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US Close: Powell’s Mic Check, Taper Confirmed, Oh Snap, Earnings, Flash PMIs

US stocks declined from record highs after Fed Chair Powell signaled they are on track to taper but refrained from giving any signs about interest rate…

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This article was originally published by Market Pulse

US stocks declined from record highs after Fed Chair Powell signaled they are on track to taper but refrained from giving any signs about interest rate hikes.  Powell did not deliver a clear message at first, as audio issues made it difficult to hear him say that substantial progress in the labor market recovery was made and that they are ready to taper.  The US economy still needs to fill 5 million jobs before the labor market recovery is back to 2020 levels, which should suggest immediate rate hikes after tapering is done might be a bit too aggressive. 

The Fed Chair noted that the uneven recovery will eventually see job growth to return to the high levels seen in the summer.  Bottleneck and supply chain issues will continue to keep pressuring prices in the short-term, and that them will probably last a lot longer than the Fed wants. Powell is still holding onto the belief that inflation will eventual abate late next year. If inflation does end up being persistent the Fed will use their tools. 

The key takeaway from Powell was that the Fed is on track to begin tapering and that should be done by mid-2022, transitory inflation might last a little longer than expected, and that rate hike expectations should be written in pencil. 

A busy Friday

Wall Street settled lower as Fed Chair Powell prepared markets for a November taper announcement and that rate hikes will happen if they are wrong about inflation being transitory.  Some traders used Powell’s comments to lock in profits, but overall still remain optimistic following today’s mixed earnings, relieft that Evergrande made a crucial payment, and as US service sector activity bounces back. 

Earnings

Supply chain issues were the primary catalyst for poor earnings and cautious outlooks from Intel, Snap, Beyond Meat, and Chipotle US stocks refuse to break.  There were some strong results from American Express, Regions Financial, and energy stocks continue to benefit from rising crude prices. 

Social media platforms and companies dependent on advertising revenue are declining as supply chain issues have some companies pulling back ad spending.  Snap stated that global supply chain issues and labor shortages are impacting their partners and that probably will remain the case throughout the holidays, which could really take away from what should be their strongest quarter. 

US Data

The flash PMIs in the US provided optimism that the economy is still on sound footing.  This month, the service sector rebounded.  Despite the slowdown in economic activity that is being seen across the globe, both the US manufacturing and service sectors have activity in the high-50s.  IHS Markit noted that the economy accelerates despite bottlenecks as services revive from the Delta wave, but prices rise at record pace.  Everything from the flash PMIs matches up with everything we are hearing this earnings season, which should have investors getting more nervous that inflation may end up being persistent. 



Author: Ed Moya

Economics

Cannabis analytics startup Headset, led by Leafly founders, raises more cash

The news: Cannabis analytics company Headset on Tuesday announced that it raised $8.6 million in funding. That includes $3 million of venture capital from…

Headset co-founders, left to right: CEO Cy Scott, Chief Technology Officer Scott Vickers, and Chief Design Officer Brian Wansolich. (Headset Photos)

The news: Cannabis analytics company Headset on Tuesday announced that it raised $8.6 million in funding. That includes $3 million of venture capital from a round led by Althea, as well as the conversion of $5.6 million of bridge notes issued in August 2020 and this past April.

The Seattle-based company reports having more than 300 customers and 50 employees.

Headset has raised about $23 million, according to GeekWire reporting.

The tech: Headset provides data analytics for the cannabis industry on growers and product manufacturers; retail sales; food, health and beauty products; financial services; and hardware.

The company gathers information on market trends, top selling cannabis strains, market projections for states where recreational marijuana is newly legalized, ruminations on the impacts of inflation, and favored product brands in different regions.

The new funding will help Headset expand its analysis into new legal markets and launch additional services.

(Bigstock Photo)

The founders: Headset was founded in 2015 by CEO Cy Scott, Chief Design Officer Brian Wansolich and CTO Scott Vickers, who all previously co-founded Leafly, an online cannabis marketplace that is going public via a SPAC merger.

The tailwinds: While Washington and Colorado were the first states to legalize recreational marijuana use back in 2012, an additional 16 states plus Washington, D.C. have followed suit. More than a dozen others have approved cannabis for medical use.

When the pandemic forced businesses to close in order slow COVID-19’s spread, marijuana dispensaries in many states were deemed “essential” and allowed to remain open. The New York Times called it “official recognition that for some Americans, cannabis is as necessary as milk and bread.”

The sector: Competition in the cannabis analytics space include BDSA, which according to PitchBook has raised $16.2 million, and Cannabis Big Data. Both are based in Colorado.

There are big dollars flowing into online sales of cannabis. Oregon’s Dutchie has raised more than $600 million while Leafly is valued at nearly $400 million.

There is also continued momentum in delivery. Uber entered the cannabis market just last week, announcing plans to launch a delivery service in Ontario.

The investors: In addition to the private equity investment firm Althea, the VC round included two investors focused on the cannabis sector: Poseidon Investment Management and WGD Capital.

Track all of GeekWire’s in-depth startup coverage: Sign up for the weekly startup email newsletter; check out the GeekWire funding tracker and venture capital directory; and follow our startup news headlines.


