go.
Well, stocks pulled back from record highs on Tuesday with the S&P 500 dropping half a percent, while the Nasdaq dropped nearly 1%. The worst performing sector yesterday was tech. And I'm going to blame OpenAI for this one. There was a report in the Wall Street Journal yesterday that said OpenAI's growth is slowing down and the company isn't hitting their internal revenue and user targets.
We actually broke that story down in detail on yesterday's show, so go check that out if you missed it. But yeah, that story was enough to spook investors about a potential AI slowdown. Semiconductor stocks took the biggest hit yesterday. Companies like Broadcom, AMD, and Micron were all down around 4%. The market is also getting dragged down from rising oil prices from the Iran war.
Energy was the best performing sector yesterday as oil prices continued to climb. Oil has now gone up for seven days in a row, with Brent crude sitting above $114 a barrel, while WTI is above $103 a barrel. Gas prices in the US are now at the highest level in four years, with an average of $4.18 a gallon, according to the AAA Motor Club.
Now, speaking of Iran, negotiations have totally stalled, and the U.S. is reportedly looking to extend its naval blockade of Iranian ships and ports, preventing Iran from exporting their oil and putting pressure on their economy. So there is no signs of things calming down, and I think the market is starting to take notice of that again.
Big picture, we could be looking at elevated gas prices for the foreseeable future, and that could lead to a temporary spike in inflation, which could lead to the Fed having to wait longer to cut interest rates. Now, we're actually going to be hearing from the Fed today. The FOMC meeting wraps up this afternoon.
Now, the Fed is unlikely to change rates at this meeting, but we'll see what Jerome Powell says in his press conference on the timing of a future rate cut. Now, it's also possible the market totally ignores what Jerome Powell says in his press conference because this will likely be his last meeting as Fed chair.
His term as Fed chair ends on May 15th, and we'll recap all the best parts of the press conference on tomorrow's episode. And if that wasn't enough action for one day, we're also getting earnings this afternoon from Google, Microsoft, Amazon, and Meta.
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Chapter 2: How are rising oil prices affecting the market and consumer behavior?
Revenue was up 15% to $1.07 billion, but that was below the $1.14 billion that Wall Street was expecting. The big drag on the business was crypto. Crypto trading revenue fell 47% from a year ago as Bitcoin and other digital assets lost momentum. Crypto has historically been one of Robinhood's biggest growth engines. So when Bitcoin is ripping,
Robinhood usually benefits, but when crypto gets boring like it is now, Robinhood tends to take a hit. But look, to Robinhood's credit, the company is building other revenue streams. Prediction markets were a bright spot with events contracts hitting a record 8.8 billion in the quarter. And then Robinhood Gold subscriptions also helped with revenues jumping 32%.
But investors are still focused on the slowdown in the core business. Options, equities, and crypto trading volumes are all down from the previous quarter. And Robinhood also warned that expenses jumped 18% in Q1, partially tied to the work on the Trump accounts, which will require an additional $100 million.
As a result, shares of Robinhood are down around 12% this morning at the time of this recording. Let's wrap the show with a fun fact. Disney has decided not to spin off ESPN. See, for years, investors have been pushing Disney to spin off ESPN into its own company because ESPN was seen as a declining cable business, dragging down Disney's overall value. And honestly, it's a fair point.
Now, ESPN used to be Disney's profit engine because they could charge cable companies whatever they wanted to serve the channel. But about 10 years ago, cord cutting started taking off, leading to declining cable subscribers. And now ESPN is seen as a declining asset. Well, despite that, Disney's new CEO, Josh DeMauro, still wants to keep ESPN inside Disney.
And the plan is to bundle ESPN with Disney Plus and Hulu. I'm not really sure how I feel about that because, you know, if you're a sports fan, you can't just subscribe to ESPN. You need to subscribe to all the other streaming services as well. So in that case, it's just easier and better to subscribe to a cable service like YouTube TV, which is what I do.
Anyways, Disney is reporting earnings next week, so we should get more information on their streaming business. And we'll see if management has any additional information about the ESPN stuff during the earnings call.
Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like five extra seconds, consider giving us a five star rating on Apple, Spotify, YouTube, wherever you listen to your podcast. All that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching and commenting.
Shout out to Mike and Connor for all the work behind the scenes. and we'll see you guys back here tomorrow.
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