Round up of today's market news *

North American News

Stock Market Ends Day with Mixed Results, Adding a Dash of Volatility

Nvidia a big loser

The major indices are closing mixed/near unchanged. The NASDAQ index was the biggest mover with a -0.25% fall.

The final numbers are showing:

Dow industrial average +13.11 points or 0.04% at 33997.64
S&P down 0.41 points or -0.01% at 4373.21
NASDAQ index -34.25 points or -0.25% at 13533.74

Looking at some of the big losers today:

Moderna, -6.10%
Nvidia, -4.69%
Western Digital ,-3.52%
Broadcom, -2.01%
Snowflake, -1.73%

Some gainers today included:

Dollar Tree +4.79%
First Solar +4.47%
Celcius +4.09%
Whirlpool +3.45%

Looking at the Dow 30, the biggest losers were:

Goldman Sachs, -1.57%
Intel, -1.35%
J&J, -0.91%
Apple, -0.88%
Amgen, -0.86%

The biggest winners were:

Chevron, +1.34%
Coca-Cola, +1.20%
Dow, +1.08%
Travelers, +1.05%
American Express, +1.05%

After the close, United Airlines is reporting

Earnings-per-share $3.65 versus $3.35 estimate
Revenues $14.48 billion versus $14.44 billion estimate
Average fuel costs $2.95
Q4 EPS guide $1.50 – $1.80 versus $2.06 consensus
Revenue guide up 9 – 10.5%
For the fiscal fiscal year estimate $9.55 – $9.85 per share
Shares of United are trading down -3%

Atlanta Fed GDPNow estimate for 3Q growth came in at 5.4% up from 5.1% previously

Rises to 5.4% after US retail sales

The Atlanta Fed GDPNow estimate for Q3 growth came in at 5.4%.That was higher than the 5.1% at its last estimate:

In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2023 is 5.4 percent on October 17, up from 5.1 percent on October 10.After recent releases from the US Bureau of Labor Statistics, the US Census Bureau, and the Federal Reserve Board of Governors, an increase in the nowcast of third-quarter real personal consumption expenditures growth from 3.7 percent to 4.1 percent was slightly offset by a decrease in the nowcast of third-quarter real gross private domestic investment growth from 6.7 percent to 6.5 percent, while the nowcast of the contribution of the change in real net exports to third-quarter real GDP growth increased from 0.94 percentage points to 0.99 percentage points.

US September retail sales 0.7% versus 0.3% expected

US September 2023 retail sales data highlights

Prior was 0.6% revised to 0.8%

Details:

Retail sales MoM 0.7% versus 0.3% expected
Ex-autos 0.6% versus 0.2% expected.
Prior ex-autos 0.6% revised to 0.9%
Control group 0.6% versus 0.0% expected.
Prior control group 0.1% (revised to 0.2%)
Retail sales ex gas and autos 0.6% vs 0.3% prior revised from 0.2%
Retail Sales YoY x.xx% vs 2.47% prior.

NAHB housing market Index for October 40 versus 44 estimate

Details of the National Association of Home Builders report for October 2023

Prior month 45 dollars to 44
NAHB housing market Index for October 40 vs 44 estimate. Lowest level since January 2023. The index has fallen for the 3rd straight month
Single-family sales current 46 vs 50 last month. Lowest since January 2023
Single-family sales next 6 months 44 versus 49 last month. Lowest since January 2023
The traffic of prospective buyers 26 versus 30 last month. Lowest since January 2023

Regionally

Northeast 47 versus 48 last month
Midwest 37 versus 38 last month
South 43 versus 48 last month
West 35 versus 42 last month

US August business inventories +0.4% vs +0.3% expected

US business and retail inventories for August

Prior was 0.0%
Retail inventories +0.5% vs +0.6+ prior

US Sept industrial production +0.3% vs 0.0% expected

US industrial production data
Prior was +0.4% (revised to 0.0%)

US plans update rules related to semiconductors and chipmaking equipment exports

Chip stocks are getting hit ahead of the open

The United States plans to update rules related to semiconductors and chipmaking equipment exports, with updates expected to occur at least annually, according to the Commerce Secretary. These updates will affect exports of chips to foreign units of companies headquartered in China, Macau, and other countries. However, most chips used for consumer applications like gaming, smartphones, or laptops can proceed without licensing. The new rule also expands license requirements for advanced chip exports to over 40 countries and for chipmaking equipment to 21 countries, excluding China.Notably, exports of NVIDIA’s A800 and H800 chips to China will be restricted under these updated export control rules.