Author: Lisa Stiffler

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Economics

WTI Extends Losses After Smaller Than Expected Crude Draw

WTI Extends Losses After Smaller Than Expected Crude Draw

Crude prices puked over 5% today as demand fears over Omicron (jet fuel demand)…

WTI Extends Losses After Smaller Than Expected Crude Draw

Crude prices puked over 5% today as demand fears over Omicron (jet fuel demand) and European case count continued acceleration combined with Fed Chair Powell’s taper tantrum. While tighter monetary policy can be a sign of economic strength, it’s typically bearish for commodities. WTI briefly dropped below $65 a barrel for the first time since August during the session, while the global benchmark Brent also tumbled.

“That ties back to crude oil because if you start to pump the brakes on economic growth, you start to see impact on demand,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.

Oil traders are also tracking talks this week aimed at reviving Iran’s 2015 nuclear deal with world powers. Success at the negotiations in Vienna could lift sanctions on Iran’s economy, leading to a resumption in official oil flows. The exchanges began positively on Monday, according to a top European diplomat.

However, the next leg one way or the other will likely be decided by this week’s inventory data…

API

  • Crude -747k (-1.66mm exp)

  • Cushing (+1.00mm exp)

  • Gasoline

  • Distillates

Crude stocks fell 747k barrels last week, less than expected…

Source: Bloomberg

After the biggest monthly drop since March 2020, WTI was hovering around $66.75 ahead of the API print and dipped after despite the small crude draw…

Are we about to see gas prices at the pump plunge?

As Bloomberg notes, the oil market is also continuing to weigh the impact of the omicron variant of the Covid-19 virus on demand and what OPEC+ may decide to do in response when the producer group meets later this week. New travel restrictions threaten the rebound in global crude consumption that has underpinned this year’s price rally.

Tyler Durden
Tue, 11/30/2021 – 16:37




Author: Tyler Durden

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Economics

4 Top Stock Trades for Wednesday: Ethereum, XPEV, DLTR, BABA

Stocks were creamed on Friday due to worries over the new Covid variant Omicron. We bounced nicely on Monday, but stocks are back under pressure on Tuesday….

Stocks were creamed on Friday due to worries over the new Covid variant Omicron. We bounced nicely on Monday, but stocks are back under pressure on Tuesday. With that in mind, let’s look at a few top stock trades.

Top Stock Trades for Tomorrow No. 1: Ethereum (ETH-USD)


Click to Enlarge
Source: Chart courtesy of TrendSpider

While Bitcoin (CCC:BTC-USD) isn’t seeing the same kind of rotation today, Ethereum (CCC:ETH-USD) sure is.

In fact, Ethereum is going weekly-up over $4,555. From here, that puts the 161.8% extension and the all-time high in play up near $4,875 to $4,900.

If that does indeed come to fruition, bulls will inevitably turn their attention to the $5,000 level. A breakout over $5,000 puts the $5,500 area in play next, followed by $6,000 to $6,250 zone — where another set of upside extensions sit.

Back below $4,555, and investors will be watching the 10-day and 21-day moving averages.

Below $4,380 has the 50-day and 10-week moving averages on deck, followed by around $4,000.

Top Stock Trades for Tomorrow No. 2: Xpeng (XPEV)

Daily chart of XPEV
Click to Enlarge
Source: Chart courtesy of TrendSpider

Xpeng (NYSE:XPEV) continues to trade incredibly well. And if we look at just this chart, there’s no indication that the market is experiencing any volatility.

The stock is doing a terrific job holding up over the breakout level (blue line) and the 10-day moving average. Now trying for a weekly-up rotation and a move over the 61.8% retracement, bulls are hoping to see Xpeng gain steam over $55.

If it does, that could open the door to the current 2021 high up near $60, then the 78.6% retracement at $63.41.

However, a move below the breakout level and the 10-day moving average could force XPEV stock to rest a bit.

Top Stock Trades for Tomorrow No. 3: Dollar Tree (DLTR)

Top stock trades for DLTRf
Click to Enlarge
Source: Chart courtesy of TrendSpider

Dollar Tree (NASDAQ:DLTR) was a stock I had on my radar early this morning, as the stock was under pressure from a downgrade following a fantastic earnings reaction.

Shares are checking back to the 10-day moving average after its massive run, opening the door for aggressive dip-buyers to get long.

If we get a bounce going, $140 would be the first upside target. Above that, and $143.50 to $145 could be next, followed by the highs near $148.

On the downside, though, failure to find support could put $130 in play, followed by the 21-day moving average.

Top Trades for Tomorrow No. 4: Alibaba (BABA)

Top stock trades for BABA
Click to Enlarge
Source: Chart courtesy of TrendSpider

Last but not least, we have Alibaba (NYSE:BABA), which has been an abysmal performer. 

The stock is working on its fourth quarterly decline in the past five quarters, and the one quarterly gain in that stretch was a paltry 0.02% — and no, that’s not a typo!

Shares have declined in nine of the past 13 months and in the most recent month (November), we’ve seen a 22% haircut to the share price. Alibaba ended November in a monthly-down rotation, taking out the October low.

Amid the recent decline, BABA stock is now below its 2018 low at $138-and-change. If we reclaim it, it could put a reversal in play.

However, a further decline could put the $120 level on deck. With some divergence on the chart, that could set Alibaba stock up for a bounce if we get there. While it won’t always remain the case, bears remain in control at the moment.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

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Author: Bret Kenwell

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