Welcome to the weekly Market News Roundup 🗞️ — hoping everyone had a great Thanksgiving week. Here’s the agenda for today’s quick stock market news review:

1. 🖼️ big picture: this week’s overall market sentiment

2. 📊 interesting set-ups: a few stocks worth watching

3. 🔭 Market Mood™ outlook for the week(s) ahead

TRY OUR BETA NEWS SENTIMENT TOOLS FOR FREE — JUST CLICK HERE

I. Overall News Sentiment 🖼️

• Overall news: +52% sentiment, bullish 🟢

• S&P 500 (large cap) news: +58% sentiment, bullish 🟢Russell 2000 (small cap) news: +25% sentiment, highly bullish 🟢

🏄 Markets finish choppy after midweek rally, decisive moment ahead

• After opening the week with a decline on Monday (as anticipated last week), the major US stock indexes were able to offset with a rally on Wednesday, ending the week with modest gains. The NASDAQ and Russell 2000 added around 2%, the S&P 500 rose 1%, and the Dow finished up slightly.1 

• With the markets’ rally through the month of November, some are claiming that the bear rally looks all too familiar. Comparing the S&P 500’s performance since its high at the beginning of 2022, its path to date has virtually retraced the S&P’s 2008 performance leading up to the Financial Crisis. Either way, we expect a decisive move up or down over the coming weeks to break or mirror the trend.

🕊️ Dovish comments from Fed Chair Jerome Powell

• A primary driver of Wednesday’s market turnaround were comments from US Federal Reserve Chair Jerome Powell confirming that smaller interest-rate increases might be expected as soon as the Fed’s upcoming December 13-14th meeting. Keep in mind, officials approved rate hikes of three-quarters of a percentage point at each of their last four meetings

• Citing Powell’s dovish commentary, market expectations are currently pricing in a peak Fed funds rate stabilizing around 5%, expected to be reached by about May 2023 according to Bloomberg & Edward Jones:

👷 Job market stays strong with more monthly gains

• The labor market remains a source of strength in the weakened US economy, as 263,000 new jobs were added in November. It marked the fourth consecutive month with jobs gains in the 200,000 to 300,000 range and the 23rd month in a row with at least 200,000 — even despite the Fed’s efforts to curb inflation & the recent wave of big tech layoffs. The unemployment rate was unchanged at 3.7 percent, while wages were 5.1 percent higher than a year earlier, a bigger rise than expected.

📰 Other noteworthy headlines:

• 30-year US mortgage rate sees largest 3-week decline (-59bps) since ‘08

• Treasury yield curve spread is now the most inverted its been since 1981

• PCE Price INdex moved down to 6% in November, lowest levels since Dec ‘21

• More company-specific headlines from our friends at BullishRippers

II. Stocks to Watch 🔥🧊

Now, a quick look at two notable stocks to keep an eye on based on their sentiment detected in stock market news coverage this week:

Palantir (PLTR) 🗄️ bearish sentiment 🔴

this week: 🔻-93% news sentiment | 🔺+6% stock price | view news profile 📰

The speculative big data software company Palantir finished this week highly bearish in stock market news coverage (-93%) despite a rise in stock price (+6%). Palantir's negative sentiment has risen recently after one of its major investees, Fast Radius, filed for Chapter 11 bankruptcy in November; sparking concern about the soundness of Palantir's 20 other portfolio companies, many of which the company originally financed as SPAC's during last year's bubble in exchange for long-term software contracts.

Palantir prides itself as being a next-generation data analysis firm, able to see & do things with big data like no one else. Its software is used in a variety of applications — from mission-critical national defense contracts with the US government & NATO, to the curation of its own investment portfolio. The problem here with Fast Radius’s recent bankruptcy, is that it sheds light on the possibility of Palantir’s special big data sauce being less razor sharp than originally thought; eroding some trust in its core competitive advantage.