Nvidia shares are trading down $-18.45 or -4.0%

Other chipmakers are showing:

AMD down -2%
Micron down -0.7%
Intel down -0.96%
Broadcom down -1.74%
Qualcomm down -1.37%

Fed’s Barkin: Anecdotal information points to more economic slowing that data is showing

Barkin speaks at a real estate roundtable
Anecdotal info points to better labor demand and slowing growth
Fed has time to see data before making next rate hike move
Path for inflation is not yet clear, but sees clear progress
Wage pressures remain but overall they have moderated
Still seeking confirmation that economy is slowing
Businesses see less pricing power but still willing to probe on price increases
If recession arrives, it’s possible it would be milder than other downturns
Longer-term rates have moved up and that has tightened conditions
I believe we have a restrictive policy stance
Rate moves work through financial conditions
I don’t know where rates will be three weeks from now given what’s happening globally
Says the next meeting will have a good debate
Declines to say what he will support at the next meeting

Fed’s Harker says again that interest rate hikes are likely over, sees inflation ebbing

Federal Reserve Bank of Philadelphia President Patrick Harker:

says again that interest rate hikes are likely over, sees inflation ebbing
In the absence of some turn in the data the Federal Reserve should hold rates steady
Fed should not be considering more rate increases

JPMorgan boosts US Q3 GDP forecast

Now sees 4.3% from 3.5%

The US advance GDP report for Q3 is due out on October 26 and the early consensus is 4.1%. JPMorgan went even higher than that today to 4.3% from 3.5% previously. The Atlanta Fed GDPNow tracker is at 5.1%.

Higher for longer: US 2-year yields near the highest since 2006

2s less than 1 basis point from the cycle high

US 2-year yields are signalling higher rates for longer.

The note reached 5.194%, up 9.4 bps today and just below the Sept 21 intraday high of 5.202%. The rates market is hesitant to price in more Fed hikes but is growing more confident that rates will stay higher for longer due to a resilient economy.

Bank of America highlights a slowing but steady economy; sees soft landing

Comments from CEO Brian Moynihan

Here is how CEO Brian Moynihan summed it up:

Just a quick note on what we see in the economy.Our team of economists predicts a soft landing.With a trough in the middle of next year. We see that in our customer data, our 37 million checking customers we see their spending slowing down… The Q3 was up about 4% over last year’s Q3. Earlier this year, that would have been more of a 10% increase year over year. And for the entire year 2022, increased 10% round numbers over 21. This 4% level is consistent with the spending we saw in the pre-pandemic period. From 2016 to 2019. That is consistent with a low inflation, lower growth economy. As we move into October, the spending is holding at that 4% level. So growing but growing on a basis more consistent with a low growth, low inflation economy.

UBS bullish on everything….See positive returns across cash, bonds and equities to mid-2024.

UBS chief investment officer Mark Haefele spoke with CNBC on Monday:

“we see positive returns across cash, bonds and equities.When we look out towards the middle of next year, we can see the S&P 500 probably [at] about 4500 and we can see the 10-year at about 3.5%”
“If we have a hard landing…you can get lower than that.” (referring to bond yield)
added that so-called bond vigilantes aren’t overly concerned with the prospect of a U.S. default, which underpins his thesis for a dip in the benchmark 10-year Treasury

Blackrock turn tactically neutral long-term Treasuries from underweight

BlackRock Investment Institute say that after being underweight long-term U.S. Treasuries since late 2020, as we saw the new macro regime heralding higher rates, they’ve tweaked their view:

U.S. 10-year yields at 16-year highs show they have adjusted a lot – but we don’t think the process is over.
We now turn tactically neutral as policy rates near their peak.
The next step is not overweight: we see investors demanding more compensation for bond risk and stay underweight on a long-run, strategic horizon.
We downgrade high grade credit further
We now see about equal odds that Treasury yields swing in either direction. In other words, we see two-way volatility ahead.
The Fed is likely nearing the end of its fastest hiking cycle since the 1980s after raising rates into restrictiveterritory.
We still see the Fed holding policy tight to lean against inflationary pressures.

