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U.S. stocks declined, trimming a strong start to 2023, as investors prepared for a busy week full of earnings data, economic reports, and monetary policy decisions. The Fed is expected to raise rates by a decelerated 25-bp rate hike later this week, and the European Central Bank and Bank of England are anticipated to increase their benchmark rates by 50 bps. Equity news was light to begin the week, and the economic calendar was quiet today before heating up, with the most notable report being the Dallas Fed Manufacturing Index, which improved but remained in contraction territory.
Treasury yields were higher, and the U.S. dollar increased, while crude oil prices fell, and gold declined.
Asian stocks were mixed as China returned to action following the week-long Lunar New Year holiday break, and markets in Europe also diverged amid some caution ahead of the data and monetary policy decisions.
Serta Simmons Bedding, the Georgia-based mattress maker owned by private equity firm Advent International, has filed for Chapter 11 bankruptcy protection. The prepackaged bankruptcy filing includes $125 million of debtor-in-possession financing and another $125 million once it exits Chapter 11.
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U.S. equities finished mixed in a lackluster trading session, as Q4 earnings season shifted into a higher gear today. Corporate results from several Dow members were in focus, as 3M missed estimates and reported that it would reduce its global workforce by approximately 2,500 jobs. Verizon Communications and Travelers Companies reported bottom-line results that were in line with expectations, and the former offered some disappointing full-year guidance, while Johnson & Johnson missed estimates amid a decline in revenues citing unfavorable foreign exchange and lower COVID vaccine sales.
Additionally, Lockheed Martin bested forecasts but issued EPS guidance that was lower than anticipated. The economic calendar offered several reports on domestic activity, as manufacturing and services PMIs unexpectedly rose but remained contractionary in January, while manufacturing activity in the Richmond region fell much more than expected.
Treasury rates were lower, and the U.S. dollar dipped, while crude oil prices fell, and gold was higher.
Asian stocks rose although volume remained light as Chinese and South Korean markets were closed for a holiday, while European stocks were mixed amid a host of PMI data across the globe.
The December CPI report showed 59% of its components “are now in deflation,” Fundstrat’s Tom Lee said in a Friday note. That’s good news for the stock market, as a drop in inflation will help ease financial conditions. “This is setting up 2023 to be the opposite of 2022, where inflation expectations fall faster than EPS risk,” Lee said.
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Stocks Higher as Q4 Earnings Season Begins U.S. equities ended the day and week higher, as the markets reacted to a host of results from the banking sector to kick off Q4 earnings season. Bank of America, Wells Fargo, and Dow member JPMorgan Chase all bested estimates, but each posted significant increases in provisions for loan losses, while Citigroup fell short of forecasts.
Meanwhile, Dow component UnitedHealth Group beat forecasts and reaffirmed its guidance. News on the economic front was mixed, as a read on import prices surprisingly increased, detracting some from yesterday’s tamer read on consumer prices, while consumer sentiment rose far more than what was projected.
Treasury yields were higher, and the U.S. dollar dipped, while crude oil and gold prices traded to the upside.
Asian and European stocks finished mostly higher, as investors digested inflation reports from the U.S. and abroad.
Madison, Wisconsin-based Exact Sciences has become the top holding of Cathie Wood-led Ark Invest’s flagship exchange-traded fund. Ark Innovation ETF (NYSE: ARKK) now holds just under 10 million shares of Exact Sciences with a market value of $600.06 million. The stock currently accounts for 9.37% of the ETF. Exact Sciences has unseated Zoom Video Communications, Inc. (NASDAQ: ZM) as ARKK’s top holding, with the latter now having a weighting of 9.30%. Tesla, Inc. (NASDAQ: TSLA) and Roku, Inc. (NASDAQ: ROKU) are ARKK’s third and fourth-biggest holdings, respectively, with weightings of 6.78% and 6.72%. She just added Coinbase, too!
U.S. equities finished higher in the wake of a consumer prices report that showed inflation cooled last month. However, the gains were tempered, as the core rate, which strips out food and energy costs, rose on a monthly basis.
Treasury yields were noticeably lower, along with the U.S. dollar, while crude oil prices rose, and gold rallied to extend a recent run. Employment figures were also in focus, with jobless claims dipping slightly and coming in better than expected.
News on the equity front surrounded some ancillary corporate results ahead of the start to Q4 earnings season tomorrow, as American Airlines boosted its Q4 guidance, but KB Home missed quarterly expectations.
Asian stocks finished mostly higher, and markets in Europe continued its strong start to 2023 with the U.S. inflation data in focus.
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NEWS FLASH: The Securities and Exchange Commission (SEC) announced it just charged Genesis GlobalCapital and Gemini Trust Company “for the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program.”
Silvergate Capital Corporation reported a sharp drop in fourth-quarter crypto-related deposits on Thursday as investors spooked by the collapse of FTX pulled out more than $8 billion in deposits, sending shares down more than 42%. The crypto-focused bank also said it would cut its workforce by 40%, or about 200 employees, as it tries to rein in costs amid a deepening industry downturn. Its stock was last trading at $12.55.
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U.S. stocks were lower as the markets continued to speculate as to how long the Fed will keep its monetary policy tight. Yesterday’s minutes from the Fed’s December meeting suggested that the Central Bank will remain aggressive. Jobs data pointed to a tight labor market, as the ADP Employment Change Report came in higher than expected, and jobless claims were lower than anticipated, which seemed to be solidifying expectations of further rate hikes. Services sector data also came out, with output being revised higher but continuing to depict contraction.
Treasury yields were mixed, and the U.S. dollar rallied following the data, while crude oil prices rose, and gold dropped.
Equity news offered varying results, as Exxon Mobil offered mixed Q4 guidance, T-Mobile US’ phone customers topped forecasts, Constellation Brands missed earnings estimates and lowered guidance, and Conagra Brands topped quarterly estimates.
Finally, Asian stocks finished mostly higher, and European stocks were mixed following a three-day winning streak, as the markets digested the Fed’s minutes and amid optimism regarding China’s reopening.
Stock market holidays are non-weekend business days when the two major U.S. stock exchanges, the New York Stock Exchange (NYSE) and the NASDAQ, are closed for the day. These days often closely follow federal holiday schedules and include major holidays like Independence Day and Thanksgiving.
Regular operating hours for both exchanges are Monday-Friday from 9:30 a.m. – 4 p.m. ET. Markets do not operate during the weekend.
Sometimes, if a holiday falls on a weekend, stock markets will close on the Friday prior to the holiday, as is often the case with Good Friday and Easter. Other times, a holiday will be observed on a Monday after it occurs, like New Year’s Day taking place on Sunday, yesterday, in 2023.
Thus, it is a good time to catch up on you reading:
Sovereign wealth funds could be selling roughly $29 billion in equities by the end of December. Meanwhile, U.S. defined benefit pension plans would need to shift up to $70 billion from equities to bonds to hit their targets, reports Bloomberg quoting the JPMorgan estimates. “The recent equity market correction and bond rally are consistent with the rebalancing hypothesis,” Bloomberg quoted Vincent Deluard, a macro strategist at StoneX.
