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What exactly is influencer marketing? How does it differ from other forms of advertising? And why should marketers care?
Influencer marketing has become a powerful tool for businesses looking to reach new audiences.
Marketers use various strategies to identify influential individuals and gain access to their followers.
In this article, we’ll discuss what influencer marketing is and the variable for incorporating influencer marketing into a brand’s strategy.
Influencer marketing uses celebrities, athletes, bloggers, and other influential figures to market brands.
Influencers are those who have large social media followings and have the ability to influence their audience.
Brands use influencers to promote their product or service through paid advertisements, free giveaways, and endorsements. In addition, they can generate significant brand awareness and loyalty through paid or unpaid posts.
The goal is to get them to share valuable information and create excitement around a particular topic, product, or service. The key benefit for brands is that they reach a larger audience at a lower cost than traditional advertising methods.
However, this opportunity comes with some responsibility on the part of the brand.
Brands must be careful when choosing an influencer because it’s easy for them to fall in love with the idea of working with someone influential.
Unfortunately, without thorough background research, this can lead to a situation where a potentially ideal influencer promotes products that aren’t aligned with a brand’s values. Therefore, it’s important to ensure the influencer you want to work with aligns with your brand’s goals and values.
Influencer marketing also requires brands to pay influencers fairly. If you don’t pay your influencers what they deserve, they won’t promote your brand in the vision you want them to. Additionally, you can risk a potentially fruitful relationship.
When collaborating with an influencer, it’s essential to not just think of the total cost but the project’s goals and establish what you would like accomplished in the front end.
This can include a discovery call to plan out potential posts or how-to videos. Will you provide the content and supporting information, or will they? Of course, all this will affect the cost and time involved in creating the posts.
Influencer marketing has become one of the most effective ways to get people talking about your business online. It’s essential to know how to find the right influencers for your niche to ensure your message gets across.
A study showed that in 2022 influencer marketing is set to reach $16.4 billion and 75% of brand marketers plan to include influencer marketing in this year’s strategy. This type of marketing is growing fast and doing well.
And this isn’t just for B2C brands, since 86% of B2B brands find influencer marketing a valuable strategy. That’s a considerable return on investment if you have the right approach.
If you’re only using traditional digital marketing (SEO, PPC, social media, etc.), you’re clearly missing out on a huge opportunity to increase your ROI.
It doesn’t matter if you’re an agency, brand, or business – everyone can benefit from trying influencer marketing.
Don’t believe me? You should. Influencer marketing is not “out of your league.” Here’s why.
How many clients does your agency have? That’s how many new influencing opportunities your agency has at its fingertips.
Agencies can use their clients, the ones they like and like them, to help promote their agency for them.
Think of it like receiving a referral or customer review.
If someone enjoys working with you and the business next door asks how they got so successful so quickly, they’re going to tell the next-door business all about your agency and how you helped them.
Case Studies & New Content
Capitalize on this process and ask your clients for video testimonials to become a part of your referral program (create one) and if you can use their results for case studies.
If you’ve been able to impact a client positively, they’re highly likely to approve you sharing the story of how you took them from one to 10.
Gather a dozen different case studies from your past and current clients to publish on your website, social pages, email newsletters, and ads. This isn’t only additional content but content your existing and new clients will appreciate.
You can also make the case study an appealing PDF and share it with the case study client for them to share among their peers.
If you help them reach their goals, they’ll love the PDF filled with graphics, charts, and impressive numbers to share with other business owners.
Trial By Error
Another way to utilize your clients for influencer marketing is to ask your clients to test out a new product.
If they’re a big client of yours, it’s appropriate to let them know that your agency is trying to innovate with all of the tech advances, and you want to try a new strategy or product with them as a test.
FREE Of Charge
If things work out with the test, woohoo! You’ve added another section to the contract. And you have a new service or product to charge for in the future.
If things don’t work out, you get insightful and honest feedback from the client and know how to fix the product or plan.
