North American News
Stocks recover all losses into the afternoon trading, but then stumble and fall
- Major indices close lower on the day led by the Nasdaq
The broader stock indices (S&P and Nasdaq) moved lower in the morning trading, and then rallied into the early afternoon trading.
- The Nasdaq went from down -156.17 points to +26.79 points.
- The S&P moved as high as +16.05 points.
However, momentum faded in all the major indices in the last hour or so of trading, the prices stumbled and fell – closing near the lows for the day.
All three indices fell with the Nasdaq still leading the way lower. The Dow the best performer but still closed lower at/near the lows for the day.
The final numbers are showing:
- Dow industrial average, -210.70 points or -0.62% at 33537.15. That is just off the low for the day at 33533.96
- S&P -35.40 points or -0.89% at 3957.52. That also was just off the low at 3956.40. The high for the day reached 4008.97 but could not sustain momentum above the 4000 level
- Nasdaq fell -127.10 points or -1.12% at 11196.23. The Nasdaq was lower earlier in the session (first hour of trading), but after rallying and testing the highs from Friday, buyers turned back to sellers.
- Russell 2000 fell -21.48 points or -1.14% at 1861.25.
Overall, a disappointing day for the stocks. The buyers almost dug the indices out of the hole, but sellers were waiting and the price reversed lower.
NY Fed 5-year inflation 2.4% vs 2.2% in Sept survey
- The latest inflation expectations data from the New York Fed
- 1-year inflation 5.9% vs 5.4% in Sept
- 3-year inflation 3.1% vs 2.9% prior
- Expected home-price inflation flat vs +2% prior
- Year ahead expected household income growth hits record +4.3%
- Expected unemployment at highest since April 2020
Fed’s Brainard: Appropriate ‘soon’ to move to a slower pace of increases
- Comments from the Fed vice chair
- Most recent CPI suggests core PCE might also show reduction
- Really focused on core inflation
- Starting to see the wage series step down but it will take time
- Core services and housing remain strong, will take until next year to filter into the headline
- Appropriate ‘soon’ to move to a slower pace of increases
- Fed has done a lot but more to do
- By moving at a more deliberate pace, the Fed can assess more data and better adjust the path of rates
- Question of peak rate will be informed by the flow of data, even for the Dec meeting, information will come in
- Doesn’t say whether her own estimate of the peak Fed funds rate has changed
- Real incomes have fallen in aggregate during high inflation
- Treasury yield curve is now above 1% in real terms
Commodities
Gold to push higher on risk flows
Gold capitalized on risk flows and the broad-based US Dollar weakness last week and gained over 5%. In the absence of high-impact macroeconomic data releases this week, the risk perception is likely to continue to impact the US Dollar’s valuation and Gold price’s action.
Risk flows are likely to continue to weigh on US Dollar
“October Industrial Production and Retail Sales figures from China will be released on Tuesday. Investors, however, are likely to ignore these data and stay focused on developments surrounding the Covid restrictions. In case China continues to ease its rules, Gold price should stretch higher on improving demand outlook.”
“On Wednesday, the US Census Bureau will publish the October Retail Sales data. The Federal Reserve Bank of Philadelphia’s Manufacturing Survey and the US Department of Labor’s weekly Initial Jobless Claims data will be the last data of the week from the US on Thursday.
Since the above-mentioned data releases don’t have the potential to move the markets in a significant way, participants will keep a close eye on Fedspeak and the overall risk perception.”
“In case global equity indexes preserve the bullish momentum, XAUUSD could capitalize on the broad US Dollar weakness.”
Crude oil trades to a new low as the post settle market sees more selling
- The settled price was at $85.87 down -$3.09
The crude oil contract settled the day at $85.87, down -$3.09 from the Friday settled level at $88.96. The selling has continued in after hours trading the price trading to a new low at $85.26. The current price is at $85.33.
Looking at the hourly chart, the price remains above the low from last week at $84.70. Connecting recent lows has a target at $85.15. The 50% of the range since the September 26 low cuts across at $84.98. All are downside targets on more selling momentum.
Conversely hold support and another snap back rally would be in the cards as sellers turn back to buyers on the support area holding.
Key dip. We will see if the sellers can keep the momentum going? Or if the dip buyers can hold support again.
EU News
Europe indices all close higher on the day
- Spain’s Ibex tests 200 day MA
European indices are all closing higher on the day. The closing levels are showing:
- German Dax up 0.62%
- France’s CAC +0.22%
- UK FTSE 100 0.92%
- Spain’s Ibex +0.84%
- Italy’s FTSE MIB, 0.50%
SNB’s Jordon: There is a “great probability” that the SNB will need to tighten monetary policy
Swiss National Bank Chairman Thomas Jordan who hinted recently that further interest rate hikes were on the way from the central bank, saying “determined action” is required to check rising prices has said in trade today there is a “great probability” that the SNB will need to tighten monetary policy further as inflation is likely to remain elevated for a while.
He also said the nominal appreciation of the Swiss franc is helping guard against inflationary pressure. Jordan had said last week the SNB was prepared to take “all measures necessary” to bring inflation back down to its 0-2% target range and that current monetary policy was not restrictive enough to do the job.
Key quotes
In 2023, see swiss growth weaker than this year.
Inflation in Switzerland is likely to remain elevated for a while, though lower than in other advanced economies.
See limited second-round wage effects in Switzerland.
SNB still has credibility in eyes of businesses that inflation will moderate.
Other News
Biden: I’m not looking for conflict, I’m looking to manage competition
- Comments from the US President
- Wants to make sure everyone abides by international rules
- China and the US should be able to work together when possible
- One China policy has not changed
- I absolutely believe there need not be a new cold war
- I do not think there is any imminent attempt by China to invade Taiwan
- Xi was willing to compromise on certain key issues
China Xi: Taiwan question is at the very core of China’s interests
- Comments from the Chinese President
- Taiwan question is the first red line that must not be crossed in China-US relations
Cryptocurrency News
Bitcoin stumbles to the lows of US trading. Waiting for the next shoe to drop
- Hopes for a Binance rescue fade
Bitcoin has come under some fresh pressure in the last hour and is trading at the US lows, down $540 to $16,219.
There’s an epic battle ongoing between those expecting more bad news and liquidations and those who think the market has survived the worst. For bitcoin, there are also some flows into the relative safety of BTC from altcoins.
Earlier today there was something of a rally in crypto after Binance CEO Changpeng Zhao wrote:
To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis.
To some that’s a sign of a strong hand, to others it’s reminiscent of the FTX rescues after the previous crypto crisis. Chanpeng also said that redemptions from Binance have only ticked up slightly, which is hard to believe.
Most eyes are on crypto.com at the moment after a botched ETH transfer. That isn’t exactly inspiring confidence.
Binance to form industry body amongst the main crypto firms
- Binance CEO says will organize an industry body
Nothing says ‘decentralized’ like an industry body of heavily-regulated exchanges. What was the point of all this anyway?
Here’s a screenshot from a supposed FTX insider. It rings true and shows that even at the genesis of the Sam Bankman-Fried scam there wasn’t any real meat on the bones.
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