Edition #13-Wednesday January 4th 2023
Quiz Question of the Week ❓❓
Answer at the bottom
This Week in History 📰
1st January 1622- The Catholic Church adopted 1 Jan as the beginning of the New Year (instead of 25 March).
3rd January 1924- English explorer Howard Carter discovered the tomb of Tutankhamun in the Valley of the Kings, near Luxor, Egypt.
5th January 1818- The first regular trans-Atlantic shipping service begins between Liverpool and New York.
Major Events This Week 🔬
Monday
Tuesday
Wednesday
FOMC Minutes Released
Thursday
Initial jobless claims
S&P U.S. services PMI (final)
St. Louis Fed President James Bullard speaks
Friday
Unemployment rate
Several Fed speakers
Summary 📝
Happy New Year! To all clients, new investors, and friends of the page, I wish you the very best for 2023, and a very successful year in the markets!
The year has started with the same level of volatility we saw in 2022, with giants of the market making some huge moves, such as Tesla’s enormous 14% drop yesterday.
The market is down 0.4% or so in the last week, with the FOMC minutes in clear focus, as we wait to see what is next for interest rates.
At present, we’re looking at a 70% chance of a 25 BPS hike in February, with 30% chance of another 50BPS following the December hike.
With some hope, we might see the end of the Fed’s rate hikes after the next couple of meetings, meaning the road is clearer for investors, with slightly more certainty if inflation continues to decline.
My 10 Predictions for 2023 🔮🔮
I have a number of predictions of what we might see in 2023, which will be the basis for my portfolio strategy as we move further into the year.
1. We may see a second peak in inflation after Fed cuts rates in the second half of 2023.
2. Gold outperforms S&P as the value of the dollar declines following investors returning to markets.
3. Energy continues to perform strongly as global markets seek to increase resilience.
4. Cryptocurrencies continue to disappoint as investors remain cautious of risky assets.
5. Heavy layoffs in tech continue following those seen in 2022 as CEOs look to protect bottom lines.
6. International stocks beat US equities.
7. Minimal IPOs as more risky companies look to avoid disappointing launches.
8. Bonds performance improve as interest rates stabilise.
9. Healthcare stocks perform well as investors seek undervalued sectors.
10. Many buybacks & Mergers as companies with strong cash reserves look to deploy their capital.
2023 Watchlist
My 2023 watchlist is going to be made up of companies with the following:
Strong cash reserves
Beaten down sectors in 2022
Household names with strong name recognition
A range of products which can cater to wide demographics
Fair valuations (P/E)
ZERO or manageable debt levels
Pricing power to move in line with inflation
Net buying from company insiders
Resilient supply chains
Market Recap 📈
Provided by Unusual Whales Futures
Post of the Week 💌
Best of 2022 👇
✅ Let’s face it. 2022 hasn’t been the best year to be investing. But if you are young, and have decades ahead of you, then such times are often the best periods to be growing a portfolio. 📈
✅ If you are able to learn the tough lessons while your portfolio is still relatively small, then it will serve you well into the future. If you can constantly learn, then making good decisions in the market will come as second nature. 🥳
✅ Oak Investor Coaching has had a fantastic year of work with clients, developing partnerships with some of the best platforms out there @unusualwhales @tortoai, and building content which I hope you all find helpful! 🥳
✅ I’ve put together a top 10 list of the posts which made the year for the page. What was your favourite, and what do you want to see more of into 2023? 🤔
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What’s Moving Markets?
Incoming Earnings Reports this week- provided by Earnings Whispers.
CNBC- China risks loom over U.S. tech giants Tesla and Apple as share prices plunge
Apple and Tesla are facing major headwinds in China.
Tesla shares tanked 12% on Tuesday after the electric car maker reported deliveries that fell short of analyst expectations.
Apple dropped more than 3% as concerns resurfaced about iPhone demand.
CNBC- Tesla makes China boss Tom Zhu its highest-profile executive after Elon Musk
Tesla’s China chief Tom Zhu has been promoted to take direct oversight of the electric carmaker’s U.S. assembly plants as well as sales operations in North America and Europe, according to an internal posting of reporting lines reviewed by Reuters.
The move makes Zhu the highest-profile executive at Tesla after Chief Executive Elon Musk, with direct oversight for deliveries in all of its major markets and operations of its key production hubs.
Zhu’s appointment to a global role comes at a time when Musk has been distracted by his acquisition of Twitter.
CNBC- Sam Bankman-Fried pleads not guilty to federal fraud charges in New York
Former FTX CEO Sam Bankman-Fried pleaded not guilty to federal charges in New York on Tuesday, less than two months after his crypto empire collapsed.
Charges against Bankman-Fried include money laundering, conspiracy to commit wire fraud and securities fraud.
The case was assembled quickly by prosecutors from the Southern District of New York, who gained the cooperation of Bankman-Fried’s close lieutenants Caroline Ellison and Gary Wang.
Chart of the Day 📈
It’s very likely that we see some form of recession in 2023. Markets as we know work to price in events about 6 months ahead of the wider economy, meaning that we’ve seen a huge amount of uncertainty as central banks around the world look to thread the needle of supporting economies through without breaking the bank.
Before the US Fed acted in 2020 to provide support to businesses, we saw the VIX hit a massive 82.69, indicating total panic from markets. As we know, the ensuing rally of meme stocks and almost all asset classes was historic.
Unfortunately, this sentiment didn’t last forever, and with rampant inflation hitting in 2021, we’ve had to start paying off some of this market rally, with interest rates soaring, and most asset classes experiencing severe downturns.
Back to the VIX again, if we want to see the end of this downturn, it’s likely we’ll need to see another spike in the volatility of the market. This may come in the form of a black swan event, or a clear sign from the Fed that their work to cool inflation is done, but when we see the spike, it’s very likely we’ll know it’s meaningful.
As we saw in 2008 and 2020, these spikes signalled the end of each recession, and the start of the recovery. It’s not necessarily a guarantee that we see as severe a jump, since the recession has been so widely forecast, but volatility never lies, and always means something important is being processed.
Investor’s Toolkit ⚒️
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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 A- Frankfurt
The origins of the Frankfurt Stock Exchange go back to medieval trade fairs in the 11th century. By the 16th century Frankfurt developed into a wealthy and busy city with an economy based on trade and financial services.
In 1585 a bourse was established to set up fixed currency exchange rates, which is considered to mark the 'birth' of the stock exchange.