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Santa Claus Seems To Have Arrived On Time

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In his Daily Market Notes report to investors, Louis Navellier wrote:

Santa Claus Sighting

Stocks are making a serious effort to mount a Santa Claus rally this morning. The Dow opened up 300 points and all the major indexes are solidly in the green. Stocks managed to close marginally in the green yesterday after four days in the red. Sectors that have had a rough month are rebounding; consumer discretionary +1.,2%, banks + 1.5%, retail +1.4%. Even Ark Innovation (ARKK) is up 0.75%.

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The VIX is down 5.4% to 20.3 as traders are cautious of getting run over by the prospects of the Santa rally showing up.

Crude oil is up 2% to $77.80, gold is modestly in the green at $1,829. Interest rates have moderated after the open with the US 10-year down 4bps to 3.65% after rising to 3.72% overnight and the 2-year down 5.6bps to 4.21% after hitting 4.28%. International interest rates are flat and most stock indexes are up 1% or better.

Nike (NYSE:NKE) reported good numbers last night and is up 13.7% albeit down 29% YTD. FedEx (NYSE:FDX) reported a topline miss but a bottom line beat, spoke to further cost cuts planned, and also forecast a global slowdown in 2023.

The shares are up 4% today but down 34% YTD. Semiconductors are also catching a bid with NVIDIA (NASDAQ:NVDA) up 2.3% (-45% YTD) and AMD (NASDAQ:AMD) up 2.9% (-55% YTD).

Looking toward 2023, we see that 1Q'23 S&P earnings estimates are still up 1.9% but well off the +7.4% that was forecast at the beginning of the 4th quarter.

Rising interest rates are the primary challenge going forward by making new financing more expensive, especially as transactions done at record-low rates during the pandemic are refinanced in the next couple of years. Note that in December of 2020 there was $18 trillion of negative interest rate debt in the world and today only $650 billion.

As the day rolls on, stocks continue to rise with all the major indexes up over 1% on the day. If the Santa Rally plays out, we should continue to have green days into year-end with follow through into the first week of the New Year.

The reports of Christmas sales by retailers will show up shortly thereafter and set the tone for January. For now, celebrate that Santa seems to have arrived on time and might claw back the last week's losses by year end and get the new year started on the right foot.

Coffee Beans

When asked which gifts U.S. adults would personally most like to receive this year, 36% of men and 46% of women said cash or bank transfers.

Meanwhile, where smartphones, tablets and accessories were a fairly popular choice for both groups, women showed slightly more interest in travel-related gifts (19% versus men at 14$) as well as event tickets (19% versus men at 12%). Source: Statista. See the full story here.