Stock Market Today: October 30th - November 3rd, 2023

Welcome StonkForums to the trading week of October 30th!

This past week saw the following moves in the S&P:


S&P Sectors End of Week:


Major Indices End of Week:


Major Futures Markets End of Week:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:

(N/A.)

 

Bonds, Gold, & Crypto Surge; Stocks Purged As USA Credit Risk Rises Into WW3
FRIDAY, OCT 27, 2023 - 04:00 PM

US Macro data surprised to the upside this week (seasonally-adjusted, of course), despite tightening financial conditions...



Source: Bloomberg

...but the US earnings outlook is deteriorating rapidly, as Barclays strategists say full-year guidance “looks unusually soft” for this time of year, while the number of profit warnings are already trending toward season-highs with about half of the S&P 500 still to report...



Source: Bloomberg

...and while the market's expectations for inflation over the next 12 months is lower this month, Americans' expectations for inflation is dramatically rebounding...



Source: Bloomberg

...and the term premium has soared to its highest since 2015...



Source: Bloomberg

All of which makes one wonder, why all of a sudden UST yields are rising along with USA sovereign risk's sudden surge...



Source: Bloomberg

Around 1300ET, the IDF warned of an imminent ground invasion and several signals showed internet being cut off in Gaza. That sent stocks legging lower and gold and oil soaring...



The US majors were already at the lows of the day, and those losses accelerated on the Gaza headlines. The Dow was the marginal winner of the bunch, not puking quite as hard as the rest...



VIX actually ended lower on the week (by a smidge) and has decoupled from the drop in the S&P...



Source: Bloomberg

A really ugly week for big-tech with the Magnificent 7 tumbling to the lowest since May 2023 ...



Source: Bloomberg

...but the banks were battered too



S&P and Nasdaq entered correction making October an ugly month...



Source: Bloomberg

The equal-weighted S&P tumbled to one-year lows today and the cap-weighted S&P is starting to catch down to it fast...



Source: Bloomberg

Amid all the chaos, Treasuries were actually relatively well-behaved today, holding yesterday's gains with yields down between 5 and 10bps on the week (led by the belly)



Source: Bloomberg

The 2Y Yields fell back toward 5.00% (10Y broke below it and 30Y oscillated around it)...



Source: Bloomberg

The yield curve (2s30s) uninverted...



Source: Bloomberg

Amid all the crazy swings in stocks and commodities, the dollar ended the week very marginally higher...



Source: Bloomberg

Bitcoin surged midweek, topping $35,000 for the first time since May 2022, and held the gains



Source: Bloomberg

Oil dropped over 4% this week, but today's escalation pushed WTI back up to $86...



Spot Gold surged on the Gaza headlines, topping $2000...



Source: Bloomberg

...up to its highest since May (nearing record highs)...



Source: Bloomberg

Finally, as Alasdair Macleod noted on America’s deteriorating finances: gold is now rising along with US Treasury yields...



Source: Bloomberg

...indicating that the dollar is becoming destabilised by Bidenomics, and a debt trap is being sprung on US Government finances.

RIP Byron Wien

 

The Energizer Bunny Economy and What Comes Next


You just can’t put this economy down. There are expectations and then there’s reality. Earlier this year, expectations were for a “mild recession” in the second half of 2023, and then that got revised to a more optimistic outlook as time went by (and data came through). On the eve of the third quarter GDP release, expectations for growth had risen as high as 3.8%. The actual reading blew past those expectations, with the economy growing 4.9% in Q3. That’s after adjusting for inflation.

Sit with this: Real GDP growth has grown faster than what the Congressional Budget Office (CBO) projected just before the pandemic, in January 2020. They also projected that the unemployment rate in 2023 will be 4.4%. It’s at 3.8% now.



It’s important to keep perspective as well, because the economy has grown more than expected (in real terms) in the face of 3 massive shocks:

• A worldwide pandemic that killed millions of people, resulting in massive job losses and businesses going under.
• An energy price shock that sent inflation to the highest level in 40 years. Historically, energy shocks have pushed the U.S. into a recession, but not this time.
• The most aggressive Fed tightening cycle since the early 1980s. Surging interest rates crushed the housing market in 2022, which was not unexpected. Historically, housing downturns have preceded recessions, but not this time.

