Mother Nature vs. Wall Street: What to Expect if Disaster Strikes

January 12, 2024

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Today's report packs a punch like a 9.0 on the Richter scale! We're diving into the financial tremors left by Mother Nature's wrath, from Japan's earthquake lessons to how Wall Street weathers disasters. It's a story of resilience, adaptation, and a surprising sip of Starbucks optimism (hint: check the "Chart of the Day"). Take the chill pill, as we might just see some green shoots poking through.

 

Get ready to dissect:

  • Mother Nature vs. Wall Street: Can the bulls outrun the earthquakes? We'll crack the code on disaster preparedness and navigating volatile markets. ⛑️
  • Investing in the Shadow of Disaster: Learn from Japan's recovery playbook and discover hidden opportunities amidst the rubble.
  • Market Moving News: We'll dissect the headlines that matter most, separating the tremors from the trends. ⚡️
  • And for the caffeine fiends: A deep dive into Starbucks' chart, revealing why their cup might soon runneth over. ☕️

Today, we're charting a course through crisis, opportunity, and maybe even a venti latte. Let's make this market roar!

 

Today's Market Mood: EXTREMELY BULLISH!

The Bear-Bull Meter

 

Daily Market Roundup: A Mixed Weather Report

 

Thursday's market mirrored a day in April – sunshine and showers, all in a few hours. The hotter-than-expected Consumer Price Index (CPI) fanned the flames of inflation concerns, momentarily sending chills down equity spines and Treasury yields soaring. But by late afternoon, the clouds parted, reflecting the market's unwavering faith in the Federal Reserve's eventual rate-cut serenade.

 

The S&P 500 remained largely unfazed, barely budging at 4,780.24. The Dow, however, went forward, adding a cool 15.29 points, while the Nasdaq, hummed its own tune, inching up 0.55 points. So, was this a fleeting rain shower or a harbinger of a stormier season?

 

Under the hood, analysts whispered of a cautious Fed, not a hasty policy pirouette. Inflation might be a tad toasty, but the long-term trend is still downward. This means the central bank's rate-cut symphony, while not an immediate disco, remains on the playlist. 

 

Meanwhile, tech stole the spotlight, with mega-caps like Nvidia and Microsoft hitting record highs, proving their evergreen appeal. Amazon, Google, and Netflix joined the chorus, painting a picture of continued investor enthusiasm for the sector.

 

But the real headline comes from the crypto corner. The SEC's green light for spot bitcoin ETFs marks a tectonic shift. It's like opening a sun-drenched window in the crypto world, letting mainstream investors peek in without diving headfirst into the deep end with actual bitcoin. Bitcoin, for its part, responded with a celebratory leap, nearly tripling since the start of the year.

 

So, what's the takeaway? Thursday's market was a mixed bag, reflecting the tug-of-war between inflation anxieties and Fed hopes. But beneath the surface, the currents still flow towards a gradual rate-easing move and continued tech dominance. As for bitcoin, the door to wider adoption has swung open, potentially ushering in a brighter dawn.

 

Strategies to take:

  • Stay tuned to the tech sector's rhythm. With megacaps leading the charge, consider amplifying your tech allocation.
  • Don't expect an immediate rate-cut stampede. Patience and diversification are key while the central bank conducts its policy orchestra.
  • The ETF window is open, but approach it with caution. Bitcoin is still a volatile asset, so do your research and invest responsibly.

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Market Mischief: Inflation's Hot Tamale Hustle

 

Remember the great toilet paper caper of 2020? Well, brace yourself for a new market twist – inflation's back, and it's got stocks doing the lukewarm limbo while Treasury yields do the jitterbug on sugar cubes. The Consumer Price Index just turned up the heat like a rogue jalapeno in your guacamole, hotter than anyone expected.

 

But don't panic! The Fed's still at the punch bowl, giving awawy Kool-Aids about future rate cuts like a waiter promising free dessert. Think of it as an all-you-can-eat buffet of lower rates, just delayed until everyone's worked up an appetite (for market stability, of course).

 

Just remember, it's all part of the economic ecosystem, even if it feels like someone cranked up the thermostat on the crazy meter.

 

Chart of the Day

$SBUX: Brewin' Up a Big Bounce?

 

Move over, PSL, because Starbucks is brewing up a potentially epic chart comeback. After months of treading water, that green siren's looking feisty, eyeing a breakout from its recent slumber party.

 

Remember that sweet spot Starbucks bounced off back in September? Yeah, that's the 89-92 zone we're watching closely. If it holds, get ready for a caffeine-fueled rally, potentially all the way back to its glory days. But if it crumbles like a stale biscotti, well, then things could get a little latte less exciting.