DEFINITION: A sovereign wealth fund, sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds. Sovereign wealth funds invest globally.
And, in a recent interview with CNN, Bank of America CEO Brian Moynihan said he’s concerned the housing market will continue to challenge buyers in the coming years. Moynihan pointed to sky-high mortgage rates as a big reason buyers might continue to struggle — especially first-time buyers with more limited financial resources. Moynihan also said there could be two more years of pain in the housing market before things cool off and homes become more available and affordable. And that’s a tough pill to swallow.
Finally, U.S. stocks were lower, adding to last week’s declines, as the global markets continued to grapple with the ultimate impact of aggressive monetary policy tightening around the world. Last week, the Fed, European Central Bank, Bank of England, and Swiss National Bank all increased their benchmark interest rates by 50 basis points, fostering recession concerns.
Treasury yields traded higher, and the U.S. dollar was unchanged, while crude oil gained ground, and gold was lower.
Other equity news was light, as L3Harris Technologies announced an agreement to acquire Aerojet Rocketdyne with an enterprise value of $4.7 billion, while shares of Madrigal Pharmaceuticals surged after positive trial results for its NASH and liver fibrosis treatment.
A busy week of housing data commenced, as the NAHB’s December Housing Market Index unexpectedly deteriorated.
Asia finished mostly lower as China’s COVID concerns weighed on sentiment, though European stocks were mostly higher, rebounding from last week’s decline as the global markets digest the recent rate hikes on both sides of the pond.
U.S. equities were able to finish higher after coming off early solid gains in the wake of the Consumer Price Index (CPI). The November CPI report came in softer-than-expected and seemed to somewhat sooth concerns regarding how aggressive the Fed will remain in its rate hike campaign. This came ahead of tomorrow’s highly anticipated Fed monetary policy decision, with the markets expecting a 50-basis point increase to the target fed funds rate.
Treasury yields tumbled following the inflation data, and the U.S. dollar fell, while crude oil and gold prices were sharply higher. In other economic news, the NFIB Small Business Optimism Index unexpectedly rose.
Equity news was light, as Oracle beat earnings estimates despite the significant impact of the strengthening U.S. dollar, while Raytheon Technologies authorized a $6 billion share repurchase program. European stocks finished higher, getting a boost from the CPI report, while markets in Asia were mixed
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The world’s biggest central banks will this week wrap up the most aggressive year for interest-rate hikes in four decades with their fight against inflation still not over even as their economies slow. The US Federal Reserve on is set to raise its key rate by 50 basis points to a range of 4% to 4.5%, the highest since 2007, and to signal more increases in early 2023.
A day later, the European Central Bank and the Bank of England are likely to follow with half-point moves. And higher borrowing costs are also in the cards in Switzerland, Norway, Mexico, Taiwan, Colombia and the Philippines.
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Earlier in October, Kiyosaki mentioned that he is bullish on Bitcoin because state-sponsored pension funds are starting to invest in BTC. Kiyosaki has repeatedly cautioned that the U.S. is heading toward an economic collapse. He said in a tweet that amid a financial meltdown, investors could keep their capital intact by loading up on gold, silver, and Bitcoin. At the time of writing, Bitcoin was trading at $17,156, up about 1% in the last seven days. The apex crypto’s market cap stood at around $330 billion.
Real estate prices continued to cool in September—the first time prices declined for three straight months in nearly four years, which is a big deal. The change was especially noticeable out west.
For example, San Francisco and Seattle experienced the largest percentage decrease (2.9%) from August to September, according to the S&P CoreLogic Case-Shiller Indices. The report, which tracks home price fluctuations, showed “short-term declines and medium-term deceleration” in US housing prices, said Craig Lazarra, S&P Dow Jones Indices managing director.And, Las Vegas, Phoenix, San Diego, and Dallas also saw declines of more than 2%, in contrast to cities like Chicago and New York, where prices fell the least (less than 1%). But even as prices cool, housing overall has grown less affordable since the start of the pandemic—the year-over-year change was 10.6% nationally in September. Pair that with mortgage rate climbs, and you’ve got a market that’s seen a decline in activity for nine straight months. The good news is economists don’t expect things to spiral as far down as they did in ’08.
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U.S. equities tumbled for a second day, as uncertainty regarding how aggressive the Fed will remain was met with increased recession fears.
Yesterday, the economic calendar was light, with the only notable report showing that the trade deficit widened less than expected. The equity front was also fairly quiet, as AutoZone beat earnings and revenue estimates, and shares of Meta Platforms fell after the Wall Street Journal reported that European Union regulators said the company should not require users to agree to personalized ads based on their online activity.
Treasury yields finished lower, and the U.S. dollar gained ground, while gold increased slightly.
Crude oil prices added to yesterday’s drop that came amid new restrictions on Russian oil, and after OPEC+ announced that it would leave its production target unchanged.
Stocks in Asia were mostly lower despite China continuing to ease COVID restrictions in some parts of the country, while European stocks fell amid a host of construction PMI data. The international markets also digested the Reserve Bank of Australia’s decision to hike its interest rate by 25 basis points, and its subsequent statement that was less dovish than expected.
*Stock data as of market close, cryptocurrency data as of 3:00am ET.
U.S. equities reversed course and finished with solid gains in the wake of remarks from Fed Chairman Jerome Powell at a gathering at the Brookings Institution in Washington. The Chairman reiterated the Fed’s plan to “stay the course” with its rate-hike campaign, but noted that smaller increases were likely ahead, as soon as next month’s meeting. Powell’s comments came just before the Fed’s release of its Beige Book report on business activity across the nation that showed a slight moderation. Preceding Friday’s key nonfarm payroll report, ADP’s private sector payroll data came in below estimates, and job openings remained robust.
In other economic news, mortgage applications snapped a two-week winning streak, Q3 GDP growth was revised higher, Chicago manufacturing unexpectedly fell further into contraction territory, and pending home sales continued to fall but at a slower pace. Moreover, the advance goods trade deficit widened surprisingly, and wholesale inventories rose more than projected. Treasury yields turned lower following Powell’s comments, and the U.S. dollar tumbled, while crude oil prices rose and gold was solidly higher. Earnings season has headed toward the finish line, with CrowdStrike Holdings topping profit and revenue estimates but missing its annual recurring revenue growth forecast, though Workday topped earnings expectations, raised its guidance, and announced a $500 million share buyback plan.
Asia finished mostly higher and stocks in Europe gained ground, with the markets digesting mixed economic data, while optimism remains that China may be set to ease some COVID-related restrictions.
This quarter’s pharmaceutical earnings were overall better than expected. Especially Merck, thanks to its Keytruda sales. The cancer drug brought in $5.4 billion last quarter, accounting for a whopping 36% of the company’s revenue for that period. But, Keytruda’s patent is expiring in 2028, and everyone is waiting to see what Merck pulls out of its hat to replace it.
Apartment rents across the US dropped in November by the most in at least five years, a sign that a key cost tracked by the Federal Reserve could be easing up. A national index of rents fell by 1%, the third straight month-over-month decline and the steepest drop in data going back to 2017, Apartment List said in a blog post recently.
