December 6, 2022
The Market Health Indicator (MHI) measures market health on a scale of 0 – 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.
There was a battle of the Bob’s at Disney, and you’ll never guess who came out on top.
Bob Iger served as the CEO of Disney from 2005 – 2020 before stepping down and handing the reigns of the most magical place on Earth to his successor, Bob Chapek.
However, last month Disney announced Iger would be taking back over as interm CEO.
This move came as a surprise as Bob (Iger) had reportedly handpicked Bob (Chapek) to replace him as CEO, and Chapek even received an extension on his contract back in June.
Internal complaints from some senior execs as well as underperformance in the parks and streaming units caused the board to quickly change the direction of the company.
Iger is slated to stay on for two years, and Disney is hoping he can right the ship and drive innovation like he did during his original tenure.
For the first time in over a year (since July / August 2021), markets closed positive in back-to-back months.
Stocks followed October’s strong gains with another positive month in November. The Dow Jones Industrial Average led the way higher for major indices, notching a 5.66% gain. The S&P 500 and Nasdaq were close behind, with gains of 5.38% and 4.37%.
Providing a tailwind earlier in the month was inflation, as CPI fell for the fourth consecutive month and came in below consensus expectations. Later in the month, markets received another boost as investors digested the Fed minutes which stated a majority of participants believed slowing the pace of rate hikes would soon be appropriate.
Overseas, markets experienced outsized gains with developed international stocks jumping 12.55% and emerging market stocks closing the month up a whopping 14.30%. Chinese stocks in particular led the charge higher, boasting their largest monthly gains since 1998 on hopes of less strict covid measures to help support the economy.
Despite another 0.75% Fed rate hike early in November, interest rates dropped on expectations of fewer rate hikes moving forward, helping bonds notch a positive month as well. As the 10-year Treasury yield fell from 4.10% to 3.68%, bond prices moved higher with the US aggregate bond market gaining 3.68%. This marked the first gain for aggregate bonds since July, with the index still down 12.63% year-to-date. However, if rates continue to stabilize it could create some much needed support in the fixed-income space.
As expected, markets continue to be driven by inflation and the Fed. With the bounce from recent lows, investors are hoping for a sustained holiday rally to end 2022 as we head into the final month of the year. While it appears we are getting close to the end of the current rate hike cycle (which is historically a boon for broad stock markets), any indication of a more aggressive policy shift could bring back volatility, which is why it’s important to have a plan in place to help guide your portfolio regardless of market conditions.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
This quote comes from John Ray III, the lawyer who was hired to oversee the liquidation of Enron after an accounting scandal swiftly bankrupt the Fortune 500 company back in 2001.
Only, the quote above isn’t in regard to Enron. It was actually about the recent collapse of the world’s second largest crypto exchange – FTX.
So what caused the meltdown? Bankruptcy reports point to a lack of regulatory controls, with employees using company funds for personal purchases (such as property in the Bahamas).
It’s estimated FTX owes its largest 50 creditors $3 billion, and the negative impact seems to have spread to some smaller crypto firms who had exposure to the exchange. Bitcoin prices also tumbled to a year-to-date low on the news.
Coming off three consecutive monthly declines, stocks soared higher in November on the back of growing rate pause expectations.
October was filled with more tricks than treats as markets continued to slump.
Inflation increased for a second straight month, with CPI rising from 3.2% to 3.7%, above expectations of 3.6%.
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