This Week, All Eyes On The Fed

Happy Halloween Everyone!

I might dress up as Inverse Cramer tonight because I know everyone will give me their money.

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Prices as of 4 pm EST, 10/28/22; % YTD

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MARKET UPDATE

Month to date

• S&P 500 +8.8%

• Nasdaq +5%

• Russell 2000 +11%

• DOW +14.4%

October 2022 ranks as the 10th best month on record for the DOW since 1915

• DOW holdings with October performance, all 30 DOW holdings up in October

  • Caterpillar +34%

  • Chevron +25%

  • Honeywell +22%

  • JP Morgan +21%    

  • Visa +18%

  • Apple +12%

  • UNH +9%

  • Walmart +9%

  • Home Depot +8%

  • Microsoft +1%

Why did the market go up in October?

• Market believes the Fed will pause after 2 more hikes.

• 75-point hike in November

• 50-point hike in December

• In September, Market assumed 75-point hike in December

• In October, Market assumed only a 50-point hike in December

• The revision from 75 to 50 which occurred in October was the catalyst for the majority of the October rally

• Strong earnings from Caterpillar, Chevron, Visa, etc. also contributed

• Investor Positioning

• The strength also speaks to the elevated cash levels of investors and very low hedge fund leverage

• Any small positive signal creates a large market impact

FOMC meeting is Wednesday

• expect 75 basis point hike

• Expect 2-year yields to go up

November 4, 2022 U.S. October jobs report

November 8, 2022 U.S. midterm elections

November 10, 2022 U.S. CPI

Europe: Inflation surged to 10.7% in October, GDP +0.2%

• Russia pulling out of a UN deal to allow Ukraine grain exports, Wheat up 4%

• Ukraine is one of the world’s biggest suppliers of wheat, corn and vegetable oil

• The July agreement to open 3 ports has been vital to help alleviate a global food crisis

Crude 86.50 -1.5%

• Crude lower after China’s Manufacturing PMI was 49.2 vs. street 49.8

• New orders contracted for a 4th consecutive month

• 8:30 a.m. OPEC 2022 World Oil Outlook

Shanghai Disney DIS

• To close October 31 under requirement of pandemic prevention and control

Earnings

• EMR Emerson

• GPN Global Payments

• L Loews

CRYPTO UPDATE

Doge

• Dogecoin is up over 100% over the past week

• Why? → Elon’s Twitter TWTR purchase

• Market cap >$16 billion

  • That’s roughly 3 Lyfts LYFT

• +$89 million in liquidations since Friday

• ~$650 billion in futures open interest

• Does it make sense? → Doesn’t have to ¯\_(ツ)_/¯

Investor flows to digital asset investment products

• Minor ($6.1 million) inflows last week

• 7th consecutive week muted flows

• Bitcoin inflows $14 million

  • 70% of flow volumes

• Ethereum outflows $2.1 million

  • 7th consecutive week of outflows