January 8, 2024

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The market's crystal ball is finally clear, and this week it reflects inflation data with laser focus. Get ready for the "aha moment" of 2024 as CPI and PPI unveil the truth beneath the market's mask.


We'll dissect the numbers, chart the fallout, and guide you through the financial maze, from Boeing's accident-plagued nosedive in "Chart of the Day" to Market Moving News that could reshape your portfolio.


Plus, a splash of financial humor and historical quirks to keep your mind nimble during this pivotal week. Let's navigate the market's truth serum together, one data point at a time.


Today's Market Mood: Moderately Bullish

The Bear-Bull Meter


A Week Painted in Shades of Doubt

The new year's market honeymoon ended abruptly last week, replaced by a bout of skepticism triggered by a robust jobs report and its implications for the Federal Reserve's dance with interest rates. The S&P 500, after nine weeks of positive strikes, tripped on the unexpected strength of Nonfarm Payrolls, stumbling 1.6% lower by the final curtain.


The December jobs data surprised like a confetti cannon at a board meeting, surging past estimates and painting a picture of a surprisingly resilient labor market. This threw a wrench into the narrative of imminent Fed rate cuts, sending shivers down the spines of tech stocks and leaving small-caps bruised with a 3.7% decline.


While the Fed's rate-hike peekaboo might take a few extra steps, the underlying story might not be one of doom and gloom. Remember, a healthy labor market provides fertile ground for economic growth, even if it slows down the party for a bit.


So, how do we navigate this uncertainty? Here are some strategic moves:


Seek Stability: Consumer staples and real estate, though lackluster last week, offer havens during market jitters. Consider adding a touch of these defensive sectors to your portfolio for some waltz-worthy balance.

Be Mindful of Momentum: Technology, after its recent dip, might be tempting, but proceed with caution. Wait for clearer signals before chasing falling knives.

Embrace Agility: The Fed's next move remains shrouded in some fog. Stay nimble and adjust your portfolio based on evolving macroeconomic cues.


With a strategic mindset and a touch of patience, you can still find your rhythm and lead your portfolio to graceful returns. Keep those dancing shoes at the ready, and remember, flexibility is key!


Bonus fact: While you're crunching numbers, don't forget to enjoy the little things. Did you know the Cboe Volatility Index, aka the VIX, actually has a mascot? A cuddly little bull named "Archie Fearless"! So, even when the market throws you a curveball, remember, Archie's there to remind you that a little fear is normal, but courage is your best trading partner.


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Market Mischief: Boeing's 737 Max: Grounded, Not Soaring, Like a Lead Balloon at a Birthday Party


Remember those birthday balloons you used to tie to a chair to keep the little ones from wandering off? Well, imagine Boeing's 737 Max as that chair, weighed down by safety concerns and regulatory woes. While other stocks are soaring like helium-filled unicorns, the Max remains firmly tethered to reality (and the tarmac).


But hey, at least it's not a sinking ship, right? And who knows, maybe with some TLC and a regulatory overhaul, the Max will one day grace the skies again. Until then, we'll just have to enjoy the show from the ground, popcorn in hand, and hope the only turbulence we experience is from a particularly rowdy piñata.


So, raise a glass (not on a Boeing plane, please) to the 737 Max, the birthday party guest who's more grounded than a party pooper. Here's to hoping it takes flight again, but until then, we'll just keep our celebrations low-flying.


Chart of the Day

$BA - Boeing Looks to Take a Nosedive


Turbulence alert for Boeing's stock price! The once-soaring jetliner has hit some rough air, plummeting 8.5% in pre-market Monday trading after a series of mid-air mishaps. A fuselage ripping incident, a grounded windowless plane, and Alaska Airlines' precautionary Boeing inspection sent investors scrambling for their parachutes.


But before you eject your entire portfolio, let's take a closer look at the chart.


Red alert? Not necessarily. While the projected dip is cause for concern, consider it a blip on the radar compared to Boeing's long-term flight path. 


