What You Might Have Missed: Eggs, Chicken and Apple

11/12/2022

3 minutes read

2022.11.12 10:50

A lot happened in the markets this past week. And perhaps the best analogy to explain it all rests with one obscure development in the broader world of economics: The price of eggs jumped, while the cost of chicken dropped.

So which came first? The chicken or the egg hike?

The answer is: It does not matter. Because it’s all about perceptions, not facts. Not really. At least in the short term.

The stock market illustrated this perfectly this week. Take a look at how the markets ended the week for an example. On Thursday, U.S. markets posted their best day since 2020, with a rally triggered by a better-than-expected report that showed inflation had slowed more in October than analysts had predicted. Nothing really happened that day. The CPI report was just confirming the reality everyone had already lived through. It was just the news that things seemed better than many had thought.

Then Friday, the rally slowed. And again, nothing had really happened. It was just the realization this time that the initial sense of euphoria that inflation was slowing was wearing off a bit.

And this pointed to the next thing: What will the Fed do with all this data? What will it mean in terms of future interest rate increases?

Sentiment is such an intangible factor that will never be tamed. Not really. Not in the short term.

As for the price of eggs. It increased more than any other grocery item in the month of October, jumping 10%, according to the CPI report. But not without reason. The price of a dozen has just about doubled in the past year in the U.S. The cause is attributed to the most severe outbreak of avian flu in the U.S. that has forced the culling of about 37 million laying hens, which represent about 10% of the country’s production.

Meanwhile, in this age of inflation, the price of chicken, according to the same CPI report, actually dropped about 1.3% in the month of October. It turns out broiler chickens are not as susceptible to avian flu as laying hens. But again, don’t be too taken by perception. The price of chicken today, although down slightly, is still about 14.5% higher than this time last year.

Why all this talk about chicken and eggs, you ask? The moral of the story here is that traders should not count their chickens before they’re hatched.

Forget Chicken. But How Do You Like That Apple?

Speaking of food-like substances, let’s talk about apples. No. Just kidding. But let’s look at what happened to Apple stock this week.

The tech giant – also known as the most valuable company in the world – added a new superlative to its repertoire this week, when last Thursday’s stock rally buoyed its shares by 8.9%, pushing its market cap up a whopping $190.9 billion. That is now the record for a one-day increase in value of a U.S. company, according to data by Bloomberg. It edged out Amazon’s one-day big valuation bump of $190.8 billion recorded in February.

Apple shares (NASDAQ:) continued to gain yesterday to close the week at $149.70, up another 1.93% on the day, putting the company’s market cap at $2.38 trillion.

Apple Weekly Chart