It's sure looking a lot like last year's news cycle
It's sure looking a lot like last year's news cycle
What the Market? - Nov 29, 2021
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What the Market?
We hope y’all had a great Thanksgiving break discussing similar topics as last year such as the new COVID variant, vaccines, love life (or lack thereof?), politics and football, amongst other festive taboos. Mr. Market had a grueling couple of days heading into the break driven by the new virus variant and an exceedingly solid jobless claims report.
What’s driving the market?
This isn’t even my final form! Equity markets took a nosedive upon news of the Omicron COVID variant appearing in South Africa. The NIH stated that there is little information about the Omicron variant yet and insisted that people do not panic. Alas, the media couldn’t help but jump on the click wagon, so once more the media got on its horse and rode alongside the four horsemen to announce the apocalypse and impending dystopia. Will this ever stop? For now, the market drop appears to be more a reaction to a seemingly abrupt end to the optimism hoping the pandemic was over rather than the actual dangers of the new variant. Get vaxxed, stay informed (ideally from official sources rather than from the media).
Who needs oil if we can’t travel anyways? As travel restrictions are reinstated to prevent the spread of the Omicron variant, oil prices plunged more than 10%. Logically, as we have learned this year, making grandiose restrictions to people’s lives without information is always easier than planning ahead of the obvious new variant that would eventually appear. This week’s OPEC+ meeting should provide some insight into what to expect in the short-term and likely cause additional volatility in the sector. President Biden already caused quite the stir after announcing the US will release 50 million barrels of oil from the US’ reserves in an effort to lower gas prices. Exciting times!
Don’t call it a comeback, I’ve been here for years….and will be for four more! - LL Cool J - Jerome Powell. So let’s talk about interest rates! With Powell confirmed to lead the Fed for another 4 years, analysts are wondering how the Fed will approach interest rates given that the asset purchasing program is already winding down. about the use of the Fed’s most famous policy lever, interest rates. There has been no clear commentary on interest rates since the start of the pandemic, and if markets hate anything more than bad news, it's uncertainty. As inflation continues to defy the meaning of transitory, and labor markets continue to beat analysts expectations, it’s fair to assume the Fed will need to address interest rates soon. Expect this to be a main news driver going forward
What’s an investor to do?
Investor mindset
As you come out of the greatest food coma of the year and start to digest the couple metric tons of turkey you devoured over the long weekend, try not to stress too much about the market correction. A lack of information is leading the charge right now and where we’re headed is unclear. Stay informed, avoid panicking, and keep focused on the long-term.
Portfolio management
Don’t panic sell. Focus on the overarching macro trend you are betting on rather than your price point today. Continue to monitor official news and the omicron variant. We’re not in the same place we were a year ago and hopefully you have adjusted your portfolio accordingly over the past year. Bonus: This market drop has created a lot of buying opportunities, particularly in the travel and hospitality sectors.
Keep an eye on the economy
Jobs Report: The November jobs report could provide the Fed with a solid reason to consider speeding up the tapering of its asset purchasing program and focus on planning its interest rate strategy ahead of its last meeting of the year in mid December. Analysts expect the economy to have added 550k jobs, driving unemployment to about 4.5%.
Upcoming Earnings
Nothing noteworthy
Economic Calendar:
Monday: Eurozone consumer confidence, business climate, industrial sentiment, Fed speeches
Tuesday: Chinese PMI, Eurozone CPI, US housing data, consumer confidence and Fed speeches
Wednesday: Eurozone PMI, Bank of England Governor speech, US employment change, manufacturing PMI and data, Fed beige book
Thursday: Eurozone unemployment data, US jobless claims
Friday: Eurozone retail sales, US jobs report, factory orders and services employment index
What we’re vibing:
A Very Windy Set by Yotto and Anden. At the risk of getting tedious, we are vibing once again a new set by Finish DJ Yotto. His label, Odd One Out, is one of the biggest surprises of the year. This set, with Anden, is absolute fire. The location is pretty cool as well. This one is a little bit more on the dark and mellow side of music.
Rush on Netflix. This biographical sports film behind the exhilarating rivalry between two of the greatest F1 drivers in history, Niki Lauda and James Hunt. A great balance between drama and race sequences that will definitely keep your eyes fixed to the screen.
Resources
WTM Watchlist
A content guide to investing (books, books, books!)
Disclaimer
This writing is for informational purposes only and the author/s undertake/s no obligation to update this article even if the opinions expressed change. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. It also does not offer to provide advisory or other services in any jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. The author/s expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.