In his Daily Market Notes report to investors, Louis Navellier wrote:
Last day of the Santa Rally is hoping to hold on to gains.
Market Gets A Jolt
While hopes were for a serious year-end rally, the actual long-term Santa Rally numbers are only a 1.3% gain. To hit that, we only need to close the S&P at 3,822 which we were holding early in the day. The big difference is that it usually comes at the end of a strong December return which didn’t happen.
Q4 2022 hedge fund letters, conferences and more
Today, we are seeing another repeat of yesterday where the market opened up clearly in the green, the S&P shot up to 3,856 up 32 points, but after the strong JOLTs numbers were announced, it dropped right down to 3,814 demonstrating the caution of buyers, and how the focus remains on the what the Fed will do this year.
The JOLTs job opening number from the US Bureau of Labor Statistics for November came in at 10,458K well ahead of the 10M forecast and ahead of October's 10,334K.
The Fed is trying to suppress the wage/price inflation spiral, and strength in job opening leaves things moving in the wrong direction. Granted it's a backward-looking number, but the Fed has repeated many times that it is looking for multi-month trends before it pivots, leaving an increase in job openings no help to investors looking for a Fed pivot sooner rather than later.
Rally On Lower CPI
ISM Manufacturing Employment for December was also higher than forecast at 51.4, the highest since August. Tomorrow we'll get unemployment data which are forecast to be flat. Later today, they will release the Fed FOMC meeting minutes which may show more granularity of which data the Fed is focused on.
Next week's CPI is the single most important monthly data, and the core CPI is expected to drop slightly. A bigger drop should trigger a rally, an increase may bring a meaningful correction.
Attractive Energy Pullback
Today, we're seeing a meaningful drop in interest rates with the US 10-year down 8bps to 3.70% and the 2-year down 3bps to 4.37% and we're seeing similar drops in European yields. The US dollar index is still stuck at 104 where it's been for a month.
Crude oil is down meaningfully to $73.60, and natural gas is finally holding above $4, after testing $3.90 overnight. Energy stocks have been the weakest sector this week on soft commodity prices, but with Biden promising to start refilling the US Strategic Energy Reserve in the high $60s, energy stocks don't have a lot of downside from here.
Today, both Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL) are bouncing off yesterday's pullback, but not a full recovery, and Microsoft (NASDAQ:MSFT) got a downgrade and is off 4.75%. As the day goes on stocks are grinding higher and the VIX is slightly lower.
We are in a holding pattern, waiting for 4th quarter results and subsequent 2023 estimates which will set the tone for the first quarter, as will next week's CPI data. It's still time to be conservative given the uncertainty of earnings and inflation, with the pullback in energy an attractive opportunity.
Coffee Beans
According to the Norwegian Road Federation, electric cars accounted for 79 percent of new passenger car registrations in Norway in 2022, and 87 percent when including plug-in hybrids. In the United States, electric vehicles excluding hybrids accounted for just 2.6 percent of passenger car sales in 2021. Source: Statista. See the full story here.
