How to play the Bear Market

Good morning. this is Jason Ma in Los Angeles, where gas prices are falling — but still above $6 a gallon in most places. The Labor Department will release September consumer price data on Thursday. This information could indicate where the Federal Reserve or the stock market are heading. 

Analysts anticipate that the headline Consumer Price Index will continue to fall, to 8.1% per annum from 8.3%, 8.5%, and 9.1%, respectively. Investors should prepare for a 5% drop in stock marketsJPMorgan’s trading desk stated in a note that if the reading is higher than 8.3%, it would be reported in a separate note. 

Even a reading of 8.1% to 8.3% would also be negative for stocks, with the note estimating that the S&P 500 would fall about 2% in that scenario.

JPMorgan said that a CPI print of below 7.9% would likely lead to a rally of 2%-3%, but “if we see CPI gap lower than 60 basis points, the move could be greater.”

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1. Investors should not be bullish about the fall in stock markets.Bank of America reports that inflation and concerns about rate-hike continue to undermine the valuation norms of past 20 years.

The bank said that it was waiting for three important factors to show it’s safe enough to buy stocksNone of these have been realized.

The bank stated in a Wednesday note that the three pieces needed to turn bullish on the stock markets are falling corporate earnings by at least 9 percent from current levels, falling consumer savings while the unemployment rate increases, and outflows into equity ETFs.

These metrics show that there is still much to be done. According to BofA data, the year ended December 31, 2017, saw $531 billion inflows into ETFs, which is the second highest year on record. 

One ETF stands out despite the massive sell-off. It continues to see strong investor inflows. According to VettaFi data, Cathie Wood’s flagship ARKK ETF saw $1.3 billion in inflows in the past year.

This is despite the fact that it has fallen 77% since its peak, surpassing the decline of dot-com bubble burst. And The ETF is unique in two ways that tech stocks 20 years ago are different and could cause a sell-off.DataTrek Research stated this in a Wednesday note. First, unlike the dot-com bust of 2008, interest rates have not fallen but are increasing. ARK Invest can be managed actively, while the Nasdaq can be passive and more diversified.

Bullish activity has been seen in stocks overall recentlyThis suggests that investors believe that the bottom is coming. BofA clients invested $6.1 Billion in US stocks last WeekThis was the third largest inflow since 2008, when the bank started tracking data and it also marks the fifth consecutive week with inflows.

What do YOU think? Is the stock market at its bottom? Email jma@insider.com. 

Other news:

2. Stock futures in the US rose on Thursday morning Before the eagerly awaited US Inflation Data due later this morning. Meanwhile, bitcoin traded at the $19,000 mark, while cryptocurrencies were still down. These are the most recent market movements.

3. Earnings on deck:All are welcome to Delta Air Lines and Walgreens Boots Alliance, BlackRock, Walgreens Boots Alliance, and many other companies reporting.

4. Morgan Stanley reports that many companies are working to solve their supply chain problems. They are building up inventories, while consumers are cutting back on purchases because they fear for the economy. This could lead to a disastrous combination. However, the bank listed nine companies that could avoid it..

5. The US is facing a “perfect storm”: debt, political strife and an overseas war, billionaire investor Ray Dalio said. Bridgewater Associates founder Ray Dalio warned that the Fed would have to harm markets and the economy in order to overcome stubborn inflation. He also provided portfolio advice.

6. The highest levels of Russian fuel supplies to the troops fighting in Ukraine’s war have been recorded since the invasion.. Bloomberg reported that fuel deliveries to Ukrainian military units reached close to 220,000 tons in September. Moscow’s mobilization of more troops following a string spectacular defeats is the reason for this increase.

7. China’s oil consumption is falling as OPEC predicts that it will drop by 60,000 barrels per year.After forecasting an increase in oil imports of 120,000 a month earlier, the cartel reported that it was now up by 12%. The cartel pointed out the extension to zero-COVID policies within some parts of China, which is the largest oil importer in the world. OPEC also reduced its projections of global demand growth for 2022-2023. 

8. Stock trader, who has seen a 42% increase in his stock trading this year, explains how he navigated the market.Matthew Caruso works as a position trader. This means that he keeps his stocks for several weeks, or even months. He shared five key modifications to his trading strategy that helped him beat the market while remaining profitable..

9. Grammy-nominated Steve Aoki made more money with NFTs than royalties.Insider heard from the celebrity producer, 44 years old, about his “headfirst” plunge into Web3. Here’s how he says he’s profited $10 million — and how Web3 can disrupt the multi-billion-dollar music industry.

10. Twitter stock remains below Elon Musk’s offer price for $54.20 per sharedThe market seems to be skeptical that both sides will agree to these terms, which suggests that there is no way for them to come up with a deal. But SharesThey have outperformed both the wider market and the Nasdaq thus far this year. David Einhorn, billionaire investor, said that Twitter is his biggest long wager in 2022.

Check out the Market News page to keep up-to-date with all the latest market news throughout the day. Insider’s RefreshThe Insider newsroom has a dynamic audio news bulletin called. Listen here. 

Jason Ma, Los Angeles. Do you have any tips or feedback? Email jma@insider.com. 

Max Adams edited the text@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.