The Stock Market Got Ran Over By A Reindeer

Even Santa cannot save the markets this year

Author

Mark Roussin
December 19, 2022

Hello Everyone,

Welcome to the +354 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 ~4.3K investors.

Gathering KPIs and segment data is a time sink for investors. Stratosphere.io has made it EASY for investors to have quick access to financial data used when researching stocks. Stratosphere.io just launched their brand new platform and you can give it a try completely FREE. It gives me the ability to quickly navigate through company financials, comb through numerous metrics with data going back as far as 35 years on over 40,000 stocks globally. Get started researching on the Stratosphere.io platform today, for FREE.
Click HERE to give it a try.
*This is sponsored advertising content.

Market Talk ⏪

Well, if you recall in my newsletter last week, I said it was a “make or break week for the stock market” and I have to say it most certainly broke.

On Tuesday we got the latest CPI reading, which showed an increase of 7.1% over prior year and a 0.1% increase from the prior month. Expectations were an increase of 0.3% over prior month and an increase of 7.3% over prior year, which means inflation was slowing slightly faster than expected.

And what did investors do, got their hopes up again.

  • Fed will pivot

  • Fed will start slowing

After the CPI data was released we saw the stock market climb higher, only to be completely shut down by the Federal Reserve the very next day.

We have been here before folks, and if you have been reading my newsletters for some time now, you would recall my warnings. The Federal Reserve was late to action at the start, they will NOT be early to cutting rates.

On Wednesday, Fed Chair Jerome Powell announced a 50 basis point hike to the federal funds rate. The hike brought the targeted range between 4.25% and 4.50%, the highest level in 15 years. Also, the 50 basis point hike broke the string of four straight 75 basis point hikes we have seen, signaling that the pace would slow.

The pace slowing was expected, but the hawkish tone from the fed chair sent markets into a spiral. Comments such as “plenty of work left to do” as well as mention of a forecasted fed funds rate of 5.1%, higher than the markets had anticipated. The latest fed dot plot shows rates peaking in the back half of 2023.

Another piece of data we got last week was a drop of 0.6% in retail sales during the month of November. Another point I have been trying to hammer home as been the idea of a weakening US consumer, which is starting to become more and more apparent.

So what is the game plan from here you might ask. CAUTION!

The Fed is dead set on bring CPI down to its 2% goal and in the past, we have seen the Fed increase rates until it is above inflation, and right now we still have a serious gap between the two. As such, further hikes will be added pressure to equities and there will need to be a full re rating of 2023 estimates.

The reduction in estimates could send shockwaves through the market as well. My approach is to utilize options. Buying SPY puts 2 weeks to 1 month out as well as utilizing cash secured puts to enter into high-quality positions.

In terms of international news, we saw some weak sales data out of China, which saw retail sales fall nearly 6% from a year ago. The FTX debacle continues to weigh on the crypto market as SBF has now been arrested. Also, their have been talks of a ban on Tik Tok due to China’s influence on the app.

Deep Dive 📰

Over the weekend I published my latest Deep Dive where we took a look at one of the most popular REITs, that being Realty Income (O). They pay a MONTHLY dividend that is popular among retail investors.

You can become a Premium Subscriber today for ONLY $1 PER DAY on a monthly plan or even LESS on the annual plan. Premium subscribers receive:

  • 2 Monthly Individual Stock Deep Dives

  • Monthly Portfolio Updates

  • Earnings Recaps

  • And More

Stratosphere.io is not only the sponsor of today’s newsletter, but they were also a great tool that I utilized when performing the research for my deep dives. Here is a summary snapshot of what you can see when using the tool.

If there is a specific stock you would like me to consider for a future Deep Dive, then send me an email at [email protected] and I would be happy to consider it.

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, we have seen a fast move from a reading of ‘Extreme Greed” just two weeks ago to now having a reading of Fear once again. Currently, the index has a reading of 42, which is not much change from the prior week reading of 53.

Earnings on Deck 💰

We still have some late earnings trickling in this week from a few notable companies, including: General Mills, Nike, FedEx, Rite Aid, and Micron to name a few.

Notable Analyst Updates 📝

  • Oppenheimer cuts PT on to $170

  • Citi increases PT for to $205

  • Wells Fargo increase PT for to $185

  • Deutsche Bank increases PT for to $170

  • Wells Fargo increases PT for to $400

  • UBS lowers PT on shares of to $420

  • Credit Suisse increases PT for to $165

  • JPMorgan names as a top pick in biopharma for 2023

  • Evercore ISI making its top tech pick for 2023

  • Credit Suisse increases PT for to $122

This Week 📆

Monday

  • NAHB Survey

Tuesday

  • Housing Starts

  • Building Permits

Wednesday

  • Existing home sales

  • Consumer confidence

Thursday

  • Initial jobless claims

  • Real GDP Q3

Friday

  • November durable goods

  • November personal income/spending

  • New 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.

Today’s video will be covering my TOP 10 Dividend Stocks For 2023. Be sure to check it out.

Here is a look at my latest video in which I discussed my FAVORITE Dividend ETF which is SCHD:

Also during the week, I did a video breaking down EVERY Dividend King:

Here are a few others of my latest videos:

If you enjoyed the newsletter, 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 Happy Holidays!

Mark

Reply

or to participate.