One of the most significant ways I see brands utilize influencer marketing is by partnering up with other brands.
Before I get too deep into this, I want to clarify that there are prominent corporate players like Sprint and Blue Apron. And they’re also individual brands like famous Instagram users and YouTube celebrities.
A brand can be an individual brand, like you trying to grow your role as a digital marketer in the industry. However, it can also represent a larger entity for cosmetics and skincare like Maybelline.
Now, back to the brands and the whole influencer marketing idea. Brands will partner together in campaigns to help widen their audience with influencer marketing.
They can use relevant brands in the same industry or reach out of the spectrum and partner with entirely different brands to increase their exposure to a new audience.
When you work with an influencer in a different industry, you get a level of influencer where you can capitalize on the new audience. Be strategic in who you reach out to and ask to partner up in a new influencing campaign.
Partnering with the wrong brand will profoundly impact your brand’s reputation and possibly ruin it.
Red Bull partnering with Coca-Cola for a new content campaign also wouldn’t be the best of ideas. On the one hand, Red Bull is heavily involved in extreme sports. But, they’ve chosen that angle due to their real product, an energy drink named Red Bull that essentially “gives you wings,” to be extreme.
Sure, the Red Bull athletes could do an incredible stunt riding a mountain bike down the ledge of the mountain holding both a Coca-Cola and a Red Bull can, but what would be the point?
It wouldn’t make sense because, technically, the two can be seen as competitors. They both are on-the-go drink manufacturers.
Instead, Red Bull could partner with Nike and do a content campaign featuring Nike’s new apparel line, Red Bull’s energy drink, and summer sports.
Just because your brand is in the same industry as another doesn’t mean a collab will work. It’s important to research how your consumers will react to the ad.
We can most commonly recognize influencer marketing when businesses do it.
If your business makes pipes for the plumbing industry, head to that list of the most famous plumbers and start reaching out.
Doing outreach is a huge part of influencer marketing. It almost feels like putting on a public relations or journalist hat for a second as you try and narrow down your influencers.
Once you’ve found an influencer who has agreed to help promote your product, don’t just stop there. The more influencers you have, the more brand exposure you get, as well as trust.
The word will get around if one of the most famous plumbers uses your pipes for repairs. Other plumbers will trust the renowned plumber and follow in their footsteps to purchase and use only your pipes.
Sometimes, you don’t need to pay an influencer. Instead, samples of the product you’re asking them to promote, discounts, or free services usually suffice.
It changes and becomes a more costly strategy when you pick who the influencer is and depends on the type of content you want.
The bigger the influencer, the more they’ll want.
If you’re aiming for that Kardashian type of exposure, you will need to break out the wallet. And the credit card. And possibly your mortgage.
If you’re a brand, business, or agency with goals like a Kardashian type of exposure and the budget to match. Then, by all means, reach out to your lawyers and start preparing contracts for when you lock in those influencers.
Make sure your contracts clearly state the expectations of the influencer. For example, if you want them to run the content by you before they publish it, specify that in the contract.
If you want the influencer to only be able to promote your plumbing pipes and not work with any other pipe companies, state it in the contract.
For the rest of us, focus on the more affordable influencers. These people may already invest much of their time promoting your brand because they love your product or what you do.
Death Wish Coffee is an excellent example of this.
People love their product, the ridiculously strong coffee that comes with a side of sarcasm. The brand speaks its customer’s language, making it fun for customers to engage and promote the product themselves.
This coffee company can monitor its hashtag mentions and unlock hundreds of potential influencers that would love to receive a free month of coffee for posting more about their brand.
Look at what kind of mentions your brand, business, or agency is attracting online and follow the conversation. You’ll quickly discover who’s talking about you the most.
Then, look at their followers if they have a healthy following reach out and see if they’d be interested in partnering up with you on an influencer campaign.
Don’t stop reading. I know those of you who are rolling your eyes yelling, “NO ONE MENTIONS MY BRAND!”
