The AP on the Street 45th Week of 2022

The AP on the Street

The AP on the Street 45th Week of 2022

It was a good week not only for the technology sector but also for the whole market; better-than-expected CPI and Core CPI drove the market for a massive bull run. Investors took those numbers as a hope for a potential policy pivot since numbers indicated a cooling phase for the CPI levels. As Chairman Powell said, they are not considering a pause, but with this data, the FOMC would probably at least start to discuss the opportunity for it —which is generally regarded as bullish for the markets.

By the way, this week, we have a few crucial data; PPI, Core PPI, Manufacturing Indexes, Jobless Claims, and Retail Sales. There were two data last week that affected our model, so let’s take a look at what happened the previous week:

  • Cryptocurrencies tumbled after Binance’s announcement of the acquisition of distressed FTX. Binance Chief said the near collapse of FTX severely eroded the confidence in the Crypto industry, then walked away from a deal to buy tumbling competitor FTX after a review of the company’s books. Additionally, FTX was probed by the regulators over the handling of the client funds.
  • Investors are preparing for a government gridlock after potential control of the House of Representatives by Republicans.
  • Meta finally announced that they are laying off 11,000 employees —nearly 13% of the workforce. Their shares jumped over 7% after the announcement ($103.96).
  • Disney stock went down 13% to a new 52-week low —reaching the lowest since 2020 and the most significant one-day drop since 2001.
  • FTX filed for chapter 11 bankruptcy due to liquidity problems.
  • Amazon’s market cap fell down to $879 billion from $1.88 trillion —becoming the first public company to lose a trillion dollars in market capitalization.
  • Elon Musk’s net worth went down 48% to $177 billion from its peak of $340 billion.
  • U.S. Mortgage rates rose to 7.14% —the highest level since 2001.
  • U.S. October CPI became 7.7% year on year —30 basis points better than expected. DOW soared by more than 3%, S&P by more than 5%, and NASDAQ by more than 7% best daily gain since march.
  • U.S. October Core CPI became 6.3% year on year —20 basis points better than expected.
  • U.S. Dollar tumbled after October CPI rose less than expected. U.S. Treasury yields went down around 5%.
  • Investors dumped Lockheed Martin and Eli Lilly stocks, after ridiculous tweets of the fake verified accounts.
  • Democrats are likely to retain the control of the Senate as Nevada flipped.

Overall Market Indexes & Commodities Moves:

DOW = 4.1%
S&P 500 = 5.9%
NASDAQ = 8.1%
RUSSELL 2000 = 4.6%
Gold = 5.8%
Silver = 5.1%
Oil = -2.8%

Overall Market Indexes & Commodities Moves

Our two most performing stocks:

Our two most performing stocks

As people who read the last week’s article would know, these two stocks were under our “the least performing” table. They pretty much gained what they lost last week. We do not have any stock with a loss this week.

TIL: What exactly are the Manufacturing Indexes?

The Empire State Manufacturing Index gauges the general state of the economy in New York. A value above 0.0 denotes better conditions, whereas a value below 0.0 denotes worse conditions. The information was gathered through a survey of around 200 manufacturers in the state of New York.

The Philadelphia Federal Reserve Manufacturing Index measures the relative level of Philadelphia’s prevailing business conditions. A level on the index above zero suggests better conditions; a number below zero indicates poorer conditions. About 250 manufacturers in the Philadelphia Federal Reserve district participated in the survey that produced the statistics.

Those indexes are crucial for investors to anticipate the market’s future outcomes. A reading that is higher than anticipated should be interpreted as bullish or optimistic for the US dollar, whereas a reading that is lower than expected should be interpreted as negative or bearish.

Next week’s important macroeconomic data to be released are:

The PPI, the Core PPI, Manufacturing Indexes (Both the Empire State and Philadelphia), Jobless Claims, and Retail Sales.

Elections are still going on, and there are still a few key races to look at. Republicans almost certainly gained control of the House of Representatives; however, the Senate’s control depends entirely on the runoff in Georgia. If the Republicans win this seat, a potential government gridlock would be on the table. Historically, a divided government is far better for the markets, as can be seen below:

Since the midterm elections happen after two years of the presidential election, we can clearly see a pattern there. Midterm elections generally divide the government, so there was a gridlock after pretty much every midterm election.

We will see how the investors will behave after the Jobless Claims, Retail Sales, and precise election results. Until then, stay tuned for the next week.