Well folks - October is finally done and November is upon us! Equities ultimately moved sideways on the last session of the month yesterday as traders hold their breath awaiting the results of the FOMC meeting that kicks off tomorrow. Today is poised to be a different story with futures on the Dow, S&P and Nasdaq up 71, 109 and 138 bps respectively - read on for more of our thoughts regarding the FOMC’s decisive meeting below and your daily dose of market inspiration with the 142nd Coachman’s Report!
Markets in Review and Bonus Trade - Long $VIX | Timeline: 3 Days
With every step closer to tomorrow’s FOMC meeting the market has priced a higher and higher chance of a 50bp hike instead of a 75bp one - within one week alone, the 98%+ probability of the latter has dropped 10%. If the FOMC surprises tomorrow, this could serve as an influential (5%+) upward catalyst to equities. Moreover, one thing that is for sure is that given the multitude of known shifts upcoming, such as this meeting, the Friday jobs report, or OPEC’s cutting of production, the volatility index should be clocking in much higher than its current value of 25.
It's worth noting that every ⅕ days the S&P and VIX move in the same direction, with the recent decoupling of their movement with the S&P’s strong comeback over the last week and the VIX’s decent, alongside the aforementioned catalyst on the horizon and the extremely low RSI, we believe there is definitely an opportunity to long the $VIX over the next 3 days.
Short: Avista Corporation (AVA-NYSE) | Timeline: 2 days
Avista Corporation (AVA), which operates as an electric and natural gas utility company in the United States, reported earnings earlier this morning. The company managed to beat revenue estimates by 12%, however, AVA reported a net loss of $5.8 million, or an EPS of -0.08, missing estimates by a whopping 154.24% as pressures of inflation and rising interest rates continue. (Full Story) Referring to the chart, AVA has trended sideways for the majority of this year - up until the company reported lower-than-expected earnings last quarter, resulting in the stock beginning to trend lower. Price per share then retraced upwards leading into this quarter's earnings, however, due to a negative report and the Stochastic RSI in extremely overbought levels, traders can expect a bounce off of previous resistance, and a continuation of the previous downtrend.
Zooming out...
Biden’s New Bright Idea The Biden administration has announced plans to issue heavy taxes on ever-profitable big oil companies if they refuse to lower prices at the pump or reinvest in production. This comes after multiple oil giants including Chevron and ExxonMobil have reported record profits throughout the year, all while average consumers, alongside Biden’s chances at reelection, have been burdened by high prices at the pump. The Biden admin’s negative rhetoric against oil companies is nothing new, as they’ve been on opposing sides of the climate debate since he stepped into office- and although the possibility of enforcing such claims is limited, it is interesting timing considering the ever-lowering SPR and next week's US midterm vote. The FOMC that Has the World Waiting Today’s FOMC announcement will be paramount to how the United States handles the three-headed dragon of inflation at home, American poverty and global financial tightness. The result of this meeting will also allow us to predict the cohesiveness of the global financial system for the short-term future. While some central banks, Canada’s being a prime example, have heeded the UN’s advice to slow the pace of rate hikes, others including Japan and the UK have already switched back to asset purchasing in an attempt to lift markets. Officials have been quite clear in their desire to not pause, slow, or change their direction until inflation is dealt with. Moreover, FED officials are likely fearful of the coming jump in inflation once the SPR reserves have been depleted or cut off.
Making headlines...
China aims to ship 25 million virtual reality devices by 2026
China released its first action plan dedicated to virtual reality on Tuesday, with an aim for its industry to ship more than 25 million devices with a value exceeding 350 billion yuan ($48.20 billion) by 2026. (Full Story)
Inflation hits Thanksgiving dinner
Thanksgiving dinner essentials like turkey, cranberries and potatoes are more expensive than ever, leaving many Americans to wonder if it'd be cheaper to dine out. (Full Story)
J&J to buy heart pump maker Abiomed in $16.6 billion deal
Johnson & Johnson said on Tuesday it would buy heart pump maker Abiomed Inc in a $16.6 billion deal, its biggest in nearly six years, as the conglomerate seeks to boost its cardiovascular business. (Full Story)
Tesla's Autopilot faces unprecedented scrutiny
Elon Musk has championed Tesla Inc's driver assistance Autopilot and "Full Self-Driving" software as innovations that will both improve road safety and position the electric vehicle maker as a technology leader. (Full Story)
Chart of the Day: Netflix, lowest revenue growth in its history.
“Opportunity is missed by most people because it is dressed in overalls and looks like work.”
— Thomas Edison
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