👉 The Investing Week Ahead: 9/5/22

Happy Labor Day,

It’s your holiday — let’s get you what you need to know right away!

What You Should Be Thinking About:

We’ve talked a lot about the European energy crisis and how the current situation looks pretty bleak.

You may have noticed in the most recent Week in Review that Russia has indefinitely closed the Nord Stream 1 — the largest pipeline of oil to Germany (and consequently the rest of Europe. Just today, Vladmir Putin’s spokesman said what we had already assumed — that Russia will not be delivering anymore oil until Western sanctions are lifted.

So how is this issue addressed? Let’s check out the chart above of American’s oil reserves for some perspective.

Our strategic oil reserve is now sitting at its lowest level in nearly 4 decades. Countries of the Western World have spent the last few years lessening their own oil production, while increasing reliance on countries like China, Russia, & Saudi Arabia. Now that push has come to shove — these countries are forced to dip into their energy reserves, which are intended to be used during times of emergency.

Russia appears steadfast in its attempts to cripple Europe’s energy supply. While Europe can deplete reserves (like us), attempt to resurrect nuclear power deals that hadn’t recently been seen in a positive light, and scramble for other ways to get sufficient energy — the outlook looks dismal.

Remember this note over the coming months as electricity and gas prices may not seem as bad as they should be. Governments that were setting up their energy infrastructure for failure will continue to stick Band-Aids all over the situation — but China and Russia know what they are doing.

The combination below should be in the minds of every investor:

1. The energy crisis described above.

2. The US Dollar strengthening is not necessarily a good thing in the short-term. Stability and predictability are always better. The strong dollar’s ability to provide a cushion against inflation (in the form of cheaper imports) is very much a double-edged sword. On one end, the soaring dollar adds risks to the Fed as it tries to tame inflation — meaning the currency’s strength is making the central bank’s job of cooling demand harder. That sets up either even tighter monetary policy or stagflation, where high inflation persists as growth meaningfully slows. On the other end, the dollar’s strength hurts U.S. exports and currency-translated overseas profits of U.S. companies, in turn threatening economic growth. When currency values are fluctuating as rapidly and unpredictably as they are right now — bad things tend to happen… See below for what has happened the last few times the dollar has risen in value at such a rapid rate. The dollar could switch from strong to weak in a matter of days and weeks.

3. The colossal debt problem, which is focused on federal and personal debt — opposed to 2008’s crash from mortgages.

The Takeaway: Months ago, we wrote a post titled 15 Reasons for a Recession. The reality is that quite literally none of these reasons have been resolved. In fact — about 5-7 new reasons have emerged or resurfaced from the past.

Buying opportunities are ahead. Stay tuned with our writings and let’s find the right times for building out positions.

The Investing Week Ahead — Too Long, Didn’t Read:

⚡ Earnings reports from Coupa, DocuSign, GameStop, GitLab, Nio, Kroger, RH, UiPath, & ZScaler.

⚡ The UK has a new PM, China is locking down, and Apple has questions to answer.

⚡ We get a closer look at the Fed’s intentions and if Consumer Credit is rising.

Key Earnings Announcements:

A few names to watch during this short week in the market.

Tuesday (9/6): Coupa, GitLab, HealthEquity, UiPath

Wednesday (9/7): Academy Sports & Outdoors, American Eagle, Asana, Casey’s, Dave & Buster’s, GameStop, Nio

Thursday (9/8): Bilibili, DocuSign, FuelCell Energy, Restoration Hardware, Smith & Wesson, ZScaler

Friday (9/9): ABM Industries, Kroger

Investor Events / Global Affairs:

The UK’s newest leader, Apple is gearing up to sell you another overpriced phone, and Chinese lockdowns resurface as a global threat.

• The New Prime Minister of the U.K.

Liz Truss will take the keys from Boris Johnson as Prime Minister of the United Kingdom. She has her work cut out for her — with British inflation set to rise above its current rate of 10% by the end of the year and real wages spiraling at their fastest pace in 20 years. Filling the spot of leader of the country’s Conservative Party — Ms. Truss will travel to Scotland on Tuesday to meet with Queen Elizabeth II, who will formally appoint her as the British Prime Minister.

• Apple’s iPhone 14 Lineup

During an event in its Cupertino, California HQ on Wednesday — Apple is expected to officially announce its iPhone 14 lineup of four models (base model, Pro, Max, & Pro Max).

• China Lockdowns

33 Chinese cities, including eight major provincial and municipal centers, have been placed under China’s “static management” tier of lockdown — disrupting the lives of ~65 million residents. Measures include the closure of offices, schools, entertainment venues, non-essential shops and services. Office workers and civil servants are required to work from home and students conduct their learning online.

Hospitals remain open but specialist and dental clinics have to close. Pharmacies are banned from selling antibiotics, antiviral drugs and medicines for fever and cough.

Major Economic Events:

Continued chatter by Federal Reserve leadership and looking under the hood of our unsustainable credit bubble.

Tuesday (9/6): ISM Services Index

Wednesday (9/7): Beige Book, Cleveland Fed President Speaks, Fed Vice Chair Speaks, Fed Vice Chair for Bank Supervision Speaks, International Trade Balance

Thursday (9/8): Average Consumer Expenditures, Chicago Fed President Speaks, Consumer Credit, Fed Chair Jerome Powell Speaks, Quarterly Services Survey

Friday (9/9): Chicago Fed President Speaks, Fed Governor Waller Speaks, Kansas City Fed President Speaks

Events-Driven Winners

Which stocks moved the most last week.

Our friends at LevelFields scrub through thousands of data points each week to determine how events impact stock prices.

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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.