“Wall Street icon” Howard Marks recommends selling equities buying high yield bonds (BUT!)

Yeah. there’s a but in this

His latest memo titled:

Further Thoughts on Sea Change

Marks wrote his original “Sea Change” memo in December 2022 saying that, in a nutshell:

the changes I described in Sea Change aren’t just usual cyclical fluctuations; rather, taken together, they represent a sweeping alteration of the investment environment, calling for significant capital reallocation.

His updated ‘Further thoughts …’ memo recommends, again in a nutshell:

credit securities are likely a much better risk-adjusted investment than equities at the moment
it may be prudent for investors to reallocate their capital accordingly, particularly into high-yield bonds

Canada September CPI 3.8% versus 4.0% expected

Details of Canada CPI for the month of September 2023

Prior month 4.0%
CPI MoM -0.1% versus 0.1% expected
Prior MoM 0.4%

Core measures:

BOC core YoY 2.8% versus 3.3% last month
BOC core MoM -0.1% versus 0.1% last month
CPI median 3.8% versus 4.1% last month
CPI trim 3.7% versus 3.9% last month
CPI common 4.4% versus 4.8% last month

CPI report means the the Bank of Canada probably won’t need to hike again – CIBC

CIBC on today’s CPI report

CIBC has been hinting at a forecast for one more Bank of Canada rate hike but they’re aren’t leaning that way after today’s CPI, which

With gasoline prices falling so far in October, in contrast to a sharp acceleration seen during the same month a year ago, headline inflation should ease further next month and print close to the upper bound of the Bank of Canada’s 1-3% target range. Even though the Bank’s core measures of inflation remain too high for their liking, some of the details within today’s report, combined with the stall in economic activity seen during Q2 and Q3, should give policymakers comfort that inflation will continue to ease back to 2% without the need for further interest rate hikes.

Commodities

Gold dips back into $1,920 after early Tuesday lift

Spot Gold prices are slipping back into the middle after Tuesday saw a push above $1,930.
Gold remains well-bid, sticking to the high end of last week’s rally.
Inflation fears remain a key factor in Gold prices as investors keep one foot in safety.

Gold kicked off Tuesday trading near $1,919 before seeing a steady rise into an intraday high of $1,931.65, but the day’s momentum is proving short-lived as Gold bids settle back into near-term consolidation $1,920.

US Retail Sales broadly beat market estimates, with the headline figure for September printing at 0.7% versus the forecast 0.3%, with the previous period also seeing an upwards revision from 0.6% to 0.8%.

WTI crude oil settles unchanged at $86.66

No change on the day

The price of WTI crude oil futures is settling at $86.66. That’s unchanged on the day.

The high price today reached $87.43. The low price was at $85.65.

Technically, there is support against the August high at $84.85 and there is resistance against a swing area near $88.42. The range today was within those parameters.

The market is treading water with caution as a geopolitical situation plays out globally.

New Zealand dairy prices rise at fourth straight auction

GDT Price Index up 4.3%

NZD got a lift at the start of the week on the election and the latest dairy numbers should helped to improve terms of trade. The GDT Price Index rose 4.3% with whole milk powder prices up 4.2%. This is the fourth consecutive auction with higher prices following the crunch in August.

