Macrosynthesis  

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Bad News is Good News

Investors were hopeful the Fed is done raising rates, thanks to recent signs of a slowing US economy. Higher-than-expected initial unemployment claims, a two-year high in continuing claims, and a 3.2% year over year inflation rate fueled a big rally in the market. A decrease in oil prices for four weeks also gave hope the high interest rate environment may soon end.
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U.S. Housing Permits Rise

In October 2023, the US experienced a 1.9% month-over-month increase in housing starts with the West and Midwest U.S. driving most demand.

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Chinas Housing Market Slumps

Last month, home prices in China fell the most in eight years, despite government efforts to boost demand.  Economic indicators, including youth unemployment and slowed growth in household medium-to-long term loans, reflect the sector's challenges.

Market Moves

Yields on the 10 and 20-year treasuries fell, fueling a market rally that ended the week with the Dow increasing by 2%, and the S&P 500 and Nasdaq growing by 2.6% and 3%, respectively.

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The most interest rate sensitive sectors and industries performed the best last week, with the real estate ETF rising almost 5% (XLRE), solar stocks rising 10% (TAN), and regional banks rising 9% (KRE). Semiconductor stocks rose over 3%, even after headlines swirled that hedge fund manager, Michael Burry, took out a $45M short on the sector.

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Top Bullish Events Last Week (1D move)

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Noteworthy Events    

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X-rated

Elon Musk's confusing anti-semitic comments have once again landed the x-Twitter platform in hot water as advertisers pull out funding. Apple and IBM both paused their campaigns, which might benefit Meta and Pinterest as budgets shift.

Sonos

Sonos' stock surged by +17% Thursday following CEO Patrick Spence's announcement that the company is embarking on a multiyear product cycle, including entry into a new multi-billion dollar category in the second half of fiscal 2024.

Alibaba

The U.S.-listed shares of Alibaba fell by -9.1% Thursday after the company canceled plans to spin off its cloud business, attributing the decision to the recent increase in U.S. export restrictions on advanced computing chips.

Cisco

Shares of Cisco Systems fell -9.8% Thursday following the release of its earnings guidance. This decline was attributed to a slowdown in new product orders, leading Cisco to also reduce its full-year revenue forecast.

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Target

Target's shares jumped nearly +18% Wednesday following its fiscal third-quarter earnings report, which exceeded expectations. The retailer announced earnings of $2.10 per share on a revenue of $25.4 billion, surpassing the anticipated earnings of $1.48 per share and revenue of $25.24 billion.

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Boeing

Boeing's shares surged +4.01% Monday following two positive developments. Emirates placed a $52 billion order for 95 Boeing aircraft. And Bloomberg reported that China might resume purchasing Boeing's 737 Max planes, indicating an end to its current freeze on buying these aircraft.

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CASE STUDY: SPRC +44%

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Weed for Dementia?

SciSparc Ltd., a specialty clinical-stage pharmaceutical company, develops drugs based on cannabinoid molecules. The company announced positive results in a Phase II trial to treat agitation associated with Alzheimer's Disease.

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As with most small cap announcements for the treatment of AD, the stock rose +44% on the news quickly, sold off quickly, then rose +27%. Patient investors were rewarded on this trade.

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If successful in phase III and commercial development, the drug could generate tens of millions of dollars. The company is currently valued at $3.5M.

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The trial focused on their proprietary drug, SCI-110, and its effects on Alzheimer's patients. The results showed that SCI-110 was both safe and effective in reducing agitation in elderly patients with Alzheimer's.

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LevelFields users were alerted to the breakthrough within the Alzheimer's Breakthrough scenario on Wednesday morning.

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Upcoming Catalysts:

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Notable Earnings

Monday

Agilent (A)

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Tuesday

Abercrombie & Fitch (ANF)
Nvidia (NVDA)
Best Buy (BBY)
Dick's Sporting Goods (DKS)

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Wednesday

Deere (DE)

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Thursday

Royal Bank of Canada (RBC)

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The LevelFields Team