Don’t worry. I’ve got a solution for you, too. Look at your big competitors. Think of the Red Bulls and Coca-Colas of your industry.
See what kind of mentions they’re getting and from who. Then, reach out to those influencers and pitch away.
You never know who will say yes unless you ask.
Plus, they may not want as much as you think or even be willing to promote for free after getting to know more about you and your business.
Nowadays, there are numerous influencer marketing tools out there that can help connect you with the right people and brands. So, if you’re having trouble finding people you want to work with, it can be beneficial to supply one of the tools a try.
Influencer marketing has become much more than just a buzzword.
Marketers have been using influencers to promote their products for years, but brands are now using influencers to build customer relationships and create new revenue streams.
By leveraging the power of social media platforms like Facebook and Instagram, marketers can connect directly with consumers through influencers.
This can help to increase brand awareness and drive sales. It can also open your brand, business, or agency to new audiences.
As we get closer to the end of this year, try strategizing the influencer marketing opportunities you have out there.
More Resources:
Featured Image: Anton Vierietin/Shutterstock
Every fall, new students join the lab, eager to learn about consciousness and the brain. At this time of the year, I always ask myself, "What are the fundamental ideas about consciousness and the brain that should be taught first?" I always find myself revising, updating, streamlining, and making clearer the ideas in introductory lectures and the lab manual (Morsella, 2022). Below are the four fundamentals that, over the years, have always been presented first, both in the manual and in lab discussions.
The first thing to learn is what a “conscious content” is. Any particular thing one is conscious of has been referred to as a “conscious content.” A conscious content could be the sight of a coffee cup, an afterimage, a song that keeps playing in one’s mind, a percept, an urge (e.g., to scratch a sunburn), the smell of an ice cream sundae, or an autobiographical memory (e.g., memory of last summer’s camping trip).
The term “conscious content” refers to the most basic form of consciousness: If a creature is capable of having an experience of any kind—pain, nausea, a pleasant dream, or the sound of a bell—then it possesses this basic form of consciousness (Morsella, 2022). In short, to have an experience of any kind is to have some kind of conscious content. Sometimes people refer to this kind of basic consciousness as “awareness,” which means the same thing: Being aware of a cup or ringing in the ears is to experience these conscious contents.
The second thing to learn is the term “conscious field.” The conscious field is made up of all the conscious contents that are activated at one moment in time: the sight of an ice cream sundae plus the smell of coffee plus the feeling of the chair on which one is sitting plus the song that one cannot get out of one’s mind plus the memory of the doctor reminding one to cut down on sweets.
We are not aware of, and have no conscious contents for, many things going on in the brain or body—peristalsis in the gut, how the pupils in the eye are controlled, and many other activities in the nervous system (e.g., motor and syntactic programming). These processes are said to be unconscious. There is usually no experience about them. We know of these processes mainly through reading about them in textbooks. We have no direct experience about them. In short, “unconscious events are those processes that, though capable of systematically influencing behavior, cognition, motivation, and emotion, do not influence the organism’s subjective experience in such a way that the organism can directly detect, understand, or self-report the occurrence or nature of these events” (from Morsella & Bargh, 2011).
Knowledge of unconscious process leads to the third important fundamental about consciousness and the brain: Not all brain processes and regions are associated with consciousness. Consciousness is associated with only a subset of the regions and processes. Researchers are attempting to home in on these circuits associated with consciousness (e.g., Morsella et al., 2016; Morsella, 2022).
The fourth fundamental is an observation that holds some clues about why one needs a fully operational conscious field, one in which many conscious contents are presented: Each conscious content activates brain processes, including, to some extent, behavioral inclinations. Consider the classic Stroop task (Stroop, 1935). In the task, subjects are instructed to name the color in which a word is written. When the word and color are incongruent (e.g., RED presented in blue), “response conflict” leads to increased error rates and response times. The response conflict arises because, though one intends to name only the color in which the word is printed, the stimulus (RED) activates involuntarily the “word reading” action plan (to utter “red”).