Keep in mind that the trajectory of economic growth was not a given, considering the scale of the shocks. In fact, most other developed market economies have seen economic scarring from Covid and its aftermath, with significant output loss relative to pre-pandemic expectations. The US is the odd one out, with output running above pre-pandemic expectations.



Even better, the inflation trajectory in the US is a lot better than in most other places. Despite pushing a lot more fiscal stimulus into the economy, inflation in the US is now running below a lot of other developed economies. The chart below shows core inflation – excluding food, energy, and owners’ equivalent rent – enabling cross-country comparisons.



So, What Comes Next?
A big reason for GDP growth coming in close to 5% in Q3 was because businesses rebuilt their stock of inventories – it added 1.3 percentage points to the headline number. But inventories (along with net exports) can be volatile from quarter to quarter. It helps to expand the horizon a bit. What’s incredible is that the economy has grown faster than the 2017-2019 pace of 2.8%. Over the last year, it’s grown 2.9%, and over the last two quarters, it’s grown 3.5% (all in real terms). That should give you an idea of the current underlying speed of the economy.

Powering this are two major components that make up just over 60% of the economy, which should help us think about what could come ahead.

• Services consumption (45% of the economy) is running ahead of its pre-pandemic pace.
• Government spending (17% of the economy) is also running strong on the back of federal government nondefense and defense spending and investment, as well as state and local government spending.

More recently, housing has also gone from being a massive drag on the economy to a slightly positive contributor. Residential investment contributed to GDP growth in Q3 for the first time in 10 quarters. Incredibly, that’s come in the face of mortgage rates north of 8%. What’s happening is that high mortgage rates are locking a lot of homeowners in their homes, so the inventory of existing homes is low. That’s pushing a lot of potential homebuyers into the new homes market, boosting single-family housing construction. In any case, this dynamic is likely to continue and even if housing doesn’t contribute a lot to GDP going forward, it’s unlikely to drag on the economy as much as it did in 2022.



Coming Next for the Big Two: Services Spending and Government Spending.
Stronger spending is a direct result of stronger incomes across all workers in the economy. Overall income growth is running around 5% right now, thanks to strong employment gains, strong hourly wage growth, and hours worked running similar to what it was pre-pandemic. Plus, as I pointed out in a prior blog, household balance sheets are in good shape. Median net worth rose 37% between 2019 and 2022. So, households feel less urgency to save and solidify their balance sheets, unlike what happened after the stock market and housing crash in 2008. Yet another tailwind: gas prices are falling. Nationwide average gas prices have fallen from about $3.90 a gallon to $3.50. Food inflation is also easing. That’s going to be a boost for household wallets.

With respect to government spending, it’s unlikely more money for nondefense gets authorized by Congress given the political makeup. However, there’s plenty left in the tank within the Bipartisan Infrastructure Act, CHIPS Act, and IRA – only a fraction of the spending authority given by Congress has been exercised to date. There’s more to come.

Defense spending rose at an annualized pace of 8% in Q3, the fastest pace since 2020 Q4. Defense spending is currently just 3.6% of GDP, close to an all-time low. It’s likely this will move higher going forward.



State and local governments spending makes up 11% of the economy, which is significant. They cut back significantly between 2020 and 2022, in preparation for a storm. But they’re starting to ramp up spending and investment, and this likely to continue over the next few quarters. Sales taxes and property taxes are likely to remain strong if spending remains strong (likely if we avoid a recession, as we expect), and we avoid a housing market crash (also likely given demand dynamics). This is in sharp contrast to the post-Financial Crisis period when states struggled and cut back on spending for several years.



What Does This Mean For the Fed?
There are two key pieces to how this data matters for the Fed.

• Economic strength solidifies the idea of higher for longer. That’s likely to continue until we see some softness in the data, which is coming given the torrid pace of growth in Q3 is unlikely to continue.
• However, slower inflation will probably stay their hand from raising rates further. Core inflation, as measured by the personal consumption expenditures index, clocked in at 2.4% in Q3. That was softer than expected and the slowest pace since the end of 2020.

