Trading week of August 01 - August 05 - Brown Surfing

Trading week of August 01 – August 05

Posted on: August 1st, 2022
By: Efrain Lemus

The Personal consumption expenditures price index is at a new high since 1982. This is a key inflation report.

Earnings

  • Last week AAPL came out with better than expected earnings.
  • ROKU missed expected earnings by about 60M
  • PYPL went up so I’m assuming it had better than expected earnings
  • ABNB will report earnings on the 3rd (even tho it says the 2nd)
  • PINS had earnings on the 1st but it seemed it surge even more when Elliott said it is now the company’s largest shareholder

General

  • The price of Crude Oil started at $93.58 this week (writing this on Monday).
  • Mortgage rates increased up to 7%
  • The value of the dollar is at 105.29 (down 0.58% from last week)
  • US Treasury is at 2.605%
  • VIX is at 22.38
  • Finviz heatmap shows more Bear than Bull

News

According to this article: FAANGs ain’t what they used to be, so beware the bear-market bounce says this hedge fund manager investors should be weary and not think it’s a bull market from here.

It says that markets have already grown as much as they’ll grow and they hat will probably encounter resistance.

This article, Dow Pauses, Boeing Gains—and What Else Is Happening in the Stock Market Today doesn’t really give an opinion on whether it’s a bull or bear market but it explains the reasons why there was a bull market last week.

Such as saying how the small decline in jobs goes on par with the Fed’s efforts to slow down the economy by increasing rate hikes. This means that if the economy is slowing, they might ease on the rate hikes. That’s why there was such a bull sentiment last week.

The article Credit card balances jump 13%, highest leap in over 20 years, as inflation outpaces wage growth says that because of inflation, credit card balances have increased by said amount. Disregarding the rise in wages as the cost of living has been rising even faster.

This article Stocks slip on Wall Street after another meandering day suggests that the bull run from the end of July was better than expected corporate earnings.

It’s also saying that earnings from the company Caterpillar are a bellwether for a downturn in the market because the stock fell 5.8%. This was a weaker report than they had expected.

Airbnb stock falls sharply despite earnings beat, plan to repurchase $2 billion in stock

The article above said the stock fell, however, when I checked it went up today but something important the article is saying is that ABNB is expecting to see better results next earnings.

Bank of England launches biggest interest rate hike in 27 years, predicts lengthy recession

Walmart lays off corporate employees after slashing forecast

The above two news might affect the market. Although the rate hike might be a good thing because it will bring inflation down, which in turn is good for the market.

Payrolls increased 528,000 in July, much better than expected in a sign of strength for jobs market

With still a strong economy, the market is already anticipating a 0.75 rate hike next week.

Amazon to acquire maker of Roomba vacuums for roughly $1.7 billion

How major US stock indexes fared Friday 8/05/2022

This article is suggesting that inflation is still not close to reaching its peak with so many jobs arising (signaling a strong economy).

3 ways the Taiwan-China standoff could impact world markets

  • With tensions being high, ships are at risk which means their insurance could go up.
  • Airplanes are having to find alternative routes to fly-around prohibited/dangerous areas.
  • China’s campaign of cyber warfare against Taiwan
  • Economic coercion by not allowing imports or exports

US STOCKS-S&P 500 ends down as jobs data rekindles rate hike fear

The increase in jobs is giving the market a sense that a stronger rate hike will happen.

Dow Wavered After Jobs Report, Virgin Galactic Slides—and What Else Happened in the Stock Market Today

This article also says the market notched on Friday due to the job reports coming out, which doesn’t signal a recession as it has been mentioned due to two consecutive decreasing GDP reports.

If the inflation report for June (coming out July 13) shows inflation has keep going up, it will not be good news for the market.

But Timothy Chubb says that with an overall reports coming in higher than expected, then it shouldn’t be any different this time and that a hot number will not be as bad of news.

The Inverted Yield Curve Is Back. What Investors Need to Know.

Is saying the inverted yield curve is definitely signaling a recession. To lean more towards biotech and healthcare stocks and avoid stocks with high price/earnings ratios.

Stock market live news updates: Stocks mixed, bond yields soar after July jobs shocker

Talks about the yield curve being a strong signal of a recession and that a 0.75 rate hike will be very likely on the next Fed meeting (Sept).

It also says that there’s some volatility in the market, for example Bed, Bath & Beyond went up with no news coming out.

Jobs Data Threatens Wall Street’s Recession Trade

The tech-heavy index Nasdaq jumped 19% this week.

There’s a good video explaining some advanced terminology breakeven inflation rates but the main point is that asset managers are moving money around in a way that signals a recession.

Questions

  • So is it a bear or bull market after last week?
  • Why was last week such a bull week? What is the psychology behind it? How can I see an event like this coming in the future?
  • Is what’s going on in China and Taiwan affecting the market?
  • Why did the stocks go down yesterday (Tuesday)?
  • What does it mean that the yield curve continues to widen?

Articles to read:

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