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Market Talk ⏪

Another week and the stock market continues to roar higher. Previous weeks we saw the market climb over “better than expected” earnings as well as the thought that the Fed could soon pause their rate hike plans.

Fed Chair quickly squashed those ideas a week ago in his briefing, but this past week we got a glimpse into his work starting to pay off.

Fed decision day and CPI readings have become the Super Bowl for investors, all eyes are watching. Last week we got the CPI report showing October CPI increased 0.4% for the month and 7.7% from a year ago, which were both lower than estimated.

Markets rejoiced the news!

Now with October CPI data out, which is the last CPI data the Fed will see prior to their next meeting at the beginning of December, what will Powell & Co decide to do?

My belief, which is in-line with many economists, is that we will see a 50 basis point hike in December and then another 25 basis hike in the first meeting of 2023. After that is anyone’s guess, but I am not sure the Fed even knows yet because it will all be dependent on the data.

The Fed and CPI have rightfully been the center of attention of late, but something that did not get talked about enough last week was the fall in the 10-year treasury. As noted below, the 10-year treasury fell 25 basis points to 3.9%, which is back to where we were at the start of October.

Higher rates compress valuations, and with rates coming off their highs (for the time being) and the dollar falling last week as well, investors went back to a “risk on approach” as technology stocks once again led the charge. Lower yields and a weakening dollar could provide some further short-term tailwinds for the market. Bond markets were closed on Friday, so I will be paying close attention to where those open today.

In other news we saw continued layoffs in the technology sector with META (formerly Facebook) announcing layoffs of roughly 11,000 employees. This announcement was cheered by investors, as META shares rallied nearly 20% during the week. The timing of the layoffs was interesting, considering two weeks prior, an open letter was written by Altimeter Capital’s CEO Brad Gerstner, in which he called for a 20% reduction in the workforce.

Another week and yet another cryptocurrency exchange goes down. This week, FTX filed for bankruptcy and yet again crypto investors were locked out of their account. This has become far too common of late and it comes down to investors losing trust in this type of “currency” and the exchanges involved. FTX was supposed to be legit, backed by the likes of NBA star Steph Curry and NFL legend Tom Brady, but now they are set to lose millions on the failed crypto exchange.

In international news, things are looking more dire across the pond. The UK continues to be in shambles, as it was reported that their economy contracted by 0.2% in Q3, signaling what could be the start of a long recession.

China’s economy also continues to struggle, in large part due to the COVID restrictions that remain in place. I discussed the impact of these restrictions in my SBUX Deep Dive. Investors have been hoping, for some time now, that those restrictions would loosen in the near future, which would be a tailwind for companies involved in the region.

Deep Dive 📰

I recently dropped a Deep Dive on Starbucks Corporation (SBUX). If you have not checked it out yet, CLICK HERE. If you have checked it out, let me know what you think of the format.

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, and the continued resurgence in the markets, we have seen the index continue to fall deeper into the Greed level. Investors have survived the earnings season, thus far, but the economic headwinds remain the same giving me cause for concern. Currently, the index has a reading of 66, which is not much change from the prior week reading of 59.

Source

Earnings on Deck 💰

We have made it through peak earnings season for Q3, but we still have plenty of notable companies reporting their latest earnings this week. Analyst estimates continue to come down, which is one reason we are seeing plenty of companies beat estimates, but some of the troubling signs have come from future guidance from companies.

Here is a look at the companies reporting this week.

Source

Notable Analyst Updates 📝

• Wells Fargo with a rare downgrade of Costco (COST) to equal weight

• Barclays cuts PT of Disney (DIS) to $98

• JPMorgan with a huge DOUBLE downgrade of Intel (INTC) from buy to sell and cut PT to $32 from $64

• Mizuho lowers PT for Federal Realty (FRT) to $109

• Deutsche Bank upgrades shares of Walgreens (WBA) to Buy and increases PT to $50

This Week 📆

Monday

• Fed Officials Speak: Fed Vice Chair Brainard, New York Fed President John Williams

Tuesday

• PPI

Wednesday

• Retail Sales

• NAHB survey

Thursday

• Initial Jobless claims

• Housing Starts

Friday

• Existing Home Sales

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 in which I discussed 10 Top REITs To Buy

Also during the week, I did a comparison between Coca Cola and Pepsi stock.

Here are a few others of my latest videos:

3 Top Dividend Stocks To Buy In November

Better Buy: Home Depot vs Lowe’s

Earn Dividends EVERY Month

5 FOREVER Dividend Stocks

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

Have a Great Week!

Mark