Edition #17- Monday January 30th 2023
Quiz Question of the Week ❓
Answers at the bottom!
This Week in History 📰
January 30, 1882- Franklin Delano Roosevelt (1882-1945) the 32nd U.S. President was born in Hyde Park, New York.
February 1, 2003 - Sixteen minutes before it was scheduled to land, the Space Shuttle Columbia broke apart in flight over west Texas.
February 3, 1870 - The 15th Amendment to the U.S. Constitution was ratified, guaranteeing the right of citizens to vote, regardless of race, colour, or previous condition of servitude.
Summary 📝
2023 is still off to a flyer, with the more risky assets flying in a manner similar to the meme stock days, with regular 10% moves in the more volatile stocks in the market.
However, it just takes one bad earnings report for the music to stop. With the FOMC meeting on Wednesday to lay out their plan on inflation and interest rates, it seems likely that more aggressive narrative will be required following the large January rally in the markets. A 25BPS looks very likely, with 98% of analysts backing the Fed to make a couple more hikes to rates, and then pausing to see how the economy reacts.
Only 2% expect the Fed to skip an interest rate hike, but plenty of big voices in the financial and business world, such as Elon Musk, are hinting that continuing to raise rates could be terrible for the economy, as the lagging effect has still to reach the average consumer. I’d tend to agree with this, as historically it takes months or even years for rates to impact the hiring/firing, business decisions, and housing purchases to really show up in the economic data.
In the near term, markets will likely be paying more attention to earnings season and the rhetoric which the FOMC releases in their statements, but if you have seen some nice profits in the last month, now might be a time to take some off the table and wait for some volatility to buy back in cheaper.
Major Events This Week 🔬
Important Data Releases
Monday- Dallas Fed Manufacturing Index (Jan)
Tuesday- S&P Case-Shiller National Home Price Index (Nov)
Wednesday-
Global Manufacturing PMI
US FOMC Minutes and Interest Rate Decision
Thursday-
ECB Policy Meeting and Interest Rate Decision
BOE Policy Meeting and Interest Rate Decision
Friday- U.S. Nonfarm Payrolls Report (Jan)
Incoming Earnings Reports This Week
My main focus will be on:
McDonald’s (Tuesday)
General Motors (Tuesday)
Meta Platforms (Wednesday)
Amazon (Thursday)
Apple (Thursday)
Alphabet (Thursday)
Provided by Earnings Whispers
Market Recap 📈
Futures- Provided by Unusual Whales Futures
Fear & Greed Index- Provided by CNN
Post of the Week 💌
❗️ Companies Within Companies👇
________________
➡️ Follow @oakinvestorcoaching for daily investing content. 📆
_________________
✅ In today’s market, being agile and adaptable is essential for both investors and companies. If you are going to survive the volatility, you need a diverse portfolio full of quality companies performing well. 🥳
✅ For the biggest companies in the world, they want to have several diverse income streams, so that if one area suddenly drops off for whatever reason, the others can help to pick up the slack. 🥳
✅ Let’s focus on Amazon. Previously they used to be known for delivering products, but now they are almost 3/4 companies in one, with their cloud services, streaming platform, and analytics services. 📈
✅ By being spread across a number of areas, if there are issues with supply chains, or a slump in demand due to an economic downturn, there are plenty of ways the company can continue to benefit, as businesses still require analytics or cloud storage. ☁️
What’s Moving Markets? 🏃♂️
CNBC- Most Adani shares continue bloodbath as Asia’s richest man loses $28 billion in a month
Most Adani Group companies continued to see sharp losses for a third consecutive trading session as the company released its rebuttal on short seller firm Hindenburg’s report.
Adani Enterprises’ stock price remains more than 25% lower in the month to date, Refinitiv data showed.
Founder and chairman Gautam Adani’s net worth fell $27.9 billion in the year to date, according to the Bloomberg Billionaires index.
CNBC- Europe’s crackdown on Big Tech omitted TikTok — but now that’s set to change
Unlike its larger American peers, TikTok hasn’t faced the kinds of mega fines or legal penalties that Google, Facebook-owner Meta or Amazon have in the EU over the years.
TikTok has stayed out of regulatory scrutiny partly because it’s kept out of the crosshairs of commercial interests in Europe.
That doesn’t mean political leaders and legislators in Europe aren’t worried.
Moritz Korner, a German lawmaker, said the app poses “several unacceptable risks for European users.”
At the executive level, the European Commission’s tone on TikTok has begun to change.
CNBC- Shell to combine its integrate gas, upstream businesses
The new division, which combines Shell’s most profitable operations, will be headed by current upstream director Zoe Yujnovich, Shell said in a statement on Monday.
Sawan took office on Jan. 1 after heading Shell’s integrated gas division, which included Shell’s LNG and renewables businesses, with a vow to simplify and improve the company’s operations.
Chart of the Week 📈
The speed to which markets can change direction can be incredible at times, with investors keen to get ahead of the competition by acting at the first glimpse of good or bad news.
We see how aggressive the latest move has been with the Goldman Sachs Financial Conditions Index below, showing borrowing costs, exchange rates, equity moves, all indicating how markets have moved from an extremely restrictive position towards a much more loose and bullish position.
As with all cycles, this likely doesn’t last long, since history has shown us that large peaks in the index have been quickly reversed, but the notable feature in this chart is that usually to see such a drastic turnaround, there needs to be a recession.
Of course, this hasn’t formally happened yet, but with this so universally forecast, is it possible that the heavy lifting usually done has already been worked through in the market, even if it hasn’t hit the wider economy yet?
Investor’s Toolkit ⚒️
Unusual Whales- Options Flow and Analysis
5% off with code OAK2022
5% Discount with code OAK
5% discount with my signup link, and 20% off with code OAKINVESTOR20
Follow for More 🎉
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 C- $23 Billion
Ronald Wayne was the third cofounder of Apple, along with Steve Wozniak and Steve Jobs. In 1976, he sold his 10% share of the company for $800. Today, his 10% would have been worth of $35 billion.