North American News
S&P snaps 5-day losing streak. Nasdaq 4 day slide stopped
- Dow higher by 0.54%
The final numbers are showing:
- Dow Industrial Average +183.56 points or 0.55% at 33781.47
- S&P index +29.59 points or 0.75% at 3963.52
- NASDAQ index up 123.46 points or 1.13% at 11082.01
- Russell 2000 up 11.38 points or 0.63% at 1818.29
Some winners today included:
- Game Stop +11.32%
- Allibaba +6.62%
- Nvidia +6.51%
- Celsius +6.17%
- Intuit +4.3%
- snowflake +4.02%
- Papa John’s +3.94%
- Block +3.85%
- Roblox +3.82%
on the downside
- United Airlines -2.86%
- Palo Alto networks -2.37%
- Worthington industries -1.85%
- First Solar -1.31%
- Alphabet -1.3%
- Biogen -1.04%
- Bank of America -0.92%
- Southwest Airlines -0.85%
After the close there are some key earnings including Lululemon, Costco, and Broadcom
Lululemon announced earnings with beats on the top and bottom line:
- earnings-per-share two dollars per share versus $1.96 expected
- revenues $1.86 billion versus $1.81 billion expected
- sees fiscal year EPS $9.87 – $9.97 versus expectations of $9.91
- fiscal year net revenue $7.94 – $7.99 billion versus 7.95 billion estimate
- Shares are down after the close as they guide down for 4Q. Gross margins are lighter than expected as well.
- Shares closed at $374.51 and is trading currently at $335.80
Docusign:
- Earnings-per-share $0.57 versus $0.42 estimated
- Revenues 646 million versus 627 million estimated
- Docusign shares are trading up $5.60 or 12.89% in after-hours trading
- shares closed that $43.75 and are trading at $49 in after-hours trading
Broadcom:
- earnings-per-share $10.45 versus $10.28 expected
- revenues $8.93 billion versus $8.90 billion estimate
- Broadcom close that $531.08 that are trading at $539.95 in after-hours trading
Costco:
- revenues $54.5 billion versus $54.64 billion estimate
- EPS $3.07 versus $3.11 estimate
- Costco closed that $481.42 and are trading down at $477.13 in after-hours trading
US weekly initial jobless claims 230K vs 230K expected
- Weekly US initial and continuing jobless claims
- Prior was 225K
- Four-week moving average vs 227.0K last week
- Continuing claims 1671K vs 1600K expected
- Prior continuing claims 1608K
US 30-year fixed mortgage rate falls to 6.33% vs 6.49% a week earlier
- Data from Freddie Mac
After rising well-above 7%, US mortgage rates are trending lower along with bond yields. Freddie Mac’s latest data puts rates at 6.33% from 6.49% and that’s likely continued to fall alongside yields this week.
The public is exceedingly bearish on US housing but the chart of the homebuilders XHB ETF shows signs of a bottom.
If rates can fall below 6% (there’s some spread compression likely coming) then housing activity could be an upside risk to US GDP in 2023.
Commodities
Gold Price Forecast
- Gold bulls eye a run towards $1,800 from W-formation neckline support.
- All eyes will be on the Federal Reserve next week and key data before then.
Gold price is up on the day by some 0.22% after rising from a low of $1,781 to a high of $1,794.88 so far on Thursday. Markets have been relatively quiet on the day with little data released and the Federal Reserve in a blackout. Nevertheless, The US dollar eased, while investors positioned themselves ahead of key US inflation data and the Federal Reserve’s policy meeting due next week.
The US Dollar index, as measured by the DXY index, fell 0.4% from a high of 105.433 to a low of 104.724, making gold less expensive for other currency holders. The dip came at the same time a rise in weekly jobless claims suggested that the labour market is slowing down. Weekly jobless claims rose to 230K, as expected. Continuing claims rose to 1.671M, topping the forecast of 1.6M and the data comes ahead of next week’s Federal Reserve meeting.
There will be more key data events coming up before the Federal Reserve December 14 meeting. The Producer Price Index and the University of Michigan’s consumer sentiment survey on Friday as well as November’s Consumer Price Index are due. Investors will be on the watch for any signs that the Federal Reserve is getting ready to pause its hikes.
Fed expectations
Meanwhile, money markets show there is a 91% chance that the policy-setting Federal Open Market Committee (FOMC) will raise rates by half a point next week, and just a 9% chance there will be another 75 basis point increase with the rates peaking in May 2023 at 4.92%. The US Federal Reserve has already raised its policy rate by 375 basis points this year in the fastest hikes since the 1980s.
Meanwhile, supportive of the Gold price, safe haven assets were in strong demand amid growing recessionary fears this week as seen in the thirty-year Treasuries that dropped more than 10bp to a three-month low while yields on the 10-year were also lower. The yield curve between the 2-year and 10-year Treasury notes US 10-year has also widened in recent days.
US weekly EIA natural gas inventories -21B vs -31B expected
- Weekly storage change data
- Prior was -81B
Another tough day for the oil market as gains turn to losses
- WTI crude oil settles 55-cents lower to $71.46
Oil is due for a relief rally and it looked like one was coming earlier today after the shutdown of the Keystone pipeline but sellers attacked the rally and a $3.50 jump was wiped out (and more).
