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Inflation Today, FOMC Tomorrow!

Well folks, today’s inflation print will ultimately set the tone for tomorrow’s FOMC meeting with the rate of CPI increases having cooled down somewhat from their high of 9.1% achieved over the summer, many have been posturing for a slowing or complete halt in the speed of interest rate hikes within the US; with the results now in and inflation actually reported at 0.2% vs the 0.3% median forecast for November, the fate has been sealed for a 50 bp rate hike tomorrow - let’s go America! Read on for more on this, the recent arrest of SBF and China’s continued easing of COVID restrictions in this 173rd Coachman’s Report!


Markets in Review

Premarket futures have risen sharply on this positive inflation print with the Dow, S&P and Nasdaq up 62, 68 and 79 bps at the time of writing. This has consolidated the notion that the Federal Reserve will not announce a 75 bps hike at the end of the FOMC meeting come Thursday, but instead a 50 bps increase - the probability for which is now at 87% (more than 10% higher from yesterday)! Positive investor sentiment is still at lows, with over 40% of participants sitting in the bearish camp, however with rates decreasing, inflation becoming more manageable and oil markets at the lower end of their oscillation is it likely that real earnings will start to turn around as Q4 caps off. With traders likely to price this in over the next couple of days, we are issuing a long recommendation on the S&P 500 with a deadline of Friday close. Should the Fed not surprise tomorrow with a 75bp hike out of left field, a 4,000+ point S&P 500 by the end of the year is not looking like a pipe dream, but instead a possible reality. The technicals are pointing towards a confirmation of the overarchingly bullish trend as the index has now traded above its 50-day moving average for over a month and is edging everso more closely to its 200-day moving average.


Long: Core & Main, Inc. (CNM-NYSE) | Timeline: 2 days

Core & Main, Inc. (CNM), which distributes water, wastewater, storm drainage, and fire protection products and related services to municipalities, private water companies, and professional contractors in the municipal, non-residential, and residential end markets in the United States, reported earnings this morning before market open. The company managed to beat earnings and revenue estimates by 17.31% and 7.39%, respectively, due to healthy end-market demand, robust performance across the company’s growth initiatives, and continued price realization. (Full Story) Referring to the chart, CNM has had a quite sideways year so far, only peaking at around $26 after spikes in volume around earnings season. That said, as the company edged closer to today’s earnings announcement, traders have formed a falling wedge - a popular bullish pattern used by traders that indicates a trend reversal.


Zooming out...

SBF Finally Arrested After weeks of uncertainty, public speeches, and ill-advised Twitter Spaces SBF has finally been arrested by Bahamian authorities. Early this morning the SEC directly accused SBF of $1.8B worth of fraud in an “orchestrated scheme to defraud equity investors”. Although, due to the arrest occurring yesterday it’s highly unlikely that SBF will be brought back to Washington in time for his scheduled hearing before the US House later today. Concerningly, on a Twitter Space yesterday prior to his arrest SBF admitted that essentially, people trading on FTX were all trading non-existent assets while real client deposits were being sent straight to sister company Alameda Research’s bank account. The United States is already pushing for SBF’s extradition, however, only time will tell when he will be back on American soil to face trial. China Continues to Curb Covid Restrictions On Monday authorities announced that they’ll be deactivating mobile itinerary cards throughout the majority of the nation. These ‘cards ' were a key pillar of the nation’s zero covid strategy, and more or less acted as mandatory always active contract tracing apps. The cards had been a major source of contention both from voices at home, and abroad as they had been generally overused, and abused in order to quell protests. Many are concerned about the forecasted wave of cases expected to affect the Chinese medical system, however, the further removal of oppressive covid controls shows that the nation may be looking at taking less heavy-handed action in pandemic security going forward.


Making headlines...

Shopify’s $118 Billion Rout Slows Canada’s Stellar Stock-Market Run

  • Shopify Inc.’s 70% plunge has almost single-handedly dragged the Canadian stock market into the red this year, taking the shine off what would otherwise be one of the world’s top-performing major equity benchmarks. (Full Story)

Bank of Montreal Drops on $2.3 Billion Stock Sale to Hit Capital Hurdle

  • Bank of Montreal, which is working to close the largest acquisition in its history, is selling C$3.15 billion ($2.31 billion) in equity to make sure it can meet Canadian regulators’ recently-increased capital requirements. (Full Story)

Keystone Has Leaked More Oil Than Any Other Pipeline in US Since 2010

  • Last week’s oil spill in Kansas means that TC Energy Corp.’s Keystone pipeline has now leaked more crude oil than any other conduit on US land in the past 12 years. (Full Story)

United Airlines buys 100 Boeing 787 Dreamliners 'with options to purchase 100 more'

  • United Airlines will be flying into the next decade with wind behind more Boeing wings. (Full Story)


Chart of the Day: S&P500 Put/Call Ratio Spiking


“There is something noble in hearing myself ill-spoken of when I am doing well.” - Alexander the Great


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