 

Watch this space guys, it could be the difference between a venti-sized profit or a burnt Americano of disappointment. 

 

 

Tremors in Tokyo, Ripples Around the World: Understanding Disaster's Market Impact

 

Oops, earthquake!

Japan's recent earthquakes rattled nerves, homes, and, yes, stock prices. But just like the aftershocks eventually fade, so too will the market's tremors, albeit with lessons learned. Let's explore the complexities of disaster's economic footprint, from knee-jerk reactions to long-term ripple effects.

 

Immediate Shockwaves: When disaster strikes, uncertainty clouds the future, sending investors scurrying for safe havens. Stocks dip, volatility spikes, and the market dances a jittery one. Sectors tied to the affected area often bear the brunt, while others, like construction or disaster relief, might see a counterintuitive bounce. Remember, though, volatility doesn't always equal doom – smart investors can find opportunities amidst the chaos.

 

Long-Term Tremors: The economic aftershocks can be just as impactful. Damaged infrastructure disrupts supply chains, cripples industries, and dampens consumer confidence. Central banks might step in with economic band-aids, impacting market sentiment and influencing valuations. But amidst the gloom, resilient companies with solid recovery plans can emerge stronger, attracting investors seeking stability.

 

Global Contagion: Japan's tremors can reverberate across the globe, impacting trade, investment, and even remote markets. If the disaster sparks wider fears of vulnerability, a global risk aversion wave could crash against equities. But remember, interconnectedness cuts both ways – positive developments in Japan's reconstruction could also send positive ripples outward.

 

Lessons from the Rubble: Every disaster reveals the interconnectedness of our world and the fragility of markets. But it also highlights the remarkable resilience of communities, businesses, and economies. For investors, understanding these dynamics is key. Learn to distinguish short-term jitters from long-term trends. Identify resilient companies with robust recovery plans. And remember, a well-diversified portfolio can weather any storm, natural or financial.

 

Stay informed, invest wisely, and don't let market tremors shake your long-term vision. After all, even amid disaster, opportunity often lies hidden, waiting to be unearthed.

 

 

Market Movers

 

The following companies made headlines with their stock price moves, driven by analyst ratings, quarterly results, or other news:

  • Albemarle (ALB) slipped 3.2% after Deutsche Bank downgraded the chemical company to “hold” from “buy” and cut its price target to $135 from $155, expressing worry over lithium price swings in the near-to-medium term.
  • Citigroup © slid 1.8% after the bank late Wednesday warned of a probable loss in its fourth quarter, blaming the plunge of the Argentine peso and restructuring charges.
  • Coinbase Global (COIN) dipped 6.7% after Mizuho said the SEC approval of spot bitcoin ETFs may generate less revenue for the crypto platform than some expect. Other crypto exchanges also tumbled following the SEC approval, including Marathon Digital Holdings (MARA) and Riot Platforms, which dropped 13% and 16%, respectively.
  • Salesforce (CRM) climbed 2.7% after Robert W. Baird upgraded the cloud computing company to “outperform” from “neutral,” citing better-than-expected margins.
  • Paramount Global (PARA) fell 5.5% after Redburn Atlantic analyst Hamilton Faber downgraded the entertainment company to “sell” from “neutral,” citing concern over “material downside.”
  • Seagate Technology (STX) eased 1.1% after BNP Paribas downgraded the data storage company to “underperform” from “neutral,” citing the stock’s valuation.
  • Yum! Brands (YUM) fell 0.2% after Wells Fargo (WFC) downgraded the parent of KFC and Pizza Hut to “equal weight” from “overweight” and lowered its price target to $135 from $150, citing expectations for slower store traffic and moderate price gains in 2024.

Investors are gearing up for the unofficial start of the next quarterly earnings season today, with results expected from big banks including Bank of America (BAC), Citigroup ©, JPMorgan Chase (JPM), and Wells Fargo (WFC). Those results will be scrutinized for clues to the economy’s outlook.

 

Friday’s earnings will be followed by results from more major banking names next week, with Goldman Sachs (GS), Morgan Stanley (MS), and PNC Financial Services Group (PNC) expected to report results on January 16.

 

PPI data up next

 

The CPI report also brought some positive news for the market. The core rate, which excludes volatile food and energy prices, posted a 3.9% year-over-year increase in December, down from a 4% rise in November and the first sub-4% core rate increase since mid-2021. Also, high shelter prices accounted for more than half of the headline CPI figure, reflecting a long-term factor that’s of no surprise to analysts.

