- This week’s jobs report offered mixed results, with new payrolls of 311,000 beating expectations, at the same time unemployment rose and wages remained broadly flat
- Fed Chairman Jerome Powell also commented on Tuesday that interest could initially be higher than expected, and then remain high for a longer period of time.
- Shares of most major banks have been affected this week as smaller banks are in trouble, offering potential opportunities for investors
- Top Weekly and Monthly Trades
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Major events that can affect your portfolio
Well, if the market was expecting some clear direction from Friday’s jobs report, they may be a little disappointed. On the one hand, non-agriculture Payrolls increased by 311,000, It’s not the blowout result from January, but it’s still a huge margin above the 223,000 forecast from Wall Street.
Unemployment, on the other hand, rose to 3.6%, higher than the expected 3.4%. At the same time, average hourly earnings were largely flat, registering an increase of just 0.2%, equivalent to 8 cents more an hour for the average worker.
The data is unlikely to change the trajectory of the Fed’s rate hike. The market is currently pricing in a 0.25 percentage point hike in the next Federal Open Market Committee (FOMC) meeting on March 21 and 22, but it is increasingly likely to be 0.50 percentage points.
These latest jobs data are quite strong, but given that unemployment has risen and wage growth has slowed, the Fed is unlikely to view this data as a clear sign that they need to raise by a half point. .
S&P 500 futures were up slightly in premarket hours on Friday, supporting the view that the Fed may not need to be more aggressive with its rate policy. This is likely to be especially well received, given comments made by Jay Powell on Tuesday, saying that interest rates may need to go higher, and stay on longer than originally expected. may be required.
It’s been a tough week for challenger banks.
SVB Financial Group, parent company of Silicon Valley Bank biggest hit, the stock closed Friday after falling 62% in premarket trading. This decline brings the total decline to almost 80% at the time of writing, and the stock is experiencing an incredibly high level of volatility.
The crash was followed by SVB’s announcement that they needed to raise $2.25 billion in stock after being forced to liquidate $1.8 billion in assets to cover the balance sheet.
The problems have been compounded by the collapse of Silvergate, a challenger bank focused on the crypto sector. VCs apparently needed to transfer funds to their portfolio companies in more established banks, which led to a significant increase in withdrawals from SVBs.
Other smaller banks have also been affected, some SVBs for no apparent reason other than negative sentiment. First Republic Bank held on after plunging 21%, and is down about 15% as of Friday morning. Another crypto-focused bank – Signature Direct – is down nearly 27% over the past five days.
Such challenger banks are at greater risk of liquidity issues, simply because of the size of their balance sheets. Higher interest rates have significantly reduced the demand for loans, which are the bank’s main source of revenue. This isn’t usually a problem for large banks like JPMorgan Chase or Bank of America, but smaller banks may find it more difficult to weather the storm.
This is the type of trend that is very important for investors to watch when it comes to their own portfolios.
This week’s top themes from Q.ai
Despite the fact that the major banks are likely to avoid any permanent damage from these sustained high interest rates, many of their stock prices are being dragged down by general sentiment against financials right now.
Goldman Sachs is down about 7% over the past 5 days, with JPMorgan Chase down -8%, Bank of America -12%, Citi -8%, and Wells Fargo -12% over the same period.
Going after companies in such a space is called value investing. It’s the old Warren Buffett playbook, where investors seek to buy companies with large cash flows, predictable revenues and established business models at prices that don’t reflect their true value.
In fact, Bank of America is the second largest holding in the Berkshire Hathaway portfolio, accounting for about 10% of the total allocation.
Q.ai’s Value Vault Kit Uses AI to look for value stocks that have the potential to outperform the broad market. It analyzes large amounts of data to find companies that have:
– Undervalued relative to both earnings and cash flows
-High return on invested capital
-Mature, predictable business model
While AI looks for securities that have good return potential, it also takes into account the expected volatility. Once these predictions are made, the kit automatically rebalances accordingly every single week.
top business ideas
Here are some of the best ideas our AI systems are recommending for the next week and month.
EW Scripps (SSP) – The broadcasting company is one of our top buys for next week With a B rating in our quality value factor. Revenue in 2022 was to grow by 7.4%.
Daktronics (DAKT) – Digital display solution provider is our top short for next week They’re rated F in value for quality with our AI. Earnings per share in the 12 months to January 2023 were -$0.35.
Titan International (TWI) – wheel and tire manufacturer is ours top buy for next month With A rating in quality price and technical. Earnings per share are expected to grow by 250.6% in 2022.
Advance Auto Parts (AAP) – Automotive parts (clue in the name) company is our Top short for next month They are rated F in technical and quality value with our AI. Earnings per share were down 13.4% in 2022.
our ai Top ETFs to Trade for the Next Month Investing in fintech, cutting edge technology and microchips and short bonds. top buys the ARK Fintech Innovation ETF, the ARK Next Generation Internet ETF, and the VanEck Semiconductor ETF, and top shorts There are the iShares 7-10 Year Treasury Bond ETF and the iShares 20+ Year Treasury Bond ETF.
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