Because conscious contents can activate processes that influence behavior, it is essential that one conscious content (e.g., a tasty ice cream sundae) not be presented alone to have too much influence on behavior. Such a monopoly would not lead to adaptive behavior. Each content should be “checked” by other conscious contents (e.g., the memory that the doctor recommended cutting down on sweets). (This is called a “frame check”; Morsella et al., 2016.) Because voluntary behavior is influenced by the many conscious contents in the field, we respond to a given stimulus (the tasty sundae) not in isolation but in light of the other contents (e.g., memory of doctor) composing the conscious field.
With these four fundamentals, incoming students not only understand new terms but also begin to appreciate the important role of the conscious field in yielding adaptive actions that are context-sensitive. Over the years, these four fundamentals have consistently appeared at the beginning of the lab manual (Morsella, 2022), and I can’t foresee an introduction to the lab without them.
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Strain gauges are those tiny sensors that look like little wire resistors, which is essentially what they are. These transducers are sensing devices that measure load, pressure, torque, displacement, and even acceleration. The resistance of a strain gauge changes under a force.
The global market for strain gauges is projected to reach USD 240.6 million by 2026, from USD 188 million in 2020, at a CAGR of 4.2 percent, predicts 360ResearchReports. China is the largest consumer of strain gauges with North America as a distant second place.
Strain Basics
Strain gauges measure the force of strain but also stress. In engineering terms, the strain is a dimensionless quantity that is a ratio of the change in length to the original length of an object. Thus, stretching material results in a positive strain while compressing it will produce a negative strain. The strain is a measurement of the force applied divided by the initial cross-sectional area of an object.
A strain gauge is composed of a thin-film, metal foil insulated by a flexible substrate. Current is passed through the gauge as the surface of the object being measured is stretched or compressed, which causes the resistance in the gauge to change. This change in resistance is proportional to the change in length on the surface of the object being tested:
Change in resistance/resistance = Gage factor x strain
Strain gauges work by measuring the change in resistance across a thin conductive foil. The gauge factor (or “gage factor”) is the sensitivity of the strain gauge, i.e., the linear portion. It converts the change in resistance to the change in length.
Instrumentation
The strain gauge’s resistance is directly proportional to how much strain (or stress) the sensor is experiencing due to the force applied. Typically, this variation in resistance is measured with a Wheatstone Bridge circuit, in which the strain gauge comprises one of the resistive paths in the bridge. In this arrangement, the quarter or one arm of the bridge formed by the strain gauge is the active gauge while the other arms are fixed value resistors or unstrained gauges.
In an ideal case, the strain gauge is the only resistor in the circuit that varies and then only due to a change in strain on the surface of the specimen to which it is attached. (See, “Fundamentals of Strain Gauge Instrumentation Amplifiers”)
Application
In addition to load, pressure, displacement, and acceleration, strain gauges are used to measure torque – such as those applied by a motor, turbine, or engine to fans, generators, wheels, or propellers. This equipment is found in power plants, ships, refineries, automobiles, and industry. Power is obtained by measuring the strain and rotational speed on a shaft.
An interesting torque application using a strain gauge was found in the development of a bicycle power meter. As reported at Nanyang Technological University, Singapore, strain gauges were used to measure the real torque applied by the cyclist when powering a bicycle, i.e., pushing the pedal. A strain gauge was mounted on a separate sensor member that was retrofitted in-between existing bicycle cranksets. The main challenge was to provide an accurate measurement of torque by eliminating the non-contributing forces and moments on the system. The goal was to develop a cost-effective solution for an accurate power-measuring device for a cyclist.
Power meters enable professional athletes to track their training progress. Most bicycle power meters use strain gauges to measure applied torque and, when combined with angular speed, calculate power. One of the more common types is the chainring-based power meter. It’s important that a good power meter only measures the torque (about spindle axis: z-axis) which is responsible for real power output.
