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Is This Fed Going To Pivot?

market & industry analysis Dec 05, 2022

Every single Friday we host a live discussion in our Discord Channel at 12:00pm EST. 

This gives you the opportunity to personally ask us any questions you have on the markets, the economy, crypto, and more!

Here are the 4 key things we went over for this week: 

  • Where all this new volatility in oil prices is coming from

  • Why the labor market is staying so strong and how the Fed will react

  • Where we think the market will outperform in Q4

  • What long-term trends we're bullish on

If you'd like to listen live and ask us questions throughout the next live session, just join the weekly Friday afternoon session at 12:00pm EST.

Meanwhile, instead of a full transcript, here's a more compact summary of what went down last week and what we're looking forward to in the week ahead: 

This week is all about watching retail and the continuing divergence between retailers like Target, who are lagging behind due to inventory woes, and juggernauts like Walmart, who have stepped up their logistics game to overcome all their supply issues from 2021. 

Meanwhile, the market had some solid moments of bull sentiment throughout the week as a few key inflation metrics came back in better ranges.

However, other job metrics gave us more mixed signals, leading to more of a selloff in broader markets while we wait for the CPI to drop next week. 

There's a lot more detail to comb through, so let's dive into what you need to know for the week ahead 👇


Labor Is Giving Us Mixed Signals:

After months of the Federal Reserve raising interest rates, the American labor market is finally showing some signs of slowing down. But the results were mixed: 

  • ADP reported only 127,000 new jobs last month. This was way less than the expected 190,000 -- which gave investors a lot of confidence. Private payrolls have been a key part of the demand side of the inflation equation, and this huge reduction is definitely progress. 

  • JOLTS Job data didn't go down nearly enough. On the same day, federal JOLTS data (measuring job openings across the whole economy) demonstrated a jobs market that's slowing down, but not as fast as the market expected.

  • Non-Farm Payrolls were really high. The US added 263,000 nonfarm payrolls in the last month, which is more than 30% higher than analysts were expecting. This news dropped on Friday and was the main reason the market trended flat-to-down on the week overall. 

The other main data point we got regarding inflation was Jerome Powell's speech at the Brookings Institute last week where he hinted that the Fed would consider lowering the amount interest rates were being raised each month.

We're encouraged overall, but the market won't know a thing until the CPI print next week. 


Energy Is Turning Volatile:

There is a lot going on in energy that we're watching this week.

Instead of an outright ban on Russian Oil, the EU has imposed a price cap of $60/ Barrel which will severely cripple Russia's ability to continue funding its invasion of Ukraine. This will also cause some supply headaches moving forward. 

At the same time, the US is moving to counter OPEC's reduction of oil supply by accepting imports of Venezuelan oil for the first time in years.

This won't shift supply or prices drastically but is a strong signal from the US to OPEC that we're not going to take higher oil prices lying down. 


Wrapping this Up:

And those are the major threads we're keeping an eye on this week.

Our analysts are also monitoring the ongoing winter in crypto as more projects sag under the downturn and the FTX collapse.

Binance announced a $1 Billion recovery fund for the crypto industry last week -- which essentially cements them as the god-emperor of all cryptocurrency. Despite stock futures going down due to concerns coming out of China, BTC is staying steady in the $16K range, which is giving our team a little more confidence moving forward. 

This downturn has had some wild twists, but retail is showing us that we may just have a path out of this where we quickly adapted to supply chain inflation and kept the market from sinking into a full-blown recession.

We'll keep a close eye on retail, labor, and tech this week as these threads develop.