BoJo's Mojo is Back

Last week set records across markets. But for all the wrong reasons. Mortgage rates have risen at the fastest rate in four decades, taking the wind out of the sails of the U.S. economy. U.S. Treasuries tumbled into their longest slump since 1984. Even Elon Musk’s fortune has fallen by more than $100 billion in less than a year.

Let’s get up to speed on news attempted to be buried into the weekend and preview the week ahead.

But first, a quick note from The BAD Investment Company.

Tired of ESG Bullsh*t? Fortunately, there's a money manager that decided that B-A-D might be the better acronym for investors.The BAD ETF (NYSE: BAD) launched last December and is taking a different stance in this green washed world focusing on 3 industries for which the ticker represents – B-A-D.

• Betting – Casinos, gaming, and online gaming operations – 33%

• Alcohol – Alcoholic beverage manufacturing and distribution – 23%

• Drugs – Pharmaceutical and biotechnology product development and manufacturing – 33%Cannabis cultivators & distributors - 10% 

The case for these BAD industries remains strong for a simple yet important reason – they have historically offered attractive risk-adjusted returns. In addition to these industries overcoming government scrutiny, these industries have shown resilience during economic downturns because people tend to indulge in their vices, or what some call hobbies.

As a result, we believe these asset classes are typically underappreciated and therefore under-valued but the reality is that people will continue to consume alcohol, gamble, and need medicine in good times, and in BAD.

In regards to the betting and cannabis aspects, as these industries become more widely accepted socially and legally, they may offer investors additional growth as more states look to legalize those industries for additional tax revenues.

Learn more about the BAD ETF fund details and sign up for our mailing list to get the latest fund insights and information.

Bad News Dumpster Dive

​​The “Friday news dump" is alive and well. In the spirit of highlighting all the efforts of market movers to bury their news, we've decided to excavate them. Here are all the Friday and weekend dumps for your viewing pleasure:

Saturday (all EDT):

1:03 AM: President Xi Jinping is officially set for a third term surrounded by allies, after key Communist Party officials without close ties to the Chinese leader exited the nation’s top leadership body (Bloomberg).

5:49 AM: China bakes rejection of Taiwan independence into party charter (Bloomberg).

9:18 AM: Billionaire Dan Och slammed by Sculptor Capital Management in court filings for “mismanagement” (Bloomberg).

10:31 AM: Apple Inc.’s head of hardware design, Evans Hankey, is leaving the iPhone maker three years after taking the job (CNN).

11:58 AM: Hurricane Roslyn strengthens to a Category 4 while heading towards Mexico before landfall (CNN).

12:00 PM: Airstrikes have hit critical infrastructure in central and western Ukraine, as Russia continues to target the country's energy grid. Almost a third of the country's power stations have been destroyed in a wave of airstrikes since Monday last week (BBC).

👀 1:24 PM: Sunak and Johnson Set to Face Off in UK Leadership Contest (Bloomberg).

2:00 PM: Footage of China's former leader, Hu Jintao, being asked to leave the stage at the Great Hall of the People in Beijing during the Communist Party Congress is drawing global attention as people try to work out what happened (BBC).

6:00 PM: Mark Zuckerberg said VR, the technology he bet his entire $340 billion company on a year ago, is entering “the trough of disillusionment” (Sunday Times).

11:40 AM: Nasdaq halts IPOs of small Chinese companies (Reuters).

👀 12:25 PM: The EU is suggesting that a curb on darkpool or off-exchange trading of shares in the European Union should be completely removed and they should also scrap the proposed ban on payment-for-order flow (Reuters).

3:44 PM: Ray Dalio said he expects "negative or poor real returns" in markets for the next five years (Fortune).

👀 4:39 PM: This week, the IRS said it was raising tax brackets and the standard deduction by 7% to account for high inflation (CNN).

Friday (all EDT):

3:27 AM: Grocery delivery app Instacart decided to push its highly anticipated IPO into 2023, believing the current stock market is too volatile (NY Times).

4:24 AM: Toyota to cut full-year production target on chip shortage (Automotive News).

4:24 AM: TikTok spokesperson Maureen Shanahan said that TikTok collects approximate location information based on users’ IP addresses (Forbes).