EU News

European equity close: Second day of largely-flat trading

Closing changes for the main European bourses
Stoxx 600 -0.1%
German DAX flat
UK FTSE 100 +0.6%
French CAC flat
Italy MIB -0.1%
Spain IBEX flat

Germany October ZEW survey current conditions -79.9 vs -80.8 expected

Latest data released by ZEW – 17 October 2023

Prior -79.4
Outlook -1.1 vs -9.3 expected
Prior -11.4

UK September payrolls change -11k vs 0k prior

Latest data released by ONS – 17 October 2023

Prior 0k; revised to -8k
August average weekly earnings +8.1% vs +8.3% 3m/y expected
Prior +8.5%
August average weekly earnings +7.8% vs +7.8% 3m/y expected
Prior +7.8%; revised to +7.9%

Other News

China reportedly tells banks to roll over local government debt at lower rates

Reuters reports, citing two sources with knowledge of the matter

It is being reported that Beijing has told state-owned banks to roll over existing local government debt with longer-term loans at lower interest rates. Adding that they will set up an emergency liquidity tool with the banks and that the interest rates on the rolled-over loans should not be below China’s Treasury bond rates so as to not see banks incur heavy losses.

Country Garden’s entire offshore debt to be in default if Tuesday payment not made

Reuters with the report saying thatCountry Garden’s entire offshore debt to be in default if payment is not made on a $15 million coupon payment on Tuesday, the end of a 30-day grace period.

Non-payment of this tranche is set to trigger cross defaults in other bonds as is standard in bond contracts.
Lack of payment – which is expected after Country Garden last week warned about its inability to meet offshore debt obligations – would make the firm the latest in scores of Chinese developers who have defaulted.
Country Garden has nearly $11 billion of offshore bonds and $6 billion of offshore loans.
Default would set the stagefor one of China’s biggest corporate debt restructurings.

Russian President Vladimir Putin arrived in Beijing on Tuesday to meet Xi Jinping

Russian President Vladimir Putin arrived in Beijing on Tuesday.

He’ll be attending the third Belt and Road Forum.

Putin will also meet with Chinese Communist Party Chairman Xi Jinping.

Putin and Xi have a mutual trust and a “no-limits” partnership.

Australian data – ANZ-Roy Morgan consumer confidence index 76.4 (prior 80.1)

Australian Weekly ANZ Roy Morgan Consumer Confidence survey.

ANZ comment:

Consumer Confidence fell below 80 on a 3.7pts fall
declines across all subindices
Inflation expectations rose despite strong retail discounting in October

RBA minutes show the Bank debated a 25bp rate hike vs. holding steady

Reserve Bank of Australia minutes from the October 2023 meeting.

Headlines via Reuters:

At October meeting board considered raising rates by 25bp or holding steady
Board members judged that case for holding steady was the stronger one
Members noted data on inflation, jobs and updated forecasts would be available at November meeting
Members acknowledged upside risks to inflation were a “significant concern”
Progress in lowering service sector inflation was slow
Board had “low tolerance” for a slower return of inflation to target
Further tightening may be required if inflation more persistent than expected
Rising house prices could support consumption, might be signal policy not as tight as assumed
Full effects of past hikes would not be evident in data for some months
Data suggested economy continued to grow modestly in the September quarter
Members believed the labour market had reached a turning point
Members noted there were few signs of wage price spiral materialising
Fall in A$ vs US$ had eased monetary conditions, though only at the margin
Trade weighted A$ only slightly lower than at start of year, limiting impact on imported inflation
Challenges to Chinaeconomy could impact Australia if not contained

Some interesting comments in this:

upside risks to inflation were a “significant concern”
had “low tolerance” for a slower return of inflation to target
Rising house prices could support consumption, might be signal policy not as tight as assumed

New Zealand Q3 CPI +1.8% q/q (+2% expected)

New Zealand CPI Q3 2023:

+5.6% y/y

expected 5.9%, prior 6.0%

+1.8% q/q

expected +2.0%, prior +1.1%

RBNZ’s own inflation measure for Q3 2023 is +5.2% y/y (vs. prior +5.7%)

The sectoral factor model is the Reserve Bank of New Zealand’s own preferred inflation measure, it dropped back significantly in the September quarter:

The Bank on its own model:

We created the sectoral factor model. It estimates the common component of inflation in the CPI basket, the tradable basket, and the non-tradable basket, based upon separate factors for the tradable and non-tradable sectors. The data excludes GST.