Further, Palantir’s hand-picked investment portfolio companies are now estimated to be down by an average of -82% from Palantir’s original purchase price; not only have these investments hurt the company’s own financials to date, but if others go under, their subscription revenue to Palantir would go away as well.

top Palantir article(s) this week:

Uber (UBER) 🚗 bullish sentiment 🟢

this week: 🔺+77% news sentiment | 🔺+4% stock price | view news profile 📰

On the cooler side of the pillow, ride-hailing gig-economy giant Uber ended the week with highly bullish market news sentiment (+77%) and a bump in stock price (+4%) after CEO Dara Khosrowshahi broke trend to announce that the company isn’t considering cutting jobs. This comment stood out, considering Uber’s peers in big tech have cut staff by thousands over the past few months (see chart below) — Lyft recently announced plans to reduce headcount by 13%, while DoorDash said it plans to cut 1,250 jobs this month to rein in expenses.

Uber has been able to avoid widespread layoffs to date and intends to keep it that way, though Khosrowshahi has said the company is taking a more conservative stance on hiring & other investments. While some argue that the strategy could hurt the company’s bottom line over the near term, others commend Uber for doing so — especially considering the less-tangible costs of losing/retraining organizational knowledge, severance, and eventually rehiring when the economy is more favorable.

Plus, with Uber’s Q3 earnings report revealing a 72% jump in quarterly revenue to $8.4B, perhaps the company is less worried about inflation hampering folks from ride-hailing or ordering takeout than we thought. More here:

top Uber article(s) this week:

III. Market Mood™ Outlook 🔭

Finally, a quick think about what’s on the horizon:

🏭 Producer Price Index (PPI) — to be released Friday, 12/9

• The ultimate goal of the Federal Reserve in our current day in age is to curb inflation in order to preserve the value of the US dollar over the long-term.

• While the Consumer Price Index (CPI) is many economists’ favorite indicator on the status of inflation, its less-touted sibling — the Producer Price Index (PPI) — may be even more worthy of your attention. Whereas the CPI measures consumer demand of a wide range of goods (from energy to food to housing), the PPI looks at these goods from the supply perspective.

• The important note here is that, according to capital cycle theory2, healthy corporate profits (& thus a healthy US economy) are driven primarily by a favorable supply side; not necessarily by high rates of demand. SO... even whilst demand (ie. the CPI) is currently indicating a decline in inflation, perhaps a more direct indication will be this week's PPI, due out on Friday.

🗓️ Fed’s FOMC Meeting — next week, 12/16-17

• In order for the US government to curb inflation, its primary lever is increasing interest rates to deliberately slow the US economy. As interest rates go up, lending/borrowing and general economic activity tends to slow, effectively reducing the rate of change (ie. inflation) of the value of the dollar.

• Therefore, the biggest catalyst for stock market performance throughout the rest of this year (and into 2023) is undoubtedly the Federal Reserve’s Federal Open Markt Committee (FOMC) meeting, which will determine exactly how much interest rates will increase heading into the new year. Over the past four meetings this year, the FOMC has increased interest rates by +0.75% each time — an unprecedented pace of increase; basically pumping the breaks all the way to the floor. The question; will they continue this pace?

• Since the FOMC’s most-recent rate hike in early November, some important events have happened with the US economic landscape that may have done enough to change the committee’s temperament: 1) the most-recent CPI report has shown a considerable decline in demand-side inflation (from 8.1% → 7.7% YoY), and 2) US employment continues to exceed expectations.

• IF this week’s supply-side inflation report (PPI) validates a decline in price change, then I’d expect Jerome Powell & the Fed to hold true and reduce the pace of hikes to between 0.25% and 0.50% — if PPI comes out hot, then perhaps we can expect one final hike of 0.75%.

🔭 Finally, a compilation of 2023 economic outlooks:

• Of course, the above is just our common-man’s opinion on what to expect in terms of effects on the market from the economic powers that be. Another useful reference is this thread from @rhemrajani9 on Twitter compiling the outlooks of market giants — the likes of Bill Ackman, Goldman Sachs, Bank of America, and Nasdaq. Worthy of a read, and perhaps I’ll provide some more input & analysis on it later this week:

Aaaand, that’s it for this week. As always, the future remains to be seen — let us know if there’s anything we missed by commenting below, replying to this email, or emailing us directly at [email protected]. And if you liked this post, please support us by clicking the like button! Best of luck to all of you in the markets this week, stay safe out there, and thank you for reading. 😎

Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Credit to the respective teams cited below: