Round up of today's market news *

North American News

US stocks close higher but lose some steam on Russian fears

Nasdaq index moves closer to 100 day MA

The major US stock indices are closing the day higher but major indices came off of their best levels on Russian fear after reports of a missile killing 2 people in Poland.

Indices moved quickly off their highs on the news, and traded to new session lows. However, the prices recovered on Russian denial and reports the missile was the remnants of a rocket shot down by Ukrainian forces.

The final numbers are showing:

Dow industrial average rose 56.0 points or 0.17% at 33592.91
S&P index was 34.5 points or 0.87% at 3991.72
NASDAQ index rose 162.20 points or 1.45% at 11358.42
Russell 2000 rose 27.95 points or 1.5% at 1889.20

US October PPI +8.0% vs +8.3% expected

US October producer price index data
Prior was +8.5% (revised to +8.4%)
PPI +0.2% m/m vs +0.4% expected
Prior m/m reading was +0.4%
Ex-food and energy +6.7% y/y vs +7.2% expected
Ex-food and energy +0.0% m/m vs +0.3% expected
Prior ex-food and energy m/m +0.3% (revised to +0.2%)
Goods +0.6%
Services -0.1%

Fed’s Barr: Paying careful attention to liquidity & interest rate risk (& all other risks)

Fed’s Barr speaking on market risk in the current environment
The Fed’s Barr who’ operated in a cautious ways is the Fed VIce Chair in charge of supervision and the top regulatory official, is speaking on risks.
Paying careful attention to liqudity and interest rate risk
Also watching cybersecurity risks
Commercial real estate and housing also something wer are monitoring
Paying attention to risks in China
We are also concerned about risks in nonbank sector, including crypto.
It would be useful for the Fed to provide guidance to banks to safely custody crypto
Firms that operate outside regulatory perimeter can cause enourmous problems
Banks have operate in a cautious way to date with regard to custody activity

The New York Fed Empire manufacturing index for November 4.5 vs. -5.0 estimate

New York Fed Empire manufacturing index for November 2022
New York Fed Empire manufacturing index 4.5 vs. -9.1 last month
New orders -3.3 vs. +3.7 last month
Shipments a .0 vs. -0.3 last month
Prices paid 50.5 vs. 40.6 last month
prices received 27.2 vs. 20.9 last month
number of employees 12.2 vs. 7.7 last month
average workweek 6.9 vs. 3.3 last month
unfilled orders -6 point vs. -3.7 last month
delivery times 2.9 vs. -0.9 last month
inventory 16.5 vs. 4.6 last month
the six-month forward expectations:
general business conditions -6.1 vs. -1.8 last month
new orders -6.4 vs. 2.4 last month
shipments -10.0 vs. 5.6 last month
prices paid 48.5 vs. 40.6 last month
prices received 32.0 vs. 36.7 last month
employment 13.0 vs. 17.8last month
average workweek -2.9 vs. -8.3 last month
capital expenditures 14.6 vs. 22.0 last month
technology spending 6.8 vs. 11.0 last month

From the NY Fed:

“Business activity edged slightly higher in New York State, according to firms responding to the November 2022 Empire State Manufacturing Survey. The headline general business conditions index climbed fourteen points to 4.5. New orders decreased slightly, while shipments expanded modestly. Delivery times were little changed, and inventories grew significantly. Labor market indicators pointed to a solid increase in employment and a longer average workweek. Input prices increased at about the same pace as last month, while selling price increases picked up. Looking ahead, firms expect business conditions to worsen over the next six months”.

Commodities

Gold catches a bid on Poland news, but US Dollar in demand

Gold perks up on risk-off turn in markets on Poland news.
US Dollar could be on the verge of a significant correction, a weight on Gold.

The Gold price is headed higher on the day, now trading at $1,778, up 0.4% on news that at least two are dead after Russian missiles landed in NATO state Poland on the Ukraine border, according to the Express. Poland has convened a national security committee meeting according to a spokesman. Before the news, the yellow metal was sliding.

The US Dollar had been pressured on Monday following Producer Price Index data that mirrored last week’s Consumer Price Index. The DXY fell to its lowest since mid-August around 105.35 and was on track to test the August 10 low near 104.636. However, the bulls have moved in and are treading water again. US yields reacted accordingly to the PPI whereby the headline came in at 8.0% vs. 8.3% expected and a revised 8.4% (was 8.5%) in September. The core came in at 6.7% YoY vs. 7.2% expected and actual in September. ”The PPI data will do nothing to dispel the notion that the Fed is moving closer to a pivot,” analysts at Brown Brothers Harriman argued.

Meanwhile, the US 2-year yield is trading near 4.37%, just above the recent low near 4.29% last Thursday. The 10-year yield is trading near 3.80%, below the recent low near 3.81% last Thursday. ”Yields are likely to continue probing the downside this week until the data say otherwise,” analysts at BBH argued.

Crude oil settles at $86.92

Price rises $1.05 on the day

The price of WTI crude oil is settling at $86.92 is up $1.05 on the day. The high price reached $88.64. The low price was at $84.07.

The price moved sharply higher on the news of a Russian missile killing 2 people in Poland. That sent the price up to test its 200 hour moving average at $88.64. Sellers leaned against the level of the test and backed off. The price fell further on reports it was accidental, or was part of a rocket that Ukraine forces had hit. Russia denied firing missiles nearly Ukrainian Border.

EU News

Eurpean indices close mostly higher

US FTSE 100 lower on the day

The European stock indices are closing mostly higher for the day:

German Dax, +0.32%
France’s CAC, +0.30%
UK FTSE 100, -0.34%
Spain’s Ibex, +0.10%
Italy’s FTSE MIB, +0.35%

In the European debt market, the benchmark 10 year yields are lower but off the lows for the day

Other News

Zelensky: We have long warned that Russian actions not limited to Ukraine

Comments from the Ukraine leader
Russian missiles have struck Poland
Ukraine will always support Poland
Strikes on NATO territory are a significant escalation and action is required
Separately, the US State Department said it is ‘certainly not trying to escalate’ when asked about the Russian statement from earlier.

Polish government spokesperson says raising readiness of military units

A spokesperson for the Polish government:

confirms two people killed in Poland in the missile strike
Poland is raising the readiness of military units
we are verifying if we need to activate NATO Article 4

Article 4 is pretty straightforward. It reads:

“The parties will consult together whenever, in the opinion of any of them, the territorial integrity, political independence or security of any of the parties is threatened.”

Fed’s Bostic: Full impact on monetary policy wont be felt for months

Atlanta Fed Pres. Bostic speaking
Full impact of monetary policy won’t be felt for months
Fed must look to economic signals other than inflation as policy guideposts
Has seen clues that tighter financial conditions may be pinching commercial real estate and Banking
He anticipates that more interest rate hikes will be needed
Indicatiors or broad based easing of inflation needs to be seen
there are glimmers of hope in goods inflation
need to see services inflation to slow as well
Labor remains tight, sees upward pressure on wages
Number 1 job is to tame unacceptably high inflation
Fed policy risks inducing a recession, but that is preferable to high inflation getting entrenched
Recession is not a foregone conclusion
Once Fed reaches appropriate restrictive policy, it needs to stay there until there is convincing evidence inflation is firmly on track to 2% target.

Cryptocurrency News

Bankman-Fried says Alameda had more assets than liabilities

With plenty of caveats

Bitcoin is having a decent day to day as it climbs $600 and trades back above $17,000. There’s a time trade in effect here as every minute that a crypto-exchange domino doesn’t fall indicates that contagion has stopped. So no news is good news but that could change any moment with plenty of eyes on crypto.com after the recent SNAFU transferring ETH to the wrong account.

Meanwhile, Sam Bankman-Fried — undoubtedly against the advice of his lawyers — is doing some damage control on twitter and wrote this.

To the best of my knowledge, as of post-11/7, with the potential for errors:

a) Alameda had more assets than liabilities M2M (but not liquid!)
b) Alameda had margin position on FTX Intl
c) FTX US had enough to repay all customers

Not everyone necessarily agrees with this

The mark-to-market comment is a minefield unto itself because the investments were in illiquid, crypto-related ventures. It’s tough to imagine that any of those marks were realistic, and certainly not now. The whole house of cards began to come down on the initial revelations that Alameda’s balance sheet was heavily exposed to FTT, which is the coin FTX created.

Sam Bankman-Fried also hasn’t addressed the balance sheet at FTX, which was obtained by the media and showed about $900m in relatively liquid assets and $9b in liabilities.

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Round up of today’s market news

ByBilals Tech