But wait, there's more turbulence: Airbus, Boeing's archrival, just secured a sweet $3.5 billion deal with the US Air Force, potentially stealing some thunder (and lucrative contracts) from Boeing. This could give Airbus an edge in the military aviation market, further dampening investor sentiment towards Boeing.


So, buckle up? Or prepare for a crash landing? The truth, as always, lies somewhere in the clouds. Fundamentals-focused investors might argue this is a buying opportunity, a chance to snag Boeing on sale before it ascends to new heights. They point to the company's strong financials and past ability to weather storms.


However, broader market concerns, like your bearish hunch about a general downward trend, cast a shadow over even the sturdiest aircraft. The coming weeks will be crucial in determining whether Boeing can regain altitude or face a prolonged descent.


Bonus trivia: Did you know the first Boeing plane, the B-17 Flying Fortress, had a nickname? "The Pregnant Guppy." Talk about an image you can't unsee! But hey, even bumpy beginnings can lead to smooth sailing. So, stay optimistic, investors, and remember, even the Guppy eventually learned to fly.



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The Market's Moment of Truth: Inflation Takes Center Stage


This week, the financial spotlight rests not on earnings calls or tech darling debuts, but on a humble number: inflation. CPI data arrives Tuesday, poised to rewrite the market's narrative and reshape your portfolio.


Forget five rate cuts in 2024 – whispers of that fantasy are fading. Core CPI is forecast to rise, defying the 2% target and stoking stagflation fears. Even headline CPI is expected to accelerate, leaving the Fed with little room for dovish daydreams.


Treasury auctions add another layer of intrigue. Can the indirect bidders return, pulling their weight and easing pressure on primary dealers? The 30-year auction on Wednesday holds the key, and its outcome could ripple across the curve.


Remember the bubble I saw ready to burst back in December? The path to redemption is at hand. If inflation comes in hot, expect that bubble to pop, sending the S&P 500 back towards 4,100. The index is already flirting with negative gamma, meaning dealer hedging will amplify market movements, making any downward spiral steeper.


The market's bet on aggressive rate cuts was bold, but reality might tap its shoulder with a dose of hawkish data. This week, it's not about fancy algorithms or viral tweets. It's about fundamentals, cold hard numbers, and the Fed's unwavering commitment to price stability.


So, buckle down, investors. We're trading fairytales for fact checks. Brace for volatility, sharpen your analysis, and remember – sometimes, the most compelling stories are written in the language of economic data.


Key Takeaways:

  • Inflation data could dash hopes of aggressive rate cuts in 2024.
  • Weak Treasury auctions may signal continued pressure on primary dealers.
  • Negative gamma in the S&P 500 suggests downward volatility will be amplified.
  • The market's narrative hinges on a reality check from economic data.

Stay tuned for:

  • A deep dive into Tuesday's CPI report and its implications for the market.
  • Analysis of the Treasury auctions and their impact on the yield curve.
  • Strategies to navigate the potential volatility ahead.
  • This week, the market takes a deep breath and prepares for its close-up with reality. Don't miss the show.

Market Movers of the Week: Up, Down, and Everywhere in Between


Agilon Health (AGL): Shares nosedived 29% after revising 2023 forecasts downwards. Rising specialist visits dug into their coffers, prompting a reality check for investors.


Carnival Corp. (CCL): Smooth sailing ahead? A Wells Fargo upgrade to "overweight" sent the cruise line operator up 2.9%, suggesting calmer waters after a choppy few years.


Constellation Brands (STZ): Stronger-than-expected earnings overshadowed weaker sales, propelling the beverage giant 2.2% higher. Forget hangover fears, this hangover delivered a celebratory toast.


Costco Wholesale (COST): E-commerce chugged like a well-oiled engine, fueling a 1.2% gain after December sales surged nearly 10%. Seems like bulk shopping still holds its charm.