Equity markets appear to be struggling to come to terms with the idea of elevated interest rates. But ultimately, higher rates are mostly just reflecting a stronger economy, and that’s good news for profits. Ryan Detrick, Chief Market Strategist, just wrote about how forward estimates of profits and profit margins are rising. It’s just that we’re currently experiencing a “good news is bad news” dynamic – that’s likely to shift eventually.

10 Things You Might Not Know, but Should


“It’s not what you look at that matters, it’s what you see.” -Henry David Thoreau (writer)

Here are a few things that caught my attention the past week or so. A few I’m guessing a lot of people don’t even know, but they should.

Profit Margins Are Increasing
One of the more obvious things we’ve been told would happen all year was that profit margins would be pressured lower. Well, you might be surprised to know that profits margins have held firm and forward 12-month profit margins on the S&P 500 are trending higher. Just like everyone said.



Earnings Should Hit An All-Time High Next Year
Yes, earnings have been lower year-over-year the past three quarters, but there’s a good chance that ends this quarter. What might surprise most investors is forward 12-month S&P 500 earnings are expected to hit a new all-time high next year, as the next few quarters should see solid growth. We’ve long been in the camp there is no recession coming and we still feel the odds of one in 2024 are quite low (more on that below), which should support solid earnings growth.



Student Loan Payments Coming Back Could Crush the Consumer
Yes, many suspended student loan payments have resumed, but this doesn’t mean the consumer will stop spending. In fact, if you look at the actual data and not the fear-mongering in the media, we see that some continued to pay their debt this whole time, while if you are struggling to pay now, the government has many ways to help.

The bottom line is that despite student loan payments starting again, we’ve seen virtually no slowdown in spending. In fact, in some cases, we’ve seen more spending. Here’s what Visa’s CFO, Vasant M Prabhu, had to say yesterday at their earnings call: “As we said consistently, we’re not economic forecasters, and so at a macro level, we are assuming no recession in our outlook. We’re also not factoring in any impact from student loan repayments because…we’ve yet to see any meaningful impact.”

Lastly, here’s retail and food sales running 5% above pre-pandemic levels and showing no signs of slowing down.



Manufacturing Is Solid
We’ve heard time and time again how poor many of the manufacturing sentiment surveys have been, suggesting a meaningful slowdown. Well, once again, a simple look at the actual hard data (versus survey data which is called soft data) shows a much different story.

Would you believe that manufacturing is up 2.1% this year? If all you followed was the headlines and media, you’d never realize this. Now, to be clear it isn’t like up 2.1% is soaring, but it still paints a better picture than what we’ve been hearing and one that we expect will continue to improve over the coming quarters.



No, A Recession Isn’t Around the Corner
Several big names out there are still calling for a recession, but the data doesn’t confirm that at all. Of course, this might sound like a broken record, as we’ve been hearing this for a year now. The National Bureau of Economic Research (NBER) is the group that oversees calling recessions.

Turns out, they don’t just look at GDP, which explains why we didn’t have a recession at the beginning of last year, even with consecutive negative GDP prints. They instead focus on things like employment, industrial production, consumption, income, and wholesale and retail sales.

Looking at the six indicators they use for a recession shows we are clearly not in a recession, not even close. Employment and incomes are a tad below pre-pandemic levels, but we’ve seen surges in industrial production and retail sales.



Stocks Can Go Lower, but They Can Also Go Higher
After the best first six months to a year ever for the Nasdaq and the best first seven months for the S&P 500 since 1997, stocks have seen what we consider to be normal seasonal weakness. But for some reason this has confused many investors. It isn’t fun, but to see weakness in August and September isn’t abnormal. But stocks tend to do much better near the end of October.

Here’s a table I’ve shared many times and it has played out quite well this year. It shows the return 10-days after a particular day. All those reds boxes in August and September fit with what we experienced this year, along with the early parts of October. Well, the good news is some of the very best 10-day returns of the year are coming up now and again over the next two months. Don’t give up hope for a fourth-quarter rally just yet.



