Monday, December 11th 2023
Hi Oak Investors,
Welcome to another recap on the week’s action and events!
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Thanks,
Gordon
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Summary 📝
Another busy week as markets continued their steady climb upwards, in line with seasonality and momentum following the cooling of inflation!
So what were the main events from last week?
Consumer Price Index (CPI) Report: The CPI for November is anticipated on Tuesday morning. There's interest in seeing if the trend of slowing price increases observed in October's data continues.
Federal Open Market Committee (FOMC) Decision: On Wednesday, the FOMC is expected to announce its decision on interest rates, with predictions suggesting no change.
U.S. National Debt: The U.S. debt has reached a staggering $33.7 trillion, marking a 45% increase since the COVID-19 pandemic.
Interest Rate Forecast: ING economics predicts rate cuts in the coming year.
Student Loan Forgiveness: The Biden administration is expected to forgive $4.8 billion in student loans.
Housing Market: The median house price in October dropped 17.6% to $409,300 compared to the previous year.
Market Summary
S&P 500 SPY 0.00%↑- 0.88%
NASDAQ QQQ 0.00%↑- 1.56%
Dow Jones Industrial Average DJIA 0.00%↑- 0.44%
The Volatility Index fell throughout the week, ending substantially down as markets prepared for the next inflation report and interest rate decision.
At present, markets are pricing in a 97.1% chance of no change in rates at the next Fed meeting in mid December, with a 2.9% chance of 25BPS hike.
All the data we’ve seen shows that inflation is now meaningfully coming down towards the central bank target of 2%, but whether the Fed will overdo things may become the next catalyst. The next few months will be a balancing act of harsh words to manage excitement, and limited actions in to keep things stable.
I suspect there won’t be any further rate hikes, but the Fed STILL need to remain firm in their language to prevent inflation from surging back.
Many analysts are now trying to guess when the next series of rate cuts will be, but this remains a very uncertain task. Last week I showed the charts below from Nomura, but I’ll include those from ING released recently as a comparison.
The Fear and Greed index climbed further into the Greed category at 68/100.
As I noted last time, seasonality is never far from my mind at this time of year, and it looks like the market is thinking the same thing despite some negative headlines. The average across the last 20 years has been great for the next few months, and many institutions seemingly don’t want to miss out!
Of course, nothing is a guarantee these days, but as always, if you keep to your strategy, don’t let the noise change your plan, and learn as much as you can, you can’t go too wrong over the long term!
This Week in History 📰
Source- The History Place
December 11, 1901 - The first transatlantic radio signal was transmitted by Guglielmo Marconi from Cornwall, England, to St. John's, Newfoundland.
December 12, 1998 - The House Judiciary Committee approved a fourth and final article of impeachment against President Bill Clinton, charging him with making false statements in his answers to written questions from Congress.
December 13, 1577 - Francis Drake departed Plymouth, England, in the Golden Hind on his voyage around the world.
What’s on my Watchlist? 👀
Three stocks I think have an interesting week ahead.
I suspect CPI will dominate how the market does this week, but I’m also keeping one eye on earnings coming from ADBE 0.00%↑ and COST 0.00%↑.
RKLB 0.00%↑ have another launch this week, which is always a tremendous catalyst for the space sector. (Also likely to impact SPCE 0.00%↑ and ASTS 0.00%↑ ).
What’s Moving Markets? 🏃♂️
Three stories I’ve got my eye on this week. Sourced from CNBC.
Russia-Ukraine war updates: Biden to host Zelenskyy at the White House; Ukraine urges green light for EU membership talks
China stocks rise after data showing increasing deflationary pressures pushed them down earlier
Treasury yields inch higher ahead of Fed meeting
U.S. Treasury yields were fractionally higher on Monday, as investors look ahead to this week’s Federal Reserve policy meeting.
Major Events This Week 🔬
Economic Events
Source- Unusual Whales
Tuesday
8:30 am Consumer price index
8:30 am Core CPI
8:30 am CPI year over year
8:30 am Core CPI year over year
2:00 pm Monthly U.S Federal Budget
Wednesday
8:30 am Producer price index
8:30 am Core PPI
8:30 am PPI year over year
8:30 am Core PPI year over year
2:00 pm FOMC interest-rate decision
2:30 pm Fed Chairman Jerome Powell press conference
Thursday
8:30 am Initial jobless claims
8:30 am Import price index
8:30 am Import price index minus fuel
8:30 am U.S retail sales
8:30 am Retail sales minus autos
10:00 am Business inventories
Friday
8:30 am Empire State manufacturing survey
9:15 am Industrial production
9:15 am Capacity utilization
Incoming Earnings Reports
Source- Savvy Trader
Notable Upcoming Earnings
Monday
ORCL (afterhours) Implied Move: +/- 5.34% Sector: Technology
Wednesday
ADBE (afterhours) Implied Move: +/- 5.34% Sector: Technology
Thursday
COST (afterhours) Implied Move: +/- 2.57% Sector: consumer Defensive
Volatility Watch 🔥
Provided by Seeking Alpha.
Monday - December 11
Volatility watch - Crypto-related names Coinbase Global (COIN), Microstrategy (MSTR), Marathon Digital (MARA), Cleanspark (CLSK), Hut 8 (HUT), Terawulf (WULF), and Riot Platforms (RIOT) are still being watched for short squeeze potential. Options trading volume rose on GameStop (GME) amid buzz about the board's decision to allow management to make stock buys of other companies. The most overbought stocks per their 14-day Relative Strength Index are Altimmune (ALT), Sera Prognostics (SERA), and Snap (SNAP). The most oversold stocks per their 14-day Relative Strength Index are ReAlpha Tech (AIRE), Ventyx Bio (VTYX), and R&Q Insurance Holdings Ltd (OTCQX:RQIHF).
