Edition #17-Monday February 27th 2023
Quiz Question of the Week ❓
Answers at the bottom!
This Week in History 📰
March 1, 1974 - Seven former high-ranking officials of the Nixon White House were indicted for conspiring to obstruct the investigation into the Watergate break-in.
March 3, 1831- Telephone inventor Alexander Graham Bell (1847-1922) was born in Edinburgh, Scotland.
March 4, 1789 - The first meeting of the new Congress under the new U.S. Constitution took place in New York City.
Summary 📝
Markets are suffering in February, with January’s rally selling off as inflation looks to be more stubborn than many economist expected.
Stocks are nearly 5% off their 2023 highs, with Fed speakers, inflation data, and investor confidence all climbing down as it looks like there is more work to do before inflation is under control.
I’ve been conscious of the prospect of a second peak in inflation, and have steadily reduced risk in my portfolio. But investors should not lose focus on the fact that interest rates have climbed faster in the last year than in any time in history. Even if inflation is not immediately under control, the lagging effect of rate hikes mean that the trend should continue downwards, even if some further small rate hikes are required.
From the CME Group tool, there is a 74% likelihood of another 25BPS at the upcoming March meeting of the Fed.
Further such rate hikes are likely. Taking a look at the May meeting, there is another 68% chance of a 25BPS hike.
With markets starting to price in these ongoing rate hikes, I’m hoping to see some major downtrends as the year on year data starts to compare with the 2022 peak.
Major Events This Week 🔬
Monday- Dallas Fed Manufacturing Index (Feb)
Tuesday-
Wholesale Inventories (Jan)
Retail Inventories (Jan)
Wednesday-
ISM Manufacturing PMI (Feb)
S&P Global Manufacturing PMI (Feb)
Thursday-
Friday- S&P Global Composite PMI - Final Reading (Feb)
Incoming Earnings Reports This Week
Provided by Earnings Whispers
Market Recap 📈
Provided by Unusual Whales Futures
Post of the Week 💌
✅ Most investors have heard of the S&P 500, made up of 11 distinct sectors. It helps to diversify a portfolio, and ensure investors can capture the growth of the largest companies in the USA. 🇺🇸
✅ However, within that 500, there is a huge amount of variance in each company’s valuation, so an investor with experience may wish to pick a smaller group of companies with more potential. 📈
✅ We’ve selected a company that falls into each of the S&P’s 11 sectors. Some are in the US Markets, and some are international, but all offer major growth potential. 🥳
✅ We look at companies with strong cash reserves, resilient fundamentals, which we think have the ability to execute well during any financial conditions. 😌
✅ Plenty of these offer goods and services which are required regardless of bull markets or recessions.
Let us know what you think 🤔
What’s Moving Markets? 🏃♂️
Britain and EU close in on crucial Brexit deal for Northern Ireland
In a joint statement Sunday, Sunak and von der Leyen said they had “agreed to continue their work in person towards shared, practical solutions for the range of complex challenges around the Protocol on Ireland and Northern Ireland.”
The U.K. may have left the EU on Jan, 31, 2020, but the Northern Ireland Protocol has caused persistent disagreement ever since.
Telecom giant Ericsson says Europe’s industry structure is ‘probably unsustainable’
Swedish telecom company Ericsson on Monday warned Europe’s industry structure is likely unsustainable.
The comments come shortly after the company, which is one of the world’s biggest providers of 5G mobile networks, announced it is planning to cut 8,500 jobs as part of its cost-cutting measures.
“The big problem in Europe is really that our customers can simply not afford to build out the networks and I think that is going to hurt European competitiveness long term,” Ericsson CEO Börje Ekholm said.
China Renaissance says its missing founder Bao Fan is cooperating with a government probe
Chinese investment bank China Renaissance said earlier this month it was unable to reach its founder and controlling shareholder Bao Fan.
The company said Sunday it’s learned that Bao is cooperating with a government investigation.
Business operations remain normal, the firm said.
Chart of the Week 📈
Successful investing is all about getting ahead of the wider market when you see a trend emerging. One of the key indicators for economies expanding is the movement of people, and with subway passengers rapidly trending upwards in China, it might be a sign that increases in consumer spending is on the way.
This might not all be good though, with increased spending, inflation is very likely to start creeping back up again. This trend is going to directly clash with the rise of interest rates globally at some point. Whether the spike in spending means more aggressive rate hikes are needed, or if consumers can stomach these rates will be a critical point in the economic recovery.
Investor’s Toolkit ⚒️
Unusual Whales- Options Flow and Analysis
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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 D- 70-%
In any given year, the stock market is more likely to go up than to go down. For instance, in the last 100 years, the Dow Jones Industrial Average (DJIA) was up 70% of the year. And in the last 40 years, the Standard & Poor’s 500 (S&P500) was up 77% of the years. This is a very significant difference.
Of course, this is only historical data. But this has been going on for 100 years. There is a good chance that this continues.