As of the week ending Nov. 19th, Americans aged 65 and older make up 92% of all deaths from the virus, according to data from the Centers for Disease Control and Prevention.MORE: Latest COVID vaccine will help people ‘move on’ from the pandemic, White House’s Jha says It’s the first time senior citizens have made up more than nine out of 10 deaths since the pandemic began and a drastic increase from the roughly 58% of deaths they made up in summer 2021, an ABC News analysis showed.
U.S. equities accelerated to the upside to finish solidly higher amid a slew of data heading into the Thanksgiving holiday break. The move upward came following the release of the minutes from the Fed’s November monetary policy meeting which indicated some caution among Committee members. The economic calendar was robust, as durable goods orders came in much stronger than expected, along with new home sales and consumer sentiment, while mortgage applications rose for a second-straight week.
However, not all the reports were positive as weekly initial jobless claims rose and preliminary reads on manufacturing and services output both showed contraction after falling more than expected. Earnings reports continued to pour in, with Deere & Company rallying following its results, while HP and Autodesk lowered their guidance.
Treasury yields were lower, and the U.S. dollar fell, as did crude oil prices, while gold gained ground.
Asia finished mostly higher, though Japan was closed for a holiday, and Europe was mixed as the markets digested Eurozone and U.K. manufacturing and services data that also showed contraction in activity.
Markets: It’ll be a short but stuffed Turkey Day week for investors. In the lead-up to Thanksgiving, when markets will close, we’ll get another batch of earnings reports and minutes from the previous Fed meeting. Traders will have to clock in on Black Friday for a half day.
Stock spotlight: The e-scooter rental company Bird is probably grateful that FTX’s implosion is stealing the spotlight from its own collapse. Last week, the company said it overstated revenue for more than two years and is warning it could go bankrupt if things don’t turn around. Currently a penny stock, Bird will be de-listed by the NYSE if its share price doesn’t rise above $1 by the end of the year.
Disney just announced that former CEO Bob Iger would return to his role atop the entertainment giant, replacing his successor Bob Chapek, who’s been CEO for less than three years.After leading the company for 15 years, Iger handed over the reins to Chapek in February 2020. It was an unexpected choice, given that streaming boss Kevin Mayer was seen as a more likely heir to the Disney throne than Chapek, who led the parks and entertainment division. But Iger had reportedly handpicked Chapek as his successor, and repeatedly said he was satisfied with being retired. “I can’t think of a better person to succeed me in this role,” Iger said in March 2020.
Unlike banks, the New York Stock Exchange doesn’t close on Veterans Day. Wall Street will have a full day of trading, and operate as usual on Veteran’s Day. Bond markets, which work with the federal government, will also be closed.
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U.S. stocks closed sharply higher yesterday, with all three major indexes posting their best day of gains since 2020 as investors cheered signs that U.S. inflation finally might be headed lower.
For example, the Dow Jones Industrial Average shot up about 1,198 points, or 3.7%, ending near 33,712, marking its highest level since August and its best daily percentage gain since May 2020, according to Dow Jones Market Data. The S&P 500 index gained 5.5% and the NASDAQ Composite Index closed up 7.4%, their best daily percentage increases since 2020. The sharp rally on Wall Street was led by gains in technology and communication shares, segments of the S&P 500 that booked massive gains of about 8.3% and 6.3%, respectively, according to FactSet.
Buyers came out in force after the release of October’s consumer-price index showed a 7.7% annual rate of inflation, down from 9.1% this summer, while spurring hopes that the Federal Reserve might be making headway in its fight to bring inflation down to its 2% target.
That took some of the attention off the ongoing woes at crypto exchange FTX, with bitcoin down near a 2-year low. The 10-year Treasury rate also dropped to about 3.8% Thursday, down from a 4.2% high in October ahead of the three-day weekend for the U.S. bond market, which will remain closed on Friday for Veterans Day. U.S. stock exchanges, however, will remain open Friday.
The consumer price index (CPI), the inflation report we dislike every month, dropped today and showed that price growth cooled off a bit in October (but is still far higher than where the FOMC wants it).
The Consumer Price Index (CPI) for October reflected a 7.7% increase over last year and 0.4% increase over the prior month, better than Wall Street expected. Economists surveyed by Bloomberg called for a 7.9% annual rise and 0.5% monthly gain.
The S&P 500 (^GSPC) rallied 5.5% — its biggest intraday gain since April 2020 — while the Dow Jones Industrial Average (^DJI) jumped 1,200 points, or 3.7%, the most since May 2020. The technology-heavy Nasdaq Composite (^IXIC) advanced a whopping 7.4%, its sharpest climb since emerging from the pandemic crash in March 2020. Meanwhile, Treasury yields tumbled following the report, with the benchmark 10-year note falling well below the 4% level.
Meanwhile, earnings season rolls on with reports from Disney, AMC, Palantir, Beyond Meat, and more.
Now that the voting is behind us, it might be safe to start checking your portfolio. In recent history, stocks have only gone up after midterm elections:
In the year following every midterm election since 1950, the S&P 500 has risen—no matter which party won.
A divided government, which could happen if the GOP retakes at least the House, delivers the best market results: Data going back to 1932 shows average annual S&P returns of 13% when there’s a GOP-controlled Congress under a Democratic president, compared to 10% when Democrats have both, per RBC Capital Markets.
Why?
There’s some debate, but partisan gridlock can be advantageous for business because it minimizes the chance of major changes to taxes or other laws that impact companies. It also doesn’t hurt to have the uncertainty of the election in the rear-view mirror.
Right now however, investors are more focused on the FOMCs’ rate hikes in response to inflation. While politicians from both sides of the aisle have criticized Jerome Powell’s recent decisions, he’s unlikely to change course due to the election outcome. Plus, economists seem pretty convinced the US is headed toward a recession, regardless of who’s in control in Washington.
U.S. stocks found their solid footing in the final hour of back-and-forth trading after all three major indexes logged their worst week in three months. The S&P 500 climbed about 0.7%, while the Dow Jones Industrial Average rose nearly 200 points, or 0.6%. The tech-heavy NASDAQ gained 0.8%.
In the bond market, the benchmark U.S. 10-year Treasury touched 3.5%, its highest level since 2011, while the 2-year Treasury note inched toward 4%.
The stock markets fell after new data showing U.S. manufacturing activity stalled and the service sector’s pandemic recovery has gone into reverse as a result of high inflation and mounting interest rate hikes, feeding concerns that the Federal Reserve’s efforts to cool decades-high price increases may force the economy into a recession. The Dow Jones Industrial Average fell 138 points, or 0.4%, to close at 31,899, while the S&P 500 fell 0.9% and the tech-heavy NASDAQ 1.9%; for the week, the indexes ended up 2%, 2.5% and 3%, respectively.
US social-media companies also saw more than $130 billion wiped off their stock-market values after disappointing revenue from Snap Inc. and a lackluster report from Twitter Inc. raised new concerns about the outlook for online advertising. The Snapchat parent plummeted 39%, sinking to its lowest level since March 2020. Meanwhile, Facebook parent Meta Platforms Inc. fell 7.6%, Pinterest Inc dropped more than 13%, and Google owner Alphabet Inc. declined 5.6% in its biggest one-day drop since March 2020. Twitter also reported quarterly results on Friday, though Wall Street remains focused on the company’s legal battle with Tesla CEO Elon Musk, who is attempting to withdraw from a deal to buy the company. The stock rose 0.8% on the day.
