Federal Reserve issues May FOMC statement

The Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent and anticipates that ongoing increases in the target range will be appropriate.

Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong. Job gains have been robust in recent months, and the unemployment rate has declined substantially. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.

The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain. The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in conjunction with this statement.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Esther L. George; Patrick Harker; Loretta J. Mester; and Christopher J. Waller. Patrick Harker voted as an alternate member at this meeting.

Implementation Note issued May 4, 2022

Press Release: https://www.federalreserve.gov/newsevents/pressreleases/monetary20220504a.htm

AMAZON.COM ANNOUNCES FIRST QUARTER RESULTS

1Q’22 Earnings: Press ReleasePresentation SlidesWebcast

SEATTLE—(BUSINESS WIRE) April 28, 2022—Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its first quarter ended March 31, 2022.

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Operating cash flow decreased 41% to $39.3 billion for the trailing twelve months, compared with $67.2 billion for the trailing twelve months ended March 31, 2021.
Free cash flow decreased to an outflow of $18.6 billion for the trailing twelve months, compared with an inflow of $26.4 billion for the trailing twelve months ended March 31, 2021.
Free cash flow less principal repayments of finance leases and financing obligations decreased to an outflow of $29.3 billion for the trailing twelve months, compared with an inflow of $14.9 billion for the trailing twelve months ended March 31, 2021.
Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations decreased to an outflow of $22.3 billion for the trailing twelve months, compared with an inflow of $16.8 billion for the trailing twelve months ended March 31, 2021.
Common shares outstanding plus shares underlying stock-based awards totaled 523 million on March 31, 2022, compared with 519 million one year ago.
Net sales increased 7% to $116.4 billion in the first quarter, compared with $108.5 billion in first quarter 2021.
Excluding the $1.8 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 9% compared with first quarter 2021.
Operating income decreased to $3.7 billion in the first quarter, compared with $8.9 billion in first quarter 2021.
Net loss was $3.8 billion in the first quarter, or $7.56 per diluted share, compared with net income of $8.1 billion, or $15.79 per diluted share, in first quarter 2021. First quarter 2022 net loss includes a pre-tax valuation loss of $7.6 billion included in non-operating expense from our common stock investment in Rivian Automotive, Inc.

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The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” said Andy Jassy, Amazon CEO.
With AWS growing 34% annually over the last two years, and 37% year-over-year in the first quarter, AWS has been integral in helping companies weather the pandemic and move more of their workloads into the cloud. Our Consumer business has grown 23% annually over the past two years, with extraordinary growth in 2020 of 39% year-over-year that necessitated doubling the size of our fulfillment network that we’d built over Amazon’s first 25 years—and doing so in just 24 months.
Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network. We know how to do this and have done it before. This may take some
time, particularly as we work through ongoing inflationary and supply chain pressures, but we see encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen
since the months immediately preceding the pandemic in early 2020
.”

Morgan Stanley: Legislation that Matters to Markets

In this “Thoughts on the Market” series, Michael Zezas offers perspective on how U.S. public policy affects equity and fixed income markets, including trade tensions, infrastructure and government policy. Listen to this week’s update.

The U.S. Congress has been quietly making progress on a couple of key pieces of legislation, and investors should be aware of which bills will matter to markets.” Michael Zezas

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TRANSCRIPT

Welcome to Thoughts on the Market. I’m Michael Zezas, Head of Public Policy Research and Municipal Strategy for Morgan Stanley. Along with my colleagues bringing you a variety of perspectives, I’ll be talking about the intersection between U.S. public policy and financial markets. It’s Wednesday, April 27th, at 11 a.m. in New York.

Compared to the Russia Ukraine situation, which rightfully has investors focus when it comes to geopolitics, congressional deliberations in D.C. may seem less important. But this is often where things of consequence to markets happen. So we think investors should keep an eye on Congress this week, where progress is quietly being made on key pieces of legislation that will matter to markets.

