Happy Hump Day folks! It’s been quite a week we’ve already had, with the US pentagon failing its 5th audit yet again, being unable to account for more than 39% of its total $3.5T in assets - this was much to be expected, however US treasuries are actually trading up on this information, funny enough. Catch the full story here and read on for your daily dose of market inspiration in this 168th Coachman’s Report!
Markets in Review
The S&P traded down 1.44% by close yesterday and today’s premarket isn’t shaping up much differently with futures on the Dow, S&P and Nasdaq respectively -27, -50 and -85 bps at time of writing. Nevertheless, the index is still above its 200 day moving and every day that it trades on has brought its 50 and 200 day MAs evermore so close together - a golden cross event would be a decisive moment for the NA equity market and it's looking like there’s a possibility this could take place as early as next week! It is also worth noting that the S&P’s price-to-earnings ratio is currently around 20.5x, higher than its historical mean of 15x.
Long: Toll Brothers, Inc. (TOL-NASDAQ) | Timeline: 2 days
Toll Brothers, Inc. (TOL), which designs, builds, markets, sells, and arranges finance for a range of detached and attached homes in luxury residential communities in the United States, reported earnings yesterday after the market closed. The company manages to beat earnings and revenue estimates by 40.28% and 16.96%, respectively, delivering record results despite a challenging year for homebuilders. (Full Story) Referring to the chart, TOL has been oscillating through a not so distinctive price channel from the beginning of March to now, however, events like quarterly earnings have driven substantial volume to the stock. That said, as traders test the channel’s upper level, one should expect a breakout in the near term, especially as the Stochastic RSI has fallen into overbought territory.
Zooming out...
Times Up For TikTok Over the past week, the governors of Maryland, South Carolina and South Dakota have banned TikTok’s presence from state owned assets including devices and networks. The language of each bill varies, but the main message is clear:TikTok is no longer to be trusted anywhere near state government technology. Following the announcements of the aforementioned states, the Wisconsin GOP has also called on it’s governor to mandate similar legislation. This comes as FBI director Chris Wray discussed the multitude of national security concerns the app contains while speaking at a university on Friday morning, specifically mentioning TikTok’s ability to influence users through it’s algorithm and espionage capacities. Although an outright ban hasn’t been floated since the waning days of the Trump administration, the sudden multistate push for the app’s removal has created the perfect climate to reintroduce such measures.
The Significance of the Twitter Files The Inflation Reduction Act (IRA) is one of the largest pieces of US legislation ever passed, both by dollar amount, and by magnitude consequence. The misnomered bill provides a vast array of subsidies for various US cleantech and sustainability focused firms with the promise of fueling the American green revolution through these funds. While potentially great for domestic producers, international trading partners have not reacted kindly to the subsidies- as they claim that it erodes competitiveness in the international free market. EU Commission President Ursula von der Leyen has come out in support of issuing new funding on a union wide level in order to make up for lost competitiveness. While the idea has become popular in Italy, German fiscal leadership has come out against the plan, and any additional debts taken on as a result of it.
Making headlines...
Mosaic Curtails Potash Output at Canada Mine on Demand Slump
Mosaic Co. has temporarily curtailed potash production at its mine in Saskatchewan after weaker demand sent fertilizer prices sliding across North America.(Full Story)
Canada Trade Surplus Widens on Rising Consumer Goods Exports
Canada’s merchandise trade surplus widened by more than expected in October, led by exports of consumer goods, canola and wheat.(Full Story)
Oil prices slump to pre-Ukraine crisis levels on economic jitters
U.S. oil prices fell in frenzied trading on Tuesday to their lowest settlement levels this year, with Brent finishing below $80 per barrel for the second time in 2022, as investors fled the volatile market in an uncertain economy. (Full Story)
Credit Suisse Offers Higher Rates to Rebuild Depleted Assets
Credit Suisse Group AG bankers are trying to entice rich clients with higher-yield notes and bonus deposit rates in a bid to quickly recoup as much as possible of the almost $90 billion recently pulled from the bank.(Full Story)
Chart of the Day: The Ballmer Peak
“If it is not right do not do it; if it is not true do not say it.”
- Marcus Aurelius
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