U.S. stock markets finished sharply higher snapping a five-day losing streak thanks in part to stronger-than-expected retail sales data and a moderation in inflation expectations. But the rally — which marked the best daily performance in three weeks — still wasn’t enough to overcome earlier losses, leaving stocks with a weekly loss. The Dow Jones Industrial Average gained 658.09 points, or 2.2%, to 31,288.26. The S&P 500 advanced 72.78 points, or 1.9%, to 3,863.16. The NASDAQ Composite climbed 201.24 points, or 1.8%, to 11,452.42.
And, Citigroup (NYSE: C) reported better-than-expected quarterly results, sending its shares more than 13% higher. The Wall Street bank was helped by blowout performance in its trading business that offset weakness in investment banking revenue and an announcement that stock buybacks would be suspended. Wells Fargo (NYSE: WFC) also surged 6% despite reporting quarterly results that fell short on both the top and bottom lines as the bank set aside more money to cover potential losses from bad loans.
Banks stocks were also helped by steepening in yield curves as data showing the consumer remains in good shape eased some concerns the economy was headed for a significant slowdown.
Markets: Stocks were directionless dipping slightly lower without much market-moving news. But, Robinhood shares popped after a Bloomberg report claimed that the crypto exchange FTX is debating whether it might be able to buy the trading app. Sam Bankman-Fried, the CEO of FTX, already owns 7.6% of Robinhood.
Cathie Wood warned that the Federal Reserve could cause a recession if it keeps hiking interest rates. The US central bank is ignoring three indicators that might show inflation easing, according to the Ark Invest CIO. First, aggressive hikes are unnecessary because inflation is already easing. Second, she pointed to the stagnating prices of gold and lumber, which are often seen as leading inflation indicators. “After soaring from $1,350/ounce pre-COVID to a peak of nearly $2,000 [an ounce] during 2020, the gold price has dropped back to $1,840 [an ounce] during the past two years. “The lumber price has dropped more than 50%.” Finally, Wood said fuel prices have likely peaked as Americans increasingly turn to electric vehicles. Surging oil prices have been one of the main drivers of inflation this year, with Brent crude up 48.3% to over $115 a barrel.
The IRS says it is climbing out from under the unprecedented stack of tax returns that piled up after the agency had to scale back its operations and close facilities in 2020 following the onset of the pandemic. The agency announced that by the end of this week it will have cleared all original individual tax returns that were filed in 2021 and that didn’t contain any major mistakes. “Due to issues related to the pandemic and staffing limitations, the IRS began 2022 with a larger than usual inventory of paper tax returns and correspondence filed during 2021,” the IRS said in a statement. “The IRS took a number of steps to address this, and the agency is on track to complete processing of originally filed Form 1040 (individual tax returns without errors) received in 2021 this week.”
Another record for US single-family rents, which jumped 14% year-over-year in April, marking the 13th period of record-breaking annual gains.
Markets: Stocks bounced yesterday after their worst week in two years, led by energy stocks and Big Tech companies. Cypto even rose. Today, investors will be glued to Fed Chair Jerome Powell’s testimony on Capitol Hill. They want to know whether Powell expects to hike interest rates by another 75 basis points next month.
US mortgage applications are in “meltdown” and the threat to house prices is growing. The Mortgage Bankers Association’s index of applications tumbled again last week and has fallen dramatically since January. Pantheon Macroeconomics said the chances of a “short period of clear declines” in home prices is growing.
Jobless claims for the week hit 229,000, the highest since January. The number of jobless claims increased by 27,000 from the last period, and it greatly surpassed the Dow Jones estimate of 210,000, according to this report.
Markets: Investors are nervous before this morning’s crucial inflation report—which will show if inflation has peaked or not. Big Tech stocks such as Meta, Amazon, and Apple dragged the market lower. The 10-year T-bond was 3.046?
Finally, average US gas pricestopped $5 per gallon according to GasBuddy. Many experts predict we’re headed toward $6 and beyond.
Global venture capital investment was a healthy $39 billion in May, according to Crunchbase. But, the figure declined for the second month in a row, reaching the lowest point since December 2020. In monthly terms, VC investments declined by nearly 16%. In yearly terms, it fell by 20%.
Nobel laureate and economist Robert Shiller said the US has a good chance of entering a recession. He told Bloomberg the odds of a recession in the next few years are 50%, which is “much higher than normal.” Shiller predicted in 2005 that the housing bubble would burst and also warned a new one may be forming. And, Ray Dalio said the FMOC will cut interest rates to combat stagflation in a recent Market Insider interview. “We are in a tighttening mode … the pain of that will become great.”
Additionally, former EY Global Chairman and CEO Mark Weinberger warned that inflation will not go down in the near future, causing the economy to “turn for the worse.”
Gemini, a crypto exchange and custodian founded by Cameron and Tyler Winklevoss faced a loss in February in the form of a $36 million breach. And now the company is being sued over its alleged failure to protect its customers.
The Stock Markets have been a bit dull recently. The S&P 500 has been directionless trading within a roughly 100-point range for the past two weeks. The only energy in the market seems to belong to Exxon Mobil which notched a record close; first since 2014.
Markets: After booming stocks had their worst day of the year because of raging inflation, slowing economic growth, and a potential recession.
Crypto: Bitcoin and other major cryptos like ethereum also tumbled in the aftermath of the FOMC announcement. They’ve typically tracked the performance of growth stocks, which have gotten hammered on the prospect of higher interest rates.
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Almost every major online retailer reporting earnings with signs of a decline:
Wayfair shares cratered nearly 26% yesterday after announcing that its active customer count dropped 23.4% from a year ago.
Bed Bath & Beyond reported an 18% nosedive in online sales.
Etsy and eBay shares both dropped by double digits yesterday after giving weak guidance for the current quarter.
At least five senior executives from Meta’s fledgling e-commerce division have fled in the last six months.
Shopify shares plummeted about 15% on Thursday after posting much lower-than-expected earnings.
FOMC: The Federal Reserve approved a rare half-percentage-point interest rate increase and announced plans to shrink its $9 trillion asset portfolio starting next month in an effort to reduce inflation that is running at a four-decade high.
Markets: Stocks boomed after Fed Chair Jerome Powell spoke. Still, JPMorgan CEO Jamie Dimon pegged the probability of a recession at 33% and a “soft landing” (lower inflation, no recession) also at 33%.
And Lyft, the ride-hailing company lost nearly 30% of its value after its profit outlook came in below forecast. Uber tried to distance itself from its ailing rival, saying that it does not need to spend money recruiting drivers like Lyft does.
Cinco deMayo commemorates the defeat of French forces by the Mexican army at the Battle of Puebla in 1862, but its popularity jumped in the 1980s, when beer companies leveraged it in aggressive marketing campaigns. Now, Cinco de Mayo is a day for celebrating Mexican culture and, interestingly, it’s now more popular in the US than in Mexico.
