Investors Are More Comfortable With Old-School Stable Businesses

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Investors Are More Comfortable With Old-School Stable Businesses
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In his Daily Market Notes report to investors, Louis Navellier wrote: 

Looking for Footing

Stocks are still looking for footing.

Crude oil is below $75, now flat for the year, and natural gas is back to March levels and down 45% from the August high, though still plenty high enough for solid cash flows for producers.

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Q3 2022 hedge fund letters, conferences and more

 

Recession fears, fed by comments from major CEOs, have driven interest rates to lows not seen since mid-September with the US 10-year now at 3.46% and the 2-year at 4.27%, still an 81bps yield curve inversion. On the bright side, mortgage rates have now fallen for 4 weeks in a row.

In other news, Democrats won the Georgia Senate runoff, giving them 51 seats, and leaving the Red Wave officially dead and a split in DC which should limit any major surprises in legislation.

Old-School Stable Businesses

In company news, Tesla (NASDAQ:TSLA) is back down below $175 due to questions about China production and news of discounting prices to drive sales. The stock is down 56% YTD.  Apple (NASDAQ:AAPL) is below $142 and is now down 22% YTD.

Amazon (NASDAQ:AMZN) is below $89 and down 47% YTD. News of a potential bankruptcy filing by Carvana (NYSE:CVNA) has pushed the shares down 33%, down 98% YTD.  MongoDB (NASDAQ:MDB) is up 19% on an earnings beat and strong guidance, albeit still down 64% YTD.

Campbell Soup (NYSE:CPB) is up 5% on earnings, +27% YTD, a reflection of how investors are more comfortable with old-school stable businesses.

Santa's Lost Sled

The sag in the market is being driven mostly by negative sentiments, with surveys showing a majority of investors saying it's a bad time to invest and only 26% saying it's a good time, the second worst gap in 15 years. Crypto is worse to no surprise, with 58% of actual crypto investors calling for more regulation.

History says (actually Baron Rothschild) the best time to buy is when there's blood in the streets, but given a Fed apparently willing to tighten into a slowdown for the first time ever, its best to keep adding high-quality cash flow names until a clear capitulation bottom has formed.

The Santa rally isn't dead yet but so far the sled appears to be lost. 

Coffee Beans

As smartphones have become a constant companion for most people in the United States, landline phones are rapidly losing their relevance. In 2004, more than 90 percent of U.S. adults lived in households that had an operational landline phone - now it’s less than 30 percent. Source: Statista. See the full story here.

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