HI Market View Commentary 11-06-2023
We are coming to the end of the year so….
Tax Harvesting = Take losses to offset gains, knowing you have to wait 31 days to get back in for it to count as a loss
Fund managers playing catch up ( Super Bullish/Buying) to have the portfolios look better
FM Catch = Some buy into positions and funds to show like they’ve been in it all year
Goals: You are more likely to accomplish a goal (42%) IF you write it down.
When you accomplish the smaller goal in life it give you an mental/physical boost
5 Facts About Goal Setting
- Specific, realistic goals work best. …
- It takes time for a change to become an established habit. …
- Repeating a goal makes it stick. …
- Pleasing other people doesn’t work. …
- Roadblocks don’t mean failure.
Can’t I also become a registered investment advisor:
If you are educated, Pass the series 65, 7 & 6 license, If you are willing to get registered, bonded and insured, and IF you are willing to make it a job
S&P +0.18 AFTER the best week year to date
Yes we have been running numerous positions with out protect after good earnings report.
The Big Picture
Last Updated: 03-Nov-23 15:37 ET | Archive
Stuck in no man’s land
The stock market is in no man’s land, otherwise known as being stuck in the middle. We don’t mean that it is trading just about in the middle of the 4,200-4,600 range, although it is convenient from this perspective that the S&P 500 happens to be there.
No, what we mean is that the stock market is pricing in a solution that might not be the solution it thinks it is.
If there is one thing this stock market has come to love, it is low interest rates. The main reason it has been acting poorly for the better part of the last three months is that interest rates have been rising — quickly.
They stopped rising this past week, however, and they came down — quickly. As of this writing, the yield on the 10-year note is down 32 basis points for the week to 4.50%. Recall that the 10-yr note yield peeked its head above 5.00% only a few weeks ago.
What happened to catalyze the reversal? Here are some prevailing explanations:
- Hedge fund manager Bill Ackman said on October 23 that he covered his short in bonds because “There is too much risk in the world to remain short bonds at current long-term rates.”
- The 10-yr note yield ran into resistance at 5.00%, prompting some profit-taking interest.
- The Bank of Japan’s tweak to its yield curve control policy was not as hawkish as feared, tempering concerns about the possibility of a destabilizing unwinding of carry trades.
- The Treasury reduced its Q4 borrowing estimate by $76 billion to $776 billion.
- The Treasury said its Q4 refunding would involve larger issuance and auction sizes for 2-, 3-, 5-, and 7-yr maturities than 10-, 20-, and 30-yr maturities.
- The October ISM Manufacturing Index showed activity contracting at a faster pace in October, sliding to 46.7% from 49.0% in September. The dividing line between expansion and contraction is 50.0%.
- Fed Chair Powell did not sound as hawkish as feared at his FOMC press conference, noting that the Fed has come very far with its rate-hike cycle and that policy decisions have gotten more two-sided.
- Q3 unit labor costs declined 0.8% on the back of the strongest productivity increase (4.7%) since the third quarter of 2020.
- The October employment report checked all the right rate-relief boxes, showing a slowdown in hiring, an uptick in the unemployment rate, and a slowdown in wage growth.
- Short sellers covered their positions.
Not to sound trite, but it was an outstanding week for the Treasury market, as well as the stock market. In fact, it was the best week of the year!
The timing is perfect for stocks, too. Since 1950, November has been the best month for the S&P 500 with an average return of 1.7%, according to the Stock Trader’s Almanac. It also starts what has been identified as the best six months of returns (November-April) for the stock market.
So, there was a powerful combination of falling interest rates and seasonality at work this past week. The former is factual. The latter is speculative in the sense that money got put to work partly on an historical record that spurred a fear of missing out on a potential year-end rally — a fear that increased because of the drop in interest rates.
We can only wonder now, but we wonder if that would have been the case if rates had not come down like they did. We think not, but all the wondering at this point is irrelevant. Rates fell and stocks rallied. Period.
