Hello Everyone,

Welcome to the +273 new subscribers who joined our Dividend Investor’s Edge community this past week. If this is your first time reading, but you have not yet subscribed, join our growing investing community of ~2.4K investors.

To celebrate the launch of Citizen Mint’s Private Market Investing Platform, they’re giving away a REI e-bike to improve your eco-transportation. Simply enter your email through the link below to participate and learn how to invest in opportunities that seek to maximize returns while creating a better future for all. Closes November 7th!

ENTER GIVEAWAY NOW

*This is sponsored advertising content.

Market Talk ⏪

Earnings season is in full swing now and we are about to really hit our stride this week with a number of notable names providing earnings updates for investors. So far, the earnings that have been reported have been better than feared.

According to FactSet, roughly 20% of the S&P 500 companies have reported earnings thus far and nearly 75% have beaten analysts expectations.

On the week, we got positive earnings from the likes of Netflix (NFLX), Johnson & Johnson (JNJ), Bank of America (BAC) and Lockheed Martin (LMT), just to name a few. These positive earnings along with the thought of a potential Fed pause coming at the start of the new year had markets in the green to end the week.

In fact, believe it or not, but the Dow Jones Industrial Average just had its FIRST three-week winning streak of the ENTIRE YEAR. Pretty shocking if you ask me.

Banks have been the primary industry that has reported thus far, and the others that have reported do not give investors a great barometer on where the economy as a whole is right now. However, that will change based on the number of companies that will be releasing their earnings this week.

‘Better than feared’ is what I keep hearing from various money managers when they describe the earnings we have seen. As an investor, that does not get me all warm and fuzzy.

Think about that for a second. If you were playing a sport or a job and you asked someone how you did and they told you, “well, you were not as bad as I thought you would be.” Does that really scream confidence? NO!

That is how I feel about the stock market right now when discussing results that are “better than feared.” The economy data thus far and the Federal Reserve’s plan is telling us things are going to get worse before they get better.

• Inflation needs to come down

• Labor needs to crack

• Wage growth needs to slow

• Treasuries need to stabilize

None of this has happened yet and this week will give us a HUGE amount of information.

After reading this, you might be asking, well Mark, why are we seeing these nice bounces in the market?

My answer to that is a couple of things:

1. Some of the wildest bounces we see in the stock market take place during a Bear Market (which we are in)

2. Investors are starting to fantasize about a potential Fed pivot or pause at the start of the new year

Let’s touch on #1 first. Here is a little history (source: LPL Research) on some of these “bear market bounces” we have seen over the years.

• During the 3-year bear market in the early 2000s, the S&P 500 jumped 10% or more 6 different times during its fall to a 49% decline.

• During the Great Recession, the S&P 500 jumped 10% or more 3x, including a 27% rally in 2008 before eventually bottoming after 56% declines

Bounces in the market can feel good in the near-term and make you forget about your worries from just a few weeks ago, but I caution you to take a long-term approach. Do not invest based on a fear of “missing the bottom.” Invest based on fundamentals and economic data.

Next, let’s touch on #2. Investors are going down almost the same exact path they did during the August bounce in which they started to convince themselves that a Fed pivot was coming. For those of you not familiar, a Fed pivot is simply a change of direction when it comes to monetary policy. Right now, the Fed is tightening and raising interest rates, but a pivot would turn to a cut in interest rates.

That is simply not the case in my eyes. The data is nowhere close to showing that and the Fed has been steadfast in crushing inflation. The next Fed rate decision comes in November followed by a December meeting, and I believe we will see another 125 basis points worth of hikes to end the year, 75bps in November followed by 50bps in December. From there, I am hopeful that inflation numbers will begin to creep lower resulting in slowing rate hikes or a pause at the very least.

Q3 results are not going to determine whether we are in the clear or whether a recession (if it is not already here) is imminent. The fact of the matter is that S&P 500 expectations still need to come down. This weeks earnings will go a long ways in that process.

Speaking of earnings, one of the biggest movers higher on the week was Netflix, who reported much better than expected subscriber growth during the quarter. This resulted in the stock being up 16.4% on the week.

