Welcome to the weekly Market News Roundup 🗞️:

Happy (late) Father’s Day, and a massive shoutout to our 17 new subscribers this week — thank you for being here! Here’s the 3-point agenda:

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 ahead

Part 1: Overall News Sentiment 🖼️

• Overall news: -17% sentiment, bearish 🔴

• S&P 500 (large cap) news: -24% sentiment, bearish 🟢

• Russell 2000 (small cap) news: +0% sentiment, neutral

After riding the edge of bullish sentiment over the past few weeks, the overall mood of market news coverage fell into bearish territory this week with a net sentiment score of -17% (on our scale from -100% to +100%) — signaling that roughly 1 in every 5 sentences written about the market this week were strongly negative. Zooming in, while the sentiment expressed directly about the small-cap Russell 2000 index came in at a net score of precisely 0% (neutral), sentiment expressed about the larger-cap S&P 500 was strongly negative at -24%. On the whole, this week’s net news sentiment was driven by the following topics and events:

📈 1. Stocks fall past official “Bear Market” territory:

The major US stock indexes fell between 5-6% for the second consecutive week, with the S&P 500 and NASDAQ posting their tenth negative weekly results of the past eleven weeks — for everyone keeping score, the S&P, NASDAQ, and Dow are all trading below where they were in January 2021.1 The S&P 500 is now officially in a bear market (down >20% from its all-time high in January 2022) — the NASDAQ has been in a bear market since March, while the Dow is sitting just shy of a bear at 18.7% below its January 2022 record high.

🧨 2. The Fed tightens policy, signaling recession afoot:

On Wednesday the Federal Reserve approved a 0.75% rate increase for the coming session, marking the Fed’s most aggressive single-session rate hike since 1994. This is about as strong a single as we could expect from the Fed, they are doing as much as they’re allowed to in their attempt to curb metastasizing inflation — hiking rates any further would essentially mean forcing the economy into a recession in order to control prices.

🏚️ 3. Average monthly mortgage payments in the US up 50%:

It’s basically the worst time in history to be a first-time home buyer — the Fed’s recent rate hikes were accompanied by a mortgage rate increase from 3% to 6%, effectively pricing out roughly 18-million households from qualifying for a $400,000 mortgage. Put more simply, the median monthly payment for new mortgages in America has risen 50% in less than six months (see this Tweet), with average American rents climbing 16% year-over-year.

Part 2: Stocks to Watch 🔥🧊

here’s a quick look at three notable stocks to keep an eye on based on their sentiment expressed in stock market news coverage: Chevron, Coinbase, and Pinterest:

1. Chevron ($CVX) 🛢️oil’s big retreat sends mixed signals:

this week: 🔺+33% article mentions | 🔻-13.5% stock price | sentiment = 🔴

After peaking at an all-time high of $120 per barrel two weeks ago, crude oil prices plunged nearly 7% throughout the past week (its biggest weekly decline of the last year) as oil traders appear to begin pricing in a potential recession. As such, oil giant Chevron’s news conversation levels have been peaking — mentions of Chevron on Wall Street increased 33% this week and finished with a net sentiment rating of -21% (bearish) as $CVX stock fell -13.5% to $148.38 per share; with the energy sector’s strong outperformance on the market over the past few months, this week’s big decline in energy stocks felt… significant.

Oil’s big price drop came after the Federal Reserve announced they’d be increasing interest rates by 75 basis points to curb inflation — the silver lining is that a higher interest rate means a stronger dollar, and with oil priced in dollars worldwide, a stronger dollar means lower oil prices; perhaps there’s some hope for consumers at the fuel pump yet. Outside of the price of oil, Chevron made headlines this week for pushing back on Joe Biden’s comments which blamed big oil for rising gas prices, saying his Administration could be doing more to help the likes of Chevron control costs. Lastly, in more optimistic news, Chevron announced plans to invest more than $2.5B into a low-carbon hydrogen fuel project; more here:

2. Coinbase ($COIN) 🪙 lays off nearly 20% of its staff:

this week: 🔻-95% news sentiment 🔴🔴 | 🔺+10.1% stock price

News sentiment expressed about crypto exchange platform Coinbase has been tanking to highly pessimistic levels over the past few weeks — finishing at a net sentiment rating of -95% this week as the cryptocurrency market’s sell-off accelerates. As of Sunday evening, the total global crypto market cap has fallen below the $1-trillion dollar mark for the first time since January 2021, with Bitcoin dropping below the $20K mark (down nearly $45K from its peak) and Ethereum hovering near $1,000 — both of which haven’t happened since 2020.

