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Guess Who’s Back...

Happy hump day folks! Yesterday was one for the history books with markets trading lower on news that missiles fired from within the Russian-Ukraine conflict zone landed in Poland, and killed two individuals - read the full story here with details still emerging as to just which side it was that fired the missiles in the first place. Panning to more domestic news, the day culminated with former United States President, Donald J. Trump announcing his intention to run in the 2024 election; this could potentially divide the Republican party with many in support of Florida governor, Ron DeSantis as their favoured candidate. Read up on this developing story and more below in this 153rd edition of the Coachman’s Report!


Markets in Review

Premarket futures on the Dow, S&P and Nasdaq have been trading lower (-0.09%, -0.18% & -0.28% respectively) on further increased tensions in the Russia-Ukraine conflict, the FTX bankruptcy continuing to unfold and the divide within the Republican party being made even sharper.

Panning to the Canadian market, CPI for October was released this morning and the TTM figures remained unchanged at 6.2%, clocking in more than a percent lower than the US’ 7.75% inflation rate. A saving grace to the Canadian economy has been its heavy resource-production dependence as sky-high commodity prices have only added to the top lines of many firms spread across the mining and energy sectors. As a result, the TSX 60 ($XIU) has retained more of its value this year than many other broad indices and has only traded 6% lower YTD while also boasting a relatively modest P/E ratio of 17.62. While the $XIU is reaching overbought territory, the index is currently at a decisive point for its long-term trend, on the cusp of crossing above its 200-day MA which has historically acted as a major resistance level through this bear market.

With OPEC+ slashing production and gold breaking out, there may be the runway needed to sustain a push toward pre-2022 price levels by the end of the year.


Short: Ferroglobe PLC (GSM-NASDAQ) | Timeline: 2 days

Ferroglobe PLC (GSM), which operates in the silicon and specialty metals industry in the United States, Europe, and internationally, reported quite underwhelming earnings yesterday in light of weaker market conditions. The company missed earnings and revenue estimates by 5.88% and 14.63%, respectively, while also reporting Adjusted EBITDA of $185.3 million, down 38.9% over the prior quarter as the company has “seen a challenging environment driven by demand slowdown and continued volatility of energy prices in Europe” (Dr. Marco Levi, CEO). (Full Story) Referring to the chart, GSM’s technicals also support this bearish narrative as the stock has continued to fall from highs of $9.50 a share from earlier this year. That said, over the last quarter traders have now formed a very popular continuation pattern, a descending triangle - and as the price per share edges along the upper part of this channel, a spike in short volume along with an extremely overbought Stochastic RSI should result in a downward retracement.


Zooming out...

Return of the Don

The man credited with the creation of the “new right” within the United States has finally confirmed his entry into the 2024 election. At Mar-A-Lago Tuesday night Donald Trump officially declared his bid to represent Republicans in a speech clouded by mixed midterm performance.

Recently, he hasn’t experienced the same blind support that existed during his early days as President due to actions that have angered the MAGA base and frankly a majority of the country. First and foremost, his feud with Florida governor Ron Desantis. At a time when the GOP is fracturing on a national level, many Republicans- supporters and detractors- found his digs against arguably the most popular Republican in the country to be childish. Additionally, Operation Warp Speed, the fast-tracking of COVID vaccines, is a tricky issue for Trump. His opponents don’t want to give him credit for it, even though many believe the shots to be essential, while his own supporters are unsure whether to herald or hate him for it due to their mixed feelings surrounding the contents and rollout of the vaccines. Even the New York Post, a formerly friendly outlet, disparaged the announcement by relegating it to the bottom of the front page. In any case, especially as incumbent Joe Biden seems hellbent on returning to the White House, it’s increasingly likely that 2024 will be a 2020 rematch. Missile Mistakes…

Midday Tuesday reports emerged that a missile fell into the remote Polish farming village of Przewodow, where it exploded and killed two people. Many reputable sources, including Poland and the United States, at first believed this to be a missile of Russian origin. An easy conclusion to draw since missiles were being fired into Ukraine during the same time period. Many were quick to pounce on Russia and pondered if NATO should invoke Article 5, the alliance’s mutual defense clause last activated after 9/11, however, as the situation evolved this question became murkier and murkier. In reality, it was revealed the missile that struck Poland was likely of Ukrainian origin. It’s believed that the missile was fired to shoot down one of the rounds launched during the most recent Russian offensive. Although accidental, the missile’s results are still the same. While not an intentional attack, since Ukraine is not a member of the alliance, would NATO be justified in invoking Article 5 against them? Moreover, could the case for Article 5 invocation against Russia be made since Ukraine was only firing missiles in defense?


Making headlines...

FTX Latest: Fears of Contagion Darken the Crypto Sector Outlook

  • The crypto industry braced for more contagion from the fall of Sam Bankman-Fried’s FTX empire. The US and The Bahamas are talking about bringing him to America for questioning, people familiar with the matter said. (Full Story)

China's Home Prices See Biggest Fall in 7 Years, Recovery Bumpy

  • China's new home prices fell at their fastest pace in over seven years in October, weighed down by COVID-19 curbs and industry-wide problems, reflecting a deepening contraction that prompted authorities to ramp up support for the sector in recent days. (Full Story)

Berlin Court Orders Rerun of Chaotic 2021 State Election

  • Berlin court on Wednesday ordered a rerun of the German capital's 2021 state election because of severe election-day glitches at many polling stations. (Full Story)

Target Cuts Outlook, Misses Big on Profit as Its Shoppers Retrench

  • Target Corp. warned in its latest earnings report that US shoppers are pulling back, slamming the retailer’s profit and dimming its outlook. Adjusted earnings tumbled to $1.54 a share in the fiscal third quarter, the company said Wednesday. (Full Story)


Chart of the Day: S&P 500 vs. Federal Funds Effective Rate


“Wars and revolutions and battles, you see, are due simply and solely to the body and its desires. All wars are undertaken for the acquisition of wealth; and the reason why we have to acquire wealth is the body, because we are slaves in its service.”

― Plato


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