No New Highs Could Be a Good Thing
Our friends at Day Hagan Asset Management tweeted this interesting stat out and I wanted to make sure you saw it. They found that years the S&P 500 didn’t make a new high (like 2023 potentially) saw big jumps the following year, up a median return of 13.1%, while years with more than 35 new highs saw a median return of only 5.8% the following year.



Bears Are Back in Town
Several big names are back in the news calling for a recession. Bill Gross (the founder of bond giant PIMCO) was in the news just this week calling for a recession by the end of the year. We already shared above how that simply isn’t likely, but the point I want to make is to never follow any one person blindly. Mr. Gross also called for the ‘death of the cult of equities’ back in the middle of 2012, right before stocks doubled the following seven years as you can see here.

The Consumer Is in Really Good Shape
One of the reasons we haven’t had a recession in the face of higher interest rates and still elevated inflation is people are worth more. If you owned a house or had stocks in the last decade, you’ve seen your net wealth increase, in many cases substantially. Things aren’t perfect, but for some reason, many economists ignored the impact of wealth on the whole equation of how the economy would do. For more on this important concept, be sure to read the blog Sonu Varghese, VP, Global Macro Strategy, wrote yesterday in Here’s Why the Economy Has Defied Recession Forecasts.

Here’s a nice table that shows how net worth has increased widely across the board, but this decade it has actually been the lower earners that saw the largest jumps in wealth. That is something you sure won’t hear in the media. Lastly, the Fed found that household net worth increased by 37% in the past three years, the fastest pace since they started tracking this data.



Monday Isn’t That Bad
Last one is… Did you know stocks just had a 15-day win streak on Monday? That’s right, the S&P 500 was higher 15 Mondays in a row! I’m not sure what in the world it means, but only a 22-day Friday win streak in 1955 saw a longer win streak for any specific day of the week.



Conclusion
So, there you go, some things you might not have known, but should. I even made it through this whole blog without pointing out that Michigan is just a bunch of cheaters! But we all knew that already, so nothing new there really

To me, the bottom line remains things aren’t as bad as we keep hearing. Yes, we have many legitimate worries and concerns, but the odds of a recession are quite low, the Fed is likely done hiking, profits should remain strong, and the consumer is healthy. Those aren’t the worst pillars for investors as we move into 2024.

Here’s Why the Economy Has Defied Recession Forecasts


It’s not been a good couple of years for macro forecasters in general. First, they said inflation would be transitory, but it persisted longer than most people anticipated (including the Fed). The other big call was for a recession in 2023, which obviously hasn’t panned out. Granted, the year is not done yet, but safe to say a recession is highly unlikely in the next 3-6 months thanks to renewed economic momentum. Though don’t be surprised if a lot of 2024 outlooks are similar to 2023 outlooks, with predictions of a recession. The Carson Investment Research Team went the other way in 2023, and without giving too much away, we’re still in the camp that a recession is unlikely any time soon.

The puzzle for a lot of economists’ is why the Fed’s aggressive rate hikes haven’t caused a recession. What’s really held up the economy is consumer spending. The traditional models say that if the Fed raises rates, companies will pull back hiring, and the unemployment rate will increase. And that’s going to pull down spending – beyond workers who are laid off and no longer have regular incomes, workers who have steady jobs become more fearful of losing them and decrease spending (dampened “animal spirits”).

Obviously, none of that has happened. Consumers continue to spend, and since one person’s spending is another person’s income, businesses continue to hire to meet higher demand, which in turn leads to more income across the economy, and more spending.

The big question then is why households haven’t really been fearful and pulled back spending, despite all the headlines of an impending recession. Simple answer: they’re worth a lot more now and feel less need to save.

The Federal Reserve just released their triennial “Survey of Consumer Finances” (SCF) last week, which is the gold standard of data related to Americans’ financial condition. After adjusting for inflation, median net worth jumped by 37% between 2019 and 2022. Median “real” net worth (removing gains just from inflation) rose from $141,000 in 2019 to $193,000 in 2022. This is the largest 3-year increase since the survey began in 1989 and stands in sharp contrast to the 2007-2019 period when net worth fell 18%. No wonder that household savings rose during the last decade, which put a limit on economic growth. In fact, the 2019-2022 increase is actually larger than what we saw during the 12 years from 1989 to 2001, amid an economic boom.