ANZ New Zealand expect RBNZ rate hike in February 2024, previously expected November 2023

ANZ analysts say the weaker-than-expected inflation buys the RBNZ some time.

The data ICYMI:

ANZ, in brief:

We now expect the RBNZ to hike the OCR 25bp in February, rather than November.
Annual CPI inflation decelerated from 6.0% in Q2 to 5.6% y/y in Q3, weaker than our forecast of 6.1%, and below the RBNZ’s August MPS forecast of 6.0%. The downside surprise was on the tradables side.
Non-tradables inflation came in at 6.3% y/y, slightly above the August MPS forecast of 6.2% y/y but below our forecast of 6.5%.
While still far too high, core inflation measures improved, which will be pleasing for the RBNZ. CPI excluding food, fuel, and energy fell to 5.2% y/y (6.1% previously). Trimmed mean measures largely eased. At the 30% trim level, inflation eased from 6.0% y/y to 5.6% y/y. Weighted median inflation eased from 6.6% y/y to 5.0% y/y.
Tradables inflation (largely imported) came in at 4.7% y/y (5.2% previously), well below our forecast of 5.5% y/y and the RBNZ’s forecast of 5.8% y/y. Petrol prices were higher, but not as high as we expected. Petrol price moves will be looked through, at least as long as inflation expectations continue to ease.
The details of today’s data support our view that domestic-driven inflation pressures remain a significant problem. However, clear progress was evident, and that takes pressure off the RBNZ to move the OCR any time soon. In short, ‘hope for the best’ remains a valid strategy. Accordingly, we have pushed our forecast hike out to the next meeting, the February Monetary Policy Statement.

BOJ reportedly mulls raising price outlook for the current fiscal year

Bloomberg reports on the matter

The report says that the price outlook for the fiscal year 2023 is being considered to be revised higher to closer to 3%.Meanwhile, the Japanese central bank is said to discuss raising the price outlook for the fiscal year 2024 to 2% or above but to keep the outlook for the fiscal year 2025 at around 1.6%.

Japan’s trade union plans to ask for more than 5% wage hike next spring – report

NHK reports on the matter

The report says that Japan’s trade union confederation, otherwise known as RENGO, is planning to ask for more than a 5% wage hike in the coming 2024 spring wage negotiations.Adding that they also plan to ask for more than a 3% base wage hike on top of that.

Singapore non-oil domestic exports (NODX) +11.1% m/m in September (expected +3.2%)

Singapore’s non-oil domestic exports (NODX) data for September 2023 accelerated sharply m/m but are still down on a y/y basis.

+11.2% m/m

expected +3.2%, prior -6.6%
m/m showed growing exports to China, Hong Kong and the U.S.

-13.2% y/y

expected -14.7%, prior -22.5%

Cryptocurrency News

Bitcoin price may not face correction even if SEC delays the final three spot BTC ETF decisions

Bitcoin price almost rallied by 10% on the back of fake news of an ETF approval on Monday before falling back to $28,555.
The second deadline for Fidelity, VanEck and WisdomTree applications is October 17, which will also be delayed.
Despite the $86 million shorts liquidations on Monday, BTC investors managed to make money, with the NUPL, touching a two-month high.

Bitcoin is still reeling from the surprise rally yesterday, which occurred due to the fake report spot BTC ETF being approved. But just as the market receives clarification, cryptocurrency is set to face another potential barrier.

Bitcoin faces the SEC once again

Bitcoin, trading at $28,538 at the time of writing, made a splash on Monday following a rise arising from the fake report.The cryptocurrency shot up by more than 10% during the intra-day high before scaling back down to $28,500.This resulted in the market facing $86 million worth of short liquidations

Cointelegraph apologizes again for posting “unverified” Bitcoin ETF approval news

Earlier today, during routine coverage, Cointelegraph’s social media team posted a message on X without prior editorial approval stating that the United States Securities and Exchange Commission had approved BlackRock’s iShares spot Bitcoin exchange-traded fund, or ETF.
This was false, the result of misinformation.
The news lead originated from an unconfirmed screenshot posted by an X user who claimed it was from the Bloomberg Terminal.

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Round up of today’s market news

ByBilals Tech