Huge Week For Stocks And The Fed
New Employment data due this week could begin to show cracks in the labor force
Hello Everyone,
Welcome to the +358 new subscribers who joined our Dividend Investor’s Edge community this past week. If this is your first time reading, but you have not yet subscribed, join our growing investing community of ~3.3K investors.
If you feel like your experience is holding you back from pursuing the career you want, then I’m excited to tell you about our sponsor Southern New Hampshire University SNHU has one of the largest accredited, non-profit, online degree offerings in the country. SNHU is radically affordable - their online tuition rates are some of the lowest in the nation Go to https://snhu.edu/mark to learn more about their degree programs.
*This is sponsored advertising content.
Market Talk ⏪
For those of you in the United States, I hope you all had a nice Thanksgiving holiday. Now that thanksgiving is behind us, everyone seems full speed ahead towards Christmas and the end of the year.
2022 has been a rough year for most stocks, with the S&P 500 down ~15%, however, keep your eye on the Dow Jones Industrial index as it is close to turning positive. The DJI is down only 5% on the year, as it has roared higher by roughly 7% over the past month alone.
The S&P 500 has also been in a little groove of late, yet again getting investors excited about a possible strong finish to the year.
Here is a look at the rebound we have seen in the S&P 500.
A lot of how we finish the year will be predicated on what happens over the course of the next two weeks.
This week we get some fresh readings on the economy, with employment, inflation, and manufacturing data all dues this week. A lot of focus will be on the labor report, as we have seen reports of sizable layoffs from many large companies in recent weeks.
The labor market has remained tight during the Fed’s tightening cycle, but a crack in that could signal a sooner than expected turnaround in their rate hike plans. Estimates currently have the economy adding 200,000 jobs in the month of November, which would be a slowdown from the 260,000 that was added the month prior.
The next Fed meeting takes place on December 13th and 14th, where Fed officials are expected to increase rates by 50 basis points. A lot will be predicated on the data we see this week. As such, we could see volatility kick back up depending on the employment report.
I believe it will continue to be a situation where good news = bad news. A strong jobs report, showing strong hiring and a tight labor market is good for those getting hired, but it also means the Fed will continue with its aggressive approach to hiking rates, which could send stocks plunging. A weak employment report, could signal the rate hike saga could be coming closer to an end, and I would expect stocks to jump on that news.
This week will also provide another outlook into the strength of the consumer. This past weekend we had Black Friday and early reports have indicated that shoppers returned to stores, after two lackluster years during the pandemic, but the real winners were those online retailers. Online Black Friday sales are expected to top $9 billion, according to Adobe. In store traffic saw a slight uptick of roughly 3% as well.
In terms of online spending, advertising technology company Captify, which tracks more than 1 billion searches a day from websites globally, stated that the top searches for Black Friday deals were as follows:
Walmart
Target
Kohl’s
Amazon
Amazon fell to fourth after being in the top spot a year ago. Overall, the holiday shopping season seems to be off to a good start, meaning retail sales may not be as gloomy as initially thought.
I expect we will begin seeing the signs of a weakening consumer. We have already seen credit levels rise as Americans put more on their credit cards, returning to pre-pandemic highs, combined with the high amounts of savings that were built during the pandemic have been wiped clean. Rising interest rates take time to make their impact on the economy.
The housing market is another area that continues to be heavily impacted, with 30-year mortgage rates above 7%, which has resulted in a sharp decline in mortgage applications. In addition, rents have been rising as well, all having a negative impact on consumers and how much disposable income they have left over.
Looking at the technicals, the S&P 500 is about 30 points below their 200-day moving average, which has proven to be a tough resistance level of late. Given that, I will continue to be patient and most likely sell some call options slightly above those levels.
In international news, COVID protests surged in China as that country continued to increase restrictions there due to the rising COVID cases. Many had hoped China would begin to ease restrictions around their policy, but that still does not seem likely any time soon.
Deep Dive 📰
I recently dropped a Deep Dive on Starbucks Corporation (SBUX). If you have not checked it out yet, CLICK HERE. If you have checked it out, let me know what you think of the video and summary format.
A new Deep Dive will be dropping in the coming days.
Monthly Portfolio Updates 💰
As a subscriber to The Dividend Investor’s edge, I will begin publishing monthly portfolio updates in the Portfolio Update tab. This monthly write up will not only show my dividend portfolio, but it will also detail out any buys or sells I made during the most recent month, in addition to the growth in my Dividend income.
One of the many perks to being a Dividend Investor’s Edge subscriber.
US Markets 🇺🇸
Here is a performance summary for US Equities:
Here is a look at US Treasuries:
The Fear & Greed Index measures market sentiment based on the following seven factors: put/call ratios, junk bond demand, stock price breadth, market volatility, stock price strength, safe-haven demand, and market momentum.
When it comes to the Fear and Greed Index, and the continued uptick in the markets, we have seen the index continue to remain in the Greed level. The index largely remained unchanged week over week as we approach the next Fed meeting and some fresh new economic data in the coming days and weeks ahead. Currently, the index has a reading of 64, which is not much change from the prior week reading of 61.
Earnings on Deck 💰
Earnings were pretty quiet last week given the Thanksgiving holiday, but we did see a couple of strong retail releases from the likes of Best Buy and Dick’s Sporting Goods. We also saw a nice report from John Deere that sent those shares to a record high.
This week does not have many notable earnings releases either, but we will hear from the likes of Crowdstrike (CRWD), Salesforce (CRM), Dollar General (DG), and Kroger (KR).
Notable Analyst Updates 📝
Disney (DIS) ousted CEO Bob Chapek after a dismal few quarters and brought back prior CEO Bob Iger.
Raymond James downgrades UnitedHealth (UNH) from STRONG BUY to BUY.
Wolfe Research rates Procter & Gamble (PG) as a BUY with a PT of $156.
Medtronic (MDT) downgraded to neutral from buy at Citi.
This Week 📆
Monday
New York Fed President John Williams
Tuesday
S&P/Case-Shiller home prices
FHFA home prices
Consumer Confidence
Wednesday
ADP employment
Real GDP Q3
Chicago PMI
Pending home sales
Fed Chair Jerome Powell will speak at Brookings Institution event on the outlook of the economy
Thursday
Monthly vehicle sales
Initial jobless claims
Personal income/spending
Manufacturing PMI
Friday
November employment report
Other Resources 📺
If you have not done so yet, definitely check out my growing YouTube community where I publish weekly videos on Dividend Stocks I am looking at. If you are new to Dividend Investing, be sure to check out my newest video dropping later today (Monday Nov 28th) that details out the POWER of COMPOUNDING DIVIDENDS.
Here is a look at my latest video in which I discussed 3 MONTHLY Dividend Stocks.
Also during the week, I did a video breaking down Apple vs Microsoft to determine which is the better buy right now.
Here are a few others of my latest videos:
Warren Buffett’s Top 5 Dividend Stocks
Better Buy: Home Depot vs Lowe’s
If you enjoyed the newsletter, leave a LIKE and COMMENT down below. Also, if there is someone that could benefit from this newsletter, consider sharing it.
Have questions? You can email me directly at Mark@RoussinFinancial.com.
Have a Great Week!
Mark
Hola, gracias por el articulo. Para los analisis si los puede hacer por escrito mejor, si no entendemos bien el ingles no pudemos acceder a el, por escrito podemos traducirlo o videos en youtube tambien con su traductor automatico pero si el video lo sube en esta web no tiene traductor automatico. Muchas gracias y buena semana, unas compañias para ir mirendo MDT y WHR.