Apple, Recessions, and Inflation (September 11th-September 15th)
September 11-September 15, 2023 by Adit Dayal for RIPPYGLOBAL.
Happy Sunday everyone and welcome back to the Rippy Global weekly outlook. The market remained essentially flat after the short week, with energy leading the market. The CPI inflation report this week will be the last big data point on inflation we get before the meeting in a bit over a week.
Let’s take a look at what this week has in store!
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On Wednesday we have the CPI inflation report which the market is watching after the recent jump in oil prices. Oil is now ticking at a nine month high after Saudi Arabia and Russia extended their supply cuts. Global oil use reached 103m barrels/day in June, and the Saudis have cut pieces essentially telling us they are trying too squeeze the price of oil with this supply constraint. As for the US, it’s possible we use our strategic oil reserve although I’m not sure that will happen right before the peak of election season.
Goldman Sachs’s released a report this week in which they say that they believe that “taming inflation will not require a recession” and giving the possibility of recession at 15%. This is interesting because the marketwide median consensus still lies at 60% from the other firms. Soft business from China is likely weighing down on the US right now and Barclays also came out and said that they see parts of the US economy being hit soon especially with new catalysts as the holes start to take their full effect and student loan payments restart.
According to BTIG, 82% of student loan borrowers must start repaying next month and the three companies that were targeted by BTIG were Starbucks, Chipotle, and ShakeShack. These companies can be a big short for the next few months as people stop eating there in order to pay their loan payment.
Apple also has a big event this week, but it likely won’t be on that makes waves in the markets. The new iPhone is likely to have minor changes: a new USB-C port and a titanium casing (I will look for titanium companies if this makes headlines) but don’t expect it to be too market moving. The two things to look out for are updates on their Reality Pro Headset and on their satellite program.
Lastly, let’s do our weekly update on the car market. The Manheim Index showed that compared to July, used car prices are up but not compared to the same time last year. Inventory is still not available and as I mentioned last week, it has now become a supply issue and not one where demand is actually high. I believe if US gas prices go higher that will covert more people to a shift to electric and maybe away from something they have to make a loan payment on due to high interest rates into EV bike companies.
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#1) Earnings week isn’t big with no names that I really think can be market moving. With the right guidance some smaller names may get a bump of 10-15% this week.
#2) On Monday, Fortinet FTNT has a security conference and analysts may make reports based on what they say there. The Ethereum cofounder is also speaking.
#3) On Tuesday, Nike and Apple both have meetings and events. This is also one of my favorite days because the Nasdaq releases their short interest number so we can see what our next squeeze play will be.
#4) On Wednesday, the CPI inflation report will release with an expected 3.6% YoY increase. The US Senate is also holding it’s first AI summit with huge names like Elon, Mark Zuckerberg, OpenAI CEO as well as NVDA CEO.
#5) On Thursday, the PPI inflation report is releasing.
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S&P 500
The S&P 500 ($SPX index) has bounced back a bit this week but is sgtirll unable to hold the 50SMA and therefore I am not bullish just yet.
My key breaks are $4492 for bulls and $4414 for bears.
The best ways to play the S&P 500 are via. SPY/SPX options or SPXL (3X Bull S&P 500 ETF.
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INDIVIDUAL STOCKS & LEVELS
Let’s recap some of the levels of some popular names:
TSLA
For anyone who likes trading, Tesla is one of the best charts out there. Clean bounce from the trend line and reject of the 50SMA. Over that is a breakout of both the trend line and the SMA and can be explosive, but I think a retest of $227 is healthy as there is a lot of uncertainty in the EV and car space right now. Watching for a break of the pennant.
AAPL
Apple dumped on news that China was banning iPhones as government devices and lost the last few days of gains. I don’t believe the announcement should have a huge impact on what it does but I think $170 is a strong level and we should test it again.
GAP
GAP is at the top of the trend line here and can reject this week especially with he loan payments catalyst catching up here. Under $11.15 I am looking to short this name, but if the overall indices are strong then it will likely just chop around up here. Should be a good play to the downside nonetheless though.
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Insider Activity
In terms of insider trades, GSAT (Apple’s satellite provider) is running before their event this month and hit another buy, but this name has had a few “sell the news” moments in the past, so nothing too notable. CLNN had an old one and can get volume this week if that catches on.
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Thanks for reading this weekend’s article, have a great week!
-Adit Dayal (https://twitter.com/tradelikehulk)