The October employment report provided an exclamation point to the Treasury rally this week. It was the perfect report at this point in time, providing some rate-hike relief with slower payrolls growth, an uptick in the unemployment rate, and lower wage growth.
It was a “Goldilocks” report: not too hot and not too cold. It was just right to connote some slowing in the labor market and a moderation in wage inflation, which is exactly what the Fed wants to see. Moreover, it had the markings of an economy landing softly from the rate hikes, which is exactly what everyone wants to see.
In brief, it excited the stock market because it brought additional rate relief to the Treasury market and it didn’t cast any strong aspersions on the earnings outlook.
What It All Means
If there is to be a stock market rally with some legs into year end, that dual relationship will need to persist. That doesn’t mean rates have to keep moving lower at the rate they have been moving. It would be enough if they simply didn’t return to an upward-trending formation, grounded in the thought that the Fed is done raising rates and hasn’t made a policy mistake.
It is the last qualifier there that will take more time to understand. How will we know if the Fed made a mistake by tightening too much? The data will tell us all.
If the data follow a smooth glide path like the “less good” October employment report, then the stock market can live with that.
Conversely, if the data take a more sinister turn in unison, evolving from “less good” economic news into outright bad news, then it will be a more challenging story for stocks. The bad data will inevitably lead to the conclusion that 2024 earnings estimates, which call for 12% year-over-year growth, are too good and at risk of a material downward revision.
We are not at that point. The labor market data, including the leading indicator of initial jobless claims, still looks relatively good.
There are some worrisome signs, though, like the ISM Manufacturing Index, mortgage applications at a 28-year low, crude oil futures sliding after the outbreak of the Israel-Hamas War, a widening in high-yield spreads, global shipping giant Maersk cutting more than 10,000 jobs as it deals with subdued demand, and Target CEO Brian Cornell telling CNBC that shoppers are buying less, including in food and beverage categories.
Still, the totality of economic evidence remains on the soft-landing side, and that’s where it needs to stay. If it goes to the other side — the hard-landing side — earnings estimates are going along with it. They won’t be alone as a concerning factor for the stock market either.
If the economy takes a turn for the worse, tax receipts will, too, which means the Treasury will likely find itself needing to issue more debt down the road than it currently thinks. That thought will be a thorn in the side of the Treasury market, which may not provide as much rate relief as one might think in the wake of bad economic news.
So, the solution for the stock market correction this week, which proved to be a drop in market rates for a variety of reasons, won’t be a solution initially if the economy shows signs of sinking — quickly. Sure, it could bring lower rates, but it won’t be for the best of reasons.
It is all well and good right now to cheer less good economic news, but a steady stream of bad economic news will spoil any rally effort if it turns into a flood of downward earnings revisions. That may not happen in the end, but it is a risk to take into account that would leave the stock market in no man’s land waiting on a perceived rate-cut solution.
BABA – 11/16 BMO
BIDU – 11/21 BMO
COST – 12/14 est
DIS – 11/08 BMO
UAA – 11/08 BMO
MU- 12/21 est
Where will our markets end this week?
DJIA – Bullish
COMP – Bullish
Where Will the SPX end Nov. 2023?
Mon: DISH, GT, JELD, O, TRIP
Tues: DHI, UBER, AKAM, DVN, GPRO
Wed: DDD, BYND, LYFT, MGM, UAA, HUBS, DIS
Thur: TPR, WYNN
Tue Trade Balance, Consumer Credit
Wed: MBA, Wholesale Inventories,
Thur: Initial Claims, Continuing Claims,
Fri: Treasury Budget. Michigan Sentiment
How am I looking to trade?
www.myhurleyinvestment.com = Blogsite
firstname.lastname@example.org = Email
‘It’s going to be bloody’: Why Israel’s long war ahead will be nothing like what it’s faced before
PUBLISHED FRI, NOV 3 20231:05 AM EDTUPDATED FRI, NOV 3 202310:10 AM EDT
- Israeli Prime Minister Benjamin Netanyahu warned his country that a “long and difficult war” lay ahead.
