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Good morning investors! Fear is ruling the US markets and the opinion on the future seems to be divided. 😧 

Fun fact: Speculation in the futures and options markets can cause short-term price swings that may not necessarily reflect the fundamental supply and demand dynamics.

Today we cover:

• World Bank warns oil may go above $150.

• The UK is preparing to regulate crypto.

• The Magnificent 7 – still worth an investment?

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📊 Economy and News 

Oil to hit $150?

Oil could hit a new high of $157 due to the ongoing Israel-Hamas war, according to the World Bank. 😮 

Previous high: The highest ever hit was in July 2008 when oil reached $147.5 per barrel.

Why? Experts believe that the war could spill to other Arab nations, which may result in a situation similar to the Arab oil embargo in 1973.

History: The oil crisis fifty years ago sent oil prices rising fourfold after Arab energy ministers imposed an embargo on oil exports on the U.S. in retaliation for its support of Israel in the 1973 Arab-Israeli war, known in Israel as the Yom Kippur War.

Even a small disruption could result in a reduction of 500,000 to 2 million barrels per day, a decrease rivaling that seen during the Libyan civil war in 2011. This could cause oil to break the $100 mark.

A “medium disruption”, i.e.: a reduction of 3 to 5 million barrels per day could cause oil to breach the $109 mark and hover around $121 per barrel. That’s roughly equivalent to levels reached during the Iraq war in 2003.

Anything above this could cause oil to cross the $150 mark, which will be a first.

Global hits:

• Eurozone inflation drops to a two-year low in October; economy shrinks in the third quarter ricking a recession.

• Apple introduces its fastest iMac and MacBook Pro models yet.

• Consumer confidence drops for third consecutive month.

📈 Stocks

S&P 500 4,193.80 (0.65%)
DJIA 33,052.87 (0.38%)
NASDAQ 14,409.78 (0.52%)
BRENT OIL 86.59 (1.85%)
* Prices as of Nov 1st, 12:20 AM UTC

S&P 500 logs first 3-month losing streak since 2020

October ended on a positive note as stocks inched higher with real estate (+2%) and financials (+1.1%) outperforming the S&P 500. Surprisingly, some big names, including Meta and Nvidia lagged behind with each declining by about 1%.

This, however, was the third-straight losing month for stocks since March 2020. The Dow and the S&P 500 fell 1.4% and 2.2%, respectively. The tech-heavy Nasdaq declined 2.8% in October, also notching its third consecutive negative month.

Why? Higher rates are being blamed for this. This month, the benchmark 10-year U.S. Treasury yield breached the key 5% level for the first time since 2007.

What’s next? The Fed is set to release its next decision on interest rates on Wednesday. Experts don’t see another hike this year.

Also check: UAW strikes cost Stellantis about $3.2 billion in revenue.

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🔐 Crypto

Bitcoin $34,400.60 (0.74%)
Ethereum $1,799.02 (0.89%)
Total market cap $1.27T (0.55%)
* Prices as of Nov 1st, 12:20 AM UTC

The UK has plans to regulate crypto

The United Kingdom’s Treasury department has moved closer to unveiling the country’s finalized proposal for how the digital asset industry should be regulated. 📕 

The government plans to gradually roll out new rules. According to reports, it will first target stablecoins and then move to the broader crypto industry.

What we know so far: The Bank of England, the Financial Conduct Authority (FCA), and the Payment Systems Regulator (PSR) will be the primary regulators overseeing stablecoins.

Also, crypto firms will have to be registered with regulators regardless of where they are based in the world. Furthermore, crypto exchanges will be subject to mandatory disclosures if listing a new asset on their exchange.

💵 Personal Finance

All about the 7 stocks

The Magnificent 7 are seven stocks that rule the charts. These are:

• Apple: Controls more than half of the U.S. smartphone market share and has the most robust capital-return program among publicly traded companies. 🍏 

• Microsoft: Owns the world's dominant desktop operating system and is heavily involved in AI. 💻

• Alphabet: as accounted for at least 90% of global internet search share since March 2013. Plus, also owns the world's second most-visited site, YouTube. 🤓 

• Amazon: Credited for about 40% of all U.S. online retail sales. Moreover, owns the leading cloud infrastructure service platform, Amazon Web Services (AWS). 🏬 

• Nvidia: Enjoys virtual monopoly, for the moment, in artificial intelligence (AI)-accelerated data centers. 💻

• Meta Platforms: Owns some of the largest social media platforms and is heavily invested in AI. 💬 

• Tesla: Is a leading electric-vehicle maker and the only EV pure-play generating a profit. 🚘

These are known for beating the S&P 500 Index, as seen below:

But are known for being expensive. However, some argue that traditional methods are not very effective when it comes to gauging these stocks.

While most investors lean on the price-to-earnings (P/E) ratio as the traditional valuation determinant, it has its drawbacks for high-growth companies.

The seven companies discussed above are known for reinvesting a lot of their income, thus it's safer to look at their future cash flow instead of their future earnings when seeing how profitable they can be.

Here's their forward-year cash flow:

• Meta Platforms: 9.54

• Amazon: 10.83

• Alphabet: 12.65

• Microsoft: 18.78

• Apple: 20.91

• Nvidia: 22.95

• Tesla: 37.96

As evident, Tesla is the most expensive. Apple and Nvidia are also not affordable but Meta, surprisingly is. The social media giant has tripled off of its 2022 bear market low.

Is Meta a buy?

Meta is undoubtedly a strong company and it has a great track record. After a difficult 2022, the company bounced back in 2023 and is once again growing. However, it's value is low.

Why? Due to the company's ongoing losses from Reality Labs -- the segment focused on metaverse ambitions and virtual/augmented reality devices. Plus, uncertainty surrounding the health of the U.S. economy.

The company generates a large chunk of profit through ads, which will suffer if the economy suffers. However, we're not concerned because Meta is set to explode.

If you are looking to invest in the Magnificent 7 then Meta can be a good pick. This report talked about how The 'Magnificent 7' stocks are struggling. They have shed a staggering $1.2 trillion in market value since US equities peaked in July. Even ETFs that are highly exposed to the "Magnificent 7" have been pummeled since last week amid a selloff in tech stocks.

But, we’re not worried because this is temporary. These seven companies are solid and all will go higher.

💰 Be a Better Investor

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.