Well folks, today’s session is the last chance traders have to price in their bets for tomorrow’s employment release, as such, it's sure to be a decisive one for the market; also, economists are predicting 200K jobs to be added, allowing the employment rate to remain at 3.7% - be sure to check out that update here. Anyways, read on for your daily market update, trade recommendation and macro stories within this 187th Coachman’s Report!
Markets in Review
Major equity indices are markedly down in the premarket today with the Dow, S&P and Nasdaq -47, -50 and -53 bps at the time of writing. After yesterday’s meager 15 bp gain for the S&P, the index is managing to stay right above that support line we drew earlier in the week to a T. At this 3,853 point level, the S&P is right around a P/E ratio of 20 - moreover, the share of investors in the bearish camp has fallen to just 42%, while still on the historically higher end, this is the lowest figure seen over the last month. Lastly, while tomorrow’s employment release is the closest upcoming potential catalyst for the market, it's worth noting that UST yields are once again edging higher this week, possibly signalling a risk-on sentiment amongst large asset owners.
Long: Richardson Electronics, Ltd. (RELL-NASDAQ) | Timeline: 2 days
Richardson Electronics, Ltd. (RELL), which engages in power and microwave technologies, customized display solutions, and healthcare businesses internationally, reported a stellar earnings report yesterday after the market closed. The company beat earnings and revenue estimates by 34.48% and 2.18%, respectively, with net sales increasing 22.1% from last year, driven by increases in Power and Microwave Technologies, Green Energy Solutions, and Canvys business units. (Full Story) Referring to the chart, RELL investors should be happy with the performance of the stock through 2022, climbing from lows of $11 as macroeconomic headwinds caused little turmoil. As the stock continued to increase with more force, a broadening wedge formed - and as the stock now approaches the key support level within the pattern, a bounce is likely, especially as the Stochastic RSI is turning bullish, yet quite oversold.
Zooming out...
Buzzing the Tower… As we reported previously, things are once again heating up between the two Koreas and throughout the South China Sea. More details have emerged following last week’s incursion over the Korean border, which may turn the heat up on the situation. Although previously denied, South Korean forces have confirmed that one of the five drones which crossed the border entered a no-fly zone surrounding South Korea’s presidential office. This report comes as the former secretary-general of NATO paid a visit to Taiwan on Wednesday and told reporters "[a]ny attempt by China to change the status quo in Taiwan by force should spark an equally unified response and we must make this clear to China now”. Tanks A lot As the Russo-Ukrainian War continues for the 11th month, further Western governments have stepped up their supply shipments to counter Russian aggression over the last week. The French Defense Ministry announced yesterday that they would be gifting the AMX-10 RC light tank to Ukraine. Although designated as a light tank, in reality, the AMX is a tank destroyer with a 105mm cannon that can pack a serious punch. Following the news, Joe Biden has said that he is weighing options when it comes to sending over Bradley Infantry Fighting Vehicles, which are lightly armoured personnel carriers. While the vehicles aren’t as powerful as the Abrams, or Leopard 2’s that Zelensky has been hoping for; this rhetoric and shift in policy from the French marks another step up by the Western alliance.
Making headlines...
Amazon is laying off over 18,000 workers, the largest job cut in the company's history
In a memo to Amazon staff on Wednesday, CEO Andy Jassy said the company would eliminate 18,000 roles, with most of the layoffs coming in the company's Amazon Stores and People Experience and Technology Solutions divisions. (Full Story)
California Wine Town to Fight Blackouts With Batteries, Hydrogen
A California wine country town plagued by wildfires and blackouts could soon get a backup power supply capable of running most of its homes and businesses for two days on batteries and green hydrogen. (Full Story)
Hong Kong Raises $5.8 Billion in Its Largest-Ever Green Deal
Hong Kong sold the equivalent of $5.8 billion of green bonds denominated in three currencies Wednesday, as debt markets roared back to life amid a global rush of deals. (Full Story)
Sony unveils prototype EV, Afeela, to be made with Honda
Sony unveiled a new high-tech prototype car it will produce in partnership with Honda at the CES tech show Wednesday. (Full Story)
Chart of the Day: Silver looking bullish…
“I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.”
- Abraham Maslow
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