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Morning Commentary

THE STRUGGLE IS REAL

By Charles Payne, CEO & Principal Analyst
10/13/2021 9:37 AM

Yesterday was another tough session that felt doomed, even when most S&P sectors were trading higher. Again, there isn’t a sense of panic, but frustration adds to the selling pressure and buyers not stepping up ahead of earnings.

S&P 500 Index

 

-0.69%

Communication Services XLC

 

-1.51%

Consumer Discretionary XLY

 

-0.41%

Consumer Staples XLP

 

-0.03%

Energy XLE

 

-0.37%

Financials XLF

 

-1.00%

Health Care XLV

 

-0.78%

Industrials XLI

 

-0.80%

Materials XLB

+0.01%

 

Real Estate XLRE

+0.13%

 

Technology XLK

 

-0.55%

Utilities XLU

 

-1.36%

Last year, the S&P 500 peaked on September 2 and struggled for weeks, although it hit its lowest point on September 23, it didn’t eclipse the old high point until November 13.

Still Red

The Heatmap continues to burn red with the most intriguing action in Tesla (TSLA), and Nike (NKE), which fetched an upgrade and could benefit as Vietnam climbs out of the Covid-19 hole. In addition, NextEra Energy (NEE) is very compelling, considering how hard Utilities were slammed. If President Biden can push the Clean Energy Agenda spending, this will be one of the biggest winners over his time in office.

It’s not the way you start but the way you finish, and right now, the S&P is making its way into history with a series of huge swoons ahead of the closing bell. Apparently, it’s tied with 16 other four-day streaks closings in the bottom 25% of the intraday trading range. It’s a sign of weakness. But it’s also more trivia than anything immediately actionable for buy-and-hold investors.

Image

Workers’ Walk

JOLTS

A survey done by the US Bureau of Labor Statistics to help measure job vacancies. It collects data from employers about their businesses' employment, job openings, recruitment, hires and separations.

JOLTS defines Job Openings as all positions that are open (not filled) on the last business day of the month. A job is "open" only if it meets all three of the following conditions:

1. A specific position exists and there is work available for that position.

2. The job could start within 30 days, whether or not the establishment finds a suitable candidate during that time.

3. There is active recruiting for workers from outside the establishment location that has the opening.

A reading that is stronger than forecast is generally supportive (bullish) for the USD, while a weaker than forecast reading is generally negative (bearish) for the USD.

The September JOLTS report saw 10.4 million job openings, down from the August number, but the real shocker was 4.3 million workers said, “shove it”, as they shoved off to look for greener pastures.

The number of quits established a new record, as did the quits rate – by a mile.

Back in the day, when Janet Yellen was chairman of the Federal Reserve, she had her infamous “dashboard.” It featured the JOLTS report, particularly the number of folks calling it quits. The thinking is the jobs market has to be super-hot when people are quitting, and therefore it’s time for the Fed to remove the punchbowl.

Well, we already knew this was a super-hot jobs market, but folks are also getting an economic boost to stay on the sidelines while they contemplate their next move. Yes, folks you have to go back to work someday. I think?

Q. We got asked why  we aren’t 50% in cash?

A. It's rare we go to 50% - selling out of frustration or assuming all problems are resolved in the worst way usually is a huge mistake. There are growing reasons for anxiety, including what is said on these earnings calls about supply chains and inflation. But investors need to look deeper and longer.

A lot of folks wanted to sell everything the day after the election. There is no doubt this is not a business-friendly administration, and the number of ideas on how to extract money and kneecap the investing public (you are not Jeff Bezos) is worrisome. But it’s been a heck of a ride so far, and if we can make it to the midterms without disastrous policy, this market will go into an even higher gear.

There are other reasons to be worried - but the economy’s underpinnings and what this nation has built are still intact - for now.

What Would Make Me More Nervous?

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Portfolio Approach

There are no weighting changes this morning in our Hotline Model Portfolio.

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Today’s Session

Headline CPI coming in at +0.4% against consensus of +0.3% and that sent major indices slightly lower and the ten-year bond yield slightly higher.

United States Inflation Rate MoM

But core CPI was +0.2% which was in line with consensus.

I think this is a good report with big drivers of inflation easing:

Shelter was 58.1% of inflation with home prices edging higher as overall total:

Earnings

Two big financial players earnings came in better than expected, initially moving stocks a little higher.

JP Morgan (JPM)

BlackRock (BLK)

Also Delta Airlines reported and beat on top and bottom, but the stock edged lower.

Delta (DAL)

This is a great chance for the market to rally into the close.  I think there is better than 50% chance it happens.


Comments
Stay the course!

Lorin K on 10/13/2021 11:13:12 AM
 

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