Morning Briefing
November 1, 2022 | Daily JAM, Morning Briefing |
The JOLTS survey from the Department of Labor showed a big jump in job openings in September. Which raised market worries that the Fed will raise interest rates tomorrow, November 2, by a hefty 75 basis points and signal that it is farther away from a pivot toward lowering interest rates than this recent rally has hoped. The Job Openings and Labor Turnover Survey showed that the number of available positions climbed to 10.7 million in September from a revised 10.3 million in August. Economists surveyed by Bloomberg were looking for a drop to 9.8 million openings.
October 31, 2022 | Daily JAM, Morning Briefing |
Today, Monday, October 31, it’s Morgan Stanley strategist Michael Wilson, who until recently was a Bear, joining the “the Fed is about to pause or end its interest rate increases” camp. Indicators including the inversion of the yield curve between 10-year and three-month Treasuries “all support a Fed pivot sooner rather than later,” Wilson wrote to clients today. “Therefore, this week’s Fed meeting is critical for the rally to continue, pause or even end completely.”
The Fed is widely expected to raise its short-term benchmark interest rate by 75 basis points–to a range of 3.75% to 4.00%–at its Wednesday meeting. The CEM FedWatch Tool, which uses prices in the Fed Funds Futures market to calculate the odds of a Fed move, put the odds of a 75 basis point increase at 86% today, up from 82.2% on Friday. The remaining sentiment is betting on a 50 basis point increase. No one is expecting just a 25 basis point increase.
October 28, 2022 | Daily JAM, Morning Briefing |
Bad earnings news from Alphabet (GOOG), Amazon (AMZN), Microsoft (MSFT), and (really bad news) Meta Platforms (META) this week, and yet, and yet stocks, even technology stocks are up strongly, very strongly, today. The Standard & Poor’s 500 finished the day ahead 2.46%. The Dow Jones Industrial Average was higher by 2.51%. The small-cap Russell 2000 gained 2.20%. And the technology=heavy NASDAQ Composite and the NASDAQ 100 added 32.87% and 3.17%, respectively. In the short run it can be extremely difficult to net out the forces pushes stocks higher and lower. Right now we have higher interest rates from the Federal Reserve, continued signs of a slowing economy, and slower earnings growth pushing stocks lower. Pushing stocks higher are hopes that the Fed will end its most aggressive interest rate increases soon, the speculative possibility that the U.S. economy might dodge a recession, and a flood of money in the hands of money managers who think they might be able to end the year on an up note because stocks have been punished enough in the short run.
At the moment, based on the market’s rally before tech earnings and the strong bounce today shaking off really negative earnings news from some of the market’s biggest stocks, I’d say that money talks. And that this rally looks set to continue, maybe even until the end of the year, simply because money managers are going to throw money at “bargain” stocks.
October 28, 2022 | Daily JAM, Morning Briefing |
Inflation as measured by the Personal Consumption Expenditures index, the Federal Reserve’s favorite inflation guide, rose at an annual rate of 6.2% in September, according to data released today, October 28. The core index, which excludes more volatile prices for food and energy, rose at an annual rate of 5.1%. The month-to-month gain in the overall PCE was 0.3% and the core index climbed a month-to-month 0.5%.
October 27, 2022 | Daily JAM, Morning Briefing |
Today, October 27, the Bureau of Economic Analysis reported that U.S. GDP grew by an annualized 2.6% rate (adjusted for inflation) in the third quarter. That was better than the 2.4% rate that economists had projected. After two down quarters to begin the year, this gain brings the U.S economy back close to break even for the year. But that was the end of the good news in this report
October 26, 2022 | Daily JAM, Jubak Picks, Morning Briefing, Top 50 Stocks |
Microsoft (MSFT) managed to beat Wall Street earnings estimates for its fiscal first quarter, reporting earnings of $2.35 a share versus the $2.29 expected by analysts after the market close on October 25. But the stock is down strongly today, October 26, on the company’s forecast of slowing growth for the next quarter and a decline in growth from its Intelligent Cloud business unit.
October 25, 2022 | Daily JAM, Jubak Picks, KO, Morning Briefing, Top 50 Stocks |
This morning before the stock market open Coca-Cola reported earnings of 69 cents a share for the third quarter. That was up from 65 cents a share in the third quarter of 2021 and was above the 64 cents a share expected by Wall Street analysts. Revenue of $11.1 billion was higher than the $10.5 billion projected by Wall Street.
October 24, 2022 | Daily JAM, Morning Briefing |
Last Monday, with the National Congress of the Chinese Communist Party moving toward approving a new 5-year term for current President Xi Jinping, the National Bureau of Statistics delayed the release of key economic data.
Today, with the National Congress over and President Xi reinstalled at the top of the Party, China’s National Bureau of Statistics released the data.
And as every economist outside China expected, the data showed disappointing weakness in China’s economy.
October 23, 2022 | AAPL, AMZN, CAT, Daily JAM, EQNR, GOOG, Morning Briefing, MSFT, PXD |
Earnings. Earnings. And more earnings. From the big bellwether technology stocks: Apple, Amazon, Microsoft, Meta Platforms, and Alphabet. Wall Street has already slashed earnings forecast for these stocks so there’s a good chance these companies will report earnings that surpass expectations even if only by a few pennies. By and large, though, these reports will show either an absolute drop from the September quarter of 2021 or, at best, a slowing of revenue and earnings growth. Key to the market’s reaction will be what these companies say about expectations for the next quarter or two. Will they emphasize what are already clear slowdowns in PC and smartphone sales? Will they speak to the elephant in the room–the U.S/China trade war? Will they say that a strong dollar plus inflation is cutting into sales outside the United States and U.S. sales to domestic customers who are showing signs of “price fatigue”?
October 21, 2022 | Daily JAM, Morning Briefing |
Sometimes a single earnings report is just that–a report from a single company that reflects what’s going on in that company’s business and that tells us relatively little about the economy as a whole. And then there are earnings reports that give us a snapshot of the larger economy from the point of view of a single company. In that case, savvy investors should be looking to extrapolate from that snapshot. Today, October 21, American Express (AXP) delivered this second kind of earnings report.
October 20, 2022 | Daily JAM, Morning Briefing |
The bad news is that the Treasury Department is worried about liquidity stress in the huge market for U.S. Treasuries. The good news is that the department is moving to do something about the problem.
October 19, 2022 | Daily JAM, Morning Briefing |
The two-day bounce in U.S. stocks stalled today. The Standard & Poor’s 500 closed down 0.67% and the NASDAQ Composite was down 0.40%. Why? Increased sentiment that the Federal Reserve will raise its target short-term interest rate by a hefty 75 basis points at its November 2 meeting and its December 14 session. While the 75-basis-point increase at the November 2 meeting has been expected for some time, the shift in sentiment for the December 14 meeting is new.
