D&D Note (6.7.2022) ~ Target Spooks Markets Revising Guidance Down Again ~
Retailer Target again guides down sending markets lower to start the day. Stocks pushed back to rally into the close as the 10 Year Note yield fell back below 3%.
Target CEO Brian Cornell said they are clearing room for merchandise consumers are actually desiring right now in groceries and back-to-school supplies. In doing this they are canceling orders and marking down unwanted merchandise. This caused them to again lower guidance of operating margin to around 2% which is lower than initial lowered guidance just 3 weeks ago when they reported earnings.
The World Bank cuts global growth forecast to 2.9% warning of 1970’s type stagflation as growth slows, interest rates are going up and inflation stays high.
Crypto Regulatory bill was introduced to Congress today that would classify the majority of all crypto coins as commodities (not currencies or securities) which would allow the Commodity Futures Trading Commission to regulate most of the Crypto industry.
Bitcoin dropped 5% today to fall back below $30,000 triggered by a report the SEC is investigating the BNB token issued by Binance and possibly categorizing it has a security. BNB led the whole Crypto market down in a selloff before Bitcoin rallied back to be roughly flat on the day.
Stock Specific News:
D&D today started a position in semiconductor maker Advanced Micro Devices. Semiconductors typically lead the market in both falling before the overall market falls and then rising before the overall market rises.
D&D almost pulled the trigger today on Palo Alto Networks, Lockheed Martin, and Devin Energy but lost price discovery as the overall market rallied. We would like to see a pull back in the coming days to then add more to these positions.
Amazon falls -1.43% post stock split as traders take profits on the trade playing the stock split.
SpaceX Starlink satellite internet business IPO is still 3 to 4 years away according to Elon Musk.
Market Knowledge Tip:
An investor must understand their own level of risk tolerance as every investor has their own individual tolerance level. You need to be able to sleep at night being comfortable knowing you own a specific stock or investment. If you can’t sleep then you probably have too much risk.
Some people are willing to take higher risk thus be able to own higher beta stocks that move more up or down than the overall market. Others have lower risk tolerance and want lower beta stocks that more directly follow the market direction.
Just because somebody recommends a stock that makes sense to them, you need to understand does that stock make sense to you on a risk tolerance level.
Closing Markets (as of 1:15pm PST)
DOW up 0.80%
S&P 500 up 0.95% (4,160.68)
NASDAQ up 0.94%
VIX down -4.19% to 24.02
2 Year Note up 0.03 bp to 2.73%
10 Year Note down -6.36 bp to 2.98%
Oil up 1.274% to $120.01 a barrel.
Gold up 0.64% to $1855.50 an ounce.
Bitcoin up 0.07% to $31,404.32
Ethereum down -0.47% to $1,857.81
~ Dave James / Principal Trader and Market Strategist