Cela's Weekly Insights - January 22, 2023

Welcome to this week's newsletter, where we dive into the latest market trends and developments. It's been a bit of a wild ride in the markets recently, but let's dive in and see what's been happening.

Last week, the markets took a nosedive after a series of disappointing economic data. US-Retail sales for December took a bigger hit than expected, with a 1.1% decline, and even bigger-ticket items like cars and furniture weren't immune to the weakness. This could be a sign that consumers are starting to feel the pinch of inflation and potential economic trouble.

Meanwhile, US-manufacturing data also came in weaker than expected, with industrial production down 0.7% and both the NY and Philadelphia Fed indexes pointing to contracting trends in January. With these indicators, it's looking like growth may be slowing down, and with all the negative news around, it's not surprising that consumers are being more cautious with their spending.

In addition to the weak economic data it looks like investors are having a field day with the ongoing debt-ceiling drama in the US. The country officially exceeded its debt limit of 31.4 trillion USD and the Treasury had to resort to "extraordinary measures", including suspending the sale of certain government securities.

But don't worry, history shows that Congress has a habit of coming together at the last minute for a debt-ceiling deal, so it's likely that this too shall pass. And in any case, the market performance tends to be driven more by economic and earning fundamentals rather than the political landscape.

Let's move away from politics and let's talk about earnings! Earnings season is in full swing and so far, it's a mixed bag. Some companies are doing well, but the overall picture is not so rosy. About 11% of S&P 500 companies have reported earnings so far and while 69% have beat expectations, it's still below the 10-year average. Earnings for the quarter are expected to fall overall by 4% annually and companies are preparing for a slowdown ahead by adding to reserves for potential loan defaults.

Last Week's Market Performance: A Global Overview

It was a mixed bag for global markets this week, with the German market experiencing a dip on Thursday and ultimately ending the week slightly negative with a performance of -0.35%. On the other hand, the American stock market had a relatively quiet week due to the Martin Luther King Day holiday on Monday. Despite some positive earnings from a few companies pushing the S&P 500 higher on Friday, the index closed the week with a negative performance of -0.66%.

The Nasdaq had a down week until Friday, when a few companies presented their earnings, resulting in a weekly performance of 0.67%. Meanwhile, the Chinese market continues its rally without any breaks, with the HANG SENG index closing the week with a positive performance of 1.41%. Additionally, Brent crude saw a turn around after being down almost 10% at one point, with gains of 2.79% last week. The Euro also gained ground on the dollar, nearing 1.10 and finishing the week with a 0.22% increase. Both gold and Bitcoin also saw positive gains, with gold edging higher for the 5th consecutive week and Bitcoin closing the week up 5.67%. The bond market, however, saw little action with 10-year US Treasury yields remaining relatively stable.

*** Last Week's Survey Results | Calender Week 03/2023

Last week's poll results are in, and it looks like the majority of LinkedIn (73%) and Instagram (75%) users were feeling bullish. Unfortunately, the S&P 500 had other plans and decided to take a small dip (-0.66%) instead. Looks like we'll have to rely on the wisdom of the crowd some other time 😅

What can we expect from the S&P 500 in the upcoming (04/2023) week? You can still vote here.

That's all for today folks. If you've made it this far, thanks for tuning in 😁.

Cheerio!

Endrit Cela The Investment Fella - #ECB #mm #411 🦍