Monday Morning Edge Report - August 28, 2023

Stocks Set To Enter The Worst Performing Month of the Year

Author

Mark Roussin
August 28, 2023

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Market Talk ⏪

Last week, we did not get much movement from the major indexes, outside of the Nasdaq. The Dow Jones Industrial and Russell 2000 are still holding onto slight gains, but the Nasdaq was the big winner on the week as Nvidia reported a blowout quarter.

The Fed Chair, Jerome Powell, spoke at his conference in Jackson Hole, which has resulted in some fireworks in the markets in recent years, but none of that this year. He eased investors concerns around the possibility of further rate hikes, by stating that the Federal Reserve would “keep its options open” in terms of further rate hikes.

Earnings season is coming to an end, as you will see in the Earnings section below, but we do still have a few notable companies reporting this week, including: Broadcom (AVGO), Salesforce (CRM), and Crowdstrike (CRWD), to name a few.

Earnings reports may be passed us, but there will be no shortage of economic reports this week as we will get a look into the economy, housing, and jobs.

Here are some of the top stories of late:

  1. Reviving the IPO Market: Last week, Instacart filed the necessary paperwork to go public on the Nasdaq under the ticker symbol “CART.” The IPO market has largely been non existent for much of the past year, so this is a refreshing sight.

  2. Money Market funds balloon to nearly $1 Trillion: In a report published by Bank of America recently, they estimated that money market assets has ballooned to $925 billion year to date, meaning investors are stacking cash as we approach the fall months of 2023. Not only does September tend to be a difficult month for the stock market, but it is also competing with high-yield opportunities investors have that represent very little risk to them. When that money starts getting put back into the stock market, this could help spark a rally.

  3. Labor Market remains tight as workers are not staying unemployed for every long: Last week not only did we see initial jobless claims drop, but we also saw a drop in the continued jobless claims. The tight labor market has proven to be difficult to navigate as it relates to the fight against inflation.

  4. 3M agrees to pay more than $5.5 Billion in settlement over military earplugs: 3M has been stuck in a huge litigation revolving around defective earplugs that they sold to the military, that apparently resulted in hearing loss for users of the product. This settlement will resolve more than 300,000 lawsuits and it will be paid over five years. This has weighed heavily on the stock over the past year, so this is some resolution for 3M shareholders.

  5. Apple is the most under owned Big Tech Stock: Apple stock has not been this under owned since 2008, according to a new report put out last week by Bank of America. Meta is the most ‘over-owned’ Big Tech stock at the moment, which makes sense given the massive move higher the stock has seen in 2023 alone.

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Premium subscribers will be receiving their two Deep Dives this week!

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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.

After a big move in the Fear & Greed Index in the week prior, this last week was relatively flat with the index remaining in neutral as investors were awaiting the Fed Chair’s speech in Jackson Hole on Friday that did not result in many fireworks to close the week. Currently, the index has a reading of 48, which is slightly higher than the prior week’s reading of 45.

Earnings on Deck 💰

Earnings season is almost over, but we still have a few notable companies reporting this week. Here is a look at the company’s reporting earnings this week:

Analyst Upgrades/Downgrades 📝

In this section we will highlight any recent notable analyst upgrades or downgrades.

  • RBC upgrades Iron Mountain to outperform from sector perform

  • JPMorgan upgrades Emerson Electric to overweight from neutral

  • Mizuho upgrades Edison to buy from neutral

  • Edward Jones upgrades Dollar General to buy from hold

  • Barclays initiates Duke Energy as overweight

  • Bank of America downgrades Dick’s to neutral from buy

  • Stifel upgrades Nvidia to buy from hold

  • Bank of America upgrades Williams-Sonoma to neutral from underperform

  • Raymond James upgrades Prudential to strong buy from market perform

  • Wolfe adds Charles Schwab to its top picks list

Economic Data This Week 📆

Monday

  • None

Tuesday

  • S&P Case-Shiller home price index

  • Job openings

  • Consumer Confidence

Wednesday

  • ADP Employment

  • GDP (revision)

  • Advanced US trade balance in goods

  • Advanced retail inventories

  • Advanced wholesale inventories

  • Pending home sales

Thursday

  • Initial jobless claims

  • Personal income

  • Personal spending

  • PCE Index

  • Core PCE Index

Friday

  • US non-farm payrolls

  • US unemployment rate

  • US hourly wages

  • ISM manufacturing

  • Construction spending

Other Resources 📺

If you have not done so yet, check out my growing YouTube community of roughly ~34,000 like-minded investors where I publish weekly videos focused on building wealth through investing.

Here is the latest video I released: $100K in VOO or SCHD: Which ETF Is Better?

Here is another video I put out last week: Earn $1,000 EVERY Month From These 4 Dividend Stocks:

Here are a few others of my latest videos:

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

Happy Investing!

Mark

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