Skip to Main

Market Strategy 11/21/2022

  • John Stoltzfus
  • November 21, 2022

Thanksgiving 2022

A time to reflect and consider whether things are getting better even as challenges remain

Key Takeaways

  • With 95% of the S&P500’s companies having reported Q3 results, earnings are up 3.2% on the back of 11.6% revenue growth.
  • Of the 11 sectors, three have reported double-digit earnings growth, one has reported triple-digit earnings growth, and five have reported negative earnings growth. All 11 sectors have reported positive revenue growth thus far this season.
  • Data on retail sales released last week points to renewed spending vigor from US consumers that is likely to fuel a positive GDP growth rate for the fourth quarter.
  • Three double-digit rallies this year in the S&P 500 argue a case that as difficult as 2022 has been for equity markets, there’s enough resilience to suggest that this year could be a harbinger for better times ahead. 
abstract financials

The Thanksgiving holiday-abridged week ahead should see lighter data flow and trading volume with markets closed on Thursday and with the stock exchanges closing at 1pm (Eastern time) on Friday.

The last few weeks have brought an improvement in news on inflation with recent Consumer Price Index and Producer Price Index data suggesting that the Federal Reserve’s fed funds hike cycle (with six moves now implemented) have had in aggregate some positive effect at slowing inflation from its 40-year high levels.

Employment and consumer spending remain at levels higher than the Fed would like to see before the authorities consider a pause or a reduction in the rate cycle currently underway.

Fed speak (comments from Fed officials at events) suggests that opinions among US monetary policy officials vary in terms of where the Fed should stand this far in the hike cycle. There’s enough hawkish and dovish commentary to keep even seasoned Fed watchers guessing.

Our expectations are that the Fed is likely to raise 50 basis points or perhaps as much as 75bps at its last FOMC meeting of the year on December 14 with no small degree of consideration of key economic data released from now until then.

Quotation from Aenean Pretium

In our view, the Fed will be looking to avoid pushing the US economy into a recession if it can avoid it and might even be able to skirt a recession this cycle so long as factors over which it has little or no control keep improving.

Based on the strength of the job openings data from the JOLTS report and last month’s nonfarm payrolls gain as well as other recent data we would expect that the Fed is likely to continue hiking its benchmark rate into next year but in smaller increments (compared to the last three hikes of 75 bps each)—so long as the rate of inflation continues to ebb lower.

In our view, the Fed will be looking to avoid pushing the US economy into a recession if it can avoid it and might even be able to skirt a recession this cycle so long as factors over which it has little or no control keep improving.

With the US elections moving into the rearview mirror fiscal policy, commodity prices (particularly oil), and indicators of the resilience of the consumer and business will be key items for investors and traders to monitor in the coming weeks.

While broad declines experienced by both equities and fixed income assets this year could define 2022’s results through last Friday as an annus horribilis for stock market bulls, three double digit rallies (3/11/22- 3/29/22; 6/16/22-8/16/22 and 10/12/22) with respective gains for the S&P 500 of 10.99%, 17.41% and 10.86% would argue a case that as difficult as the year has been enough resilience has been evident to suggest that this year could be a harbinger of better things ahead.

Happy Thanksgiving to our readers from the Market Strategy Radar Screen Team!

John Stoltzfus headshot
Name:

John Stoltzfus

Title:

Chief Investment Strategist, Oppenheimer Asset Management Inc.

John is one of the most popular faces around Oppenheimer: our clients have come to rely on his market recaps for timely analysis and a confident viewpoint on the road forward. He frequently lends his expertise to CNBC, Bloomberg, Fox Business, and other notable networks.

Hide Bio
/asset-management/john-stoltzfus.aspx

DISCLOSURES

Strategist Certification - The author certifies that this investment strategy report accurately states his/her personal views about the subject securities, which are reflected in the substance of this investment report. The author certifies that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this investment strategy report.

The strategy provided in this report is provided by Oppenheimer Asset Management Inc., (“OAM”) a registered investment adviser affiliate of Oppenheimer & Co. Inc. (“OPCO”). It reflects analysis of fundamental, macroeconomic and quantitative data to provide investment analysis with respect to U.S. securities markets. The overview in this report is provided for informational purposes and does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security or investment advisory services. The report is not intended to provide personal investment advice. The investments discussed in this report may not be suitable for all investors. Investors should use the analysis provided by this report as one input into formulating an investment opinion and should consult with their Financial Advisor. Additional inputs should include, but are not limited to, the review of other strategy reports generated by OAM, its affiliates, and looking at alternate analyses. Securities and other financial instruments that may be discussed in this report or recommended or sold by OPCO or OAM are not insured by the Federal Deposit Insurance Corporation and are not deposits or obligations of any insured depository institution. Investments involve numerous risks including market risk, counterparty default risk and liquidity risk. Securities and other financial investments at times may be difficult to value or sell. The value of financial instruments may fluctuate, and investors may lose their entire principal investment.

