Weekly market Recap – October 17th

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  • Markets are beginning to price in when “peak inflation” or a Fed pivot away from “hawkish” sentiment might occur.

  • Many believe (and hope) that it will be in or around the November meeting.

  • The volume of options trading on the S&P 500 reached a fresh record high on 10/13, surpassing 3.8M contracts.

  • The surge happened on the day the index had one of the largest reversals in history after a higher-than- expected US inflation data, with the S&P 500 closing with a gain amid a technical squeeze.

The winner of the craziest stock chart goes too......the entire stock market on Thursday !

Did the Medicine Heal the Patient or was it Worse than the Illness?


  • So far, massive amounts of tightening have only seemed to help marginally.
  • Now that several nations like Brazil have stopped increases, we will see if the fall in CPI catches up in time.
  • Historically low mortgage rates have added to years of massive home-price appreciation to create the least- affordable new-home market since the late 1980’s.

  • As rates increase, owners remain stubborn as they compare “covid offers” with lower offers now.

  • With most mortgages well below the current rate, the concept of “trading up” houses from smaller to larger

    will be very challenged with little incentive to move.

  • Combine this with lower new construction from supply-chain problems, and you have a major housing supply challenge for the foreseeable future.

  • When US Treasuries swing 29% in a month, it implies a potential crash in rate-sensitive assets.

  • Weak tech names, long-dated junk bonds, and cyclical small caps are vulnerable.

  • ESG funds have been growing steady in popularity for over 5 years now.

  • There are indications lately that we have reached a “peak” in ESG funds as well as overall popularity.

  • There is still no clear-cut guideline for what exactly constitutes “ESG-compliant”, and the lack of performance have left many investors frustrated.

  • This lack of a clear definition has gotten several politicians calling for the category to banned all- together.

  • Earnings estimates continue to decline but holding up better are “value” sectors like consumer staples, energy, and utilities.

  • This trend is likely to continue as rates continue to raise and companies low in free cash flow and high on “future growth” have trouble borrowing money.