 

Also on Thursday, the Labor Department reported weekly Initial Jobless Claims at 202,000, about 7,000 below expectations and the lowest reading since the second week of October last year. Continuing claims, an indication of how long it’s taking unemployed people to land new jobs, fell to 1.834 million from 1.868 million.

 

The claims numbers suggest the labor market “is still relatively tight,” Peterson said.

 

Next up is Friday’s Producer Price Index (PPI). Analysts expect monthly and core monthly PPI to increase 0.1% and 0.2%, respectively, and annual headline PPI and annual core PPI to increase 1.3% and 1.9%, respectively, according to Trading Economics. PPI tracks wholesale prices, or what companies, not consumers, pay for goods. Because companies often pass higher or lower costs on to consumers, it can sometimes be a helpful barometer of future inflation.

 

 

Random Musings and the Time Machine

 

Random Musings

 

If you think inflation is bad, imagine living in Zimbabwe in 2008, when the annual inflation rate reached 89.7 sextillion percent. That’s 89,700,000,000,000,000,000,000%. A loaf of bread cost 300 billion Zimbabwean dollars. You could literally use the money as wallpaper or toilet paper.

 

Bitcoin is often compared to gold, as a store of value and a hedge against inflation. But unlike gold, bitcoin is not shiny, heavy, or useful for making jewelry. It’s also not edible, unlike chocolate coins. Maybe that’s why some people prefer to invest in chocolate instead of bitcoin.

 

Starbucks is one of the most recognizable brands in the world, with over 30,000 stores in 80 countries. But did you know that the original name of the company was Pequod, after the whaling ship in Moby-Dick? The founders later changed it to Starbucks, after the ship’s first mate. Imagine ordering a Pequod latte instead of a Starbucks latte. Doesn’t have the same ring to it, does it?

 

Japan is known for its resilience and innovation, especially in the face of natural disasters. The country has developed some of the most advanced earthquake-resistant buildings, early warning systems, and disaster relief efforts in the world. It has also given us some of the most popular and influential cultural products, such as manga, anime, video games, and sushi. Japan is truly a land of contrasts and surprises.

 

 

On this day in history, January 12th:

 

On this day in 1776, Thomas Paine published Common Sense, a pamphlet that advocated for American independence from Britain. The pamphlet sold more than 500,000 copies in a few months, and influenced many of the Founding Fathers, including George Washington, John Adams, and Benjamin Franklin. Common Sense is considered one of the most influential works of political literature in history.

 

On this day in 1920, the League of Nations was established in Geneva, Switzerland, as the first international organization dedicated to maintaining world peace and cooperation. The League was the brainchild of U.S. President Woodrow Wilson, who won the Nobel Peace Prize for his efforts. However, the U.S. never joined the League, and the organization failed to prevent the outbreak of World War II. The League was replaced by the United Nations in 1946.

 

On this day in 1946, the first United Nations General Assembly met in London, England, with representatives from 51 countries. The assembly adopted its first resolution, which called for the peaceful use of atomic energy and the elimination of nuclear weapons. The assembly also established several committees and agencies, such as the UN Security Council, the UN Economic and Social Council, and the UN Educational, Scientific and Cultural Organization (UNESCO).

 

On this day in 1984, the United States and the Vatican established diplomatic relations for the first time since 1867. The move was initiated by President Ronald Reagan, who sought to improve ties with the Roman Catholic Church and its leader, Pope John Paul II. The pope played a key role in supporting the Solidarity movement in Poland, which challenged the communist regime and contributed to the end of the Cold War.

 

On this day in 1999, The Sopranos, a TV series about a New Jersey mob boss and his family, debuted on HBO. The show starred James Gandolfini as Tony Soprano, a conflicted and complex character who struggles with his personal and professional life. The show was widely acclaimed for its realism, writing, acting, and cinematography, and won 21 Emmy Awards and 5 Golden Globe Awards. The show is regarded as one of the greatest TV series of all time.

 

 

Final Ledger

 

Earnings season looms, promising its own brand of drama, while the Fed continues its "hold" tune, though whispers of "cut" are crescendoing in the background. Remember, the market's a playing field, not a dance floor. Stick to your game plan, embrace the pivots, and know that even the most seasoned athletes need to take a breath between plays.

 

Before we head to the weekend, here’s something to think about: 

 

"If you're not failing, you're not pushing your limits, and if you're not pushing your limits, you're not maximizing your potential." - Ray Dalio

 

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