Strategist Certification - The author certifies that this strategy report accurately states his/her personal views about the subject matter reflected in the substance of this report. The author certifies that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this strategy report.

Potential Conflicts of Interest: Strategic analysts employed by OAM are compensated from revenues generated by the firm. The strategists authoring this piece also contribute to an OAM managed portfolio product that relies on and trades on the information contained herein. The managed portfolio strategy trades frequently, both ahead of and after the publication of this report. OAM generally prohibits any analyst and any member of his or her household from executing trades in the securities of a company that such analyst covers. Additionally, OAM generally prohibits any analyst from serving as an officer, director or advisory board member of a company that such analyst covers. In addition to 1% (or more) ownership positions in covered companies that are required to be specifically disclosed in this report, OPCO may have a long positon of less than 1% or a short position or deals as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon and makes a market in the securities discussed herein. Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

Third Party Research Disclosure OAM has a research sharing agreement with OPCO pursuant to which OPCO provides OAM Strategy thought pieces to its institutional and retail customers. OPCO does not guarantee that the information in OAM Strategy reports is accurate, complete or timely, nor does OPCO make any warranties with regard to the strategy product or the results obtained from its use. OPCO has no control over or input with respect to opinions found in OAM strategy pieces. OAM is a registered investment adviser affiliate of OPCO.

This report is issued and approved by Oppenheimer & Co. Inc., a member of all Principal Exchanges, and SIPC. This report is distributed by Oppenheimer & Co. Inc., for informational purposes only, to its institutional and retail investor clients. This report does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account the investment objectives, financial situation or specific needs of any particular client of Oppenheimer & Co. Inc. Recipients should consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The strategist writing this report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security discussed in this report, the recipient should consider whether such investment is appropriate given the recipient's particular investment needs, objectives and financial circumstances. We recommend that investors independently evaluate particular investments and strategies, and encourage investors to seek the advice of a financial advisor. Oppenheimer & Co. Inc. will not treat non-client recipients as its clients solely by virtue of their receiving this report. Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal.

Oppenheimer & Co. Inc. accepts no liability for any loss arising from the use of information contained in this report. All information, opinions and statistical data contained in this report were obtained or derived from public sources believed to be reliable, but Oppenheimer & Co. Inc. does not represent that any such information, opinion or statistical data is accurate or complete and they should not be relied upon as such. All estimates and opinions expressed herein constitute judgments as of the date of this report and are subject to change without notice. Nothing in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation. 

Investment Strategy should not be construed as offering tax advice on the tax consequences of investments. As with any investment having potential tax implications, clients should consult with their own independent tax adviser.

This report may provide addresses of, or contain hyperlinks to, Internet web sites. Oppenheimer & Co. Inc. has not reviewed the linked Internet web site of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient's convenience and information, and the content of linked third party web sites is not in any way incorporated into this document. Recipients who choose to access such third-party web sites or follow such hyperlinks do so at their own risk. The S&P 500 Index is an unmanaged value-weighted index of 500 common stocks that is generally considered representative of the U.S. stock market. The S&P 500 index figures do not reflect any fees, expenses or taxes. This research is distributed in the UK and elsewhere throughout Europe, as third party research by Oppenheimer Europe Ltd, which is authorized and regulated by the Financial Conduct Authority (FCA). This research is for information purposes only and is not to be construed as a solicitation or an offer to purchase or sell investments or related financial instruments. This report is for distribution only to persons who are eligible counterparties or professional clients and is exempt from the general restrictions in section 21 of the Financial Services and Markets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds that it is being distributed in the UK only to persons of a kind described in Article 19(5) (Investment Professionals) and 49(2) High Net Worth companies, unincorporated associations etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended). It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. In particular, this material is not for distribution to, and should not be relied upon by, retail clients, as defined under the rules of the FCA. Neither the FCA’s protection rules nor compensation scheme may be applied. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Oppenheimer & Co. Inc. Copyright © Oppenheimer & Co. Inc. 2022.