Monday Morning Edge Report - September 18, 2023

Fed decision week has arrived

Author

Mark Roussin
September 18, 2023

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Market Talk ⏪

Welcome to the Monday Morning Edge Report, where we breakdown some of the top stories going on in the stock market and put it is an easy to understand report.

This week is likely going to bring some added volatility as the Federal Reserve is expected to give their next decision on interest rates and discuss further plans. The Fed’s dot plot is something investors will have their eyes on, as it predicts where Fed members believe interest rates will be in future meetings. The Federal Reserve is likely going to pause and keep rates unchanged this week, but the conference call is where investors are going to learn about the committee’s future plans.

Let me discuss some of those in more details within our Top 5 Stories:

  1. The Federal Reserve will be conducting their two-day meeting beginning on Tuesday. The Fed will then provide a decision on whether to hike interest rates or keep them at the same levels. Given the sticky inflation data we have seen in recent weeks, I would not be surprised to hear some commentary about potential future hikes before the end of the year, although I believe rates will remain unchanged this month.

  2. ARM Holdings has a successful first day of trading after going IPO. ARM Holdings was the largest IPO of the year, in what could reignite the IPO market. THis week, Instacart is expected to begin trading on the stock market as well. ARM opened up with a valuation near $60 billion, as the stock climbed nearly 25% on the first day of public trading. ARM is a chip design company with 90% ownership being held by Soft Bank.

  3. Inflation data remains hot with CPI and PPI data coming in high. As I mentioned above, inflation has remained sticky of late, which could lead to the Federal Reserve choosing to hike rates yet again prior to the end of the year. CPI showed 0.6% YoY growth and PPI MoM growth of 0.7% compared to 0.4% expected.

  4. Auto Union workers at odds with automakers and on strike: Union workers for the auto makers are at odds over pay, with a union of 400,000+ union workers going on strike. General Motors, Stellantis, and Ford Motor Company has all offered upwards of 20% raises, which have not been accepted by the union’s leader, Shawn Fain yet. With this, the automakers have actually announced some layoffs, to which they say is not related to the work stoppage.

  5. Apple announced their new iPhone 15 a long with a new Apple Watch. Last week, Apple unveiled their latest edition on the iPhone, the iPhone 15, which came with a stronger camera, a new outlet. Apple swapped out its proprietary Lightning connector for a new USB-C connection, which was part of the agreement they had with the European Trade Commission. The iPhone 15 also surprisingly did not come with a price hike.

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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.

With stocks largely unchanged to finish the week off, the Fear & Greed Index was little changed as well. As we enter Fed week, we could see some movement within the index by this time next week. Currently, the index has a neutral reading of 52, which is slightly higher than the prior week’s reading of 51.

Earnings on Deck 💰

We have entered a dead period as it pertains to earnings season, with only a few companies reporting this week. The companies I will be watching this week include: AutoZone (AZO), General Mills (GS), and FedEx (FDX). Here are the companies reporting earnings this week:

Analyst Upgrades/Downgrades 📝

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

  • Bank of America upgrades CSX to buy from neutral

  • Deutsche Bank upgrades Kenvue to buy from hold

  • Citi adds a positive catalyst watch on Microsoft

  • Monness Crespi Hardt downgrades Oracle to neutral from buy

  • Wolfe upgrades CVS to outperform from peer perform

  • JPMorgan downgrades Oracle to neutral from overweight

  • TD Cowen initiates Hershey as outperform

  • Bank of America downgrades J.M. Smucker to neutral from buy

  • HSBC initiates Deere as buy

Economic Data This Week 📆

Monday

  • NAHB Housing Market Index (September)

Tuesday

  • Building Permits preliminary (August) 

  • Housing Starts (August) 

Wednesday

  • FOMC Meeting 

  • Fed Funds Target Upper Bound

Thursday

  • Current Account (Q2) 

  • Continuing Jobless Claims

  • Initial Claims

  • Philadelphia Fed Index (September) 

  • Existing Home Sales (August) 

  • Leading Indicators (August) 

Friday

  • Fed Governor Lisa Cook gives speech for Keynote Address at the National Bureau of Economic Research Economics of Artificial Intelligence Conference, Fall 2023, Toronto, Canada

  • PMI Composite SA preliminary (September) 

Other Resources 📺

If you have not done so yet, check out my growing YouTube community of 35,000+ like-minded investors where I publish weekly videos focused on building wealth through investing.

Here is the latest video I released: Ranking 5 ETFs From BEST to WORST:

Here is another video I put out last week: I Am Beginning To Like This ETF MORE Than SCHD:

Here are a few others of my latest videos:

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Happy Investing!

Mark

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