6:27 AM: Boris Johnson, Rishi Sunak lead race to be UK's next prime minister (BBC).

8:09 AM: Saudi Arabia and China are ready to cooperate to maintain oil market stability (Reuters).

8:28 AM: Biden’s administration discussed whether the US should subject some of Elon Musk’s ventures to national security reviews. This would include his deal for Twitter and the Starlink satellite network (Business Insider).

9:13 AM: Japanese CPI: actual 3.0% (forecast 2.9%, previous 3.0%) (CNBC).

9:26 AM: Cathie Wood of Ark Invest bought 66,190 shares of Tesla (Barron’s).

👀 9:30 AM: The St. Louis Federal Reserve said it would "think differently" about appearances by its president James Bullard at non-public events after news reports of his attendance at a private policy forum last week sponsored by Citigroup (NY Times).

10:58 AM: Deutsche Bank laid off dozens of employees, including some out of the UK (Yahoo Finance).

11:21 AM: Treasury 10 year yield rises above 4.25% for first time since 2008 (Reuters).

12:13 PM: TikTok to introduce adult-only content option (Yahoo Finance).

👀 12:26 PM: Bank of Japan announces another emergency bond buying operation (Nikkei Asia).

12:40 PM: Snapchat is cutting costs and relying more on remote work, and closing its office in San Francisco (Business Insider).

👀 2:00 PM: Jan. 6 Capitol riot committee subpoenas former President Donald Trump (CNBC).

2:05 PM: FTX US will do its own analysis of what kinds of crypto tokens count as a security when making listing decisions (Cointelegraph).

3:58 PM: Lyft co-founder says autonomous vehicles won’t replace drivers for at least a decade (TechCrunch).

4:36 PM: France decided to withdraw from the energy charter treaty (FT).

4:50 PM: Walmart to pay $215 million to settle Florida opioid claims (Reuters).

5:34 PM: With Elon Musk’s $44 billion deal to buy Twitter set to close no later than Oct. 28, the company is trying to reassure workers about their employment and compensation (NY Times).

6:05 PM: German parliament votes to approve an emergency €200 billion rescue fund to tackle the energy crisis (POLITICO).

7:21 PM: SEC says Mattel agreed to pay $3.5 million to settle charges relating to financial misstatements (CNBC).

Market Outlook

News to know for the week ahead

Early estimates for the US GDP’s third quarter are set to be released this Thursday (Oct 27th). The upcoming GDP report is expected to show an economic rebound just before the midterms, though families and businesses continue to struggle with inflation

Sunak and Johnson set to face off in the UK leadership contest. Johnson’s campaign team claim he’s surpassed the required support of over 100 Members of Parliament, though dozens of those are yet to announce their choice, while Sunak has the public backing of more than 110. A direct runoff risks reopening deep divisions in the Conservative Party since it was Sunak’s resignation as chancellor in July that prompted an exodus of ministers from Johnson’s scandal-ridden government and led to his downfall.

As the proximity to Brazil’s runoff vote gets closer, so too do the forecasts. Recent opinion polls show President Jair Bolsonaro is chipping away at Leftist former president Luiz Inacio Lula da Silva’s lead. An Ideia survey published yesterday had both candidates statistically tied while a Datafolha poll released Wednesday showed Lula’s lead tightening by 2 percentage points in a period of four days.

Elon Musk’s Twitter saga could draw to end as its Oct. 28th deadline looms. It could be a busy November for Judge Kathaleen McCormick, depending on whether Elon Musk keeps to his word over the next week. The Delaware judge has given the world’s richest man a deadline of 5 PM EDT to complete a $44bn deal to buy Twitter, or else she will see him and the social media platform in court soon after.

The world’s largest bond market is being whipsawed by its longest stretch of sustained volatility since the onset of the financial crisis in 2007. It marks a stark break with the stability seen during the long era of historically low interest rates. And the uncertainty that’s driving it doesn’t appear set to fade anytime soon: inflation is still running at a four-decade high. The Federal Reserve is raising interest rates aggressively, and Wall Street is struggling to gauge how well a still-resilient economy will hold up.

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