(THE MARKET IS LOOKING FOR CLARITY)
October 30, 2023
Hello everyone,
Welcome to the triple treat week.
Halloween, the Fed Policy statement, & non-farm payrolls.
Could be hair-raising or it could all be a big yawn.
So, let’s get to the detail of what’s on our plate this week.
Monday, October 30, 2023
10:30 a.m. Dallas Fed Index (October)
Earnings: Public Storage, Simon Property Group, On Semiconductor, Western Digital, McDonald’s
Tuesday, October 31, 2023
8:30 a.m. ECI Civilian Workers (Q3)
8:30 a.m. FHFA Home Price Index (August)
9:00 a.m. S&P/Case Shiller com. 20 HPI (August)
9:45 a.m. Chicago PMI (October)
10:00 a.m. Consumer Confidence (October)
Earnings: First Solar, Advanced Micro Devices, Caesars Entertainment, Pfizer, GE Healthcare Technologies, Caterpillar
Wednesday, November 1, 2023
8:15 a.m. ADP Employment Survey (October)
9:45 a.m. Markit PMI Manufacturing (October)
10:00 a.m. Construction Spending (September)
10:00 a.m. ISM Manufacturing (October)
10:00 a.m. JOLTS Job Openings (September)
2:00 p.m. FOMO Meeting
2:00 p.m. Fed Funds Target Upper Bound
Earnings: Marathon Oil, Clorox, Costco Wholesale, Qualcomm, Norwegian Cruise Line Holdings, Yum! Brands, Airbnb.
Thursday, November 2, 2023
8:30 a.m. Continuing Jobless Claims (10/21)
8:30 a.m. Initial Claims (10/28)
8:30 a.m. Unit Labor Costs preliminary (Q3)
8:30 a.m. Productivity preliminary (Q3)
Earnings: Apple, News Corp, Booking Holdings, Eli Lilly, Starbucks, Paramount Global, Moderna.
Friday, November 3, 2023
8:30 a.m. Jobs Report (October)
9:45 a.m. PMI Composite Final (October)
9:45 a.m. Markit PMI Services final (October)
10:00 ISM Services PMI (October)
It’s been an interesting month, to say the least. Political instability, conflict in the Middle East, yields on a tear, a weakening consumer against data showing a resilient economy, and the market throwing in the towel and adding to the chaos.
Most expect the Fed to hold rates steady when it announces its decision on Wednesday. But what will be more significant will be the Fed speech during the press conference. What Chair Jerome Powell says will be just as important as what he doesn’t say.
If the stance is hawkish, investor sentiment may be undermined, and this outlook could exacerbate fears of a recession when markets are already stressed. Stocks are headed for their third straight month of losses as Treasury yields rise to multiyear highs. Both the S&P 500 and the Nasdaq Composite slid into correction territory last week after the market reacted savagely to some mega cap tech reports. And the choppiness could continue until markets gain clarity.
On the other hand, the forecast is for the rate of economic growth to slow and inflation to moderate, which could mean the Fed’s commentary may be more accommodative. By the middle of 2024, it is possible that we will see the impact of higher rates rippling throughout the economy, initiating a recession & a couple of quarters of perhaps negative GDP growth. Stocks will react, as will the Fed.
The 10-year Treasury yield continues to hover around 5%. To take the pressure off equities, bond yields will need to fall. Will Powell address the growing fiscal deficit in his commentary? I’m certain his language will be thoughtful and measured.
On Friday, investors will get some insight into the labor market. It is expected to show that the U.S. economy added 175,000 jobs in October, according to consensus estimates from FactSet. It seems investors may only begin to breathe a sigh of relief from the Fed’s hawkish outlook when a real slowdown in growth happens.
Thursday will be Apple’s turn for earnings. Up around 30% this year – will the data be positive? Even if it is, how will the market react? If there is a slight miss, the market may punish it.
Uncertainty is weighing on the market. Geopolitical risks, a possible government shutdown in November among other concerns could weigh on the market until year-end. Alternatively, we know the lead up to Christmas is historically a positive time for the market, so equities could rally in time as they price in the effects of a slowing economy.
If world events are causing you a bit of angst now, and you seek to understand how to calm your mind/body, then maybe we should delve into some thoughts from Deepak Chopra. He cites inflammation as the scourge of our modern age. “Stress, inflammation, depression, anxiety, and chronic disease go together,” Chopra says. “Inflammation is the culprit in all these diseases.”
Constant stress can lead to a state of chronic inflammation, which increases the risk for mental health problems like anxiety and depression along with heart disease and Alzheimer’s, according to the Cleveland Clinic.
What’s often behind this constant state of stress?
Trauma.
Chopra explains that the rise in mental health problems and chronic stress is related to the body’s response to trauma – which can stem from generational trauma, isolation, or the constant bombardment of the news cycle & its continuous spouting of negative scripts.
Although we can’t control everything, there is a circuit breaker if we look inward. Understanding the biology of inflammation and how it can be aggravated by lifestyle habits is a good place to start, according to Chopra.
Here are his suggestions for reducing inflammation:
Plenty of Sleep.
Seven to nine hours is recommended.
Sleep reduces the risk of heart disease, stroke, and many chronic health problems.
Practice a wind-down regime – minimize screen time and keep sleep & wake time consistent.
De-stress.
Take 15–20-minute time-outs and lose yourself in an activity that brings you joy, whether that be a hobby, exercise, meditation, gardening, yoga, or spending time with your pets.
Maintain emotional connection with others.
Isolation and loneliness are harmful to our health.
Stay in contact with friends & family.
Stay connected with others through volunteering and community groups.
Recognize moments of joy.
This can be as simple as listening to a favourite song/piece of music, listening to birdsong, observing the change of seasons through your plants/trees in your garden, or enjoying the perfume of a rose flower, or the smell of your favourite treat.
Eat an anti-inflammatory diet.
Eat plant-based, whole foods.
Chopra indicates the Mediterranean diet is ideal, as it emphasizes fruits, vegetables, olive oil, and lean meats.
Wishing you all a wonderful week.
Cheers,
Jacquie