The half-day session on Friday saw the market eke out a slim gain with the same cautious theme.  Cyclical stocks led the way as growth stocks struggled, and Energy (XLE) continues to resist being pulled down by crude oil.

It’s hard to believe, but West Intermediate (WTI) closed at the lowest level for 2022.

Heat Map

Oil stocks exhibiting resolved vis-a-vis crude prices; those larger mega-cap names cannot gain any traction.

The good news is professional investors are very reluctant to buy low, which means those positioned properly ahead of them will reap the rewards.

Before we get to more core long-term positioning, we must know this isn’t just another bear market bounce.

Part of answering that question will be leadership from several niches in the market, including semiconductors.

The sector is breaking out but still in a huge down channel – but we are spying closely.

Portfolio Approach

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

Today’s Session

The China Covid-19 Lockdown story is dominating the market early this morning.  Mass protests are breaking out everywhere.   This could be a seminal moment for China and the cause of freedom.  Sadly, the establishment in the United States has already displayed its willingness to overlook the human cost when it comes to protecting bottom lines.   

President for Life

Dictators seem to always be on never-ending missions of universal suffering as both a way to hold people down and also as a reminder they can hold people down. President Xi is a dictator and unleashing pain and wreaking havoc. 

Back in the United States, it’s all about the data and the Fed this week.  The calendar is stacked with eventual releases, but I would rank Jay Powell’s comments on Wednesday at the top, followed by core PCE, jobs report, and JOLTs report.

Monday

Time	Release	Period	Cons	Prior
10:30	Dallas Fed Manufacturing	November	-23.0	-19.4
12:00	John Williams (NY FED) speaks Economic Club

 

Tuesday

Time	Release	Period	Cons	Prior
9:00	FHFA House Price Index	September	-1.3%	-0.7%
9:00	Core Logic 20-city NSA	September	10.5%	13.0%
10:00	Consumer Confidence	November	100	102.5

 

Wednesday

Time	Release	Period	Cons	Prior
8:15	ADP Employment Report	November	200K	239K
8:30	Wholesale Inventories	October (P)		0.60
8:30	GDP	3Q22 (2nd)	2.8%	2.6%
9:45	MNI Chicago PMI	November	47.1	45.2
10:00	JOLTs	October	10.03m	10.07m
1:30	Jay Powell Brookings

 

Thursday

Time	Release	Period	Cons	Prior
7:30	Challenger Gray & Christmas	November	200K	48.3%
8:30	Personal Income	October	0.4%	0.4%
8:30	PCE Core Deflator	October	5.0%	5.1%
9:25	Fed’s Logan
10:00	ISM Manufacturing	November	50.0	50.2
1:30	Jay Powell Brookings

 

Friday       

Time	Release	Period	Cons	Prior
8:30	Non-Farm Payrolls	November	200K	261K
8:30	Unemployment Rate (U3)	November	3.8%	3.7%
8:30	Average Hourly Wages	November	4.6%	4.7%
8:30	Labor Force Participation	November	62.3%	62.2%
10:15	Fed’s Evans

In the end, it’s all about inflation coming down and the Fed not wrecking the economy too much.

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