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Let’s start with legislation directed at boosting energy infrastructure investment. Reports suggest that Democratic senators are seeking to revive the clean energy spending proposed in the build back better plan, and pair it with fresh authorization for traditional energy exploration. The deliberations have momentum for a few reasons. While environment conscious Senate Democrats may have in the past balked about supporting traditional energy investment, they could now see this effort as the last chance to boost clean energy investment for years, given the chance that Democrats lose control of Congress in the midterm elections. Russia’s invasion of Ukraine and the resulting need to boost American energy production to aid Europe, may also be persuasive. And while there are several roadblocks to this deal getting done, in particular negotiations about which taxes to increase in order to fund it, investors should pay attention. Such a deal could unlock substantial government energy investments that benefit both the clean tech, and oil and gas sectors of the market. The downside could be that corporate tax increases become its funding source, and if the corporate minimum tax proposal becomes part of the package, that drives margin pressure in banks and telecoms.

Investors should also keep an eye on the competition and innovation bill that includes about $250 billion of funding for re-shoring semiconductor supply chains, and federal research into new technologies. The bill, known in the Senate as the U.S. Innovation and Competition Act and the House as the COMPETES Act, is in part motivated by policymakers view that the U.S. must invest in critical areas to maintain a competitive economic advantage over China. While this kind of industrial policy is uncommon in the mostly laissez faire U.S. economic system, these policy motives make it likely, in our view, to be enacted this year. That should help the semiconductor sector, which has been facing uncertainty about how to cope with the risks to its supply chains from export controls and tariffs enacted by the U.S. This week these two bills move into conference, which means in the coming weeks we should have a better sense as to what the final version will look like, and if our view that it will be enacted this year will be right or wrong.

So summing it up, don’t sleep on Congress. There’s slowly but surely working on policies that impact markets. We’ll of course track it all, and keep you in the loop.

Thanks for listening. If you enjoy the show, please share Thoughts on the Market with a friend or colleague or leave us a review on Apple Podcasts. It helps more people find the show.

Morgan Stanley Apple PodCast

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Boeing Reports First-Quarter 2022 Results

First Quarter 2022

  • 737 production and deliveries continue to increase; submitted 787 certification plan to the FAA
  • Launched 777-8 Freighter; now anticipate first 777-9 delivery in 2025
  • Recorded charges on fixed-price defense development programs as well as for impacts of the war in Ukraine
  • Operating cash flow of ($3.2) billion; continue to expect positive cash flow for 2022
  • Revenue of $14.0 billion; GAAP loss per share of ($2.06) and core (non-GAAP)* loss per share of ($2.75)
  • Total backlog of $371 billion; including nearly 4,200 commercial airplanes

1Q’22 Earnings: Press ReleasePresentationWebcast Replay

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The Boeing Company [NYSE: BA] reported first-quarter revenue of $14.0 billion, driven by lower defense volume and charges on fixed-price defense development programs, partially offset by commercial services volume. GAAP loss per share of ($2.06) and core loss per share (non-GAAP)* of ($2.75) also reflect $212 million of pre-tax charges for impacts of the war in Ukraine (Table 1). Boeing recorded operating cash flow of ($3.2) billion.

While the first quarter of 2022 brought new challenges for our world, industry and business, I am proud of our team and the steady progress we’re making toward our key commitments,” said Dave Calhoun, Boeing president and chief executive officer. “We increased 737 MAX production and deliveries and made important progress on the 787 by submitting our certification plan to the FAA. Despite the pressures on our defense and commercial development programs, we remain on track to generate positive cash flow for 2022, and we’re focused on our performance as we work through certification requirements and mature several key programs to production. Leading with safety and quality, we’re taking the right actions to drive stability throughout our operations, deliver on our commitments to customers and position Boeing for a sustainable future.

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Teladoc Health Reports First Quarter 2022 Results

1Q’22 Earnings: Press ReleaseInvestor PresentationWebcast

First quarter revenue grows 25% year-over-year to $565.4 million
• Net loss per share of $41.58, primarily driven by non-cash goodwill impairment charge of $6.6 billion or $41.11 per
share
• Full year guidance ranges for 2022 revenue, net loss per share and adjusted EBITDA revised to $2.4 – $2.5 billion,
($43.50) per share – ($43.00) per share, and $240 – $265 million, respectively

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PURCHASE, NY, April 27, 2022— Teladoc Health, Inc. (NYSE: TDOC), the global leader in wholeperson virtual care, today reported financial results for the first quarter ended March 31, 2022.
Teladoc Health continues to be the global leader in transforming healthcare, delivering
personalized, flexible and efficient whole-person care at scale for millions of consumers and patients while meaningfully reducing costs across the healthcare system. During the first quarter, we demonstrated significant progress in a number of strategic initiatives, such as successfully launching multiple clients on our innovative services, including Primary360 and our stepped-care chronic condition programs
,” said Jason Gorevic, chief executive officer of Teladoc Health.
While we continue to see sustainable growth across our suite of products and services, we are revising our 2022 outlook to reflect dynamics we are currently experiencing in the direct-to-consumer (D2C) mental health and chronic condition markets. In the D2C mental health market, higher advertising costs in some channels are generating a lower-than-expected yield on our marketing spend. In the chronic condition market, we are seeing an elongated sales cycle as employers and health plans evaluate their long-term strategies to deliver the benefits and care that their populations need. Despite the revision to our 2022 outlook, we are confident in our strategy, along with our breadth and depth of capabilities, which empower people everywhere to live healthier lives,” Gorevic added.

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First Quarter 2022
Revenue increased 25% to $565.4 million, from $453.7 million in the first quarter of 2021. Access fees revenue grew 29% to $491.3 million and visit fee revenue grew 12% to $67.9 million. U.S.
Revenues grew 24% to $491.2 million and International revenues grew 27% to $74.2 million.
Non-cash goodwill impairment charge of $6.6 billion was recorded in the first quarter of 2022.
The non-cash charge had no impact on income taxes.
Net loss totaled $6,674.5 million, or $(41.58) per share, compared to $199.6 million, or $(1.31) per share, in the first quarter of 2021. Results for the first quarter of 2022 primarily included a non-cash goodwill impairment charge of $6,600.0 million, or $(41.11) per share, as well as stock-based compensation expense of $60.4 million, or $(0.38) per share, and amortization of acquired intangibles of $49.4 million, or $(0.31) per share.
Results for the first quarter of 2021 included stock-based compensation expense of $86.3 million, or $(0.57) per share, amortization of acquired intangibles of $43.7 million, or $(0.29) per share, and non-cash income tax charge of $87.0 million, or $(0.57) per share.
Adjusted EBITDA* decreased 4% to $54.5 million, compared to $56.6 million in the first quarter of 2021.
GAAP gross margin, which includes depreciation and amortization, was 66.0 percent for the first quarter of 2022 compared to 67.0 percent for the first quarter of 2021.
Adjusted gross margin* was 66.9 percent for the first quarter of 2022 compared to 67.8 percent for the first quarter of 2021.
Average revenue per U.S. paid member increased to $2.52 in the first quarter of 2022, from $2.09 in the first quarter of 2021 and $2.49 in the fourth quarter of 2021.

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Financial Outlook: Teladoc Health provides guidance based on current market conditions and expectations and what we know today. In addition, given the uncertainty of the expected path of the COVID-19 pandemic as well as the broader economic impact, this is an evolving situation and circumstances may change. Based on what we know today, we believe our guidance ranges provide a reasonable baseline for 2022 financial performance.

