To The Moon

On Fri, 11 Nov 2023 -- Moody lowered its outlook on the US credit rating from "stable" to "negative".

Reasons cited:

• Large fiscal deficits.

• A decline in debt affordability.

The ratings agency explained that "continued political polarization" in Congress raises the risk that lawmakers will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability."

Republicans controlling US House of Representatives, is expected to (yet again) release a stopgap spending measure on Sat, 18 Nov 2023 to avert a partial government shutdown by keeping federal agencies open when current funding expires on Fri, 17 Nov 2023.

The news drew immediate criticism from the Biden administration.

Unfortunately, there is nothing much the incumbent govt could do to:

• Avert the issue of rising debt.

• Manage the House of Representative proceedings.

In short, Moody's reasons are "valid" to say the least.

“Luckily” the US market did not react too negatively towards Moody’s forecasted outlook of US market when trading resumed on Mon, 13 Nov 2023. (see above)

Stocks closed Monday's trading session mixed, as investors geared up for US inflation report (Consumer Price Index - CPI) due for release on Tue, 14 Nov 2023.

By the time market closed:

DJIA: +0.16% (+54.77 to 34,337.87). Only index that ended in “green”.

S&P 500: -0.08% (-3.69 to 4,411.55).

• Index hovered near its key 4,400 mark.

• The gauge closed little changed after posting 9 positive days out of 10 — a level of consistency seen less than 1% of the time this century and last observed in 2021.

Nasdaq: -0.22% (-30.36 to 13,767.74).

Stock market will be hawking over the inflation report [Consumer Price Index (CPI) for October 2023] at 08:30am ET, in the morning; an hour before market resumes trading on Tue, 14 Nov 2023.

Based on preliminary forecast: (see below)

• Wall Street is expecting Core CPI to remain status quo at 4.1%.

• This is the same core inflation rate as September 2023.

• Is expectations for inflation to ease from the prior reading, especially the top-line number “realistic”?

• Investors are eager for a data that would support the case for the Federal Reserve to be finished with interest rate increases.

• This, despite Fed officials decided to leave “another interest hike” as an opened option on the table.

US Banks forecasts on US's October Core CPI

• Strangely enough, US banks’ forecast for October Core CPI (YoY) comes in “higher” than general consensus.

• Only $Morgan Stanley(MS)$ and $Goldman Sachs(GS)$ forecasted 4.1%.

• Only Piper Sandler, a leading M&A advisor forecasted a lower (4.0%) October 2023 Core CPI.

Q3 2023 Quarterly earnings continues.....

Third quarter earnings for the week beginning 13 Nov 2023 centres squarely on Retail stocks. (see above)

With [a] weak home sales and [b] elevated interest rates, I do not think there will be much “celebratory” earnings data coming from these stocks.

Conversely, if Core CPI data for October comes in lower than the anticipated 4.1%, a euphoria rally might be on the card.

Energy stocks - My area of focus.

It might sound “strange” to many but I am still bullish about energy stocks.

OPEC confirms this too in its latest report. (see below)

OPEC points to “robust major global growth trends” including:

• US economic data for Q3 2023.

• Upgraded Chinese economic growth projections of +5.4% for 2023.

• OPEC analysts noted latest data shows Chinese crude imports increasing to 11.4 Million barrels per day (bpd) in October, on track to reach a new annual record high for this year.

With a scheduled meeting on 26 Nov 2023, where the organization's current production cuts:

• Aimed at restricting supply.

• Keeps a floor on crude prices are scheduled to continue through 2024.

• Excluding the additional 1 Million bpd unilateral cut by the kingdom (Saudi Arabia) until end 2023.

The anticipated demand from both US and China will “automatically” help to drive oil price up sustainably.

Forbes Advisor - Top 3 Oil stocks recommendation

Of the many oil stocks available in the US market, I will stay focus on only the “best”:

• $Exxon Mobil(XOM)$

• $Chevron(CVX)$

• $SHELL PLC(SHEL.UK)$

• Do you think US October Core CPI will help US market to rally?

• Do you think US Energy / Oil stocks is the way to go from 2023 into 2024?

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