North American News
major US stock indices closing mixed
- The Dow is leading the way to the downside. The NASDAQ index closes with a modest gain
The major US indices are closing with mixed results:
- the Dow industrial average is closing lower by -193.25 points or -0.56% at 34396.52
- the S&P index is down -3.33 points or -0.08% at 4076.78
- the NASDAQ index is up 14.46 points or 0.13% at 1482.46
- Russell 2000 is down 4.896 points or -0.26% at 1881.68
The next key event comes tomorrow with the US jobs report due out at 8:30 AM ET. A weaker number (estimate 200 K and 3.7% unemployment rate) would give stocks reason to move more to the upside. A less tight labor market with the unemployed rate near all-time lows at 3.7% is what the Fed is hoping for to help slow inflation.
US October PCE core inflation +5.0% vs +5.0% expected
- Highlights of the Fed’s personal consumption expenditure report for October 2022
- Prior was +5.1% (revised to 5.2%)
- PCE core MoM +0.2% vs +0.3% expected
- Prior MoM +0.5%
- Headline PCE +6.0% vs +6.2% expected (prior +6.2%)
- Deflator MoM +0.3% vs +0.5% expected (prior +0.3%)
Consumer spending and income for October:
- Personal income +0.7% vs +0.4% expected. Prior month +0.4%
- Personal spending +0.8% vs +1.0% expected. Prior month +0.6%
- Real personal spending +0.5% vs +0.3% prior
November US ISM manufacturing index 49.0 vs 49.8 expected
- November US manufacturing PMI from the Institute for Supply Management
- Prior was 50.2
- Estimates ranged from 48.0 vs 50.4
- Prices paid 43.0 vs 47.5 expected (prior 46.6)
- Production 51.5 vs 52.3 prior
- Employment 48.8 vs 50.0 prior
- New orders 47.2 vs 49.2 prior
- Order backlog 40.0 vs 45.3 prior
- New export orders 48.4 vs 46.5 prior
Comments in the report aren’t positive:
- “Customer demand is softening, yet suppliers are maintaining high prices and record profits. Pushing for cost reductions based on market evidence has been surprisingly successful.” [Computer & Electronic Products]
- “Future volumes are on a downward trend for the next 60 days.” [Chemical Products]
- “Orders for transportation equipment remain strong. Supply chain issues persist, with minimal direct effect on output.” [Transportation Equipment]
- “Consumer goods are slowing down in several of our markets, although the U.S. economy seems decent. Cannot say the same for the European economy.” [Food, Beverage & Tobacco Products]
- “General economic uncertainty has created a slowdown in orders as we approach the end of the year, and many of our key customers are reducing their capital expenditures spend.” [Machinery]
- “Overall, things are worsening. Housing starts are down. We’re doing well against our competitors, but the industry overall is down. We’re sitting on cash (that is) tied up in inventory.” [Electrical Equipment, Appliances & Components]
- “The market remains consistent: sales match expectations; there are concerns about the impact of rising interest rates on customers; most suppliers have recovered on labor, but some are still struggling; and inflation seems to have peaked, but commodity price decreases have not been passed through to us. Lots of unknowns regarding impact to the European Union from the Russia-Ukraine war and questions about customer behavior in 2023.” [Miscellaneous Manufacturing]
- “There is caution going into 2023, but the commercial section of construction seems to still be going strong.” [Nonmetallic Mineral Products]
- “Looking into December and the first quarter of 2023, business is softening as uncertain economic conditions lie ahead.” [Plastics & Rubber Products]
- “Slight improvement on overall business conditions from the previous month.”[Primary Metals]
US construction spending for October -0.3% vs -0.3% estimate
- US construction spending
- US construction spending for October fell -0.3% versus 1013% estimate.
- Prior month revise to +0.1% from 0.2% previously reported
- private construction fell to -0.5%. Residential construction fell -0.3%. Nonresidential construction fell -0.8%.
