RR: CPI Surprise and a Favorite Energy Stock Sees Strong Insider Buying

Is Paul Krugman right? Have we finally defeated inflation? Or are we just at the turning point that goes from "how high" to "how long" on interest rates at 5% or more.                                                                                                                                                                                                                                                                                                                                                                                                                 Forwarded this email? [Subscribe here]() for more [RR: CPI Surprise and a Favorite Energy Stock Sees Strong Insider Buying]( Is Paul Krugman right? Have we finally defeated inflation? Or are we just at the turning point that goes from "how high" to "how long" on interest rates at 5% or more. [Garrett {NAME}]( Nov 14   [READ IN APP](   Equity Index Strength Is GREEN on the S&P 500 and GREEN on the Russell 2000 Each morning, we assess the full flows of the market by measuring statistical metrics on a very specific number of stocks to determine broader sentiment and the momentum trend. When these readings turn red, we focus on cash, build trades around positive sectors, or take inverse positions against indices. This morning, the Consumer Price Index was much lower than previously forecasted. The CPI was flat for October, signaling that the Fed may not need to raise interest rates in December. Expectations called for a monthly increase of 0.1%. Total CPI came in at 3.2%, which is also lower than expected. The Fed’s official target is 2.0%, which means the central bank still has some work to do to contain prices. The CPI strips out food and energy prices, suggesting that the Fed is progressing in its fight against inflation. In addition, the 10-year bond has slumped back under 4.5%. --------------------------------------------------------------- Key Takeaways: - The Yen teetered near a 33-year low against the dollar, with potential for further decline pending U.S. inflation data outcomes . - Stellantis is offering voluntary buyouts to a significant portion of its U.S. salaried workforce as part of a cost-cutting strategy amid its transition to electric vehicles. - Hindenburg Research has taken a short position in Golden Heaven Group (GDHG), labeling it as another 'China Hustle' due to questionable financials and business operations. - The Technology Select Sector SPDR ETF (XLK) is now overbought on the Relative Strength Index (RSI) and the Money Flow Index (MFI). Be careful, as this will likely pull the Nasdaq and the S&P 500 to overbought levels as well. --------------------------------------------------------------- Dear Fellow Expat: And once again - the narrative changes across the financial markets after a surprise beat on the Consumer Price Index. The CPI figure was flat for October (month-over-month) - while the annual figure came in at 3.2%. We’re still away from the Fed’s target, and the real work (sacrifice) begins now as we keep our eyes toward 2024.  The U.S. is not completely out of the woods yet, given the perpetual threat of rising geopolitical tensions, and that government spending is expected to balloon yet again next year. But this is positive news on the inflation fight, and may officially mark the transition of the Fed narrative from “How high” on interest rates to “How long” will the Fed keep rates elevated.  Already, some institutions are making heavy bets that the Fed will start cutting rates in March, with an emphasis that economic growth is expected to slump in the first and second quarters. The challenge is how the market will take the December jobs report, which will likely see another uptick in government hiring and seasonal workers ahead of the holiday season. Insider Buying and Selling in Net Dollar Amount As I noted two weeks ago, insider buying-to-selling levels in dollar amounts reached their highest level for the ratio in 2023. When insider buying is extremely strong, it often acts as a contrarian signal for the markets. Naturally, since then, the 5-day and 22-day moving averages for the buy-sell ratio have reverted to the 2023 mean.  We’re now seeing more insider selling than buying for the first time in a month - in dollar averages. The insiders appeared to once again call the short-term bottom when the market was oversold and in correction territory in October. November is historically a strong month for the markets.  What are the Insiders Buying? Healthcare and Energy sector insiders have been actively purchasing their stocks, capitalizing on recent trends. Energy executives, in particular, are seizing the opportunity to buy company shares at a discount courtesy of the recent dip in oil prices. - The CEO and CFO of Crescent Energy Co (CRGY) purchased roughly $100k worth of shares each. This stock is a personal favorite given its connection to KKR’s energy team. - The CEO and CFO of Dorchester Minerals L.P. (DMLP) purchased $350k worth of shares in total.  - David Lesar, CEO of Centerpoint Energy (CNP), a natural gas services company, purchased 37,000 shares totaling $1m.  - CEO of Energy Recovery (ERII), David Moon, purchased 8500 shares for $18.11 each.  - 10% Owner of Talos Energy (TALO),  Control Empresarial de Capitales S.A. de C.V. purchased $21.7m in shares for $13.94 each.  - Not an energy buy, but there was a sizable purchase of Block Inc. (SQ) for $27.5m by Roelof Botha, a director.  Here are the top 10 total buys in dollar amounts from insiders.  This insider purchase at Block (SQ) was massive and well-timed around the CPI report. Source: Edgar, SECFORM4.com.  Equity Sector Strength  Our Equity Sector Strength (ESS) signals show technology stocks continuing their breakout (warning, they are now overbought.) Energy is improving, but there is still a lot of caution in the sector. It’s positive to see the strong amounts of insider buying over the last week in the sector. Notable Earnings - Week of November 13, 2023. As we've crossed the peak of earnings season with over 80% of companies having reported, we’ll shift gears towards a comparatively quieter period, following a couple of busy days on Monday and Tuesday. This week, attention is centered on major retail players like Home Depot (HD), TJX Companies (TJX), Target (TGT), Ross Stores (ROST), and Walmart (WMT). The performance of these retail giants is pivotal, offering insights into the health of the consumer heading into the critical holiday season. Their results will reflect current consumer spending patterns and set expectations for the retail sector's performance during this key time of year. Earnings Releases - Tuesday, November 14, 2023 Home Depot topped weaker analyst expectations but warned about its outlook. The sentiment is strong around the company, with shares popping 5% at the open. Risk Chart of the Day Remind me again—what causes the chatter about soft landings to go quiet? Oh, that's right, hard reality. Leading indicators continue to slide across the board, and manufacturing is getting crushed in the United States. Are we really going to sit here and argue that this economy is healthy with so many people feeling the pinch? Company filings suggest that “Soft landing” is possible, and now we’re hearing “no landing” from more and more institutions. Buyer, beware of that sentiment. This narrative changes more than the plot of a John Grisham novel. Stay positive, Garrett.  You're currently a free subscriber to [Postcards from the Florida Republic](. For the full experience, [upgrade your subscription.]( [Upgrade to paid](   [Like]( [Comment]( [Restack](   © 2023 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()