- The IDF is supplementing heavy aerial bombardment of the besieged territory with what’s been described as a ground incursion, the details of which have been kept closely guarded.
- Prolonged urban combat will bring a slew of deadly challenges for the IDF – and likely some key advantages for Hamas, military analysts say.
Armoured vehicles of the Israel Defense Forces (IDF) are seen during their ground operations at a location given as Gaza, as the conflict between Israel and the Palestinian Islamist group Hamas continues, in this handout image released on November 1, 2023.
Israel Defense Forces | Reuters
Israeli Prime Minister Benjamin Netanyahu warned his country that a “long and difficult war” lay ahead.
The Israeli Defense Forces, after launching the largest military mobilization of troops in its history, has now entered into the “second phase” of its war against Hamas in the Gaza Strip. The IDF is supplementing heavy aerial bombardment of the besieged territory with what’s been described as a ground incursion, the details of which have been kept closely guarded.
The airstrikes began in response to the Oct. 7 attack by Palestinian militant organization Hamas – designated a terrorist group by the U.S. and EU – on southern Israel that killed more than 1,300 people and saw more than 240 taken hostage. And the IDF’s long-held strategy of retaliation is in full force, with more than 8,500 people killed in Gaza in just over three weeks, according to Hamas-run health ministry authorities there.
In the first six days of the war alone, Israel’s military said it dropped 6,000 bombs on Gaza – a blockaded enclave roughly the size of the city of Philadelphia. Now, ground troops are moving into the territory.
“Our soldiers have been operating in Gaza City for the past few days, surrounding it from several directions, deepening the operation,” the IDF’s Chief of Staff Lt. Gen. Herzi Halevi said Thursday. “Our forces are in very significant areas of Gaza City.”
A ground offensive is necessary to achieve Israel’s goal of eliminating Hamas, which controls the Gaza Strip, the IDF says. A prolonged invasion, however — should it become that — will be bloody and costly not only for those living in Gaza but for the Israeli military as well, military veterans and analysts say.
‘We know they’re waiting for us’
Urban counter-insurgency, as the U.S. military learned in Iraq, brings deadly challenges to troops that do not apply in an aerial campaign.
“In urban combat, you take higher casualties. That’s just a historical fact,” Jim Webb, a former U.S. Marine infantryman who served in Iraq and Afghanistan, told CNBC.
“Iraq showed just how much of an advantage the defender, particularly an asymmetrical one, has in urban combat. There, lightly armed insurgents were able to use the urban landscape to first slow and then tie down the greatest maneuver force in world history for years.”
In the case of Gaza, that defender is Hamas — and it will have almost every advantage in ground fighting, Webb said.
“Cities naturally canalize the attacker into predictable avenues of approach. It also means these fights happen at close range, which makes the use of supporting arms, such as tanks, artillery, or air power, extremely difficult, even if there are no civilians in the area,” Webb said.
“Gaza is full of civilians, and Hamas will be able to blend in,” he added. “I do not envy the task the IDF may be asked to undertake.”
Israeli soldiers will be dealing with unfamiliar streets and alleyways, mountains of demolished buildings, and Hamas’ extensive tunnel network, which the IDF euphemistically calls the “Gaza metro.” Hundreds of feet underground, the tunnels house weapons stocks, electrical generators, command and control centers undetectable from above — and likely many of the hostages that Hamas kidnapped from Israel on Oct. 7.
“We know they’re waiting for us,” one Israeli soldier, who declined to be named due to his role in Israel’s security service, told CNBC. “And as bad as Gaza is above ground, underground is much worse.”
‘It’s going to be bloody’
No one knows how long the militants will last, says Hussein Ibish, a senior resident scholar at the Arab Gulf States Institute in Washington. But he suspects that drawing Israel into a prolonged ground invasion is actually Hamas’ goal.