Earnings watch - Notable companies due to report include Casey's General Stores (CASY), and Oracle (ORCL).
All day - The two-day Fortune Brainstorm AI Conference in San Francisco will bring together leading executives and policymakers to examine new business cases for AI. Companies with speakers at the event include Cloudflare (NET), Accenture (ACN), Williams-Sonoma (WSM), Qualcomm (QCOM), Pfizer (PFE), Best Buy (BBY), Salesforce (CRM), Walmart (WMT), PagerDuty (PD), and Amgen (AMGN).
All day - Shareholders with Arlington Asset Investment Corp. (AAIC) vote on the buyout offer from mortgage REIT Ellington Financial (EFC). Shareholders with RPT Realty (RPT) will vote on the $2B acquisition offer from Kimco Realty (KIM).
All day - The healthcare sector will be on high alert with the 65th ASH Annual Meeting and Exposition taking place in San Diego, California. The Hematology meeting has led to share price jolts from participants in the past. Companies due to present this year include Eli Lilly (LLY), Agios Pharmaceuticals (AGIO), Corvus Pharmaceuticals (CRVS), IN8bio (INAB), Molecular Partners AG (MOLN), Rigel Pharmaceuticals (RIGL), Schrödinger (SDGR), Telomir Pharmaceuticals (TELO), Vor Biopharma (VOR), Bristol-Myers Squibb (BMY), Incyte Corporation (INCY), and Pfizer (PFE).
All day - Notable investor events scheduled include AECOM's (ACM) Investor Day and Affirm Holdings' (AFRM) fireside chat.
Tuesday - December 12
Earnings watch - Notable companies due to report include Johnson Controls International (JCI).
All day - Notable investor events scheduled include Centene's (CNC) investor day event, L3Harris Technologies' (LHX) Investor Day, Ligand Pharmaceuticals' (LGND) Investor and Analyst Day, and Navitas Semiconductor's (NVTS) Investor Day.
All day - The IPO lockup period for blocks of shares of CAVA Group (CAVA) will expire. Shares of CAVA have seen some selling pressure already ahead of the lockup expiration on concerns that some insiders will cash out.
8:30 a.m. The consumer price index report for November will be released. Economists forecast a drop in the November year-over-year inflation rate to +3.1% from +3.2% in October. Core CPI is seen coming at +4.0% year-over-year.
Wednesday - December 13
Earnings watch - Notable companies due to report include Adobe (ADBE) and ABM Industries (ABM).
All day - Rocket Lab (RKLB) has a launch planned for its Electron rocket. The flight, which is for a Japan-based Earth-imaging company, will be the 42nd flight of the Electron rocket and the first since a launch failure in September.
All day - Notable investor events scheduled include Couchbase's (BASE) Analyst Day, U.S. Silica Holdings' (SLCA) Investor Meeting, and Verint Systems' (VRNT) Investor Day.
All day - Fontainebleau Las Vegas will open its doors to opening. The 3,644-room hotel complex will be the first new resort on the Las Vegas Strip since Resorts Worlds opened in 2021.
8:30 a.m. The producer price index report for November will be released.
11:00 a.m. Amdocs (DOX) will hold a webcast called "Unlocking the Transformative Power of Generative AI."
2:00 p.m. The Federal Reserve Open Market Committee will release its statement on interest rates.
2:30 p.m. Federal Reserve Chairman Jerome Powell will hold a press conference.
Thursday - December 14
Earnings watch - Notable companies due to report include Costco (COST), Jabil (JBL), and Lennar (LEN). Options trading implies double-digit share price swing for Mesa Air (MESA) after its report.
Central bank watch - The European Central Bank, Bank of England, and Swiss National Bank will release their interest rate decisions.
All day - Notable investor events include Chewy's (CHWY) first investor day event in the company's history, Phillips Edison & Company's (PECO) Investment Community Day, Coherent's (COHR) Business Update Call, and Schrodinger's (SDGR) Investor Day.
8:30 a.m. The retail sales report for November will be released. Economists forecast a 0.2% month-over-month increase after stripping out the gas and auto categories.
8:30 a.m. Regeneron Pharmaceuticals (REGN) will host a conference call to provide an update on the company's hematology portfolio.
10:00 a.m. Intel (INTC) will hold its AI Everywhere Event. The semiconductor giant said the event will include the launch of 5th Gen Intel Xeon processors for data centers and Intel Core Ultra processors for laptops.
Friday - December 15
Earnings watch - Notable companies due to report include Darden Restaurants (DRI).
All day - The stock market could see extra volatility with triple witching day featuring the simultaneous expiration of stock options, stock index futures, and stock index options contracts.
All day - The tender offer for Eli Lilly (LLY) to acquire Point Biopharma (PNT) expires. Shares of Point Biopharma traded 12% above the deal price at the time of publication.
All day - Utz Brands (UTZ) will hold its Investor Day event at the New York Stock Exchange.
8:30 a.m. FREYR Battery (FREY) will hold an extraordinary general meeting of shareholders in connection with its previously announced process to redomicile from Luxembourg to the U.S.
Seeking Alpha editor Josh Fineman contributed to this story
Chart of the Week 📈
Source- Chart of the Day
You’d be wise to diversify your portfolio, according to financial experts.
By holding investments that move in different ways based on different market forces, you effectively ensure that something in your portfolio is always working, even when your core stock holding is faltering.
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Thanks for reading, have a great day!
Gordon
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.
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