- Public spending +0.6%. Educational construction rose 0.5%. Highway construction fell -0.8%
- Total construction came in at $1794.9 billion. Last month the spending came in at $1800.1 billion
- During the first 10 months of the year construction spending amounted to $1507.8 billion +10.8% above the 1360.8 billion for the same. In 2021.
Commodities
Gold rises to 3.5-month high above $1800 on soft US Dollar
- Gold price climbs above $1800 for the first time since August 2022.
- Dovish speech by the Federal Reserve Chair Jerome Powell weakened the US Dollar.
- The US Dollar Index tumbles below the 105.000 mark, while US T-bond yields plunge to 3.60%.
Gold price rallies and hits a fresh three-month high following a more “dovish” than expected message from US Federal Reserve (Fed) Chairman Jerome Powell. Another factor denting demand for the US Dollar (USD) is that the Federal Reserve preferred gauge for inflation was unchanged, while unemployment claims were lower than expected. At the time of writing, the XAU/USD is trading above the $1800 mark for the first time since August.
Gold soars on dovish remarks by Fed Chair Powell as US bond yields plummet
XAU/USD remains in the driver’s seat after hitting a daily low of $1767, Wednesday’s high, towards $1803.40, following dovish remarks from Jerome Powell on Wednesday. Powell said that “moderating the pace of rate increases may come as soon as the December meeting,” cementing expectations that the Fed will move away from the 75 bps hikes they’ve pursued at the last four meetings in favor of a slower 50 bps pace. In the Q&A after the speech, he said that “my colleagues and I do not want to overtighten,” referring to monetary policy.
Data-wise, the economic docket for the United States (US) did not help the US Dollar, which remains on the back foot following Powell’s speech. The US Core Personal Consumption Expenditure (PCE), the Fed gauge for inflation, rose by 5% YoY, below the previous month’s 5.2% reading, and aligned with consensus, Commerce Department data revealed Thursday.
In the meantime, initial Jobless Claims for the week ending in the last week on November 26 rose by 225K, below the expected 235K by analysts and less than the previous week’s reading.
Elsewhere as the US Dollar Index (DXY) drops below the 105.000 mark, extending its daily losses to 1%, US Treasury bond yields are plunging, with the US 10-year Treasury bond yield reaching 3.600%, while Gold prices extended its gains.
Silver trades around 5-month highs above $22.00
- Silver price rose more than 1%, spurred by Federal Reserve Jerome Powell’s dovish speech.
- Soft US Dollar and US Treasury bond yields plummeting, a tailwind for XAG/USD.
- Silver Price Analysis: Once it cleared $22.00, a rally above $23.00 is on the cards.
Silver price soars more than 2% following a “dovish” perceived speech by the Federal Reserve (Fed) Chair Jerome Powell, who laid the ground for lower rate hikes Wednesday. The United States (US) economic docker revealed mixed data, undermining the US Dollar (USD), as shown by the rise of precious metals and most FX peers. At the time of writing, the XAG/USD is trading at $22.55.
Upbeat sentiment, dovish Fed, and mixed US data weighed on the US Dollar
Traders’ mood remains upbeat after Powell’s speech. The Federal Reserve Chair said that “the time for moderating the pace of rate increases may come as soon as the December meeting,” spurring US Dollar weakness and sending Silver prices up. He added that most Fed policymakers would not want to “overtighten,” stating that he does not want to cut rates soon.
Data-wise, the Institute for Supply Management (ISM) revealed that manufacturing activity in the United States fell to 49.0 below 49.2 estimates and trailed October’s 50.2 reading, the lowest since May 2020. Usually, when the ISM Manufacturing PMI drops below 50, activity is in contractionary territory. However, lower readings would help to tame inflation, though it opens the door for a recession.
Earlier, the US Department of Commerce (Doc) revealed that the Fed’s preferred inflation gauge, the US Core Personal Consumption Expenditure (PCE), rose by 5% YoY, below the previous month’s 5.2% reading, and aligned with consensus. At the same time, the US Department of Labor (DoL) revealed that Initial Jobless Claims for the week ending on November 26 rose by 225K, below the expected 235K by analysts and less than the previous week’s reading.