Markets: US stocks rose for two straight weeks. Investors appear to be putting more emphasis on strong corporate earnings than all the uncertainty around the war in Ukraine and inflation.
Treasury: Yields climbed (in anticipation of higher interest rates), giving a lift to financial stocks.
Ukraine: Top Russian military officials signaled a change in approach to the war. They spoke about the “complete liberation” of the Donbas region in eastern Ukraine, which means Russia could potentially be pivoting from its initial goal of taking Ukraine’s biggest cities and toppling its government.
EARNING REPORTS THIS WEEK:
Monday: Earnings from Dave & Buster’s.
Tuesday: US consumer confidence; US Job Openings and Labor Turnover (JOLTS); earnings from Micron, Chewy, Lululemon and RH.
Wednesday: US ADP jobs report; US GDP for Q4 (third estimate); weekly crude oil inventories; earnings from BioNTech and Paychex.
Thursday: End of first quarter; US personal income and spending; US weekly jobless claims: earnings from Walgreens and Blackberry.
MARKETS: Stocks rose for a fourth day in a row Friday, closing out their biggest weekly gain since November 2020. The S&P 500 added 1.2%, bringing its weekly gain to 6.2%. The NASDAQ climbed 2.1% and the Dow Jones Industrial Average rose 0.8%. Investors have welcomed the long-expected pivot from the Federal Reserve from stimulating the economy to fighting inflation, which began this week with its first interest rate increase since 2018.
OIL: The price of oil remains above $100 a barrel as investors monitor the ongoing Russian invasion of Ukraine.
10 YearTreasury Note: The yield on the 10-year Treasury Note fell to 2.15%.
Markets: Stocks have gone up and to the right for three days running propelled by the Federal Reserve’s determination to curb inflation with a series of rate hikes this year.
Oil: The big crash in oil prices reversed somewhat and crude jumped again to more than $100 a barrel.
Mortgage Rates: The average rate for a 30-year fixed mortgage topped 4% for the first time since May 2019, a big jump from its record low of 2.65% in January 2021.
MARKETS: The Dow Jones Industrial Average rose 653.61 points, or 2%, to end at 33,286.25.
The S&P 500 gained 2.6%, or 107.18 points, finishing at 4,277.88, its best daily percentage gain since June 5, 2020, according to Dow Jones Market Data.
The NASDAQ Composite Index advanced 3.6%, or 459.99 points, closing at 13,255.55, its best daily percentage gain since March 9, 2021.
The S&P 500 had dropped nearly 5% over the last four sessions.
LABOR DEPARTMENT: Will issue its inflation report, which economists expect will show that prices for U.S. consumers leapt 7.9% in February compared with a year ago, according to data provided by FactSet. That would be the biggest gain in four decades. Consumer prices jumped 7.5% in January from a year earlier. Shortages of supplies and workers, heavy doses of federal aid, ultra-low interest rates and robust consumer spending combined to send inflation accelerating in the past year.
EDITOR’S NOTE: Although it has been some time since speaking live with busy colleague Vitaliy Katsenelson CFA, I review his internet material frequently and appreciate this ME-P series contribution. I encourage all ME-P readers to do the same and consider his value investing insights carefully.
By Vitaliy Katsenelson, CFA
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The Six Commandments of Value Investing
3. The market is there to serve you, not the other way around.
Part 1: The market is there to price stocks on a daily basis, but it doesn’t value them on a daily basis. In the long run (the yardstick here is years, not days or months) the market will value stocks, but in the short run stock price movements are random.
Despite this randomness, the media will always find a rational explanation for a move. However, trying to understand randomness and predict stock movements in the short run is like trying to have an intelligent conversation with a two-year-old. It may be fun, but it will consume a lot of your time and energy, and the outcome is far from certain.
Stock fluctuations should be looked upon as a natural and benign feature of the stock market, but only if you know what the asset is worth. To make Mr. Market serve us and not become its slave, here is what we do.
If we know a stock is worth $1, then if its price falls from 50 cents to 30 cents (a 40% decline), that’s a blessing for several reasons: The company can now buy back a lot more of its stock at lower prices, and we can add to our position. After all, it’s 40% cheaper.
Here is the key, though: You have to make sure that what you thought was worth $1 is still worth $1.
To quote Mike Tyson, “Everyone has a plan till they get punched in the mouth.” How do you remain rational when Mr. Market has just smashed you in the face by repricing your $1 stock from 50 cents to 30 cents? Maybe Mr. Market is right and that company’s fair value was never really $1 but only 40 cents?
To remain rational, we focus on maximizing our Total IQ. I know we were not supposed to have math, especially this early in the book. But indulge me with this little equation: Total IQ = IQ x EQ (where EQ <=1)Before I explain I want to stress this point: Your IQ, EQ, and thus Total IQ will vary from stock to stock and from industry to industry.
Let’s start with IQ.
IQ – our intellectual capacity to analyze problems – will vary with the problem in front of us. Just as we breezed through some subjects in college and struggled with others, our ability to understand the current and future dynamics of various companies and industries will fluctuate as well. This is why we buy stocks that fall within our sphere of competence. We tend to stick with ones where our IQ is the highest.
As I have mentioned before but will continue to repeat: If investing were an exact science – a formulaic process by which you could (in a vacuum) constantly test and retest your hypotheses and repeat your results – then EQ, our emotional quotient, would be irrelevant.
If we were characters from Star Trek – with complete control over our emotions, like Mr. Spock, or lacking emotions entirely, like Lieutenant Commander Data – then our EQ wouldn’t matter. However, investing is not a science and we are humans. We have plenty of emotions, and thus EQ is a very important part of this equation.
Though we usually think about our capacity to analyze problems as being dependable and stable over time, it isn’t.
First, emotions distort probabilities. So, even if my intellectual capacity to analyze a problem is not impacted, my brain may be solving a distorted problem.
Second, my IQ is not constant, and my ability to process information effectively declines under emotional stress. I either lose the big picture or overlook important details. This dilemma is not unique to me; I’m sure it affects all of us to varying degrees.
A friend of mine who is a terrific investor, and who will remain nameless (though his name is George), once told me that he never invests in grocery store stocks because he can’t be rational when he holds them. If we spent some Freudian time with him, we’d probably discover that he experienced a traumatic childhood event at the grocery store (he may have been caught shoplifting a candy bar when he was eight), or he may have had a bad experience with a grocery stock early in his career. The reason for his problem is irrelevant, though. What is important is that he has realized that his high IQ will be impaired by his low EQ if he owns grocery stocks.
The higher my EQ is with regard to a particular company, the more likely my Total IQ will not degrade when things go wrong (or even when they go right). This is why in the little formula above, EQ cannot be greater than 1. In your most emotionally stable state (when EQ = 1), your Total IQ will equal your IQ.
There is a good reason why doctors don’t treat their own children: Their ability to be rational (properly weighing probabilities) may be severely compromised by their emotions.
