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Morning Commentary


By Charles Payne, CEO & Principal Analyst
11/16/2022 9:42 AM

The rally stalled early yesterday, but buyers kept it buoyant and then reports crossed the wires that Russian rockets fell in Poland, killing two people. Immediately, the Dow Jones Industrial Average (DJIA) slumped into the red, while the other major indices held on for dear life.

There is still a lot of finger-pointing. But, more than likely, this will not trigger the North Atlantic Treaty Organization (NATO) intervention and Article 5. However, it did trigger a reverse in the oil patch, and defense sector stocks popped as well.

All the major indices finished higher. The most beaten-up names of 2022 continued to enjoy a revival,  lifting Communication Services (XLC) and Consumer Discretionary (XLY).

Heat Maps: Performance

Health Care (XLV) continues to drag, and Financials (XLF) were choppy.

Forward price-to-earnings (F P/E) covers a wide range, but these names are not screaming ‘buys’ based on valuation alone.

What If Investors Should Be Greedy?

Warren Buffett is famous for saying investors should be greedy when others are fearful, which suggests going the exact opposite direction of the crowd. But there are times when the investor’s intuition is spot on, and perhaps this is one of those times.

I read there have only been five times when the New York Stock Exchange (NYSE) spent more than 100 days below the 200-day moving average since 2001. The subsequent move above that metric has resulted in rallies for the S&P 500 (SPX), which enjoyed an average gain of 18%.

Portfolio Approach

We took profits in a position yesterday in Industrial in our Hotline Model Portfolio.

Today’s Session

Yield curves inversion deepen this morning, especially after the release of earnings from Target (TGT), which was a huge miss.

10y2y Yield Curve (steepest since 1982)

10y3m Yield Curve

Missing the Target

Target posted quarterly results this morning and it was a huge miss on the bottom line. The street was looking for $2.13, the company posted $1.54.

Comp store sales were up 2.7% from being up 12.7% a year ago when shoppers went back to stores after the Covid-19 lockdown.

Guidance points to further comp store deterioration.  Management is looking to cut $3.0 billion in cost but are not planning any layoffs as of yet.

October Retail Sales

Note: the number got a nice boost from those California Stimulus Checks.






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