Here’s another statistic which shows how this economy is different from the one we experienced over the last decade. Families in the lowest quartile of wealth, saw median real net worth jump 864% between 2019 and 2022, whereas the wealthiest 10% of families saw relative gains of 26%. This is not to say there’s a big shift in inequality, because the actual numbers show median real net worth for the bottom quartile rose from $400 in 2019 to $3,500 in 2022. Still, that’s a welcome change from the 81% decline we saw between 2007 and 2019.



Another Big Source of Net Worth Gains: Rising Home Prices
For families that owned a home, the median net housing value, i.e. the value of a home minus home-secured debt, rose from $139,100 in 2019 to $201,000 in 2022 – a 45% increase. That was because home values increased significantly even as housing debt was flat.

Now, only about 8% of households in the lowest quartile of wealth own homes. But that jumps to 70% for households in the 25th – 50th percentile, and above 90% for households in the top half of the wealth distribution. Households in the middle of the distribution, between the 25th and 90th percentile of wealth, are responsible for the majority of consumer spending in the economy. As you can see below, this group of families saw their home values increase significantly (the chart below adjusts for inflation).



American Households Are Less Financially Fragile
The share of households with credit card balances was stable at around 45%, while the median value of card balances was unchanged at $2,700. Beyond this, the SCF also gives us various measures of financial fragility, and all of them have fallen below pre-pandemic levels.

• The leverage ratio is debt as a percent of total assets (aggregate across all families with debt). This is now at 10.7%, down from 12.6% in 2019. That is the lowest in the history of this survey
• The median ratio of debt payments to family income across all families fell to 13.4% from 15.3% in 2019. This measure is also the lowest in the history of the survey
• The percent of debtors with debt-to-income ratio greater than 40% has also fallen from 9.7% to 8.4%, another all-time survey low.

All in all, the survey data explains why consumption has remained strong: household balance sheets are strong, which is why they’ve continued to spend and not save as much as they did before the pandemic. The last decade was a period when households were trying to recover from a massive housing crash and financial market crisis that crushed asset values. That’s not where we are today. Of course, this data is now dated but inflation has pulled back over the past year, and inflation-adjusted incomes have continued to rise. So, the overall picture of household balance sheets is unlikely to have deteriorated much since this data was collected, which is why we believe that the economy can remain resilient despite higher interest rates, and avoid a recession.

New Lows for S&P and Sentiment
Thu, Oct 26, 2023

The S&P 500 having made fresh lows in the past week has justified a continued decline in bullish sentiment per the latest AAII survey. As shown below, only 29.3% of respondents reported as bullish this week compared to 34.1% last week. Although sentiment has quickly reversed, the last week of September actually saw an even lower bullish reading of 27.8%.



Bearish sentiment, on the other hand, rose up to 43.2% which was the highest reading since the first week of May. Bearish sentiment rose 8.6 percentage points week over week which was the largest single-week increase since February.



Given the new high in bearish sentiment and drop in bulls, the bull-bear spread tipped deeper into negative territory. Bears now outnumber bulls by 13.9 percentage points. That is the widest margin since May.



While the AAII survey has shown an expressly negative turn, other sentiment surveys are more mixed. For starters, the NAAIM Exposure Index echoed the AAII results. The index tracking equity exposure of fund managers echoed the pessimistic tones of the AAII survey as it dropped to the lowest level since the week of October 12th last year. Meanwhile, the Investors Intelligence survey of newsletter writers has managed to hold onto a more bullish tone. That survey's bull-bear spread has been more steadily above its historical average over the course of the past couple of months.



Continuing Claims Rising Rapidly
Thu, Oct 26, 2023

Although much of the morning's data topped expectations, one of the areas of weakness was jobless claims. Initial jobless claims were slightly higher than expected coming in at 210K versus expectations of 208K. Additionally, last week's sub-200K print was revised up to 200K. While that doesn't steal from the fact that jobless claims have pulled back to some of the stronger levels of the year, the past few weeks are now looking a bit more choppy than they were only a week ago.