To accurately know the power output, the first step is to precisely measure the torque applied by the cyclist who is responsible for the power generation. Formally, torque (or the moment of force) is the product of the magnitude of the force and the perpendicular distance of the line of action of a force from the axis of rotation. The SI unit for torque is the newton meter (N•m).
The real torque applied by the cyclist requires the elimination of all the unproductive forces and moments in the system, for example, the bending of the crank chain towards the frame when the cyclist is pedaling. A sensor member was designed and placed in between the chainring and the crank arm, interconnecting these two parts. A full-bridge pattern was selected and mounted on the sensor member. The strain gauge in the sensor member was connected in such a way that the novel arrangement only outputted the pedaling axis’ torque. Thus, the special arrangement and circuit diagram enabled accurate measurement of the torque that was responsible for the real power output.
John Blyler is a Design News senior editor, covering the electronics and advanced manufacturing spaces. With a BS in Engineering Physics and an MS in Electrical Engineering, he has years of hardware-software-network systems experience as an editor and engineer within the advanced manufacturing, IoT and semiconductor industries. John has co-authored books related to system engineering and electronics for IEEE, Wiley, and Elsevier
We read and hear a lot about “breakthroughs” in our industry: Robots eliminate operators; auto-feeding systems never allow the machine to go dry; snazzy signal processors and transducers monitor every microsecond of the molding process. With all this gadgetry, however, are we seeing more profit and a return on investment for the money spent? Not really, because we have been dazzled by technology and ignored the fundamentals.
Recently, I got an e-mail from a guy who had just taken over the position of lead technician. He wondered about the use of chillers and their expense. He also wondered about the quality of his products when the setup sheet used "tower water" as the main source of cooling for molds and machines.
The trouble with tower water
Let's hit the simple but often overlooked problem first—tower water. When people first build a molding plant, they decide on the number and size of the molding machines and calculate the power and cooling requirements. What they tend to ignore is what happens when additional machines are purchased, because that is covered in the “safety margins” of the original designs.
Heat exchange is necessary because:
Heated machine oil is cooled directly from the tower. The molten plastic's heat first dissipates into the mold steel, is transferred to the cooling circuits and then to the mold's heat exchanger (generically called a Thermolater, although there are other suppliers) and finally to the tower's evaporative cooling circuits.
Evaporative cooling depends on the evaporation of water. This depends on the outside temperature, relative humidity and a host of other variables. It is obvious that when the outside air changes, the temperature of the tower water also will change. As the tower water's temperature changes, your mold temperature will change, and the dimensions and quality of your parts will change.
Another reason to avoid directly putting tower water in your mold is scale buildup. With water flowing through a mold you have the perfect setup for electrolysis, where the minerals in the water will plate out onto the waterlines. Just 1/64 in. (0.4 mm) of scale buildup can reduce the heat-transfer efficiency of a waterline by 60%, even with adequate flow.
Fun facts about heat distortion temperatures
First fun fact: The ideal ejection temperature for any molded part is when it reaches 80% of the material's heat distortion temperature (HDT). Second fun fact: If you check the literature, no thermoplastic resin's HDT is so low that the 80% figure turns out to be room temperature or lower. There are some practical exceptions: Thin-walled elastomers tend to turn themselves inside out during ejection. If dimensions are not sacrificed, if you “over-cool” the part prior to ejection it can be rigid enough to conventionally eject.
These fun facts beg a simple question: If this is correct, why do we need chillers? You use a chiller in an attempt to overcome inadequate cooling in a mold.
Most molds use a Thermolator to maintain mold temperature so that the part can reach 80% of HDT as efficiently as possible. Keep in mind plastic is a poor conductor of heat. The heat from the plastic radiates relatively slowly into the mold steel. The heat-transfer characteristics of the mold steel and the water in the cooling lines are many times faster.