Paypal – Q1 2022 Earnings

Q1’22: Solid start to the year with better-than-expected revenue growth
• Total Payment Volume (TPV) of $323.0 billion, growing 13% and 15% on an FX-neutral
basis (FXN)
• Net revenues of $6.5 billion, growing 7% and 8% on an FXN basis; excluding eBay,
revenue grew 15% on a spot basis(1)
• GAAP EPS of $0.43 compared to $0.92 in Q1’21, and non-GAAP EPS of $0.88 compared to$1.22 in Q1’21
• 2.4 million Net New Active Accounts (NNAs) added in Q1’22

Earnings ReleaseInvestor Update SlidesWebcast

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FY’22: Revenue expected to grow 11%-13% with TPV surpassing $1.4 trillion
• TPV growth expected to be in the range of ~13%-15% and ~15%-17% on an FXN basis
• Net revenues expected to grow ~11%-13% on a spot and FXN basis; excluding eBay, revenue
expected to grow ~15%-17% on a spot basis
• GAAP EPS expected to be in the range of ~$2.19-$2.34, non-GAAP EPS expected to be in the
range of ~$3.81-$3.93
• Approximately 10 million NNAs expected to be added to PayPal’s platform in FY’22

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Meta Platforms – Q1 2022 Earnings


First Quarter 2022 Financial Highlights
Three Months Ended March 31,
Year-over-Year %
In millions, except percentages and per share amounts 2022 2021 Change
Total revenue:$ 27,908 $ 7%
Total costs and expenses: $19,384 31%
Income from operations: $ 8,524 (25)%
Operating margin: 31 %
Provision for income taxes: $ 1,443 (28)%
Effective tax rate: 16 %
Net income: $ 7,465 (21)%
Diluted earnings per share (EPS): $ 2.72 (18)%

Earnings ReleaseSlidesWebcast – Earnings Call

MENLO PARK, Calif. – April 27, 2022 – Meta Platforms, Inc. (Nasdaq: FB) today reported financial results for the quarter ended March 31, 2022.
“We made progress this quarter across a number of key company priorities and we remain confident in the long-term opportunities and growth that our product roadmap will unlock,” said Mark Zuckerberg, Meta founder and CEO. “More people use our services today than ever before, and I’m proud of how our products are serving people around the world.”

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First Quarter 2022 Operational and Other Financial Highlights
Family daily active people (DAP) – DAP was 2.87 billion on average for March 2022, an increase of 6% year-over-year.
Family monthly active people (MAP) – MAP was 3.64 billion as of March 31, 2022, an increase of 6% year-over-year.
Facebook daily active users (DAUs) – DAUs were 1.96 billion on average for March 2022, an increase of 4% year-over-year.
Facebook monthly active users (MAUs) – MAUs were 2.94 billion as of March 31, 2022, an increase of 3% year-over-year.
Ad impressions and price per ad – In the first quarter of 2022, ad impressions delivered across our Family of Apps increased by 15% year-over-year and the average price per ad decreased by 8% year over-year.
Capital expenditures – Capital expenditures, including principal payments on finance leases, were $5.55 billion for the first quarter of 2022.
Share repurchases – We repurchased $9.39 billion of our Class A common stock in the first quarter of 2022. As of March 31, 2022, we had $29.41 billion available and authorized for repurchases.
Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable
securities were $43.89 billion as of March 31, 2022.
Headcount – Headcount was 77,805 as of March 31, 2022, an increase of 28% year-over-year.

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CFO Outlook Commentary
We expect second quarter 2022 total revenue to be in the range of $28-30 billion. This outlook reflects a continuation of the trends impacting revenue growth in the first quarter, including softness in the back half of the first quarter that coincided with the war in Ukraine. Our guidance assumes foreign currency will be approximately
a 3% headwind to year-over-year growth in the second quarter, based on current exchange rates.
In addition, as noted on previous calls, we continue to monitor developments regarding the viability of transatlantic data transfers and their potential impact on our European operations, and we are pleased with the
progress on a political agreement.
We expect 2022 total expenses to be in the range of $87-92 billion, lowered from our prior outlook of $90-95 billion. We expect 2022 expense growth to be driven primarily by the Family of Apps segment, followed by Reality Labs.
We expect 2022 capital expenditures, including principal payments on finance leases, to be in the range of $29-34 billion, unchanged from our prior estimate.
Absent any changes to U.S. tax law, we expect our full-year 2022 tax rate to be above the first quarter rate and in the high teens.

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