Stocks: Fell sharply as the economic fallout of Russia’s war in Ukraine rattled investors. The Dow Jones Industrial Average fell almost 800 points Monday to close with a loss of 2.4 percent. The NASDAQ plunged 3.6 percent lower and the S&P 500 index closed with a loss of 3 percent. Companies in the finance, travel, entertainment, retail and construction industries fell sharply as skyrocketing oil prices raised fears of an economic slowdown, while energy companies rallied on the prospect of higher prices. Stocks have fallen for weeks amid rising concern about inflation and the economic blow-back of the invasion of Ukraine. The Dow is down 10.3 percent, the S&P is down 12.4 percent, and the NASDAQ is down 19 percent since the start of 2022.
Oil & Wheat: Prices for oil, natural gas and wheat have also risen dramatically after the U.S. and allies imposed unprecedented sanctions on the Russian economy, which could limit their access to key Russian exports. Oil hit $120 barrel. But, some investors are betting on oil to surge even more dramatically, as bullish bets on crude futures increase. Since Friday, $150-a-barrel call options for Brent contracts in June have doubled. Amid new potential sanctions on Russia’s energy sector, oil briefly surpassed $130 a barrel overnight.
Economy: Economists warned that higher energy and food prices will likely slow growth in the U.S. through the first half of the year and fuel higher inflation. Prices rose 7.5 percent over the 12 months ending in January, according to US Labor Department data, the highest rate in more than 40 years.
Stocks fell and oil prices eased back after another bumpy day of trading on Wall Street as markets remained anxious about the broader impact of Russia’s invasion of Ukraine.
Okta shares were down 8.06% while Snowflake plummeted 15.37%.
***
INTEL: Intel stock (NASDAQ: INTC) fell 2.5% after Morgan Stanley and Bank of America Securities cut their targets to $47, according to StreetInsider. The stock fell to a low of $47.62, not far from its 52-week low of $43.63. Morgan Stanley (NYSE:MS) analyst Joseph Moore also downgraded the stock to underweight from equal weight while BofA’s Vivek Arya maintained his under perform rating.
INDEXES: Major indexes veered up and down for much of the day before a late-day slide pushed them into the red. The S&P 500 shed a 0.7% gain to close 0.5% lower, while the Dow Jones Industrial Average fell 0.3%. The NASDAQ composite fell 1.6%, weighed down by technology stocks, which accounted for a big share of the market’s decline.
The Dow is down 0.9% for the week, on track for its fourth negative week in a row. The S&P 500 is down about 0.5% for the week, while the NASDAQ Composite is down more than 1%.
BUYBACKS: In the third quarter of 2021, Apple, Inc. (NASDAQ: AAPL) led all S&P 500 companies with $20.4 billion in buybacks. Alphabet, Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) was a distant second with $15 billion in buybacks, followed by Meta Platforms Inc (NASDAQ: FB) with $12.6 billion.
Over the last decade, no company has come close to Apple in the buyback department. Apple has bought back $487.6 billion in stock since 2012. Microsoft Corporation (NASDAQ: MSFT) is a very distant second with $147.1 billion in buybacks, followed by JPMorgan Chase & Co (NYSE: JPM) with $146.2 billion.
Why Buybacks Matter: It should come as no surprise to investors that all three of the stocks that have been most aggressive in buying back shares over the last 10 years have outperformed the SPDR S&P 500 ETF (NYSE: SPY) total return by a wide margin in that period.
BONDS: Bond yields were mostly steady. The yield on the 10-year Treasury slipped to 1.85% from 1.86% late Wednesday.
Microsoft: Microsoft Corp.’s stock dropped 2.6% on Wednesday to close at a seven-month low of $280.07. On Thursday, the software giant’s stock opened down 2.8% at $272.51, hit an intra-day low of $271.52, then bounced 8.5% off that low to close up 5.1% on the day at $294.59. The difference between Microsoft’s bullish engulfing and that of Twitter and Meta is that the downtrend has lasted only three months, since the stock closed at a record $343.11 on November. 19th. On Friday, the stock edged up 0.9% to $297.31.
Salesforce: Shares of Saleforce.com Inc. sank 2.4% on Wednesday to close at a 19-month low of $190.54, or 38.5% below its Nov. 8, 2021 record close of $309.96. Then on Thursday, it opened down 3.0% at $184.74, but bounced sharply to close up 7.2% at $204.29. The customer relationship management software company’s stock rose another 1.9% on Friday to $208.09, but remained the worst performer of the Dow Jones Industrial Average’s 30 components over the past three months with a loss of 26.8%.
AMAZON: The stock traded down roughly 9% across 2021and it’s down roughly 19% from the high that it hit last year. Lapping incredible, pandemic-driven performance, Amazon is facing some tough growth comparisons. Massive technology and infrastructure investments are also putting some pressure on earnings in the near term, but the business remains excellently positioned to win the future, and it will almost certainly be one of the most influential companies of the next decade [maybe]?
MARKETS: The S&P 500 fell into a correction for the first time in two years, joining the NASDAQ Composite, as Russia sent troops into pro-Russian regions in Ukraine. The S&P 500 index ended down 1% at 4,304.76, below the correction level at 4,316.91, which would represent a 10% drop from its January 3rd record close. A correction is commonly defined by market technicians as a fall of at least 10% (but not greater than 20%) from a recent peak. The last time the S&P 500 entered a correction was February 27th 2020, when the market was being whipsawed by fears about the outbreak of the COVID pandemic.
And, this bearish market isn’t sparing 2021 winners like Home Depot, which fell the most in nearly two years after supply-chain bottlenecks squeezed its margins. HD was the Dow’s biggest gainer last year.
IRS: According to a news release issued by the IRS, taxpayers now have the option to verify their identities during live, virtual interviews with agents. The agency stresses that no bio-metric data will be required for those interviews.
However, taxpayers once again have the option to verify their identity using ID.me’s facial recognition services. Addressing privacy concerns, the IRS says new requirements are in place to ensure that images provided will be deleted upon verification. That would apply to any new IRS accounts created and those where selfies have already been collected.
MARKETS: Stocks closed down for a second straight week in the US— and sunk deeper into the red for 2022 so far — as investors assess the risks from escalating tensions in Ukraine and a shift in monetary policy by the Federal Reserve.
And, after another day of turbulence, the Dow and the S&P 500 both fell 0.7% (with the Dow ending Friday at 34,079) and the tech-heavy NASDAQ composite declined 1.2%. The NASDAQ has fallen farthest of the three major U.S. stock indexes to date, down 13.4% for the year, while the S&P 500 is off 8.8% and the Dow is down 6.2%.
Specifically, Intel’s shares declined $2.47, or 5.2%, while those of Boeing were off $4.38 (2.1%), combining for a roughly 45-point drag on the Dow. Salesforce.com Inc. Caterpillar and Honeywell International Inc. also contributed significantly to the decline.
STOCKS:
Shopify, which represented the Covid e-commerce boom, is down 62% from its peak.
Roblox, which represented the Covid gaming boom, is down 63%.
Netflix, which represented the Covid streaming boom, is down 43%.
Noteworthy: A $1 move in any of the Dow’s 30 components equates to a 6.59-point swing.
UKRAINE: Investors watched the latest developments in Ukraine, where Russia has been amassing troops on the border. The tensions are yet another concern for investors as they also try to determine how the economy will react to rising inflation and looming interest rate hikes.