On a non-seasonally adjusted basis, claims have begun to tick higher as could be expected for this time of year. At 191.89K, claims are 7.34% higher than they were the comparable week last year. However, that is roughly in line with readings from a couple of years prior to the pandemic.



Albeit higher, initial jobless claims remain at historically healthy levels and are not deteriorating too rapidly. The same cannot be said for continuing claims. Rising to 1.79 million through the week of October 14th (continuing claims are lagged an additional week versus the initial claims number), continuing claims have risen for five straight weeks. That is the longest streak of increases since a 12-week run ending in early December last year, and claims are now at the highest level since May 20th.



It has only been five weeks since the recent low of 1.658 million. In that span, continuing claims have risen almost 8%. As shown below, there are plenty of examples of even larger five-week increases in continuing claims counts, the most recent being in Q4 2022, however, it is still a historically rapid rise. The recent increase ranks in the top 5% of all five-week moves on record. Historically, prior increases of that size have mostly (though not always) occurred in the context of a recession. While not exactly covering like-for-like periods, that makes this recent rise in claims even more unusual when compared with GDP data released at the same time showing an impressive 4.9% QoQ annualized growth rate.



Late October Low Lines Up

I’ve been banging my seasonal weakness drum through Q3 warning of Octoberphobia, volatility, late-October lows and turnarounds. Today’s negative action aligns with that narrative. Best Six Months start next week. Rising 10-year yields, some notable earnings season misses and turmoil in the Mideast have conspired with seasonal weakness to knock the market down. But at least we now have a Speaker of the House.



Large vs Small Gap Keeps Widening
Wed, Oct 25, 2023

With each passing day this year, it seems as though the underperformance of small caps relative to large caps keeps getting wider. While the small-cap Russell 2000 is currently down over 30% from its post-Covid highs and within 1% of a multi-year low, large caps have held up relatively well as the S&P 500 is less than 12% from its post-Covid high. As a result of the divergence, the large-cap S&P 500 is outperforming the small-cap S&P 600 by more than 15 percentage points in 2023.

Just like the overall indices, the performance gap between the two is also wide across most sectors. The chart below compares the YTD performance of large (S&P 500) and small-cap (S&P 600) sectors so far this year. Amazingly, while the large-cap Communication Services and Technology sectors are both up over 30% YTD, their smaller-cap peers are either slightly down or just marginally higher. Within the Consumer Discretionary sector, there has been a similar pattern although to a less extreme of degree.

Outside of those three sectors, there really isn’t much in the way of gains for other large-cap sectors, but even if they are flat to down on the year, they’re still outperforming their smaller-cap peers. Of the eleven sectors, the only three where small caps are outperforming large caps are Consumer Staples, Energy, and Industrials. In the two latter sectors, not only are they outperforming, but they’re also the only two sectors in the S&P 600 with gains on a YTD basis. Imagine that, gains in small caps!




Breadth Bombs
Tue, Oct 24, 2023

A frequent point of discussion this year has been breadth, or more specifically, the massive impact of mega caps on the market-cap-weighted S&P 500's year-to-date performance (something we discussed in yesterday's update of our Sector Weightings report). We often use the 10-day advance-decline (A/D) line to measure how breadth is evolving in the near term; highlighting these readings for the S&P 500 and its eleven sectors daily in the Sector Snapshot. This indicator essentially shows the average net percentage of daily advancers versus decliners in an index over a two-week period.

In the chart below, we show the S&P 500's 10-day A/D line (expressed as standard deviations to clarify overbought/oversold levels) over the past year. The past week has seen a monumental shift in breadth. Just one week ago, the 10-day A/D line was deeply overbought sitting 1.72 standard deviations above the historical average, but as of yesterday's close, it has fallen all the way into oversold territory; a 2.9 standard deviation drop in only four days.



Looking back to the start of our data in 1990, that is one of the largest four-day declines on record. In fact, the last time the line fell by such a degree or more was in September 2022 when there was a record decline.



While two-standard deviation declines have been uncommon, even fewer have resulted in the 10-day A/D line going from overbought to oversold. In the table below, we highlight those nine prior instances that have occurred with at least 3 months having passed since the last occurrence. The current period holds one of the higher starting readings in the 10-day A/D line. In fact, only November 2011 saw a higher reading.

