Daily Brief - ☀️ Bull market time?

TLDR: CPI is lenient, the Fed is lenient, the economy is headed for a soft landing, SPX earnings are trending higher, PMIs are recovering. It seems all is well on the western front. Is this the end of bearish news?

We often told you to beware of 20x P/E for SPX as a sign of an overbought market.

If you look at the recent price levels, it seems like we’re sort-of getting there - but no. Thanks to the comeback in earnings, P/E is a ‘meager’ 18.8x.

This is to say that SPX could easily get back to the 2021 peak of ~4,800 before you reach a 20x P/E.

Does that have any implication for your investment choices?

Absolutely not. If you’re deciding on your asset allocation then you need to be aware that expensive equities as we head into a landing (soft or hard) are no place to park your money. Treasuries, on the flip side, look sweet - no matter what the fixed income Cassandras say.

What about the implications on your trading choices?

Well that’s another matter entirely. After the latest trendline breach (a) momentum is piling in and (b) shorts are squeezed to death. Be wary of the market’s reaction, shorting here is dangerous business - but you certainly come in at an interesting time.

What's happening in the markets?

This section is powered by Open AI connected to TOGGLE AI

In response to the dynamic landscape of consumer preferences, retailers have undergone strategic shifts to navigate these changes successfully. Walmart stands out as a prime example, adapting its focus to thrive in the competitive market by becoming the nation's largest grocer.

Analysts project an optimistic outlook for the company, anticipating quarterly earnings of $1.41 per share and revenues reaching $150 billion.

Interestingly, despite Walmart's track record of surpassing earnings expectations, its stock often experiences a post-results dip within the week, only to rebound positively a month later. Investors should exercise caution in the event of an uncommon earnings miss, as historical data indicates potential extended declines in the stock.

As the holiday season approaches, market observers will closely monitor customer traffic patterns and assess the resilience of consumer strength in shaping future market trends.

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Earnings Update: Alibaba Group reports tomorrow

Singles Day, China's version of Black Friday, plays a key role in fueling Q4 revenue and is a strong barometer of consumer sentiment in the country. Alibaba chose not to disclose the value of sales over Singles Day...yikes.

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.

Asset Spotlight: Rising Yields for HDFC Bank

Toggle analyzed 10 similar occasions in the past where yields for HDFC bank rose and historically this led to a median increase in the stock's price over the following 3 months. Read full insight!

General Interest: Planets in the void

It’s one old sci-fi trope: the lone starless planet, cruising into interstellar space.

The cosmos is full of these puzzling objects - except that they come in pairs!

Did these worlds form like planets? Or are they more like tiny failed stars? Astronomers are not sure.

Read more here on Quanta.