Pinched by dwindling revenues and in prep for a potential recession and “crypto winter”, Coinbase CEO Brian Armstrong announced via a mass email on Tuesday that the company would be laying off 1,100 employees (which is nearly a fifth of its staff) and reneging already-accepted job offers. According to sources from within the company, the announcement sparked an “internal crisis” amongst Coinbase employees, who in return created a petition calling for several key executives to be replaced. While the petition has since been deleted and rebuked by CEO Brian on Twitter, the whole situation makes $COIN’s future highly uncertain. More here:

3. Pinterest ($PINS) 📌 rising price targets = bullish?

this week: 🔺+98% news sentiment | 🔻-1.9% stock price

On the cooler side of the pillow, social marketplace platform Pinterest saw heightened levels of bullish news sentiment this week (with a +98% increase in its net-sentiment score vs. last week) after receiving a set of increased price targets and ratings from the likes of Goldman Sachs and Seeking Alpha. $PINS stock — which has declined in price by more than 50% so far in 2022 — now sits at $18.18 per share, while Goldman’s price target is for $24/share (indicating a potential upside of roughly 30%).

Seeking Alpha also raised their $PINS rating to a “Cautious Buy”, citing the company’s reasonable growth prospects and more attractive valuation as of the past week. Pinterest was one such stock that reached unprecedented overvaluation during the growth-tech market bubble we saw back in early 2021 — since then the stock is trading at a much more moderate price-to-earnings (P/E) ratio of 18.6, with a future-cash-flow (FCF) yield of 4.28% — a potentially bullish sign for the stock for long-term buyers. More on $PINS recent fundamental price improvements here:

Part 3: Market Mood™ Outlook 🔭

With the markets continuing their descent this week, sentiment measured in news coverage fell to considerably bearish levels — particularly in conversation directed toward the S&P 500, which officially reached bear market territory by the end of the week. The markets are in full convulsion — stocks, bonds, housing, and crypto’s — with inflation running its course both domestically and abroad. The United States is not technically in an economic recession yet (it’s broadly defined as two consecutive quarters of economic GDP decline), but by definition, the label can’t be assigned until we’re at least six months in. By all accounts, the odds that we will retain our current recession trajectory far outweigh the chances of a drastic recovery before the end of the year. In my (highly unprofessional) view, here’s what would need to happen for the economy to dig itself out of its current hole:

STEP 1: rate hikes + supply chain recovery stops inflation in its tracks:

First, the Fed Reserve’s drastic policy measures will need to make a significant material difference in curbing inflation over the next one to three months — in the Fed’s ideal scenario, interest rates cause consumers to reduce their spending across the board (housing, energy, food, etc.), reigning in the dollars’ runaway and addressing headline inflation.2 These interest rate efforts will have to be simultaneously accompanied by easing supply chain bottlenecks in order to reduce the cost of components that remain high (travel, building materials, etc.) in order to moderate core inflation. Together, if we’re able to see a steady reduction in overall inflation (measured primarily by the CPI) over the next few months, then there’s hope that the economic bleeding has stopped.

STEP 2: maintain economic development in the meantime:

While stopping runaway inflation is one thing (and certainly most important for the long-term prospects of the US economy), maintaining economic growth in the meantime is no small feat. At its core, inflation means people are pushed to spend their money (or face the risk of it being devalued), which means that most deliberate efforts to curb inflation (ie. interest rate hikes) are meant to force people to reduce their spending. It’s hard to accomplish this while maintaining GDP growth — though not impossible. In order for this to happen, employment will need to remain strong at the least, and corporate earnings will need to continue their growth, such that folks still have enough money (either via income or savings) to keep spending it and stimulating the economy.

These steps to avoid recession will also probably need to be accompanied by some sort of clever intervention and cooperation from the Federal Govnernment (which makes this Fall’s mid-term elections quite pivotal), and may even require some sort of positive end to the ongoing crisis in Russia-Ukraine. All of this said, I am certainly not an economist, nor have I lived through many recessions in the past (I’m 24, dude). Here’s a few other references to round out your world views:

• “Markets Take The Stairs Up and The Elevator Down” ~ Anthony Pompliano

• “15 Reasons Why We’re Headed Toward a (Very Bad) Recession” ~ Austin Hankwitz

• “Weekly Market Wrap” ~ Edward Jones

As always, the future remains to be seen. That’s all for this week — let us know if there’s anything we missed by commenting below, replying to this email, or sending us a text at +1 (833) 878 9106. 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, 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.