BIOTECHNOLOGY: According to Bloomberg, former high flying biotechnology favorites Mirati Therapeutics Inc. and Sage Therapeutics Inc. have lost more than half their value from record highs, hurt by growing pessimism on new medicines as well as the higher rate environment damaging most stocks.
MARKETS: Stocks went down, then back up, and closed pretty much where they started. The e-commerce platform Shopify is another pandemic winner that’s been absolutely crushed during the “reopening”: Its stock has fallen to its lowest level since June 2020.
PPI: The producer price index rose 1% over the prior month.
Covid: Dr. Zayid Al-Aly reported that even a mild COVID-19 infection increasedthe risk of having cardiovascular problems — including heart rhythm irregularities, potentially deadly clots in the legs and lungs, heart failure, heart attack and stroke, within a year after being infected.
MICROSOFT: Microsoft CEO Satya Nadella is on a major shopping spree. The company’s planned purchase of video game maker Activision Blizzard, with a price tag of nearly $70 billion, is Microsoft’s biggest and boldest acquisition. But it’s hardly the only notable deal in the Nadella era. Microsoft scooped up advertising tech business Xandr from CNN owner AT&T late last year for a reported $1 billion. The company also shelled out nearly $20 billion for cloud software firm Nuance earlier in 2021. That’s on top of numerous other billion dollar deals Microsoft has made since Nadella took the helm in 2014, including the acquisitions of Minecraft developer Mojang, Bethesda games studio owner ZeniMax Media, open source coding site GitHub and business social media network LinkedIn. The LinkedIn deal was previously Microsoft’s largest, with a value of $26.2 billion. Now there are reports Microsoft is looking to buy Mandiant, the cybersecurity software firm formerly known as FireEye that is currently valued at about $4.5 billion.
MARKETS: The Dow jumped 422 points, or 1.2%. The S&P 500 surged 1.5% and the NASDAQ was 2.5% higher.
OIL: US oil futures tumbled 3.7% to just under $92 a barrel. That’s despite the fact that Russia stressed that major military exercises would continue.
CPI: The Producer Price Index rose 1% last month, marking a significant acceleration from December’s 0.2% jump.
Meta: As Varietyreports, the company has agreed to pay $90 million to settle a 2012 class action lawsuit accusing it of violating users’ privacy. Facebook allegedly overstepped its bounds in 2010 and 2011 by using tracking cookies that monitored browsing after users signed out despite promises to the contrary.
MODERNA: Moderna Inc (NASDAQ: MRNA) shares were down more than 40% since the start of the year and continues to trend lower. Vaccine stocks are facing selling pressure as the COVID-19 omicron variant fades, but Moderna investors have been expressing concerns about recent stock sales from CEO Stéphane Bancel, as well as the presumed deletion of his Twitter account.
OIL: The threat of a Russian invasion of Ukraine is shaking up a fragile global oil market, pushing prices to $94 barrel as supplies will struggle to cushion the effect from any significant disruption in Russian fossil fuel exports. The headlines that moved markets last week—the Fed’s response to inflation, corporate earnings, tensions in Ukraine—will remain top of mind for investors this coming week. Analysts predict that if Russia were to invade Ukraine, oil could top $100 a barrel for the first time since 2014. And, the average national gasoline price is about $3.50/gallon.
DOMESTICMARKETS: Walmart, Airbnb, Nvidia, Roblox, and DraftKings will close out one of the most volatile earnings seasons in recent memory.
ASIAN MARKETS: Major Asian stock markets opened lower as investors sought safer bets ahead of a possible Russian military attack on the Ukraine. In Tokyo, the Nikkei 225 index dropped roughly 2 percent in the first hours of trading. South Korea’s KOSPI fell by a similar amount. And, while China’s big tech firms are under much regulatory pressure, they are also facing strong competition.
INVESTMENT BANKING: Roger Ng, the former head of investment banking in Malaysia for Goldman Sachs, will stand trial in New York beginning today. He’s accused of playing a prominent role in a massive laundering scheme that plundered billions from Malaysia’s sovereign wealth fund, 1MDB. Embezzled funds were used to buy a Beverly Hills hotel, a $200 million super-yacht, and even to help finance the film, Wolf of Wall Street.
Bonds: The 10-year US Treasury bond yield touched 2% for the first time since the summer of 2019 and stocks traded sharply lower after a key inflation figure rose to its highest level in nearly 40 years. The last time the 10-year yield was above 2% was in July 2019. Bond yields and prices move in opposition to each other.
CPI:The Consumer Price Index’s 7.5% annual surge at the start of 2022 was the biggest leap since 1982 and topped already elevated expectations for a 7.3% rise, based on Bloomberg consensus data. On a month-over-month basis, the CPI unexpectedly posted a 0.6% increase for a back-to-back month, whereas economists had been looking for a deceleration. Core inflation, which strips out volatile food and energy prices, also exceeded estimates, showing a 6.0% year-over-year jump in January.
Markets: The Dow was down 526 points while the broader S&P 500 fell 87 points. The NASDAQ Composite was also down 305 points.
Bonds: A bond selloff eased up a day ahead of an eagerly anticipated inflation report as investors absorbed another batch of earnings reports. The DJIA rose 300 points higher, but tech-related stocks lead the rally on Wall Street as bond yields stabilized and treasury yields paused their run higher ahead of the red-hot inflation report estimates.
Markets: The S&P 500 closed as a rally in Facebook-parent Meta helped the broader tech sector build on recent gains just as the S&P 500 rose 1.5%. The Dow Jones Industrial Average added 0.8%, or 306 points, the NASDAQ jumped 2.1%. And, Meta Platforms (NASDAQ: FB) jumped more than 5% as investors appeared to the buy the dip in the social media company, which hit fresh 52-week lows a day earlier. For the second-straight day, a rally in semiconductor stocks also pushed tech higher, with Nvidia (NASDAQ: NVDA) racking up a 5% gain as analysts downplayed the $1.25 billion hit to the company after its deal to acquire UK chip-maker ARM fell through.
Markets: Major stock market indexes, the S&P 500 and NASDAQ posted their best week so far this year. And, potential buyers for Peloton include Amazon, Nike, Apple, Google, Netflix, Microsoft, or a private equity firm.
Inflation: The monthly inflation report will drop on Thursday, and consumer prices are projected to have jumped 0.5% from the previous month and 7.3% over the past year—the biggest increase since 1982.
Earnings: From Snap’s 59% gain to Meta’s 26% wipeout. the companies reporting this week—Pfizer, Disney, Coca-Cola, Pepsi, Twitter and Zillow know that any small stain on their financials could lead to a stock plunge.
Oil: The big news is that US oil prices topped $90 for the first time since 2014, despite attempts by the Biden administration to keep them down. Gas prices are back up to their highest levels in more than seven years.
Covid: The US death toll from Covid-19 has now surpassed 900,000. And, Omicron has gotten more people around the world sick at the same time than at any point since the 1918–1919 flu pandemic, the WSJ points out.
Economy: The jobs report stunned experts by adding 467,000 jobs last month, far more than expected and a sign of an extraordinarily strong labor market.
