Edition #19- Monday March 6th 2023
Quiz Question of the Week ❓
Answers at the bottom!
This Week in History 📰
March 9th 1934 - Russian cosmonaut Yuri Gagarin (1934-1968) was born in Gzhatsk, Russia. On April 12, 1961, he became the first human in space.
March 10, 1862 - The first issue of U.S. government paper money occurred as $5, $10 and $20 bills began circulation.
March 11, 1918 - The 'Spanish' influenza first reaches America
Summary 📝
March started strong for the market, with all sectors finishing higher on Friday as Fed members suggested an end to the steep rate hikes by summer.
Whether this update is fully trusted by the market remains to be seen. We’ve seen reversals as narrative and rhetoric changes, with the next interest hike just on the horizon, following the March FOMC meeting on March 22nd.
With Fed Chair Jerome Powell speaking multiple times this week, a slight change in tone can have severe effects. If his dovish tone continues, then the market may continue to gradually climb, but if new information or a more aggressive stance is taken, we could see some major volatility over the next few days.
Markets are currently pricing in a 72% chance of a 25BPS hike, slightly down from last week’s 74%. With another CPI reading on inflation coming on the 14th, this could very likely drop further. More important than any single rate hike, all eyes will be on when the Fed will stop hiking, and how long they will keep rates high before the economy slows down enough to merit a cut.
I’m continuing to focus on buying quality companies at great prices, looking to keep The Recession Checklist in mind when selecting companies.
1. Financial Strength
2. Diverse Revenue Streams
3. Cost-Efficiency
4. Brand Recognition
5. Adaptability
6. Resilience
7. Innovation
8. Market Position
9. Supply Chains
10. Cash Flow
Major Events This Week 🔬
MONDAY, MARCH 6
Factory orders
TUESDAY, MARCH 7
Fed Chairman Powell testifies to Senate
Wholesale inventories
Consumer credit
WEDNESDAY, MARCH 8
ADP employment
U.S. trade balance
Fed Chairman Powell testifies to House
Job openings (JOLTS)
Beige Book
THURSDAY, MARCH 9
Jobless claims
Fed Gov Waller speaks
FRIDAY, MARCH 10
Employment report
U.S. unemployment rate
Federal budget
Incoming Earnings Reports This Week
Provided by Earnings Whispers
Notable Upcoming Earnings (Provided by Unusual Whales)
Monday:
TCOM (afterhours) Implied Move: +/- 8.9. Sector: Consumer Cyclical
Tuesday:
DKS (pre-market) Implied Move: +/- 9.0. Sector: Consumer Cyclical
DOLE (pre-market) Implied Move: +/- 6.3 Sector: Consumer Defensive
CRWD (afterhours) Implied Move: +/- 11.0. Sector: Technology
Wednesday:
MDB (afterhours) Implied Move: +/- 15.9 Sector: Technology
Thursday
JD (premarket) Implied Move: +/- 7.0 Sector: Consumer Cyclical
BBW (premarket) Implied Move: +/- 13.9 Sector: Consumer Cyclical
GPS (afterhours) Implied Move: +/- 11.0 Sector: Consumer Cyclical
DOCU (afterhours) Implied Move: +/- 12.9 Sector: Technology
ORCL (afterhours) Implied Move: +/- 5.2 Sector: Technology
Market Recap 📈
Provided by Unusual Whales Futures
Post of the Week 💌
✅ All companies want investment, and one of the best ways to do so is to hold an investor day. 📈
✅ This is not the same as an AGM, which is more an update on how the company is performing. Instead, the presentation looks to inspire new investors, spark excitement, and answer questions.🙋♀️🙋
✅ Tesla holds its investor day tomorrow, looking to outline the potential future of the company. 🔮
✅ Such events can go either way in the market. Surprise launches of new products can be very exciting for investors, but if investors are disappointed, the stock can plummet. 🤯
✅ I look to stay clear of potential short term speculation. If the company is genuinely doing amazing things, then you should be willing to stick with them for the long run. Trying to chase hype can be a dangerous strategy. 🔥
What’s Moving Markets? 🏃♂️
Apple may launch mixed reality device this year — but we’re not scared, HTC CEO says
Apple will likely launch a mixed reality product “very soon” — potentially as soon as this year, HTC CEO and co-founder Cher Wang told CNBC.
The company will prioritize such a device over augmented reality glasses, she added.
Wang isn’t worried by the competition. “It’s really proven that our direction is correct,” she said. “Competition is always good.”
China takes a cautious approach to its economy in 2023
Premier Li Keqiang’s government work report delivered Sunday pointed to growing uncertainties in the international environment
Beijing announced Sunday a target of “around 5%” growth in gross domestic product for 2023, with only a modest increase in fiscal support.
“The government’s conservative growth target of 5% for 2023 recognizes that the pickup in China’s growth continues to face headwinds,” Martin Petch, vice president and senior credit officer, Moody’s Investors Service, said in a note.
China to increase defense spending by 7.2%
China is set to increase defense spending this year by 7.2% to 1.56 trillion yuan ($230 billion), according to a draft released Sunday by the Ministry of Finance.
China’s defense budget grew by 7.1% last year to 1.45 trillion yuan.
Chart of the Week 📈
The last few years have been difficult for retail, with rates climbing at an unprecedented pace, enthusiasm in speculation drying up, and fears of a recession lingering.
However, the last few weeks have shown the highest net inflows into US equities in years, with many speculating that the bottom of the market is in, and that now is the time to be jumping back in.
Many of these stocks are the winners we saw during the crazy period following stimulus of the economy, where money was essentially free to borrow, and speculation was at its peak.
Some of these companies have solid fundamentals, but are investors making the same mistakes that caused so much pain in 2022, or is the worst of the downturn over?
I look to stay clear of trying to predict these cycles. We’ve seen how the tone can change in a moment, and I don’t want to be in the firing line if the steady climb we’ve seen in 2023 decides to stop.
Investor’s Toolkit ⚒️
Unusual Whales- Options Flow and Analysis
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Disclosure ✅
This newsletter provides general information only. Before making any financial or investment decisions, please consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.
Quiz Question of the Week- Answer ❓
Answer D- 74%.
In August 2000, Fortune magazine published “10 Stocks to last the decade”. By December 2012, a portfolio containing those 10 stocks lost 74.3% of its value.
Full breakdown here- https://nstarcapital.com/2012/12/fortunes-10-stocks-to-last-the-decade-forget-about-it/
Nokia (NOK: $4.22, -92.2%)
Nortel Networks (NT: $0, -100%)
Enron (ENE: $0, –100%)
Oracle (ORCL: $34.22, -53.8%)
Broadcom (BRCM: $33.28, -86.0%)
Viacom (VIA: $54.17, -21.5%)
Univision (UVN: $0, -100%)
Charles Schwab (SCH: $14.61, -59.4%)
Morgan Stanley Dean Witter (MWD: $14.20, -84.0%)
Genentech (DNA: $95, -36.7%)