Silver Price Analysis: Technical outlook
From a daily chart perspective, the XAG/USD is upward biased, trading above the daily Exponential Moving Averages (EMAs). After bottoming around the year-to-date (YTD) lows of around $17.56, the white metal followed an upward trajectory, which initially failed to clear the October 4 swing high of $21.23. Still, once cleared, XAG/USD hurdle the $22.00 psychological level. That said, the Silver price path of least resistance is upwards.
The XAG/USD first resistance is the June 6 high of $22.51, followed by the $23.00 figure, ahead of the May 5 high of $23.27.
WTI crude oil settles at $81.22
- Up $0.67 or 0.83%
The price of WTI crude oil futures are settling at $81.22. That is up $0.67 or 0.83%. The high price extended all the way up to $83.32. The low price early in the show the session was at $79.95.
Looking at the hourly chart, the price moved above the swing highs from mid and late November between $82.35 and the $82.66, however the high price stalled ahead of the 50% midpoint of the move down from November high. That level came in at $83.66. The $80 level will be a natural target support level on further selling pressure.
US Department of Energy is looking to pause mandatory SPR sales
According to Bloomberg, the US Department of Energy is looking to pose mandatory strategic petroleum reserve sales.
The administration has said that they would look to replenish readers near the $70 level. On Monday, the price moved to a low of $73.59 and lo and behold buyers emerged and pushed price sharply back to the upside. If you state a floor, guess what? Traders will use that floor as level to lean against on dips.
EU News
It’s a mixed close for major European indices
- UK’s FTSE 100 falls. German Dax and Spain’s Ibex the best performers
The major European indices are going out with mostly gains although the UK FTSE 100 did move lower on the day.
The final numbers are showing:
- German Dax, +0.65%
- Frances CAC, +0.23%
- UK’s FTSE 100 -0.20%
- Spain’s Ibex +0.53%
- Italy’s FTSE MIB, +0.13%
Other News
Chicago Fed hires Austan Goolsbee as new president
- Austan Goolsbee was an top economist in the Obama administration
The Fed loves to talk about how it’s a non-political institution but it’s awfully funny how most of the hires have a political background.
Fed’s Williams: Inflation is still far too high
- Comments from NY Fed President John Williams
- It will take a couple of years for inflation to ease to target
- High inflation not yet embedded in the economy
- We are seeing signs of a welcome ebb in inflation
- Fiscal stance not a big factor driving inflation right now
- Fed has a ‘ways to go’ with rate hikes
Blackstone says it will limit redemptions in its $69 billion real estate fund
- This according to Bloomberg
Blackstone is limiting redemption requests after breaching limits this quarter for its $69 billion real estate fund for wealthy individuals. The FT is also reporting that Blackstone is limiting investor withdrawals at its larger $125 billion real estate fund. The limit comes on the back of a jump in redemption requests from investors looking to take cash from private assets (like real estate).
Earlier today is reported that Blackstone sold its stake in the MGM Grand and Mandalay Bay for $5.5 billion. The good news is that they made a profit of 700 million in less than three years. The bad news is we don’t know what the marked to market profit was coming into 2022. I am sure it was much higher. The gain was only 12.7%.
Cryptocurrency News
Ripple Price: XRP is highly undervalued and whales are accumulating, here’s what you should do
- XRP price is holding above a stable support level at $0.400.
- The MVRV Z-score indicates that the remittance token remains in the undervalued zone.
- Whales’ accumulation of Ripple could hint at a potential trend reversal around the corner.
Ripple (XRP) price shows a lack of volatility as it sits above a crucial support level that could make or break its short-term future. A spike in buying pressure is what the remittance token needs to kick-start its run-up.
Join Our Whats App Group for all the latest stock market news
https://chat.whatsapp.com/KuCI3obDFfz7J6QI8tK1fX
