Edition #21- Monday March 20th 2023
Quiz Question of the Week ❓
Answers at the bottom!
This Week in History 📰
March 21, 1685- Organist and composer Johann Sebastian Bach (1685-1750) was born in Eissenach, Germany.
March 24, 1989 - One of the largest oil spills in U.S. history occurred as the oil tanker Exxon Valdez ran aground in Prince William Sound off Alaska.
March 26, 1979 - The Camp David Accord ended 30 years of warfare between Israel and Egypt.
Summary 📝
Last week saw some more volatility as investors processed the fallout of several bank collapses, and the subsequent rescue attempt by the Federal Reserve. Bitcoin saw another nice rally as the traditional financial system started to show weakness, with crypto enthusiasts indicating this is the reason for decentralised systems.
The fight against inflation is at a critical point alongside preserving the stability of the economy. With the next interest rate decision coming up this week, a delicate balance needs to be struck.
Last week’s CPI showed us that inflation is continuing to stabilise and trend downwards, but still sits too high for the Fed to declare mission accomplished.
The CME Fedwatch Tool shows us a 33% chance of no rate hike, and 67% chance of 25BPS rate hike. Unlike last week, the chance of a 50BPS rate hike has been dismissed, indicating that the economy is in too unstable a state to be adding more stress.
I think that the next week or so will be critical in terms of the fallout from banks, and also how the Fed chooses to react. To support the banks, the Fed has had to add enormous amounts to their balance sheet, effectively writing off the last few months of inflation busting, so whether this is a bump in the road, or a fundamental pivot in strategy will set us up for either a rally, or a period of stagflation which might be a problem for investors.
Major Events This Week 🔬
MONDAY, MARCH 13
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TUESDAY, MARCH 14
US CPI
WEDNESDAY, MARCH 15
UK PPI
US FOMC Rate Decision
Fed Chairman Press Conference
THURSDAY, MARCH 16
US Current Accounts
US New Home Sales
FRIDAY, MARCH 17
UK Retail Sales
US Durable Goods Orders
Incoming Earnings Reports This Week
Provided by Earnings Whispers
Notable Upcoming Earnings
Monday
PDD (premarket) Implied Move: +/- 12.2% Sector: Consumer Cyclical
Tuesday
TME (premarket) Implied Move: +/- 9.8% Sector: Communication Services
HUYA (premarket) Implied Move: +/- 20.7% Sector: Communication Services
GME (afterhours) Implied Move: +/- 14.2% Sector: Consumer Cyclical
NKE (afterhours) Implied Move: +/- 8.1% Sector: Consumer Cyclical
Wednesday
WOOF (premarket) Implied Move: +/- 16.3% Sector: Consumer Cyclical
OLLI (premarket) Implied Move: +/- 13.8% Sector: Consumer Defensive
CHWY (afterhours) Implied Move: +/- 11.7 Sector: Consumer Cyclical
Thursday
GIS (premarket) Implied Move: +/- 6.1% Sector: Consumer Defensive
ACN (premarket) Implied Move: +/- 5.5% Sector: Technology
FDS (premarket) Implied Move: +/- 7.5% Sector: Financial Services
CMC (premarket) Implied Move: +/- 12.1% Sector: Basic Materials
Provided by Unusual Whales Futures
Post of the Week 💌
✅ The Federal Reserve targets a 2% inflation rate as a way to balance the economy and stabilize prices. It aims to keep inflation low enough to avoid deflationary pressures but high enough to encourage economic growth. 💰
✅ If inflation were too low, it could lead to stagnant growth and lower consumer spending. On the other hand, if it were too high, it could lead to hyperinflation and a loss of confidence in the currency. 📉
✅ The 2% target has been in place for several years, and while it's not perfect, it has been successful in achieving a stable economic environment. 💪
✅ Understanding inflation and its impact on the economy is crucial for any investor looking to make informed decisions. By following the right strategies and staying informed, investors can navigate the markets successfully. 💸
🔥What’s Moving Markets? 🏃♂️
Saudi National Bank loses over $1 billion on Credit Suisse investment
Saudi National Bank confirmed to CNBC Monday that it had been hit with a loss of around 80% on its investment in Credit Suisse.
The Riyadh-based bank bought Credit Suisse stock at 3.82 Swiss francs per share. UBS is paying Credit Suisse shareholders 0.76 Swiss francs per share
Despite the loss, Saudi National Bank says its broader strategy remains unchanged. Shares of the lender were up 0.58% on Monday at 9:20 a.m. London time.
Brent oil prices slip under $72 per barrel amid banking turmoil
Brent oil prices have dipped below $72 per barrel amid ongoing quivers in financial markets.
The recent price decline has been intensified by activity in the options market, analysts at UBS said.
Bitcoin market gains $26 billion after hitting 9-month high as banking crisis sparks rally
Bitcoin jumped on Monday as some investors turned to digital currencies amid a crisis in the traditional banking sector.
Bitcoin was up 5% at $28,378.35 at around 5:20 a.m. ET, according to CoinDesk.
Earlier in the day, bitcoin hit $28,554.07, it’s highest level in nine months.
The rally in bitcoin comes amid turmoil in the global banking sector which was sparked by the collapse of Silicon Valley Bank in the U.S.
On Sunday, UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.2 billion).
Chart of the Week 📈
The events of the last few weeks have shown us that black swan events can come out of nowhere and change the entire story. However, when we look at the Market Risk indicator provided by the Bank of America, the market is nowhere near as stressed as it was in previous crises.
A lot of this is likely due to enhanced transparency around the financial sector, but I suspect the length of time we’ve been in bearish sentiments have meant there’s less surprise when things go wrong. Investors of all levels have adjusted their risk profiles to some degree, and are less inclined to buy the dip.
Of course, the wider impact of the collapse of regional and institutional banks is yet to be fully seen. If further damage is done, and the Fed is unable to provide support alongside the battle to combat inflation, then we might just be getting started.
Wealth Builder’s Podcast 📻🎧
This week, I made an appearance on the latest episode of the Wealth Builder’s Podcast, talking about my approach to investing, the mistakes and lessons learned along the way, and what I think is next for the market.
Investor’s Toolkit ⚒️
Unusual Whales- Options Flow and Analysis
5% off with code OAK2022
5% Discount with code OAK
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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 B- 1903
Since 1903, every day at the New York Stock Exchange starts with the ringing of a bell at 9:30 a.m.
(Investopedia)
The opening bell was usually just what the beginning of the trading day was called, but the New York Stock Exchange has rung an actual bell ever since it replaced a Chinese gong that was used before 1903.
And while this is undoubtedly one of the more interesting facts about the stock market, it has also become an iconic and famous event. The opening bell has become one of the most-watched daily events in the world.
The ceremony itself was not that publicized or popular before President Ronald Reagan asked to ring the bell in 1985 during his reelection campaign.
Ever since then, the NYSE opening bell has been a magnet for celebrities, sports stars, and leaders of the world’s biggest corporations. It is now considered a prestigious honor and an excellent platform for visibility in the internet and social media age.