Source

Snap on the other hand was the big loser on the week, as they reported their worst revenue growth rate in the history of the company, despite strong user growth. Shares of SNAP plunged 28% on Friday alone.

When it comes to fixed income, bonds have again climbed higher, which continue to add pressure to equities. As you will see below, the 2yr US Treasury is sitting at 4.4%.

In terms of Economic Data that was released last week, we saw building permits rise slightly in September after two consecutive monthly declines. That being said, housing is still slowing and has more downside to go.

Jobless claims for the week ended Oct. 15 totaled 214,000, a decline of 12,000 from the week earlier, which was less than expected.

From an International Standpoint, we got news that UK Prime Minister Liz Truss resigned after only 44 days in office. It was a tumultuous short run for the PM after a failed tax cut package, which sent shockwaves through the UK financial markets. Former Finance Minister Rishi Sunak appears to be the favorite for the PM position.

Sticking with the UK, the country reported that September inflation rose 10.1% during the month of September, which was a 40-year high.

Earnings News 📰

Earnings news will be tracked in the Earnings Recap section, which is a NEW ADDITION to the newsletter based on the feedback I received from you, the readers.

US Markets 🇺🇸

Here is a performance summary for US Equities:

Here is a look at US Treasuries:

The Fear & Greed Index measures market sentiment based on the following seven factors: put/call ratios, junk bond demand, stock price breadth, market volatility, stock price strength, safe-haven demand, and market momentum.

When it comes to the Fear and Greed Index, in a matter of a few weeks we went from a neutral reading to an Extreme Fear reading, now back to a neutral reading. The markets having a few consecutive weeks in the green have investors feel a little better, but there still is plenty of fear in the markets. Currently, the index has a reading of 45, which is not much change from the prior week reading of 22.

Source

Earnings on Deck 💰

Another huge week of earnings on tap.

• United Postal Service

• General Motors

• Coca-Cola

• 3M

• Raythen Technologies

• Microsoft

• Alphabet

• Visa

• Boeing

• Waste Management

• Meta Platforms

• McDonald's

• Merck

• Altria Group

• Apple

• Amazon.com

• Intel

• Exxon Mobil

• Chevron

• AbbVie Source

Notable Analyst Updates 📝

• JPMorgan rates TJX Companies (TJX) a BUY

• Citi boosts the PT of Exxon Mobil (XOM) to $98 and Chevron (CVX) to $155

• Citi cut the PT of Microsoft (MSFT) to $282

• Credit Suisse cuts the PT of McDonald’s (MCD) to $272

• Deutsch Bank cuts PT of Qualcomm (QCOM) to $160 and Nvidia (NVDA) to $140

• Ally Financial (ALLY) cut to SELL at Wells Fargo and Morgan Stanley goes to HOLD

• Wedbush cuts PT of Tractor Supply (TSCO) to $200

• Truist cuts PT of Tractor Supply (TSCO) to $237

This Week 📆

Monday

• October manufacturing & services PMI

Tuesday

• Case-Schiller August Home Prices

• October Consumer Confidence

Wednesday

• September New Home Sales

Thursday

• Weekly Jobless claims

• Real GDP Q3

Friday

• September Personal Income & Spending

• September Pending Homes

• October Consumer Sentiment

Other Resources 📺

If you have not done so yet, definitely check out my growing YouTube community where I publish weekly videos on Dividend Stocks I am looking at.

Here is a look at my latest video where I discussed 3 High-Yield Dividend Aristocrats:

High-Yield stocks are great for those looking to boost their portfolio dividend yield and income quickly. However, another area I like to invest in is within Dividend Growth stocks as it puts the Power of Compounding into overdrive.

Here is my latest video on 5 Top Dividend Growth Stocks:

Here are a few others of my latest videos:

Earn Dividends EVERY Month

Top 3 Dividend ETFs

5 FOREVER Dividend Stocks

If you enjoyed the article, leave a LIKE and COMMENT down below. Also, if there is someone that could benefit from this newsletter, consider sharing it.

Have questions? You can email me directly at [email protected].

Have a Great Week!

Mark