North American News
Dow has its best percentage gain for a month going back to January 1976
- Dow rises by 13.95% with Caterpillar leading the way.
The major US indices are closing lower as sharp gains on Friday could not be sustained. The Dow industrial average snapped a 6 days winning streak. The NASDAQ and the S&P index fell for the 1st time in 3 days. The Dow had it’s best month since January 1976 when the index rose by 14.4%. The gain this month was 13.95%.
Looking at the final numbers:
- Dow industrial average fell -128.87 points or -0.39% at 32732.96
- S&P index fell -29.02 points or -0.74% at 3872.03
- NASDAQ index fell -114.30 points or -1.03% at 10988.16
- Russell 2000 fell -0.578 points or 0.00% at 1846.86
For the trading month:
- Dow rose by 13.95%
- S&P rose by 7.99%
- Nasdaq rose by 3.90%
- Russell 2000 rose by 3.90%
Fed: We do not expect a pivot before 2024 – Rabobank
Analysts at Rabobank point out that with a Federal Reserve that is clearly prioritizing price stability over full employment, rates will go higher than currently anticipated. They expect the FOMC to raise the target range for the federal funds rate by 75 bps to 3.75- 4.00% on Wednesday. They do not expect the Fed to pivot before 2024.
Key Quotes:
“The next meeting of the FOMC takes place on November 1 and 2. Given the high inflation figures published in October, the FOMC is expected to take another giant step of 75 bps in November. Since that will take the top of the target range to 4.00%, and the FOMC had a terminal rate of 4.6% in mind in September, they are likely to slow down the hiking cycle at the next meeting in December.”
“We expect a 50 bps hike in December, followed by two hikes of 25 bps in February and March, which would take the top of the target range to 5.00%. We expect the Fed to remain on hold for the remainder of 2023.”
Biden to float a windfall tax on energy producers but it will be tough to pass it
- This is election nonsense
Biden is set to speak on oil companies later today and the AP now reports he will float the idea of a windfall tax on energy producers.
This is undoutedly an election ploy.
Commodities
Gold bears turn up the heat on committed longs
- Gold bears are out in force at the start of the week as the US dollar continues its reign.
- The anticipation of a hawkish Fed is building again following conflicting WSJ reports.
Gold has continued to slide, backing up from prospects of a bullish breakout as per the technical below. At the time of writing, XAU/USD is down 0.5% and has dropped from a high of $1645.74 to a low of $1,633.49 so far on the day. The yellow metal is heading for its longest streak of monthly losses on record with investors now in anticipation of continued rate hikes from central banks that will cause a strong US dollar and elevated US bond yields.
Looking to positioning data for the greenback, speculators’ net long USD index positions edged lower for a second week but remained essentially consolidative. The debate over whether the Fed is approaching a pivot point on policy has restarted in the market and that leaves scope for further length in the US dollar.
The sentiment has dented the non-yielding metal’s appeal and nudged the bulls back a step further at the start of the week where the Federal Open Market Committee is expected to deliver a fourth consecutive 75bp rate hike this week. Hot US Consumer Price Index, strong growth numbers and conflicting ideas from the likes of WSJ have kept the US dollar underpinned.
As Reuters wrote in an opening note on Monday, ”the latest round of hopes for a shift in the Fed’s tone seems to have stemmed from a Wall Street Journal article two weeks ago, flagging a possible discussion about slowing hikes. But a report from the same author over the weekend pointed to a lengthy period of high rates and traders have now tempered initial optimism, pricing in the funds rate to hit near 5% by May next year.”
This leaves the focus on the Fed chairman’s presser. Jerome Powell will talk at a press conference where guidance for future increases could move the needle and after four jumbo-sized hikes. He may want to gauge economic responses before committing to anything besides hiking rates in the face of market speculating that the Fed would slow the pace of rate hikes amid concerns about overtightening.
Meanwhile, the greenback rose 0.8%, making gold more expensive for other currency holders. The benchmark 10-year Treasury yields also edged up at the start of this week. This is now using gold prices into a spiral of more than $400 since climbing above the key $2,000 per ounce level in March.
August US monthly oil demand revised higher in another sign of elasticity
- The weekly and monthly data points continue to diverge
Today, August data was released and showed total oil demand at 20.601m barrels per day, up by 547k bpd from 20.054m based on the weekly numbers. On the gasoline side, it showed that demand was 0.1% higher than last year, though down 2.6% from August 2019.
EU News
European stock indices close the day with mixed results
- German DAX near unchanged. FTSE 100 down -0.27%
The major European indices are ending the day with mixed results:
- German DAX, +0.08%
- France’s CAC -0.1%
- UK’s FTSE 100 -0.27%
- Spain’s Ibex +0.51%
- Italy’s FTSE MIB +0.55%
Other News
Germany’s Scholz: We will implement the main framework on gas prices this week
- Comments from Scholz
European TTF gas prices are down to 88 today in a 21 euro decline as weather forecasts stay mild. It’s a different story in the US with gas prices up 11% on forecast for cool weather in the second weak of November.
In any case, winter is coming the fight over LNG supplies will restart.
Cryptocurrency News
To the moon! Dogecoin liftoffs over the weekend
- Price rose 72% on Saturday
On Friday, Dogecoin moved up over 13% higher on the back of hope that Elon Musk’s purchase of Twitter would lead to more chatter about Dogecoin.
Needless to say, it was a moon shot for dogecoin as FOMO is still alive and well. We will now look for a reignited liftoff off the corrective support. Looking ahead, on Tuesday, SpaceX launches again. This time in Florida. Do we have another Dogecoin surge scheduled for liftoff tomorrow at 9:40 AM ET to correspond with the SpaceX launch?
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