In his Daily Market Notes report to investors, Louis Navellier wrote:
Fading Soft Landing
Stocks take the worst hit in over a month, as recession fears trump falling inflation.
Hopes for a soft landing are starting to fade on weak economic data. Earnings are not easing concerns, with many stocks trading down on misses and even small beats.
Most recently, Alcoa (NYSE:AA) is down 3% (up 16.5% YTD) after an earnings miss and their second quarterly loss in a row and guiding down expected 2023 shipments. Discover Financial Services (NYSE:DFS) is also down 3% (+2.2% YTD) despite a beat top and bottom but had a significant increase in loss reserves, which also caused the other credit card names to slump.
Q4 2022 hedge fund letters, conferences and more
Charels Schwab (NYSE:SCHW) is down 5.7% (- 6.3% YTD) on a miss on the bottom. Kinder Morgan, the biggest gas pipeline company, had a beat on the bottom and a miss on the top. The stock is up 2.2% this morning and up 4.1% YTD.
Proctor and Gamble (NYSE:PG), a consumer stalwart, had beats top and bottom but did so with price increases with revenues up 5% on 10% higher prices but volumes were down 6%. After the close today we'll hear Netflix (NASDAQ:NFLX).
Earnings outlooks are becoming backend loaded, with 4Q'22 now looking like -2.8%, 1Q'23 down to +0.1%, 2Q'23 -1.3%, 3Q'23 +4.3%, & 4Q'23 +10.5%. Today, we're testing 3,900 on the S&P and 33K on the Dow. The Dow is suddenly negative YTD, the S&P only +1.8%, NASDAQ + 4.3%, and the Russell 2000 +4.7%. The VIX is back to 21.4 after testing 18 only 6 days ago.
Covid Fear
Interest rates are bouncing a bit with the US 10-year back to 3.40% after testing 3.32% overnight. The 2-year tested 4.04% and is back to 4.10%. Gold is back to $1,920, and crude oil is back over $80. The optimism over China reopening is being tempered by the Chinese Lunar New Year fears over it creating a huge spike in Covid cases. Stocks are trending lower as the day goes on.
Bears Smiling
Members of the Fed speak later today, with hopes that they will show signs of softening the tough stance of going to 5% and keeping it there. With jobless claims coming in light today, the Fed has the latitude to stand tough for now.
All of a sudden bad news is bad news again and the bears are smiling. Earnings are off to a rough start but we've got a long way to go. Keep the bias to stocks with quality earnings and reasonable P/Es.
Coffee Beans
While animals like critically endangered orangutans or humpback dolphins are getting a lot of attention, the number of threatened mammals has not been rising as fast as in other animal classes. The number of threatened mammals increased by only 22% between 2007 and 2020.
During the same time period, the number of endangered insects rose by 276%, the number of endangered mollusks rose by 145%, while endangered fish species increased by 196% and the number of endangered reptiles even rose by 336%. Source: Statista. See the full story here.