Elanco Animal Health (ELAN): A Stifel upgrade, citing a robust pet health pipeline and expansion plans, sent this stock leaping 6.2%. Looks like even our furry friends can sniff out good investment opportunities.


Palantir Technologies (PLTR): Buzzkill alert! Jefferies downgraded the AI darling, calling it "overhyped." Palantir shares dipped 1.7%, proving even high-tech dreams need a dose of reality.


Earnings Season Kicks Off: Buckle up, folks! Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo, among others, take center stage next Friday with their quarterly reports. Get ready for some financial showdowns.


Wage Growth Simmers: Beyond job numbers, Friday's data brought mixed signals. Wage growth edged higher, possibly raising eyebrows at the Fed. Could "too hot" turn the central bank's rate-cutting hopes into lukewarm reality?


Services Slowdown: The ISM Services PMI dipped, hinting at economic deceleration. Investors, however, are still betting on a potential Fed pivot in the coming months. Buckle up for inflation data next week – that could be the real reality check.


In essence, last week was a rollercoaster of earnings surprises, analyst whispers, and economic clues. Stay tuned, because this week, the story gets even spicier with inflation taking center stage.


Random Musings and the Time Machine


Random Musings?


Market Myopia: With investors fixated on the near-term Fed pivot, are they overlooking the potential long-term consequences of persistent inflation on corporate profitability and stock valuations? Could the market be suffering from a case of "policy tunnel vision"?


Wage Conundrum: The Fed's tightrope walk becomes ever more precarious as wage growth remains "too hot" even amidst a slowing economy. Can they tame inflation without triggering a recession? This economic jigsaw puzzle is missing some crucial pieces.


Retail Resilience: Costco's robust December sales offer a glimmer of hope amidst concerns about consumer spending. Perhaps the bulk-buying mentality thrives even in an inflationary environment. Could this be a signal of underlying consumer strength?


Tech Hype vs. Reality: Palantir's dip serves as a cautionary tale for investors chasing tech stocks fueled by buzzwords and "AI fever." A dose of financial realism might be in order when evaluating these innovative, yet often unproven, companies.


Earnings Season Approaches: Brace yourselves, as the quarterly earnings orchestra prepares to tune up next week. Will bank earnings set the tone for the market, or will another sector steal the spotlight? Stay tuned for the financial symphony to unfold.



On this day in history, January 8th:


January 8, 1976: Elvis Presley, the King of Rock and Roll, bids farewell to the world at the age of 42. A reminder that even icons face market forces, albeit of a biological kind.


January 8, 1981: IBM introduces the first IBM PC, forever changing the landscape of personal computing. A fitting metaphor for the disruptive potential lurking within seemingly mundane economic developments.


January 8, 1992: The Maastricht Treaty is signed, paving the way for the European Union and the Euro. A reminder that economic and political forces often intertwine, shaping the global financial stage.


January 8, 2004: NASA's Spirit rover lands on Mars, opening a new chapter in space exploration. A testament to the human spirit's insatiable curiosity and its potential to push beyond perceived boundaries.


January 8, 2021: The GameStop short squeeze saga unfolds, highlighting the power of social media and meme culture in influencing financial markets. A reminder that the unexpected can always disrupt the most carefully laid investment plans.



Final Ledger: Inflation's Hot Potato and Market's Juggling Act


As we kick off this week, the market resembles a harried chef, frantically flipping inflation's sizzling hot potato while keeping a dozen spinning plates of Fed policy in the air. Earnings surprises and analyst whispers add to the culinary chaos, while wage growth peeks over the counter, licking its chops.


Where do we stand? The Fed's balancing act might be closer to a knife-juggling performance with inflation on a short fuse. Still, even the fanciest restaurants occasionally burn the toast. This week, inflation data is the main course, as bank earnings alsto take some of the spot light.


Until then, we leave you to Will Rogers' wisdom: "The best time to buy stock is when it feels just as uncomfortable as having your teeth drilled."