Round up of today's market news *

North American News

Red Day on Wall Street: Amazon, Intel & Ford Report Earnings

The major stock indices are down once again with the NASDAQ index leading the way once again.Yesterday the NASDAQ index fell -2.43%. The NASDAQ today fell -1.76%

A snapshot of the close shows:

Dow industrial average fell -251.63 points or -0.76% at 32784.29
S&P index fell -49.56 points or -1.18% at 4137.22
NASDAQ index fell -225.63 points or -1.76% at 12595.60

Despite the beat by Meta after the close yesterday, shares move sharply lower today.The stock is closing down $-11.16 or -3.73% at $288.37.

Other big cap names also fell sharply:

Nvidia -3.58%
Apple -2.59%
Alphabet -2.67%
Microsoft -3.74%

After the close earnings:

Amazon earnings :

Earnings Per Share (EPS): $0.94 (Expected: $0.58)
Revenue: $143.1 billion (Expected: $141.41 billion)
Q4 2023 Net Sales Outlook: $160-167 billion (Expected: $167 billion)
Q4 2023 Operating Income Outlook: $7.0 billion to no specific upper limit (Expected: $8.7 billion)

Segment Breakdown:

Online Stores Net Sales: $57.27 billion (Expected: $56.82 billion)
Physical Stores Net Sales: $4.96 billion (Expected: $4.99 billion)
Third-Party Seller Services Net Sales: $34.34 billion (Expected: $33.4 billion)
Subscription Services Net Sales: $10.17 billion (Expected: $10.13 billion)
Amazon Web Services (AWS) Net Sales: $23.06 billion (Expected: $23.13 billion)

Shares of Amazon are trading up $4.18 or 3.5% $123.75

Ford earnings:

Earnings Per Share (EPS): $0.39 (Expected: $0.45)
Revenue: $43.8 billion (Expected: $41.22 billion)

Ford has withdrawn its FY guidance following the ratification of a tentative US labor agreement.The company is facing challenges in the electric vehicle (EV) market, as many North American customers interested in buying EVs are not willing to pay premiums for them over gas/hybrid vehicles.This has led to a significant compression of EV prices and reduced profitability.

Shares of Ford are trading down $-0.50 or -4.41% at $10.85

Intel earnings:

Earnings Per Share (EPS): $0.41 (Beat, Expected: $0.22)
Revenue: $14.2 billion (Beat, Expected: $13.53 billion)

Key Metrics:

Client Computing Revenue: $7.87 billion (Beat, Expected: $7.35 billion)
Datacenter & AI Revenue: $3.8 billion (Miss, Expected: $3.94 billion)
Network & Edge Revenue: $1.45 billion (Beat, Expected: $1.37 billion)
Intel Foundry Services Revenue: $311 million (Beat, Expected: $254.4 million)
Adjusted Operating Margin: 13.6% (Beat, Expected: 8.01%)
Adjusted Gross Margin: 45.8% (Beat, Expected: 43.1%)
Mobileye Revenue: $530 million

Shares of Intel are trading up to dollars and $0.11 or 6.49% at $34.64

Chipotle earnings:

Earnings Per Share (EPS): $11.32 (Beat, Expected: $10.55)
Revenue: $2.47 billion (Met, Expected: $2.47 billion)
Comparable Sales Growth: 5% (Beat, Expected: 4.37%)

Chipotle Mexican Grill Inc beat earnings expectations with an EPS of $11.32.Their revenue met expectations at $2.47 billion, and they reported strong comparable sales growth of 5%, surpassing the expected 4.37%.

Shares of Chipotle are trading up $85.53 or 4.73% at $1892

US treasury auctions off $38 billion a 7 year notes at a high yield of 4.908%

WI level at the time of the auction was 4.91%

High yield: 4.908%
WI level at the time of the auction: 4.91%
Tail: -0.2 bps (previous: 0.3bps, six-auction average: -0.2bps)
Bid-to-Cover: 2.7x (previous: 2.47x, six-auction average: 2.73x)
Dealers (they take the leftovers from the domestic and international investors): 10.98% (previous: 14.6%, six-auction average: 12.0%)
Directs (a measure of domestic demand): 18.4% (previous: 19.9%, six-auction average: 17.6%)
Indirects (a measure of international demand): 70.62% (previous: 65.5%, six-auction average: 70.4%)

US pending home sales up 1.1% versus -1.8% expected

Pending home sales for the month of September 2023

Prior month -7.1%
Pending home sales up 1.1% versus -1.8% expected
Pending home index rose to 72.6 from 71.8

Looking at the different regions

Northeast PHSI decreased by 0.9% to 62.6, marking an 18.2% reduction from August 2022.
Midwest index dropped by 7.0% to 71.3, down 19.1% from the previous year.
South PHSI fell by 9.1% to 86.5, showing a 17.6% dip from the prior year.
West index retreated by 7.7% to 56.3, sinking 21.4% compared to August 2022.