The weak link in this plastic-metal-water heat-transfer system is the water's flow rate. When water flows smoothly like a gentle stream, it flows in layers: This is called laminar flow. The layer that is in contact with something—the walls of the waterline or the bottom of the stream—will flow very slowly. The water at the top of the stream or the center of the waterline only has to slip past itself and flows must faster. With laminar flow, the heat transfers very slowly because it has to heat up this stationary layer before the flowing layers can pick it up and exit the mold.
The laminar flow effect stops when the flow increases. It ceases to flow in layers and begins to tumble over itself. This is called turbulent flow. With the water tumbling over itself in a waterline, it picks up heat directly from the mold steel. Turbulent flow is measured with a very complex dimensionless number called a Reynolds number that uses flow volume, the size of the flow channel, the heat of the water and the viscosity of the water. Instead of going through the calculus, a rule of thumb is 1 gallon per minute (GPM) per circuit will always supply you turbulent flow in normal molding situations.
Image: Maksim Kabakou/Adobe Stock
You can purchase flow meters cheaply. Hook them in-line and see what you have. The results might surprise you. Here are some examples.
Age: Like everything else, Thermolators and chillers wear out with time. A Thermolator is not something we tend to do maintenance on. First, check your Thermolator's output pressure as stated in its operating manual. In many cases, the pumps are old, tired and incapable of creating enough pressure to pump the needed 1 GPM per circuit. Repair, replace or retire worn-out equipment.
Line resistance: Let’s do a mind experiment—you want to water your front and back lawn at the same time. You only have one faucet in the front of your house. With a T connector, you hook up a 15-foot hose for the front yard and a 75-foot hose to go around your house and into the backyard. You put two identical sprinklers on each hose. Turning on the water, you think equal amounts will go to each yard but you notice the front yard sprinkler is shooting 25+ feet into the air while the backyard sprinkler is only shooting up five feet. You wonder why—the same pressure source should be the same flow. You forgot about the energy it takes to push the water through the longer hose. Water will always take the path of least resistance. Twenty-foot lines from the Thermolator to the mold require the unit to work harder and only make your utility company rich.
Hookups
Figure 1: In the best of all worlds, each cavity has individual cooling with a circuit that goes to the main machine manifold. All pressures and flows are equal.
Figures 2 and 3 show four cavities looped together. The resistance of each baffle will compound on the next, severely impeding flow. Figure 2 shows an external loop; figure 3 shows an internal loop.
Figures 4 and 5 show a ladder loop. You can fall into a productivity trap if it isn't designed well (one of the major excuses to use a chiller). Both figures supply you the illusion of one circuit cooling only two cavities. Figure 4 shows the "in" and "out" at the bottom of the ladder. This is like our mind experiment. The majority of the flow will cool the cavities closest to inlet. It will become less and less the farther away you get from the inlet and outlet. Figure 5 shows the inlet at the bottom and the outlet at the top. While the bottom of the ladder sees a high inlet pressure, it also sees a high resistance to the outlet, thus balancing the flow.
Many molds are built with short and long circuits. Look at the mold designs and designate the circuits that can be looped and what should not be making all the circuits close to the same amount of flow.
How do we document waterline hookups? I've seen photographs (hard to see with more than eight circuits), sketches (hard to read) and descriptions (sometimes hard to do). The best solution is to take from the written description you get for driving directions from your GPS.
In Figure 6 you can see circuit #1 has five loops while circuit #4 is straight through without any loops. It's amazing how techs think they can commit these “waterline maps” to memory. They can't.
Another “flow killer” is so obvious it is sad. If you have more than 15 machines, there is a better than 80% chance you can find at least one pinched-off circuit. You have looped two circuits together with a length of hose that is too short, bending it sharply and pinching it closed.
Follow up—avoiding common mistakes
Have a setup guide available when hanging a mold and have someone:
Waterline diameter
Realizing how silly this sounds, I have seen large molds cooled with ¼-in.-diameter waterlines. The physics of the Reynolds number and commonsense will tell you a small-diameter waterline and a complex path, or one with several restrictive fountains or bubblers, will require an extremely high pressure to get 1 GPM flow. Good mold design will also tell you a cooling line can only efficiently cool within three diameters of its outer wall.
