Yesterday’s session was doomed from the start. But there was a battle to make sure it didn’t turn into a rout. For the S&P 500, there were more up sectors than down sectors, but they were defensive in nature.

Staples

• Real estate
• Utilities

Growth stumbled as mighty names struggled:

Communication services

• Discretionary
• Technology

Value didn’t have smooth sailing, but Energy continued its march higher, and Industrials and Materials were still riding the wave of billions pouring into (real) infrastructure.

As usual, there were so many intriguing narratives from plunging bond yields to the battle between Amazon (AMZN) and Tesla (TSLA) to be the straw that stirs the drink when it comes to a general direction for the entire market.

On top of it all, we were reminded of the inflation crisis and malaise among business owners.

S&P 500 Index		-0.35%
Communication Services XLC		-0.25%
Consumer Discretionary XLY		-1.85%
Consumer Staples XLP	+0.35%
Energy XLE	+0.41%
Financials XLF		-0.55%
Health Care XLV		-0.37%
Industrials XLI	+0.25%
Materials XLB	+0.46%
Real Estate XLRE	+0.37%
Technology XLK		-0.41%
Utilities XLU	+0.51%

The New York Fed Consumer Expectations Survey saw median inflation expectations at new record levels.

Inflation Expectations Blow Through the Roof:

• One-Year: 5.7%
• Three-Year: 4.2%

I think I’ve discovered why the Biden administration missed the urgency of the inflation crisis – it’s not hurting college grads, as those with high school to some college education are bracing for price hikes from hell.

Musk vs. Bezos

It’s been a long time coming, but the market is now taking its cue from Elon Musk and Tesla after years of Jeff Bezos and Amazon setting the pace. Yesterday, Amazon’s 2.5% bump could not offset the 12.0% hit to Tesla, which lost the equivalent to a Ford Motor Co in market capitalization.

Titan vs. Olympian	Five days	One year	Three years	Five years
AMZN	+8.0%	+13.8%	+124.4%	363.3%
TSLA	-12.7%	+143.0%	1,344%	2593%

 

After Close

There were mind-boggling reactions to earnings & guidance that underscored why you hold losing positions with amazing stories and potential and, at the same time, underscored why some of these names will never live up to the hype:

Beats

• PubMatic Inc (PUBM): +22.8%
• RingCentral Inc (RNG): +22.4%
• PAR Technology (PAR): +22.2%
• DoorDash Inc (DASH): +18.9%
• Avid Technology (AVID): +17.4%
• Flywire Corp (FLYW): +12.7%
• Inari Medical (NARI): +11.8%

Misses

• Poshmark Inc (POSH): -26.1%
• Purple Innovation Inc (PRPL): -25.3%
• AerSale Corp (ASLE): -20.1%
• Upstart Holdings Inc (UPST): -18.5%
• Doximity Inc (DOCS): -15.7%
• Derm Tech Inc (DMTK): -13.8%
• Coinbase Global (COIN): -12.8%

Portfolio Approach

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

Today’s Session

Annual inflation rate surged to 6.2% in October, lifting it to the highest level since November 1990, and well above consensus of +5.8%.

• Energy 30%
• Gasoline 49.6%
• Shelter 3.5%
• Food 5.3%
• Airline -4.6%
• Used cars and trucks 26.4%

CPI Report

By the way, overnight we learned China’s Producer prices jumped 13.5% in October, which means we are importing inflation (see spike in goods inflation in CPI report).  We sacrificed millions of jobs and sparked a drug crisis for cheap plastic stuff from China – now it’s not so cheap.

Intriguing non-reaction thus far.

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