Market News Week of November 15, 2021
Updated: Nov 13, 2021
What happened in the market?
The market made a short-term reversal (pullback) due to a high CPI (Consumer-Price Index) report which measures inflation. The report showed that inflation was higher than estimated. A 6.2% increase in a month's time is quite high when compared to the last 30 years. This report made the market drop on Wednesday to a low of $462.04. On Thursday the market traded sideways and on Friday it recovered and rallied to close at $467.27. The recovery on Friday was probably due to the Infrastructure Bill being signed on Monday.
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How will the Infrastructure Bill signing affect the market?
The signing of the Bill will more than likely take the market into new highs. Will it continue higher after establishing a new high? That is a great question. Keeping in mind that the market has been resilient to negative news and on a bullish trend, it's hard to be bearish.
What will cause the market to reverse?
There are several things that can send the market on a downward spiral. One of them is the continued rise in inflation. With inflation rising I believe that consumers will be more reluctant to buy items at higher prices and that will put most companies in a jam with their revenue stream. The other issue is the bottleneck supply chains seeing no relief in the near future. With supply chains stranded, products are taking longer to meet the demand from consumers. With high demand and low supply, prices are skyrocketing (Economics 101). Therefore, inflation will more than likely be here for a while.
When will supply chains bottleneck issues ease?
The Infrastructure Bill will be put into effect as soon as possible. The main concern will be to ease supply chain bottlenecks especially during this time of year. During the Holiday season when people are in spending mode the demand for products is high. The government's main concern will be to kickstart supply chain mobilization to meet demand. It remains to be seen how fast the supply chains will be back to normalcy. The bill might at least get the gears moving in the right direction.
What sectors are starting to move into rotation?
We know that the clean energy sector is in hot demand due to more companies making the switch to more carbon-friendly trends. The EV market has seen huge gains and might see some continued surge after the Bill is signed on Monday. Another sector that has caught my attention is the Cannabis sector. The Cannabis sector has seen some renewed interest as more states have legislative bills in place to legalize pot. With all the pot legalization bills in many states having a very good chance of passing into law in the near future, the time to jump into this sector is now. Pot stocks are at a great value investment-wise.
What are some cannabis companies?
Some of the most important companies that can see significant gains are Tilray (TLRY), Canopy Growth Co. (CGC), Sundial (SNDL), Aurora Cannabis (ACB), GrowGeneration Co. (GRWG), Organigram (OGI), and Crono's Group (CRON).
PSC13 Newsletter
by Jose Navarro on October 16, 2021
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