Edition #11-Monday November 14th 2022
Quiz Question of the Week
Answer at the bottom
This Week in History 📰
12th December 1913-Stolen Mona Lisa Recovered
14th December 1962- First Information Received From Another Planet (Venus)
14th December 1918- Women Voted in Britain for the First Time
Major Events This Week 🔬
What to Expect in the Markets Next Week
Monday
Tuesday
Final US CPI reading of the year for November- 8.30am EST
Wednesday
US Fed Decision on Interest Rates- 50BPS expected- 2pm EST
Thursday
Friday
S&P Flash December PMI reading-8.30am EST
Summary 📝
It’s been said before, but we could well have the biggest week of the year coming up, as more critical inflation data flows through, before the Fed release their next round of interest rate hikes.
CPI lands on Tuesday, with the following consensus estimates for November:
CPI to rise 0.35% for the month versus 0.4% in October.
Core CPI to rise 0.3% for the month versus 0.3% in October.
CPI, year over year, to rise 7.3% versus 7.7% in October.
Core CPI, year over year, to rise 6.1% versus 6.3% in October.
If we see sustained falls in inflation data following a peak, investors with cash on the sidelines are very likely to feel better about the future of the market, despite the fears of a recession in 2023.
With a drop in the price rises experienced by consumers, the Fed are less likely to need a more severe 75BPS increase in interest rates, sticking with the widely expected 50BPS rise to rates on Wednesday.
Plenty of other Central Banks are making moves this week, including the Bank of England, ECB, and Bank of Mexico.
I’m hopeful of a good CPI number to come in, and a 50BPS hike from the FOMC this week, but would urge investors to be vary of volatility in either direction. Even if the news is good, we’re not guaranteed a sudden rally. We’ve seen before that a lower rate, but a higher target, can spook markets just as much as a high rate, so be careful!
Recession fears, and general uncertainty is going nowhere any time soon, so be sure to consider your decisions with a long term perspective.
Don’t get caught up with trying to time the market this week, there are just too many variables to consider. Keep some cash ready to use if we see some declines, take profits if we get good news, and keep a logical mindset through all the fear, noise, and volatility.
Market Recap 📈
Post of the Week 💌
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Investing World Cup- Week 2 Update
We’re now into the final week of the Investing World Cup, with market giants all dreaming of being crowned the Oak Investor Community champion!
Get involved by voting every day for your favourite!
What’s Moving Markets?
Incoming Earnings Reports this week- provided by Earnings Whispers.
CNBC-Microsoft buys near 4% stake in London Stock Exchange as part of 10-year cloud deal
The release also said that Scott Guthrie, Microsoft’s executive vice president for the Cloud and AI Group, will be appointed as a non-executive director of LSEG.
LSEG’s shares were seen up 4% or 5% ahead of the market open in Europe on Monday.
CNBC- Inflation has peaked — but it’s not returning to pre-Covid levels in 2023, Mastercard says
Inflation has already peaked, but it will remain above pre-Covid levels in 2023, said David Mann, chief economist for Asia-Pacific, Middle East and Africa at the Mastercard Economics Institute.
“Inflation has seen its peak this year, but it will still be above what we had been used to pre-pandemic next year,” Mann told CNBC’s “Squawk Box Asia” on Friday.
It’ll take a few years to return to 2019 levels, he said.
CNBC-Southeast Asian markets are in for a ‘bungee jump’ in 2023, says JPMorgan
Southeast Asia’s market trajectory will be like that of a “bungee jump” in 2023, plunging before surging in the second half of the year, according to JPMorgan analysts.
That’s likely to be characterized by a “sharp fall followed by a rapid increase in altitude (bear market rally) followed by another decline until eventually markets come to rest at rock-bottom,” analysts led by Rajiv Batra wrote in a report.
They attributed that to weakened purchasing power in light of monetary policy tightening, lower savings and the higher cost of borrowing.
Events today- provided by Unusual Whales.
Analyst Upgrades and Downgrades- provided by MarketWatch
Highest Short Interest Companies- provided by MarketWatch
Chart of the Day 📈
Understanding how the average investor is feeling is just as important as understanding the market at times. If we know every investor is at peak confidence, and buying every NFT and meme stock they can, then regardless of how the market looks, it’s probably sensible to be a little cautious.
In the opposite direction, if investors are constantly being hit by bad news, and buying is the last thing they are thinking of, then it might be a good opportunity to pick up some bargains.
TD Ameritrade’s Investor Movement Index, or the IMX, is a great way of tracking how investors are feeling about today’s market, and comparing against the performance of the actual market.
If you look closely, you start to see some clear trends, where sentiment gets way above the growth of the actual market followed by a huge collapse. Conversely, when things get way too negative, below the drop of the market, there’s usual a pretty good recovery in the not too distant future.
We’re currently sitting at the lowest levels we’ve seen since the pandemic lows of 3.9. Obviously there was a more distinct catalyst for the recovery, where the governments of the world effectively declared they would bail out their respective economies, but far more common is a slow turn in the road towards a recovery.
As good investors, we want to be putting our money to work in such moments, where negativity and pessimism is high, letting us get the best prices for quality assets.
We might not be at the bottom yet, but we’re getting closer. Start doing some research, and see what bargains you might want to add to your wishlist before Christmas!
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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 Bank of New York
Shares of the Bank of New York were traded under the fabled buttonwood tree on Wall Street in 1792.