Edition #14-Monday January 9th 2023
Quiz Question of the Week ββ
Find the answer at the bottom of the page!
This Week in History π°
January 9, 1960 - With the first blast of dynamite, construction work began on the Aswan High Dam across the Nile River in southern Egypt.
January 10, 1861 - Florida became the third state to secede from the Union in events leading up to the American Civil War.
January 10, 1863 - The world's first underground railway service opened in London, the Metropolitan line between Paddington and Farringdon.
Major Events This Week π¬
Monday
Tuesday
Wednesday
Thursday- 1.30pm β US CPI (December), initial jobless claims
Friday- 3pm β US Michigan consumer confidence (January)
Incoming Earnings Reports this week- provided by Earnings Whispers.
Summary π
2023 was off to a bumper start with a very nice rally on Friday to close out the week up 1.45%. It didnβt take long for the year to surprise us as oil prices tumbled, and Fed rhetoric suggested a slightly more dovish stance in upcoming rate hikes, as the heavy lifting done in 2022 seems to be bringing inflation down, albeit a long way from the 2% target.
Earnings season kicks off this week with a few notable names, but if we look at a high level to the expectations, most analysts expect there to be a decent sized drop when compared to Q4 of 2021.
How much of this has been priced into stocks remains one of the big questions for me. If we have considered the possibility on both the companies, and the level of demand, then 2023 could be a pretty nice year, but if the full scale is yet to be priced in, then we could be in for some massive misses in earnings.
As always, itβs vital for good investors to be thinking further than the next earnings report, so if you consider any investments now to be in value territory, then there could be further bargains to pick up in the coming weeks.
I expect this week to be a lot of positioning and posturing ahead of Thursdayβs vital CPI report.
If inflation continues to drop steadily, then the Fed will have a lot more room to be generous when it comes to the next interest rate hike, widely expected (77%) to be 25BPS, but if inflation stays sticky, then the 23% expecting a 50BPS hike could well be proved correct.
So stay positive, keep cash ready for dips in your favourite quality companies, and trust your strategy!
Market Recap π
Provided by Unusual Whales Futures
Post of the Week π
βοΈ 2022 in Numbersπ
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2022 was a year unlike any other weβve seen for decades. High inflation, war in Europe, soaring commodity prices, and almost countless other events which had markets more volatile and uncertain than potentially ever before. π€―
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So what made it the year that it was? Was it the collapse of the cryptocurrency spade, as investors fled towards safer asset classes?
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Or was it the volatility in the bond market as new UK PM Liz Truss attempted to stimulate growth in the economy, before being ousted only 44 days later. π€―
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One thing is for sure, we had a lot of opportunities to learn in 2022, and if we want to take these lessons forward, then we need to know what they mean for our investments. π€
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What variables are you keeping a watch on for movement in 2023? Maybe the VIX or 10 year treasury yield will be your metric for volatility, or perhaps watching the rising interest rates will be your signal? Perhaps the DXY or other currency will help guide you? π
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Whatever it is, as long as you carefully consider what might influence your money in 2023, and put your strategy into practice, the year ahead can be a successful one. π₯³
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Sure, we might have more volatility and pain ahead, but if we want to grow over decades, then these are the times to be learning lessons and building our competence. π
What do you think? Let us know π€
Whatβs Moving Markets?
CNBC- Suez Canal traffic βregularβ after bulk carrier suffers engine failure in waterway
The Suez Canal Authority said work was underway to tow bulk carrier GloryΒ after it suffered an engine failure Monday morning.
Shipping agency Leth said that the vessel had been refloated after running aground.
The vessel had loaded 65,970 metric tons of corn from Ukrainian port Chornomorsk on Dec. 25 and was bound for China.
CNBC- U.S. House Speaker Kevin McCarthy pledges to tackle immigration, βwokeβ education policies and IRS funding
The U.S. House of Representatives elected Kevin McCarthyΒ of California as speaker in the 15th round of votes early Saturday.
McCarthy made extraordinary concessions to win over a small bloc of far-right holdouts who blocked his speaker bid.
McCarthy said the tense showdown on the House floor this week was proof that he is not someone who gives up easily.
CNBC- βA cowardly and vile attackβ: Over 400 arrested after Bolsonaro supporters storm Brazilβs Congress
World leaders, including some of Brazilβs regional neighbors, condemned Sundayβs attack on Brazilβs Congress, the Supreme Court and the presidential palace and reaffirmed their support for Lulaβs administration.
Chilean President Gabriel Boric described the attack on Brazilβs institutions as a βcowardly and vile attack on democracy.β
Jimena Blanco, head of Americas at Verisk Maplecroft, said there were many similarities between the attack on strategic sites in Brazilβs capital and the Jan. 6 invasion of the U.S. Capitol two years ago.
Chart of the Week π
Most new investors tend to think the major returns come from the most innovative and dynamic companies, inventing the most futuristic robotic EV rocket launching genomics technology, but letβs take a closer look at a company such as United Health.
Making a 349,900% return since 1989 means that if you invested Β£1000, youβd now have a very nice Β£3.5 million. The company donβt necessarily do anything innovative or extraordinary, but instead have a solid and growing customer base in the form of the American public.
Iβm not necessarily suggesting UnitedHealth is a good investment in itself, but instead looking to demonstrate that value and incredible growth can be found in the most day to day of stock market areas. Iβve got my eye on companies in such areas for 2023, doing the βboringβ work we all need and expect, and executing exceptionally well.
Such companies will do well regardless of whether we see a recession or not, and as we saw in 2022, have a very good chance of outperforming the most dynamic and exciting companies most people entering the market want to own.
Investorβs Toolkit βοΈ
Unusual Whales- Options Flow and Analysis
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Disclosure
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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
The US stock market is 46% of the entire worldβs stock market capitalization in 2022.
Source- Liberated Stock Trader