"Just Close the Door"

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Macrosynthesis  

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Last Week's Recap

Powell Speak

Fed Chair Powell's remarks last week indicated a hawkish stance, emphasizing that while U.S. inflation has declined, it remains above the 2% target, and the labor market is still tight. He acknowledged that the Federal Open Market Committee has yet to achieve a sufficiently restrictive monetary policy stance to bring inflation down to 2% as well as  the need for careful navigation in monetary policy, given the erratic economic and geopolitical climate.

Update on Mortgage Rates

The average interest rate for a 30-year fixed mortgage dropped to 7.5% on November 8th - 29 basis points lower than the 23-year peak reached at October's end. This decline reflects the broader reduction in long-term Treasury yields, as expectations for the duration of the Federal Reserve's peak interest rate have lessened. Though good news, without a substantial decrease in mortgage rates, the housing market is likely to remain sluggish, and companies that profit from house buying will as well (e.g. RDFN, OPEN).

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Consumer Sentiment Falls

In November 2023, the University of Michigan's consumer sentiment in the US dropped to 60.4, the lowest in six months, from 63.8 in October, falling short of the expected 63.7. This decline was driven by increased concerns over high interest rates and conflicts in Gaza and Ukraine.  Inflation expectations rose to 4.4% for the coming year, the highest since April. Additionally, gas price expectations hit their highest levels of the year.

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British Economy Stagnates

The British economy showed no growth in the third quarter of 2023, marking its weakest performance in a year. This outcome, however, was slightly better than the anticipated -0.1% contraction.  The central bank predicts only a slight 0.1% economic growth for the year's final quarter.

Market Moves

On Friday afternoon, Wall Street saw a significant rise, driven by a decrease in Treasury yields and a boost in major growth stocks. This surge occurred despite unfavorable data and firm statements from the Federal Reserve. The S&P 500 increased by 1.2%, reaching a seven-week high, the Nasdaq rose by 1.7%, and the Dow Jones added over 250 points.  Notable gains were seen in megacap stocks, with Microsoft climbing over 2% to an all-time high, and Apple, Alphabet, Amazon, and Nvidia experiencing rises between 1.5% and 2.6%.

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In contrast, Diageo's shares dropped around 14% following its profit and sales warning for the first half of its fiscal year. Plug Power's stock plummeted by 43.93% after their third-quarter results did not meet analysts' forecasts.

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Commodity Movers

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Coal

+4.24% (1W Chg)
-62.15% (YoY Chg)

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Natural Gas

-13.84% (1W Chg)
-51.64% (YoY Chg)

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HRC Steel

+4.25% (1W Chg)
+31.38% (1M Chg)

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Butter

+7.84% (1W Chg)
+14.7% (1M Chg)

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Top Bullish Events Last Week (1D move)

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Noteworthy Events    

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WeDon'tWork

WeWork filed for bankruptcy, marking an astounding decline from a $47B valuation.

Groupon

Groupon's stock experienced a significant 39.5% drop Friday following their announcement of third-quarter results, which revealed revenue and global gross billings below market expectations. Additionally, the company has announced an $80 million rights offering to shareholders, fully backed and guaranteed.

Diageo

Diageo, a U.K.-based beverage manufacturer, experienced a 13.7% drop Friday in its share value following its forecast of a difficult business environment. The company anticipates slower growth in the first half of the fiscal year, attributing this to weaker performance in Latin America and the Caribbean.

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Plug Power

Shares of Plug Power, a clean energy firm, dropped sharply by over 34%, hitting a new annual low following a third-quarter performance where both earnings and revenue fell short of analysts' expectations. This underperformance led to downgrades from RBC and JPMorgan, who pointed to reduced clarity and heightened risks for the company.

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TKO Group

TKO Group, the company that owns WWE, lost 7.9% of its value Friday after Vince McMahon, the company's executive chairman, said he would sell 8.4 million shares of its stock. TKO executives and the company itself are interested in buying the shares that McMahon is selling.

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Duolingo

Duolingo's stock rose sharply Thursday after the company raised its full-year revenue forecast. Duolingo now expects revenue to be between $525 million and $528 million in 2023, an increase from its previous guidance of $510 million to $516 million. The company also raised its outlook for bookings for the year.

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CASE STUDY: YOU Surges +8.95%

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CLEAR increased its quarterly dividend by 29% on November 8th to $0.09 per share and declared a special cash dividend of $0.55 per share, payable on November 22, 2023. The company also increased its share repurchase authorization by $100 million to $128 million. These actions demonstrate CLEAR's commitment to returning capital to shareholders.

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In response to the announcement of a stock buyback and a dividend increase, YOU surged nearly 14% on Wednesday before retreating-- finishing up +8.95 percent. YOU was up again over 5% on Friday.

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LevelFields users were alerted to the event premarket in both the 'Stock Buyback' and the 'Dividend Increase' scenarios. This return mirrors a trend of technology stocks with a negative P/E, having an average 1D return of over 6% in the stock buyback scenario.

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Patient traders who didn't crowd the opening bell were rewarded by being able to buy the stock while others were selling for quick profits at the open.

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Upcoming Catalysts:

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Notable Earnings

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Monday

Sun Life (SLF)
Tyson Food (TSN)

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Tuesday

Home Depot (HD)
Vipshop (VIPS)
Energizer (ENR)

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Wednesday

Cisco Systems (CSCO)
Advance Auto Parts (AAP)
JD.com (JD)
Target (TGT)
Palo Alto Networks (PANW)

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Thursday

Walmart (WMT)
Gap (GPS)
ZTO Express (ZTO)
Alibaba (BABA)

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Friday

Spectrum Brands (SPB)
BJ's

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The LevelFields Team