“I think their plan is to inflict as much cost on Israel as possible during its ground incursion and ensure that pockets of the organization survive so that, assuming that Israel does engage in a long-term ground presence in Gaza urban centers, it can launch an insurgency,” Ibish said.
That insurgency would likely begin slowly because the organization is so decimated, he said, but a high risk remains that it could gain steam over time. “Hamas hopes to be able to eventually start picking off Israeli soldiers individually and in small groups,” he said, “killing and capturing them, and bleeding Israel horrendously.”
The IDF did not immediately respond to a CNBC request for comment.
Block shares surge after earnings beat and increased full-year guidance
PUBLISHED THU, NOV 2 20234:37 PM EDTUPDATED FRI, NOV 3 202310:17 AM EDT
- Block reported a top- and bottom-line beat powered by strong revenue growth in Cash App and Square revenue.
- The company saw $5.62 billion in revenue for the third quarter.
Shares of fintech firm Block surged as much as 19% in after-hours trading Thursday, after the company reported third-quarter earnings that beat analyst estimates on the top and bottom line and showed strong growth in both Cash App and Square revenue.
Here’s how the company did, compared to an analyst consensus from LSEG, formerly Refinitiv:
- Earnings per share: 55 cents, adjusted, vs. 47 cents expected
- Revenue: $5.62 billion vs. $5.44 billion expected
Block also hiked its guidance and announced a $1 billion stock buyback.
The company had previously guided to $1.5 billion in full-year adjusted EBITDA but now expects adjusted EBITDA to come in between $1.66 billion and $1.68 billion.
Block is guiding to adjusted full-year operating income of $205 million to $225 million, a sharp increase from prior guidance of $25 million. Analysts surveyed by LSEG had expected full-year revenue guidance to come in at $21.54 billion. The company didn’t provide full-year revenue guidance but did guide to $875 million in adjusted operating income for 2024.
Additionally, Block now expects 2023 gross profit ranging from $7.44 billion to $7.46 billion.
“In 2024 we expect a significant improvement in Adjusted Operating Income margin on a year-over-year basis in 2024 compared to 2023. Our outlook does not assume any additional macroeconomic deterioration, which could impact our results,” the company said in its shareholder letter.
Third-quarter net revenue grew 24% to $5.62 billion from $4.52 billion in the year-earlier period, with bitcoin revenue jumping to $2.42 billion from $1.76 billion. Gross profit climbed 21% to $1.9 billion from $1.57 billion.
Adjusted EBITDA came in at $477 million, compared to $327 million in the year-ago period. There was particularly strong growth in Block’s payment platform, Cash App, and its point-of-sale suite, Square. Cash App revenue soared $3.58 billion 34% year over year, while Square revenue grew 12% to $1.98 billion.
“We’ve been quiet lately because we’ve been focused,” Block co-founder Jack Dorsey said in a letter to shareholders. Block was the subject of a short seller report earlier this year that alleged its Cash App product facilitated fraud. “We want to thank all of you for your trust and continued belief in our work. We will work to balance that trust with accountability, some of which I hope this letter provides,” Dorsey’s letter concluded.
Dorsey said the company would focus on its go-to-market strategy, targeting local restaurants and services businesses to grow, and would refocus engineering talent using artificial intelligence technology.
On a conference call with analysts, Dorsey said he intends “to lead Square until we hit some milestones.”
“I want to see a significant return to growth, number one,” Dorsey said. “I want to see us be a lot more innovative and inventive and I want to see us connect our ecosystems better.”
Apple stock dips after weak outlook for December quarter revenue
PUBLISHED THU, NOV 2 202312:25 PM EDTUPDATED THU, NOV 2 20236:15 PM EDT
- Apple reported fiscal fourth-quarter earnings on Thursday that beat analyst expectations for sales and earnings per share, but revealed that overall sales fell for the fourth quarter in a row.
