#141 - The Canadian Political Opportunity in Roe Vs. Wade Leak, Vibe Shifts in Markets and The Collapse of Rolex Prices
In this week's episode of Reformed Millennials, Joel talks about the opportunity for Canadian Politicians as the Roe vs. Wade leak divides America, he explains why the Rolex Price collapse is a leading indicator for real estate and consumer sentiment and discusses Apple and Amazon’s earnings this past quarter.
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👉 For specific investment questions or advice contact Joel @ Gold Investment Management.
April was four weeks of relentless selling for all major indexes. Small caps Russell 2k (IWM), large caps S&P 500 (SPY), the Nasdaq Composite which includes 3,000 stocks made new year-to-date closing lows. In fact, all of the above with the exception of SPY, have fully erased their entire 2021 gains.
SPY has held better thanks to the Q1 strength in basic materials, energy, and consumer staples but even those sectors have been under some pressure lately. In a bear market, eventually, they get to every sector.
There are no safe places to hide. The picture is not pretty but it is not surprising either. Last week, we talked about the recent tendency of stocks (especially tech) to sell off ahead of FOMC meetings. There’s a new one scheduled for the next week – May 3rd and 4th. The big question is do we get the usual post-FOMC bounce or will this time be different?
The main indexes are on the brink of breaking down and having another leg lower. If the Fed doesn’t tone down its stance on future interest rate increases, look below.
The earnings season has just begun. The big theme so far is resetting expectations.
Juggernauts like Google and Amazon, which everyone thought were invincible, missed estimates.
Apple beat them but gave wide-range guidance citing supply chain challenges in China and the market sold it anyway.
Tesla dropped 20% since its best earnings report ever as Elon Musk is raising money to fund his Twitter purchase and short-sellers have smelt blood in the water.
If those major stocks can get hurt, no one is safe.
💸Reformed Millennials - Post of The Week
Not All Inflation Is Equal:
Since November, we've seen increasingly frightening inflation (CPI) data. And I still remain in the transitory camp.
People reading this will say - HAVE YOU BEEN TO EARLS LATELY?!
In response to that, I say - that not all inflation is equal and capitalism's best feature is its ability to fight inefficiencies in markets.
THIS PAST WEEK WE HAVE GOTTEN DATA FROM THE 5 LARGEST COMPANIES ON EARTH.
All 5 of these companies spoke about reducing CAPEX, no longer hiring, supply constraints easing, and prices of goods collapsing.
Inflation is two-sided
Demand (consumer balance sheets with too much cash)
Supply (shipping, manufacturing and commodities)
In the linked article here, Ryan Detrick, Chief Market strategist at LPL research makes the case for why Inflation May Be Near A Peak:
from Michael Batnick
It’s hard to believe that the S&P 500 is down just ~13.5% from its high. It feels a lot worse.
The average stock in the S&P 500 is in a 21.8% drawdown, so it’s understandable why the first number feels off. The thing is, the index is market cap-weighted, so the average decline and the index decline rarely line up.
Let’s examine why it feels so much worse than average and how the S&P is holding up as well as it is.
One reason this “it feels worse” dynamic is occurring is that we lost the leaders. Amazon just had its worst day since 2006. The Nasdaq just had its worst month since The Great Financial Crisis and is in a 22% drawdown.
The average FANMAG stock is in the worst drawdown going back to 2013. That’s being dragged lower by Netflix’s 72% crash. But even the median is down 29%, a deep decline and certainly way worse than the 13% decline for the S&P 500.