That put the settlement at the lowest since last December when omicron was spreading and a Russian oil price cap wasn’t even contemplated.
The drag for the oil market is growing worry about a recession and the idea that central banks have overtightened. Circularly, the fall in oil prices also reverses inflation, helping central banks.
Goldman Sachs boosts copper price forecasts to record High
- Now sees copper prices hitting a record
Back in April 2021, Goldman Sachs wrote what was perhaps the most-widely shared research note in base metals ever, titled ‘Copper is the New Oil’ and it laid out supply-demand forecasts that left record deficits starting in 2026. The report also laid out a scenario for mitigating those deficits — namely the sanctioning of new mines.
Since then two things have happened:
1) The mines haven’t been sanctioned because copper prices have retraced and inflation/interest rates are making it tough to raise money
2) Governments have increased infrastructure/green spending, like the US program that will kick off next year and China building more solar
Now Goldman Sachs is even more bullish and this week delivered a 12-month forecast for $11,000/tone, up from $9000; in 2024 they see prices averaging $12,000 from $8355 currently.
EU News
European equity close: Nearly flat on the day
- Closing changes in Europe
- Stoxx 600 -0.1%
- German DAX +0.1%
- France’s CAC, -0.1%
- UK’s FTSE 100 -0.1%
- Spain’s Ibex -0.7%
- Italy’s FTSE MIB -0.1%
ECB Preview: A 50bp hike with a hawkish twist – Danske Bank
Next week, the European Central Bank will have its monetary policy meeting. Analysts at Danske Bank see the central bank raising rates by 50 basis points and to continue rising rates into the first quarter of next year. They see the deposit rate peaking at 2.75%, but with risks skewed for more hikes.
Key Quotes:
“At next week’s meeting, we expect the ECB to deliver a 50bp rate hike with a hawkish twist. Specifically, we expect the ECB to present key principles of the end to reinvestments under the APP process (in which reinvestments will almost come to a full stop) and an open-ended wording for more rate hikes to come. This will be a compromise, which we believe will be palatable to both hawks and doves.”
Other News
What to expect from the FOMC next week? – BofA
- The FOMC decision is on December 14
Bank of America Global Research discusses its expectations for next week’s FOMC policy meeting.
“We expect the Fed to raise its target range for the federal funds rate by 50bp in December to 4.25-4.5%. Fed communications over the last few weeks have clearly telegraphed this move. The more important question is where the Fed goes next,” BofA notes.
“Dots to shift higher again: We expect the median forecast for 2023 to move up by 50bp to 5.125%, consistent with our terminal rate. We think the dot plot will then point to 100bp of cuts each in 2024 and 2025. The macro projections in the SEP should be revised to show lower GDP growth and inflation than in September, and higher unemployment.
“Press conference: no pivot. We expect Chair Powell to push back against easing in financial conditions and remind investors that a slower pace of hikes does not mean a lower terminal rate, and the Fed’s job is far from done,” BofA adds.
Russia’s Gazprom says increased supply to China in December at China’s request
- The gas flows to China yesterday were reportedly 16% above contract
If they can’t bring it to the rest of the world, there’s always China. Especially now as Xi has relented on the zero-Covid policy, re-opening demand is something to watch out for and that is going to be a welcome development for Russia and Putin.
Cryptocurrency News
Crypto.com Coin price is hanging by a thread as a 40% decline is at risk by New Year
- Crypto.com Coin price is tanking for a third day as markets cannot tie up with gains.
- CRO sees the changes for a Christmas rally turn into dust as markets roll over.
- As investors pull their cash out of all asset classes, expect a violent reaction in the coming weeks on the back of the central banks.
Crypto.com Coin (CRO) price is taking yet again in the ASIA PAC session as the sentiment has been handed over into Europe as a snowball effect is making casualties in all asset classes of the markets. Investors are fleeing the scene as it dawns that the Fed and the ECB will not stop hiking until that inflation target has been brought down. With inflation still very much elevated and earlier this week several indicators showing a pickup in activity, which feeds inflation, the Fed and ECB will need to bring out more ammunition to kill the inflation ghost.
Ethereum price set to tank 15% as markets get a reality check on the Christmas rally
- Ethereum price is set to slip further to the downside as the realization kicks in that the Christmas rally is a no-show.
- ETH is valued at $1,014 as global market dynamics are breaking down.
- With red lights flashing again, a massive snowball is rolling toward the markets and is set to cause many casualties.
Ethereum (ETH) price was still pronged for a rally earlier this week as the situation in financial markets started to clear up. However, since Tuesday, reality has kicked in that the Christmas rally will not happen, similar to plenty of workers hearing that there will be no Christmas bonus or wage increase to pair the inflation spikes. Currently, correlations are breaking down in global markets as the US Dollar weakens, equities still sell-off and bond prices decline massively as investors exit markets in all asset classes.
Join Our Whats App Group for all the latest stock market news
https://chat.whatsapp.com/KuCI3obDFfz7J6QI8tK1fX
