The S&P 500 closed lower on Friday to end what was a highly volatile week. There was a ton of rotational action and bifurcation occurring under the hood. Health care, real estate, utilities, and the consumer staples sectors all finished modestly higher for the week. The materials sector edged lower, and the drops were more pronounced in financials, communication services, industrials, tech, consumer discretionary, and energy.

Explaining the moves this week:

The action can be easily explained. If the economy hits a speed bump from either the Federal Reserve tightening or Covid-19 rapidly spreading around the world, the companies that will most likely be able to do their numbers are the ones that do best in a slowdown. Health care, utilities, and staples don’t need a robust environment to hit guidance, but the industrials, energy, and consumer spending-driven businesses sure do better when the economy is firing on all cylinders.

Meanwhile, a less accommodative Fed has investors evaluating their risk tolerance against the potential of a rising interest rate environment, explaining why we continue to see buying interest in companies that make stuff and do things, and pressure in unprofitable conceptional story stocks.

Here is a quick look at some of the broader market measures we like to keep an eye on: The U.S. dollar index was about flat on the week at 96. Gold rallied to the $1,800 level in the days after Wednesday’s FOMC press conference. WTI crude prices slipped to roughly $70, as the spread of the omicron variant weighed on global demand. And the yield on the 10-year Treasury fell to around the 1.41% level amid omicron variant uncertainty.

No portfolio companies reported this week.

In addition to earnings, we received several key macroeconomic updates:

Monday

- No major updates

Tuesday

- November Producer Price Index (PPI): +0.8% MoM vs. 0.5% estimate; +9.6% YoY vs. +9.2% estimate

- Core PPI: +0.7% MoM vs. 0.4% estimate; +6.9% YoY vs. 7.2% YoY

Wednesday

-Retail Sales: +0.3% MoM vs. +0.8% estimate; +18.2% YoY

-FOMC Meeting: The FOMC left rates unchanged but announced an accelerated reduction of its monthly bond purchases and signaled for three rate hikes in 2022.

Thursday

-Housing Starts: +11.8% to 1.679 million seasonally adjusted annual rate (SAAR) vs. 1.568 million SAAR estimate

-Building Permits: +3.6% MoM to 1.712 million unit rate vs 1.66 million unit rate estimate

-Industrial Production: +0.5% Mom vs. +0.6% estimate; +5.3% YoY

-Manufacturing Output: +0.7% MoM vs. 0.7% estimate

-Capacity Utilization: 76.8% vs. 76.8% estimate

-Markit US Composite Output Index: 56.9

-Services Business Activity Index: 57.5 vs. 58.8 estimate

-Manufacturing Purchasing Managers’ Index (PMI): 57.8 vs.58.5 estimate

-Manufacturing Output Index: 53.6

-Initial Jobless Claims 206,000 vs. 195,000 estimate

-Four-week moving average: 203, 750 – lowest level since November 15, 1969

Friday

No major updates

What we are watching ahead:

No companies in the portfolio are scheduled to report earnings next week.

Here are the earnings in the holiday shortened week ahead we'll be monitoring:

Monday

Open:

Close: Nike (NKE), Micron (MU), Calavo Growers (CVGW)

Tuesday

Open: Rite Aid (RAD), General Mills (GIS), FactSet (FDS), Apogee Enterprises (APOG), Enerpac Tool Group (EPAC), Neogen (NEOG), Cognyte Software (CGNT)

Close: BlackBerry (BB), AAR Corp (AIR), CalAmp (CAMP)

Wednesday

Open: CarMax (KMX), Cintas (CTAS), MSC Industrial (MSM), Paychex (PAYX)

Close:

Thursday

Open:

Close:

Friday

Open:

Close:

On the macroeconomic front, in addition to keeping an eye on the geopolitical sphere, we will be watching out for the following releases (all times ET):

Monday

10:00am: Leading Indicators SA M/M

Tuesday

08:30am: Current Account SA

Wednesday

08:30am: Chicago Fed National Activity Index

08:30am: GDP Chain Price SAAR Q/Q (Final)

08:30am: GDP Chain Price SA Y/Y (Final)

08:30am: GDP SAAR Q/Q (Final)

08:30am: GDP SA Y/Y (Final)

10:00am: Consumer Confidence

10:00am: Existing Home Sales SAAR

Thursday

08:00am: Building Permits SAAR (Final)

08:30am: Continuing Jobless Claims SA

08:30am: Durable Orders ex-Transportation SA M/M (Preliminary)

08:30am: Durable Orders SA M/M (Preliminary)

08:30am: Initial Claims SA

08:30am: Core PCE Deflator M/M

08:30am: Core PCE Deflator Y/Y

08:30am: PCE Deflator SA M/M

08:30am: PCE Deflator Y/Y

08:30am: Personal Consumption Expenditure SA M/M

08:30am: Personal Income SA M/M

10:00am: Michigan Sentiment NSA (Final)

10:00am: New Home Sales SAAR

Friday

None

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