- Apple shares fell in extended trading after executives suggested the company may not return to growth in the important holiday quarter.
Apple reported fiscal fourth-quarter earnings on Thursday that beat analyst expectations for sales and earnings per share, but revealed that overall sales fell for the fourth quarter in a row. Every hardware business outside of the iPhone declined year over year, with big drops in the iPad and Mac segments.
Apple shares fell over 3% in extended trading after executives signaled the company may not return to growth in the holiday quarter.
Here’s how Apple did, versus LSEG (formerly Refinitiv) consensus expectations:
- EPS: $1.46 per share vs. $1.39 per share expected
- Revenue: $89.5 billion vs. $89.28 billion expected
- iPhone revenue: $43.81 billion vs. $43.81 billion expected
- Mac revenue: $7.61 billion vs. $8.63 billion expected
- iPad revenue: $6.44 billion vs. $6.07 billion expected
- Wearables revenue: $9.32 billion vs. $9.43 billion expected
- Services revenue: $22.31 billion vs $21.35 billion expected
- Gross margin: 45.2% vs. 44.5% expected
Apple didn’t give formal guidance, but finance chief Luca Maestri said the company expected December quarter revenue to “be similar to” last year’s revenue. However, Apple said that the December quarter this year will have one fewer week.
Analysts were looking for $122.98 billion in revenue for the December quarter, which would be a return to year-over-year growth of about 5% in Apple’s most important quarter.
Net income was $22.96 billion, or $1.46 per share, versus $20.72 billion, or $1.29 per share, during the year-earlier period. The tech giant reported $383.29 billion in sales for the full fiscal year, down about 3% from the prior year. Quarterly revenue declined less than 1% in the September quarter.
The company’s iPhone sales were in line with Wall Street expectations and increased more than 2% from last year. It was the only hardware line for Apple to show growth in the quarter, and the period only included about a week of iPhone 15 sales.
Apple CEO Tim Cook told CNBC that the iPhone 15 was doing better than the iPhone 14 did during the September quarter last year.
“If you look at iPhone 15 for that period of time and compare it to iPhone 14 for the same time in the year-ago quarter, iPhone 15 did better than iPhone 14,” Cook told CNBC’s Steve Kovach. He added that Apple’s more expensive Pro and Pro Max iPhones suffered supply constraints because of high demand.
Apple’s Mac and iPad businesses both declined during the quarter. Maestri had warned on a call with analysts after third-quarter results that iPad and Mac sales would fall by double-digit percentages.
Mac sales came in below Wall Street expectations, falling nearly 34% year over year. Apple held an unusual nighttime launch event for its new MacBook Pro laptops and iMac desktop last month. While sales of the new devices aren’t included in the quarter, Apple was signaling that new products could boost sales once again thanks to its new M3 chips.
Cook told CNBC that the Mac comparison is to “an all-time record” fourth quarter, which followed a huge supply disruption and pushed what would have been third-quarter sales into the last quarter of 2022. “So, the comparison point here is very difficult,” he said.
“I think the Mac is going to have a significantly better quarter in the December quarter. We’ve got the M3, we’ve got the new products, and we don’t have the compare phenomenon on a year-over-year basis,” Cook said, referring to an unusually strong market for Macs in 2022.
Cook added the overall market for personal computers is “challenging.”
Revenue from iPads was also down, falling 10% from the same period last year. Apple did not announce new products ahead of the holiday season this year.
Apple’s services business was a bright spot. Apple recorded $22.31 billion in services revenue, outpacing analyst expectations and increasing more 16% from a year earlier.
Apple’s services division includes online subscriptions like iCloud storage and Apple Music, as well as warranties from AppleCare. A big chunk of the business comes from its deal with Google for the default search engine on Apple’s browser, Safari, which has been highlighted in recent weeks as part of the Department of Justice antitrust case against Google. That payment to Apple is worth an estimated $19 billion this year.