Stock Markets: Despite the big gains yesterday, the S&P and NASDAQ still wrapped up their worst month since March 2020 (history suggests stocks will rebound, though)?
Markets: Stocks just finished a period of high volatility and biotech companies in particular are feeling unsteady. The sector is off to its worst start to a year since 2016 and Moderna is the worst performer in the S&P 500.
Social Media: More than 95,000 people lost a collective $770 million due to fraud on social media last year, a new FTC report found. That represents 25% of all reported losses to fraud in 2021 and a breathtaking 18x increase over social media scam losses in 2017. Driving the surge was bogus cryptocurrencies. In fact, investment-related scams were the most prevalent type of fraud on social media, accounting for 37% of all losses. Romance scams (24%) were No. 2, and online shopping scams (14%) won the bronze medal.
Employment: The January employment rate dropped, but with Omicron forcing so many Americans to call out sick last month, the data may be specious. Economists polled by Dow Jones are estimating the economy added 200,000 jobs last month.
StockMarkets: The major equity indexes staged a thrilling comeback to close solidly in positive territory. At one point, the NASDAQ was down nearly 5% and the S&P entered correction territory.
Mark Cuban: The billionaire owner of the Dallas Mavericks just launched an online pharmacy for generic drugs that looks to cut out middlemen and combat pharmaceutical industry price gouging by offering steep discounts. Set up as CostPlusDrugs.com with 100 generic drugs to treat conditions like diabetes and asthma. Cost Plus will not accept health insurance but claims its prices will still be lower than what people would typically pay at a pharmacy. “All drugs are priced at cost plus 15%!” Cuban tweeted.
Stock Markets: The S&P is off to its worst start to a year since 2016. The NASDAQ is in a correction. And the week ahead features a busy earnings slate and a Federal Reserve meeting.
CovisPandemic: Tony Dr. Fauci said he is “confident as you can be” that the Omicron wave in the US will peak by mid-February. In a growing number of states, that peak has already come and gone and cases are plunging in states like New York and Florida. Other states, such as Oklahoma, Idaho, and Wyoming, are still reporting an uptick in new Covid cases.
Crypto-Currency: Crypto investors, meanwhile, wish they got the weekend off like stock traders, because bitcoin, ethereum, and other digital tokens continued to sink.
Federal Reserve: Federal Reserve officials will get together on Tuesday and Wednesday against the backdrop of quaking markets. Investors will want to hear an update on Chair Jerome Powell’s views on inflation. This Fed meeting will likely be the last before an anticipated interest rate hike in March. And, a blizzard of companies will report including nearly half of the Dow’s 30 giants (American Express, 3M, IBM, and more) and tech heavyweights such as Apple, Microsoft, and Tesla.
Tax Season: The income tax filing season opens today and government officials warn it could be bumpy due to a depleted IRS. The Treasury says to file early, file online, and request your refund via direct deposit to avoid the severe headaches.
StockMarkets: The prospect of higher borrowing costs has pummeled tech companies this year, and that didn’t change even after the market’s day off Monday. The 10-year yield jumped to its highest level in two years yesterday, pushing stocks (especially the tech-heavy NASDAQ) lower.
OilEnergy: Oil prices jumped to a 7-year high after an attack in the UAE raised concerns about a supply squeeze. Goldman Sachs predicts that Brent crude, the international oil benchmark, will top $100 a barrel this year because the pandemic hasn’t hurt demand for fuel as much as expected.
Gaming: An Activision Blizzard takeover would also be the biggest deal in the history of gaming, easily topping Take-Two’s purchase of Zynga for $12.7 billion last week. And, with the help of Activision’s impressive portfolio of titles including Call of Duty,World of Warcraft, Overwatch, Diablo, and Candy Crush, Microsoft will try to galvanize its monthly subscription business, Xbox Game Pass, as the “Netflix for games.”
Pandemic: New Covid cases have peaked in US regions that were hit hardest by the highly contagious variant, like the Northeast. For example, in New York City, the 7-day average of daily new cases has fallen to less than 20,000 from a high of almost 43,000 earlier this month. And, in the capital of Washington, DC, case numbers are down 20% over the last 14 days. Still, because hospitalizations tend to lag case growth by a few weeks, health care facilities are still treating more Covid patients. The average number of Covid hospitalizations has jumped 54% in the last two weeks, to 157,000.
Markets: The stock market was closed for Martin Luther King Jr. Day. Maybe a day off is just what the market needs to score its first winning week of 2022. But … For many stocks, 2022 was a real bear of a year. More than 220 US-listed companies with a market cap of $10+ billion are down at least 20% from their peaks. And things are even worse in the tech-heavy NASDAQ, where 39% of companies have dropped at least half from their all-time highs.
Economy: A combo of Omicron disruptions, higher inflation, and shortages of everything has caused forecasters to lower their projections for economic growth this quarter. Analysts surveyed by the WSJ dropped their Q1 forecast to 3% annual growth from 4.2% back in October.
China: World shares were mixed after China reported that its economy expanded at an 8.1% annual pace in 2021, though growth slowed to half that level in the last quarter. And, Paris, Frankfurt, Tokyo and Shanghai advanced while Hong Kong and Seoul declined.
Stock Markets: An inflation report couldn’t stop stocks from pushing higher yesterday, likely because it wasn’t worse than expected. Biogen shares tumbled after Medicare said it would limit coverage of its controversial $28,000 Alzheimer’s drug, Aduhelm; as the ME-P has noted.
Covid Pandemic: The current Omicron wave is projected to peak by January 19th in the US, according to an influential model from the University of Washington. Then, cases are expected to plummet “simply because everybody who could be infected will be infected,” Washington professor Ali Mokdad told the AP. Cases appear to have already peaked in Britain.
Markets: Already through a rough day, stocks dove even lower after the Fed released the minutes from its December meeting. Tech companies continued to get clobbered as rising bond yields make their shares less attractive.
About the Federal Reserve Minutes: Inflation anxiety was real at the central bank’s previous meeting, and officials signaled they could hike interest rates “sooner or at a faster pace” than previously expected to cool down prices.
StockMarkets: The three major equity indexes begin 2022 near record highs after closing out their best 3-year performance since 1999. The top-performing S&P sectors: Energy, whose 48% annual gain was its best ever (thank you, soaring oil prices). Real estate was the second-best performing sector at 42%, while tech and financials both rose 33%. The biggest winner in the S&P was Devon Energy, which gained nearly 190%. Ford, Moderna, and nine others in the index more than doubled their stock price. Microsoft rose 51%, and Apple’s 34% gain has it sitting close to a $3 trillion market capitalization.
Covid Medicine: Omicron has caused a rapid explosion of Covid cases in the US—the 7-day rolling average of nearly 400,000 new cases on Saturday was more than double the number from one week before. With hospitalizations also ticking higher, officials are warning that health systems will be overloaded before the Omicron wave is expected to peak in mid-January. And, Dr. Anthony Fauci said yesterday that health officials are looking at adding a negative test requirement after five days of quarantine. Under existing guidance, you can emerge from isolation without showing a negative test.