As for S&P 500 performance going forward, returns have generally been mixed. One week after big 'breadth bombs' the index has actually risen better than three-quarters of the time, however, one month out has averaged a decline with positive returns less than half the time. Three months out to one year on have all averaged positive returns, but those are all weaker than the norm.



Energy Energizes M&A Activity
Mon, Oct 23, 2023

The past few weeks have seen a boom in merger and acquisition news. For starters, what was approaching a two-year-long process of Microsoft (MSFT) buying Activision-Blizzard finally went through in what would be one of the largest M&A deals of the past five years and the largest in Microsoft's history. On top of that, there have been a number of new announcements this month, primarily in the energy space. Earlier this month Exxon Mobil (XOM) proposed a $60 billion bid for Pioneer Natural Resources (PXD), and Chevron (CVX) followed suit today with a $53 billion bid for Hess (HES). Additionally, while nothing is official yet, last week there were reports that Marathon Oil (MRO) and Devon Energy (DVN) have been in talks.

In the charts below, we show the pending counts and nominal dollar values of M&A deals by month over the past decade. As shown, the past few months have seen the number of deals ramping up with a record amount of activity based on dollar values. Perhaps more impressive has been the dominance of the Energy sector in these M&A announcements. As shown in the second chart below, they have accounted for over 80% of the value of these deals, the highest amount of the past decade.



Nasdaq Corrections
Mon, Oct 23, 2023

After a lower open to start the week, stocks have staged a pretty big intraday recovery (so far). One catalyst for the rally was a tweet by Bill Ackman saying his firm had covered its Treasury short, citing too much geo-political risk and an economy weakening faster than current economic data suggests. Why a weaker economy would spur a rally in stocks is a legitimate question, but we’ve all certainly seen stranger things in the market, and when markets become oversold, sometimes it doesn’t take much to spark a rally. Monday’s rebound also coincided with the Nasdaq’s decline from the July closing high crossing the 10% threshold, and it’s not uncommon for an index in the midst of a decline to bounce at these round numbers as they are where bargain hunters will look to deploy some dry powder.

The Nasdaq is no longer officially in correction territory as we write this (10%+ decline from a closing high without a 10% rally in between), but we wanted to take this opportunity to look at historical trends for past Nasdaq corrections and see how the current period stacks up. For starters, since hints of the current rate hiking cycle began, there have been four prior Nasdaq corrections. Three of the four were deep with declines of more than 20%, while the most recent before the current period was more tame at just 11%.



Looking at Nasdaq corrections from a longer-term window, the scatter chart below shows corrections in terms of their magnitude (x-axis) and length (y-axis). Overall, the median decline of corrections since 1971 has been a drop of 16.6% over a median length of 61 calendar days. Through today’s close, the current decline is only around 10%, so it’s been a lot milder, but at 96 days, it’s already been 57% longer than the typical correction. If the current decline in the Nasdaq were to reach the median level for a correction, that would take it down to just below 12,000.

The Nasdaq is known for being more volatile than the S&P 500, and when it comes to corrections, they have tended to be steep as opposed to gradual. Even with respect to the corrections during the current rate-hike cycle, three of the four prior ones were shorter than the current period. The only one that was longer lasted 115 days from 11/19/21 through 3/14/22.

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2023-



S&P sectors for the past week-

 

Here are the current major indices pullback/correction levels from 52WK highs as of week ending 10.27.23-


Here is also the pullback/correction levels from current prices-


Here are the current major indices rally levels from 52WK lows as of week ending 10.27.23-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for October 27th, 2023
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 10/29/23
Video from ShadowTrader Peter Reznicek
(VIDEO NOT YET POSTED.)

 

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StonkForums November 2023 Stock Picking Contest & SPX Sentiment Poll <-- click there to cast your monthly market direction vote and stock picks for November of this year 2023!

StonkForums Weekly Stock Picking Contest & SPX Sentiment Poll (10/30-11/3) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Monday (10/30) <-- click there to cast your daily market direction vote for this coming Monday ahead!

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It would be pretty sweet to see some of you join us and participate on these!

I hope you all have a fantastic weekend ahead!