Cook said services components including App Store sales, advertising (including the Google deal), iCloud, payment services, and Apple Music did well in the quarter and hit an internal Apple record, signaling continued growth.
“Every main service hit a record,” Cook said.
Maestri also noted in a statement that Apple’s installed base of devices, or the number of iPhones, Macs, and iPads currently in active use, reached an all-time high during the quarter, although the company did not give an exact number. Analysts say that growth in Apple’s installed base suggests future growth in its services division.
Cook said that Apple had over 1 billion paid subscriptions, which include both Apple’s own services as well as apps on the App Store that bill on a recurring basis.
Apple’s wearables business unit includes headphones like the AirPods as well as Apple Watch sales. It, too, shrank year over year, dropping over 3%.
Apple’s business in Greater China, its third largest market, is under the microscope as investors worry about increased competition from Huawei. Greater China sales were basically flat year over year. Apple reported $15.08 billion from the region, which includes Hong Kong and Taiwan.
The company continues to have a huge amount of cash and cash-like securities on hand, even as it strives to offset its cash pile with debt. Apple said it had $162.1 billion in cash on hand on Thursday.
Apple said it would pay a dividend of 24 cents per share this month and said the company had spent $25 billion during the quarter on share repurchases and dividends.
The No. 1 thing parents are ‘completely forgetting’ to teach their kids today, says a parenting expert and mom
Published Sun, Nov 5 20239:00 AM EST
As the founder and CEO of Success Academy Charter Schools, I’ve spent decades working with parents and educating students from underserved communities. I am also a mom to three kids.
Too often, I see parents putting so much energy into teaching their kids to act responsibly, clean their room, or do their homework. All of that is important, but there’s one thing that many of us are completely forgetting about: how to enjoy life.
Sure, that seems like one thing kids do naturally. But many happy children grow up to be unhappy adults. There’s a difference between enjoying life as a young child and being prepared to enjoy life as an adult.
Children can easily get the wrong message about happiness
In my experience, people are happiest when their life includes some type of meaningful, productive activity. Unfortunately, we are constantly being bombarded with the message that happiness comes from consumption.
When advertisers tell us to “treat” ourselves to their products, they are trying to make us believe that buying things is the ultimate reward, that we will be happy only if we buy a fancier car or a bigger house.
How do you fight back? Don’t make it a habit to take your children to stores where they can go running around saying “I want this” and “I want that.”
Even if your child isn’t directly exposed to a lot of advertising, they may be exposed to the culture that this advertising has created. Their friend shows them some incredible new toy they got that the friend will play with for the next week until they get another toy, for example, or they attend a birthday party at which a friend is showered with gifts.
The happiest kids value experiences over material things
Don’t encourage your child to believe that having things brings happiness by giving them too many gifts.
The concept that you express your love for somebody by giving them a gift is a nice idea that once worked pretty well, but many kids get so much stuff nowadays that it quickly becomes overkill.
As for your own birthday, use it as an opportunity to reinforce your values. My husband Eric discourages gifts for his birthday and instead asks that our kids share with him a memory of something they enjoyed doing as a family.
You can also help your children figure out gifts for your spouse that will be meaningful, like a handmade card, a home-baked cake or reciting a poem.
Children need to understand that while money can give them the opportunity to be happy, they can’t consume their way to happiness.
Play games with your kids to demonstrate how much fun can be had with a simple deck of cards. Make a treehouse or bake a cake with them to show the pleasure of a productive activity. Go to a museum to show them the pleasure of an intellectual activity.
If you can teach your children about the value of these little things, their chances of happiness will increase immeasurably when they’re older.
Eva Moskowitz is the CEO of Success Academy Charter Schools and author of “A+ Parenting: The Surprisingly Fun Guide to Raising Surprisingly Smart Kids.” She has testified before Congress about education and economics, and has worked with political leaders of both parties — from presidents and governors to mayors and state legislators — to advocate for children’s educational futures. Follow her on Instagram and LinkedIn.