The S&P index currently bears a sense of gravity, with significant shifts occurring among prominent market players, albeit temporarily.
Today’s noteworthy participant in this unfolding scenario was Netflix (NFLX). However, it’s crucial to note that the financial media might emphasize the ARM IPO as a significant event. Please be aware that the IPO’s initial valuation of 51 is only relevant to those participating. Thus, any higher valuation reported by the media should be viewed in the context of trading levels following its launch. Caution is advisable, considering Softbank’s substantial role as a lead investor. In most cases, we refrain from pursuing initial IPO surges, choosing instead to monitor potential stock fluctuations in the months following the conclusion of the ‘lockup period.’
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My forthcoming commentaries will be concise over the next few weeks as I prepare for my first international flight in four years. This extended absence is due to the various challenges posed by the pandemic that affected us all. It’s worth noting that this report is dated for the following Monday, but I anticipate an earlier update. This decision is influenced by my travel plans, which include a layover in New York and the possibility of intermittent connectivity during my stay in a coastal town in Barcelona. Considering potential delays or unforeseen disruptions, it’s customary not to embark on a cruise on the same day of arrival. Consequently, I’ll provide brief “2nd and 3rd Editions” if circumstances permit.
The Consumer Price Index (CPI) exceeded my expectations, especially concerning the headline. While oil prices have contributed to the elevated numbers, the prevailing sentiment among most analysts suggests that this won’t deter the Federal Open Market Committee (FOMC) from temporarily halting interest rate hikes.
I concur that the Federal Reserve should consider a pause and shift its focus toward addressing its Balance Sheet shortly. This shift would alleviate the day-to-day pressures experienced by small businesses and the working-class population, which relies heavily on credit. These groups are more significantly affected by rising rents and related expenses than by increasing food prices. Elevated fuel costs threaten disposable income, and the Netflix scenario aligns with consumers seeking to cut costs related to streaming services and entertainment beyond essentials. I anticipate witnessing more instances of this behavior, leading to occasional turbulence in mega-cap stocks, which may subsequently reach their lows before rebounding in 2024.
Market Outlook
The “Market X-Ray” remains cautious and watchful regarding market rallies. Despite the symmetrical structural appearance of the S&P pattern, which continues to fluctuate around the 50-day Moving Average, there’s an ongoing sense of uncertainty surrounding the stability of leading large-cap stocks.
A minor tug-of-war between bullish and bearish sentiments unsettled the stock market during the final hours of trading on Wednesday, and a repeat of this scenario remains possible today. Tensions will likely persist as we approach the FOMC meeting scheduled for the following week. Consequently, we may not witness any significant developments until then, with an overall cautious tone characterizing the current atmosphere in September.
There have been limited noteworthy changes regarding corporate developments within the stocks we cover. Delta Airlines (DAL) has observed a decline, mirroring the trend in other airline companies. However, Delta’s prudent approach to operating its refinery affords it a cost advantage, sparing it from the full brunt of Jet A fuel prices, which competitors like America and the United must bear. Nevertheless, Delta remains subject to refueling expenses for its international fleet, a significant revenue source, albeit during a season of reduced travel demand. I anticipate lighter load factors during this period while I navigate the Atlantic and contend with potentially turbulent weather in the Mediterranean.
Conclusion:
It’s essential to acknowledge the allocation of substantial subsidies to major corporations, with the realization that a significant portion of profits may ultimately benefit foreign entities. The rise of electric vehicles poses a substantial threat to the UAW and the broader auto-repair industry. This dynamic underpins ongoing concerns about wages and job security. Today, Ford (F) introduced a hybrid F-150 pickup truck, a development likely to be well-received by workers. This move addresses the “range-anxiety” challenge faced by electric trucks.
The market remains jittery, as previously discussed. I will provide a morning update or tweet and a possible commentary on Thursday. Further updates beyond these are contingent upon the availability of extra time at Delta’s SkyClub at JFK, which remains unpredictable, much like the market or the notorious lounge entrance queues. The primary focus should remain on avoiding delays and successfully traversing the Atlantic before the approach of Hurricane Lee to the Northeast.
Regarding the market, it should maintain a subdued stance leading into Rosh Hashanah, commencing on Friday evening. To those observing this occasion, I extend my warm wishes for a Happy New Year. I will be in Spain during this time and anticipate a respite from any potential inquisition-style inquiries.
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