In his podcast on today’s markets, Louis Navelier made the following comment.
Fourth quarter results
Well, this is a very important week for earnings announcements, and since this is supposed to be the bottom of S&P 500 earnings, for many companies, the forecast will be more important than the actual results for the fourth quarter.
Many major international equities have already posted mixed fourth quarter results. With the exception of companies related to energy and agriculture, the choice for most investors is rather limited.
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Hedge Fund Letters Q4 2022, Conferences & More
Naturally, I remain “locked and loaded” for the fourth quarter announcement season. Our best defense remains a strong offense from fundamentally superior stocks. With the exception of companies related to energy and agriculture, earnings in other sectors of the S&P 500 are forecast to worsen.
Failure to comply with the ban on the use of gas appliances
The Biden administration has stopped the release of 1 billion barrels of light sweet crude oil per day from the Strategic Petroleum Reserve (SPR), so crude oil prices are expected to rise despite an excess of crude oil in the domestic market. As I have said many times, the demand for crude oil naturally rises in the spring as the weather improves in the northern hemisphere.
Natural gas is more dependent on the weather, but since the US is the Saudi Arabia of natural gas and Europe needs LNG, I also expect natural gas prices to pick up after recently falling to their lowest levels since April 2021.
I should add that at my home in Reno I added natural gas to one of my decks so I could set up a natural gas barbecue and fire pit that would be great on chilly chilly evenings. It snowed a lot at our house in Reno this winter, and my family also loves natural gas fires.
When spring comes, I think my family will be outdoors more because of the new gas stove, which helps keep family conversations going. For example, I cannot imagine life without natural gas, especially in the western mountains because of the cool evenings for several months of the year.
As Americans, we should all be proud of the vast production and reserves of natural gas in the United States. Despite the Biden administration’s new tax on natural gas (as well as coal and crude oil), I don’t see other states following California and banning natural gas. gas appliances.
The Biden administration’s call to start following California and start banning natural gas stoves and possibly other home appliances is expected to fail due to a new Republican-led House of Representatives.
In fact, the hype over natural gas stocks by the Consumer Product Safety Commission may have just been a political ploy to distract the media from the growing concerns about classified documents found at Joe Biden’s home in Wilmington, Delaware. The truth is that President Biden is now effectively a lame duck, especially if he continues to meet opposition within the Democratic Party.
Another political distraction is that due to the federal government’s $31.4 trillion deficit ceiling, the Treasury Department is currently taking emergency action to keep the US government running until June.
Obviously, the federal government’s deficit ceiling will be a political football that will be discussed endlessly, so that one side can embarrass the other side for several months. After all, the deficit ceiling is likely to be raised, so as investors we shouldn’t worry unless it has a negative impact on Treasury yields.
The Fed has succeeded in its interest rate policy, reducing existing home sales by 34% in 2022 to 4.02 per annum, the slowest pace in more than 12 years (since November 2010). In addition, the Fed also spooked consumers as retail sales fell 1.1% in December (the biggest drop in a year) and 1% in November.
The ISM manufacturing index also declined in December and November, while the non-manufacturing and services ISM index fell to 49.6% in December and is now signaling a contraction. Despite all this terrible economic news, the Atlanta Fed is forecasting 3.5% annual GDP growth in the fourth quarter.
If economic corundum confuses you, you are not alone. The Biden administration’s release of roughly 200 million barrels of light, sweet crude oil in 2022 from the SPR has significantly reduced the US trade deficit, exaggerating overall economic growth. In addition, the decline in China’s exports has also widened the US trade deficit, forcing economists to revise their estimates of US GDP upwards.
The truth is that China is reopening after its Covid Zero restrictions were abruptly lifted and it reopened international air travel. India, Indonesia, South Korea, Taiwan, Thailand and Vietnam have benefited from China’s economic problems. Europe is also doing much better than expected due to an unusually warm winter as well as more accommodative central banks.
In the US, the Fed has led the global fight against inflation. While the Fed has no influence on food and energy prices, they managed to bring down the prices of end-use services (i.e. services inflation) to just 0.1% in the December PPI report.
With federal funds rates now above Treasury yields, the Fed is expected to raise key interest rates by only 0.25% on Feb. 1. More important than the Fed’s actions will be the FOMC announcement, which I hope will signal that the Fed is nearing the end of its rate hike.
In the meantime, the most likely economic development is that crude oil prices will rise in the coming months due to rising global demand and the fact that the Biden administration will no longer release up to 1 million barrels per day of SPR to manipulate crude oil prices. .
While crude oil inventories remain high in the near term, as seasonal demand picks up, crude oil prices are expected to rise to $100/bbl and peak at $120/bbl during the summer months. It will also be interesting to see what happens to EV sales now that Tesla and other EV makers are facing overstocking.
The local Rhode Island Police Department received an unusual request: to conduct a DNA test for evidence of the existence of Santa Claus. A young girl asked the police to run a DNA test on a partially eaten cookie and carrot allegedly eaten by Santa Claus and some of his nine reindeer on Christmas Eve.
The Cumberland Police Department said it was awaiting test results and asked residents to stay in touch for more information. Source: NPR. See full story here.