Why investing in the stock market is so weird right now: The Morning Brief

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Monday, October 22, 2022

By today’s newsletter Brian Sozzisenior editor and Host at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and continues LinkedIn. Read this and more market news on the go Yahoo Finance Software.

Every Saturday I have some kind of ritual.

First, I do two exercises – one in the morning and one in the afternoon. Second, I relax by waxing my car. Third, I’m revisiting a bunch of camera content I made during the week. Call it the obsessive pursuit of constant improvement. Did I miss a question for a senior executive? Was I too harsh on a company’s quarter? Did I smile when I should have been serious? All questions and discussions.

During this weekend’s analysis, I realized I was using this word strange when it breaks down a ton of corporate earnings and the start of the overall earnings season.

This image was created by Yahoo Finance using the Dall-E image generator. (Open AI)

Here’s a look at some of the things we’ve covered at Yahoo Finance:

CEO of Bank of America Brian Moynihan CEO tell me consumer spending rose 10% through October. Which recession?
CEO of American Express Tell me Stephen Square in a fiery phone conversation, the market misunderstands its quarter and its guidance, and it sees no recession on the horizon.
Snap’s stocks are crashing the continued slowdown in advertising caused by the global economic slowdown (and terrible execution by CEO Evan Spiegel).
General places a profit alert and says there is too much generator inventory in the sales channel. Bring on the energy-saving discounts!
Whirlpool – known for its impressive performance – cuts full year management and inventory levels are also too high for the current economic environment.
Verizon publishes subscriber additions as consumers protest the company’s recent price hikes. CEO Hans Vestberg, in my opinion, struck a more cautious tone in the business. Interview with Brad Smith of Yahoo Finance.
AT&T CFO Pascal Desroches tells me consumers are trading up to higher phone plans and added a large number of new subscribers in the third quarter.
Netflix gets shares greater love from investors for a bit of a comeback quarter – everyone is ignoring projected sales of $1 billion this year from a stronger dollar.
CEO of P&G Jon Moeller tell me While his company continues to raise prices on everything from Tide detergent to Gillette razors, he doesn’t see a recession.
Alcoa neighborhood it sucked.
I wasn’t too keen on the quart of WD-40 either.

Read all about: These are strange times for investors, as they are strange times for publicly traded companies.

Interest rates are rising. Supply chain inflation is still around in a big way. Some companies do great in this environment, others not so much. There really is a lack of a well-defined narrative right now for investors to rally around (or run away from). And oh yes market corporate profits can be completely ignored and torn apart by a Federal Reserve member on television.

So what to do? Mark Haefele, chief investment officer at UBS, provided a good framework for evaluating these strange times, so markets may not make a sustained advance until these conditions change:

“First, the latest U.S. inflation and labor market data suggest that even if the Fed is likely to hold off on rate hikes in the first quarter of next year, a rate cut remains far off. Core consumer price inflation is at its highest level since 1982. The Fed has consistently states that they are more willing to ‘tighten too much’ than risk not doing enough and that the labor market is tight.
Second, consensus earnings forecasts of 5% global growth in 2023 do not factor in the potentially negative effects of a period of tight monetary policy. Multiple leading indicators point to the downside. China, however, remains a source of near-term risk as it tries to deal with issues related to COVID-19 and the property market.
Third, the continued rise in interest rates also means that valuations, while definitely falling, do not yet fully discount the bearish situation, especially in the US. The selloff in stocks can almost entirely be explained by higher interest rates, while lower growth expectations are not yet pricing in stocks.”

On that note, what could be the Happy Wealth Building another weird week.

What to Watch Today

Economy

8:30 a.m. ET: Chicago Fed National Performance IndexSeptember (0.00 during previous month)
9:45 a.m. ET: S&P Global US Manufacturing PMIOctober Preliminary (51.0 expected, 52.0 last month)
9:45 a.m. ET: S&P Global US Services PMIOctober Preliminary (49.6 expected, 49.3 last month)
9:45 a.m. ET: S&P Global US Composite PMIOctober Primary (49.5 in previous month)