 

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Here are the most anticipated Earnings Releases for this upcoming trading week ahead.

***Check mark next to the stock symbols denotes confirmed earnings release date & time***

Monday 10.30.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES!

Monday 10.30.23 After Market Close:

Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Tuesday 10.31.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Tuesday 10.31.23 After Market Close:

Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 11.1.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 11.1.23 After Market Close:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 11.2.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 11.2.23 After Market Close:

Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 11.3.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 11.3.23 After Market Close:

Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!

(NONE.)

 

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($AAPL $AMD $SOFI $PLTR $PYPL $SHOP $LLY $NVO $MCD $ROKU $QCOM $ANET $SQ $SMCI $DKNG $PFE $NCLH $SEDG $ON $CAT $ABNB $MRNA $CROX $ETSY $CVNA $MELI $PINS $FTNT $CVS $ALB $SBUX $COIN $JBLU $GOLD $FSLR $RIG $PXD $CZR $PAYC $CCJ $AGNC $ELF $HUM $TPVG $ET $ETN $AMGN $WDC $PENN $NET)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning October 30th, 2023 <-- click there to view!

 

Top of the morning StonkForumers! Happy Monday to all of you and welcome to the new trading week and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are a little over an hour from the US cash market open.

GLTA on this Monday, October the 30th, 2023!

 

Morning Lineup - 10/30/23 - Still Here
Mon, Oct 30, 2023

While the record streak of positive Mondays ended last week, it’s looking like another positive start to the trading week this morning as investors breathe a sigh of relief that the world didn’t end over the weekend. The week is starting off slow in terms of news and data, but it’s going to be a busy week of data, earnings, and central bank decisions (FOMC, BoJ, and BoE).

Simply put, last week was a lousy one for US stocks. While the S&P 500 was down less than 1.5% for the month of October heading into the week, it now finds itself down just under 4%. What was notable about the declines, though, was in how uniform they were. In a market that has been so uneven for at least the last year (see the YTD performance numbers in the fourth column), all fourteen of the US index ETFs we track in our Trend Analyzer were down over 2% but less than 3%. Another common theme? All of them are at ‘Extreme’ oversold levels.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Monday, October 30th, 2023.

 

Top of the morning StonkForumers! Happy Tuesday to all of you and welcome to the final trading day of October and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are about 15 minutes from the US cash market open.

GLTA on this Tuesday, October the 31st, 2023!

 

Morning Lineup - 10/31/23 - Two in a Row?
Tue, Oct 31, 2023

It’s been a while and it’s still early in the day, but with futures trading higher as we head into the opening bell, the S&P 500 is on pace for its first back-to-back run of gains in three weeks. Treasury yields are moving lower this morning, and the 10-year yield is barely hanging onto the 4.8% level after breaking above 5% just over a week ago. In international economic data, China released some weak PMI data, and GDP in Europe missed expectations.

Back here in the US, the Employment Cost Index came in slightly higher than expected at 1.1% versus forecasts for an increase of 1.0%. Besides that report, we still have home price data at 9 AM, Chicago PMI at 9:45, and Consumer Confidence at 10 AM.

There’s never a shortage of strange when it comes to the markets, and October has been no exception. In a month where geo-political uncertainty in the Middle East moved to the front burner, gold surged (which you would expect), but crude oil, which you would also expect to rally, quickly ran out of steam. The fact that crude oil was unable to get going given the geo-political backdrop reinforces the view that the market isn’t expecting a major escalation/spillover of the current unrest.



With crude oil down just under 9% this month and gold up just under 9%, October is on pace to be just one of 20 other months in the last 40 years that crude fell at least 5% in the same month that gold rallied more than 5%. In the table below, we list each of those prior periods along with each commodity’s forward three-month performance. Going forward, crude oil has tended to largely recoup the ground it lost, averaging a three-month gain of 8.9% (median: +5.3%) with positive returns just over two-thirds of the time. Gold, however, was not as strong. Over the next three months, it averaged a gain of just 1.2% with gains less than half of the time (42%) On a median basis, though, gold’s forward three-month performance was a loss of 0.2%.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Tuesday, October 31st, 2023.