Back in the Red | The Daily Peel | 10/7/22

Market Snapshot

Fleeting hopes of JPow pumping the brakes were dashed Thursday as the market came to the conclusion that a Fed pivot was unlikely.

The labor market has been a head-scratcher. Although job openings fell and layoffs rose in August, the private sector showed strong job gains in September.

Jobless claims released Thursday were higher than expected, but the market just isn’t convinced that will change JPow’s mind about rate hikes.

At the close, the Dow dropped 1.15%, the Nasdaq sunk 0.68%, and the S&P fell 1.02%.

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Let’s get into it.

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What's Ripe

Pinterest ($PINS) — Analysts at major banks have liked what they’ve seen with $PINS recently, with a flurry of upgrades coming in the past week.

Long-term tailwinds, like a booming creator economy and online ad spending, are part of the appeal.

Rumors of a potential purchase from Alphabet or PayPal added to the gains.

$PINS was up 4.96% by the end of the day.

Weed Stocks ($THCX) — Weed stock investors were sparking up Thursday after positive vibes on Capitol hill sent shares soaring.

$THCX, as you can tell by the name, is a weed stock ETF, and it’s gotten smoked this year.

But Joey B’s pardoning those in jail for small herb possession Thursday had stoners everywhere optimistic that legalization could follow.

$THCX was up 13.04% by the end of the day.

What's Rotten

UK Pound (GBP/USD) — The pound got dangerously close to USD parity a few weeks ago but saw a nice bounce after the government reversed its tax cut plan.

Now, it’s sinking again.

The Bank of England doesn’t meet again until early November, so the market will have to decide where it goes until then.

A strengthening dollar will have a big impact, but could it sink the pound all the way to dollar parity?

GBP/USD ended the day down 1.41%.

Shell ($SHEL) — The British oil behemoth prepared investors for a bummer of a Q3 report, citing weak nat gas trading and shrinking oil refining margins.

$SHEL is still up big on the year after notching record profit in the first half of 2022.

Big Oil likes high oil prices, but they might like stable oil prices even more. Whipsawing oil markets will affect cash flow in Q3, according to management.

By the end of the day, $SHEL was down 4.35%.

Thought Banana

Who Really Controls Oil Prices? — Inflation is Joey B’s biggest domestic problem heading into the midterms, and no price is more visible to Americans on a daily basis than gas.

Despite his pleas, OPEC+ is cutting production to prop up prices, directly interfering with two of Biden’s biggest headaches. Higher oil prices will help Russia’s war effort and keep inflation elevated.

Even though US oil production has skyrocketed in the last decade, when you’re going up against a cartel of the other biggest oil-producing countries on the planet, you’re bound to lose.

• $80/bbl is a well-known price threshold the Saudis, in particular, need to stay above. Below that, government budgets are severely strained.
• Joey B is expected to turn on the taps of the Strategic Petroleum Reserve, but that’s ultimately a short-term solution

With many of NATO’s biggest foes holding hands in OPEC (Russia, Iran, and sorta Saudi Arabia), the West is watching closely for how the cartel acts in the following months.

The big question: Will the West ramp up oil production to combat OPEC’s power? Or will it double down on renewables as the death blow to oil once and for all?

Wise Investor Says