Hakuna Matata!
It means no one seems to be worried about the Fed, the War, Covid, Inflation, Recession, Monkey Pox (where’d that go?), Oil Prices, the Elections, the Diesel Shortage, Housing… Santa Claus (rally) must be coming to town and we just had the best month in the market since 1976 – and it all came in the last two weeks but we opened the month at S&P 3,600 and finished at 3,871, which is up 7.5% – very impressive!
3,960 would complete a 10% gain from the September lows and that is right about halfway back to 4,300 – where we started to fall in August – so that would be great but we never should have been at 4,300 in the first place, given the current macro conditions – so we’re not expecting that to happen.
Earnings have been weak but not weaker than expected and certainly not Recession-weak. Traders are suddenly in a forgiving mood as IMAX missed by a lot yesterday but they bought a note from China (shutdowns) and the stock is up from the lows this morning. AFL missed and barely budged, NXPI missed big and is up pre-market.
Overall, we had 11 misses our of 53 reports but that’s 78% (3 were flat) beats, not Recessionary at all. This morning alone there are about 50 reports and that many tonight as well. ARNC missed by a mile and guided down, so watch them to see what mood traders are in. KKR also missed by a mile but their report indicates their stock holdings as of Sept 30th – much improved since then.
PFE continues to be a money-machine and my comment on them (fortunately) in our Oct 17th Portfolio Review was:
“PFE – I can’t believe they sold off like that – people are crazy. Let’s buy back the 30 short June 2024 $55 calls for $7,170 (up $5,580 from Aug) to give them room to bounce before selling something else. “
That left us aggressively bullish with the stock at $43.11 and we should be back to $48 this morning, a lovely 11.5% recovery and will be FANTASTIC for our 40 long June 2024 $40 calls, which were $7.78 that day and should be well over $10 this morning. At $50, we will re-cover and get back our $7,170 (at least) – hopefully with a much higher strike – giving us more room to run over the next 18 months. Should be good for our MRNA positions as well (also very aggressive) as PFE’s upside surprise and guidance were vaccine-related.
While we are waiting for the Fed tomorrow, let’s look at some other things we can not worry about:
- Yields Surge To Session High After Treasury Unexpectedly Projects It Will Issue An Additional $150BN In Q4 Debt
- Eurozone Inflation Rate Rises to 10.7% as Recession Looms
- China Builders Have $292 Billion of Debt Coming Due Through 2023.
- Global Bankers Fly Into Hong Kong Amid Growing US-China Tensions
- Bond Rout Forces Japan Regional Bank Into Alternative Assets
- Emerging Stocks Are Flashing a 2008 Financial Crisis Signal
- OPEC Says World Can’t Live Without Oil, Demand Will Keep Rising.
- Iran’s IRGC Seizes Foreign Fuel Tanker In Persian Gulf
- Biden Warns Oil Firms He’ll Seek Tax on ‘Windfall’ Profits
- The World’s Food Security Is at Stake as Russia Exits Grain Deal
- More Than a Third of Small Businesses Can’t Pay Their Rent
- Homebuilders say the new year could be ugly as buyers pull back
- University-Endowment Returns Drop Into Negative Territory
- Delta pilots vote in favor of potential strike as contract talks drag on
- Inflation, Economy Are Top of Mind for US Voters in Midterm Poll
- GOP Prospects Rise Amid Economic Pessimism, WSJ Poll Finds
Hakuna Matata folks, nothing to see here, move along…
I’m certainly worried and we went very bullish in our Short-Term Portfolio (STP) on last month’s dip and it’s time to turn that around and protect our recent gains. We shall do so in our Live Member Chat Room this morning – let’s not let this nice rally go to waste.