If you can only remember one thing on the Topic of cooling a mold, put the Mississippi River through the mold. Temperature is easy to regulate but flow determines the mold's temperature.
Conclusion
Injection molding should be both fun and boring. The fun side comes with psyching out the process to balance everything. All this effort should come when you first run/qualify the mold. If you did your homework properly, the boring part is sitting back and watching the profits roll in.
Epilogue
At the end of a few e-mails, my guy tested and scraped a few worn-out Thermolators. He got the engineer to re-write clearly the process sheets and waterline diagrams. He and his crew went on constant hunts and found pinched off waterlines.
The results:
In other words, more profits for less work.
About the author
Bill Tobin has more than 30 years of hands-on experience in injection molding. Through his company, WJT Associates, he writes articles, presents papers and teaches seminars helping people Excellerate their profits and productivity. He can be contacted at [email protected].
This course is only available if you are studying the Foundation Certificate (International) or Foundation Certificate (International – Accelerated)
Learning outcomes can change before the start of the semester you are studying the course in.
Assessment weightings can change up to the start of the semester the course is delivered in.
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By Josh Beckerman
Laser Photonics Corp., discussing the performance of shares that have mostly traded below their initial public offering price, said the company's "fundamentals are solid, with strong revenue growth and profits."
The maker of laser systems for tasks including cleaning and paint removal provided an updated capitalization table. It said the management team didn't sell any shares in the IPO or in subsequent trading.
The 3 million-share IPO priced at $5 each. In the stock's Sept. 30 debut, shares peaked at $5.50 but closed at $2.58, with lower closing prices in subsequent days.
The stock was recently up 1% after hours to $1.89.
Write to Josh Beckerman at josh.beckerman@wsj.com
This course is only available if you are studying the Foundation Certificate (International) or Foundation Certificate (International – Accelerated)
Learning outcomes can change before the start of the semester you are studying the course in.
Assessment weightings can change up to the start of the semester the course is delivered in.
You may need to take more assessments depending on where, how, and when you choose to take this course.
The LA-based firm is forming Aluminium Solutions Group through the combination of Extol and Aluminium France Extrusion.
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This week may be the one that provides the catalyst for the much anticipated “capitulation” event traders have been waiting for to call a “bottom”. The economic reports this week are nothing short of monumental, geopolitical tensions have reached levels we haven’t seen since the Cuban Missile Crisis, and credit markets haven’t seen this much attention since 2008.
The Technicals: From a technical standpoint, the market has breached the key level of support back in June and is now testing the recent September lows, which also coincides with the August 2020 highs. This current level also aligns with the 200-Week SMA. This indicator is critical: over the last 11 years the SPX has bounced off this moving average, except for the COVID-19 market sell-off where this trend was violated for only one month before the market began its ascent to all-time highs. From a Fibonacci Retracement standpoint, a 50% retracement from the COVID lows to the January peak would settle out at the 3,503 level – a retracement level that would be considered healthy by most chart technicians. But technical trends are not enough, let’s check out the fundamentals.
The Fundamentals: PPI and CPI data this week will be the focus. A hot reading from either could continue this downward slide as the market will assume the Fed will have to continue its aggressive rate hiking program. Another key datapoint to keep an eye on will be the 10-year and 30-year treasury bond auction. If we see a large dealer takedown, meaning the dealers will have to purchase the remaining bonds not purchased by others in the marketplace, that could supply another sign of credit market weakness – leading to rates increasing further. Lastly, banks will begin to report earnings on Friday. A key line item to keep on your radar will be the amount of Loan Loss Reserves banks set aside. As a result of the Great Financial Crisis, banks are required to set aside cash in anticipation of perceived losses they may incur due to loan defaults from their customer base. Outside of the commentary we will hear from executives in the sector, this will be the key item to gauge where banks may see cracks in the financial system.
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