From Lawrence Yun, NAR Chief Economist:

“Mortgage rates have been rising above 7% since August, which has diminished the pool of home buyers.”
“Some would-be home buyers are taking a pause and readjusting their expectations about the location and type of home to better fit their budgets.”
“It’s clear that increased housing inventory and better interest rates are essential to revive the housing market.”

US Q3 advance GDP +4.9% vs +4.3% expected

The first reading on third quarter 2023 US gross domestic product

Final Q2 reading was +2.4% annualized
Q1 was +2.0% annualized
Best quarter since Q4 2021
Estimates ranged from 2.5%-6.0%

Details:

Consumer spending +4.0% vs +0.8% prior
Consumer spending on durables %
GDP final sales +3.5% vs +4.5% expected (+2.3% prior)
GDP deflator 3.5% vs +2.5% expected (+2.2% prior)
Core PCE +2.4% vs +2.5% expected (+3.8% prior)
Exports +6.2% vs -9.3% prior
Imports +5.7% vs -7.6% prior
Business investment +8.4% vs +5.2% prior

Percentage point changes:

Net trade -0.08 pp vs +0.04 pp prior
Inventories +1.32 pp vs 0.0 pp prior
Govt +0.79 pp vs +0.57 pp prior

US initial jobless claims 210K vs 208K estimate

The weekly US initial jobless claims in continuing claims

Prior week 198K
Initial jobs claims 210K vs 208K estimate
4 week moving average of initial jobless claims 207.5K vs 206.25K last week
Continuing claims 1.790 Mvs 1.740M estimate.Prior week revised to 1.727M from 1.734M
4 week moving average of continuing claims 1.724M versus 1.692M last month

September advance goods trade balance -$85.78B vs -$84.64B prior

US monthly trade balance in goods for September 2023
Prior was -$84.64 billion

US September durable goods orders 4.7% versus 1.7% expected

US September 2023 durable goods orders data

Prior +0.2% revised to -0.1%
Durable goods orders 4.7% versus 1.7% expected
nondefense capital goods orders ex air 0.6% vs +1.1% last month (revised up from 0.9%)
Ex Transportation 0.5% versus 0.2% expected. Prior 0.5% (revised from 0.4%)
Ex Defense 5.8% versus -0.7% last month
Shipments -$0.8 billion or -0.3 percent to $283.7 billion. This followed a 0.5 percent August increase.

Other details showed:

Unfilled orders for durable goods rose by 1.4 percent or $18.5 billion to reach $1,353.8 billion. This increase follows a 0.3 percent rise in August. The growth was primarily driven by the transportation equipment sector, which increased by 2.1 percent or $17.8 billion to reach $855.7 billion.
Inventories of manufactured durable goods continued to rise, marking two consecutive months of increase. The total inventories increased by $0.5 billion or 0.1 percent, reaching $523.7 billion. This uptick follows a 0.2 percent increase in August. The machinery sector played a significant role in this growth, with an increase of $0.3 billion or 0.3 percent, bringing its total to $95.1 billion.

US Sept wholesale inventories 0.0% vs -0.1% prior

US retail and wholesale inventory data

Prior was +1.8%
Retail inventories +0.3% vs +0.5% prior

UAW makes a new proposal to GM

The end of the strike is getting near

The UAW is making a new proposal to General Motors as both sides bargain to end the 40+ day strike.

GM is said to be preparing a counteroffer to be proposed on Thursday or Friday. The union’s offer is similar to the tentative deal that was reach with the Ford autoworkers yesterday.

Yellen: We have what looks like a soft landing

Comments from the Treasury Secretary
Investments in green energy and chips will create jobs
We see good strong consumer spending, the economy is doing well
Surge in bond yields is happening in most advanced countries, it’s not an indicator of recession
Part of increase in yields is a reflection of expectations that interest rates will be higher for longer

WSJ reports that US Auto Workers union & Ford expected to announce a deal

Wall Street Journal:

The United Auto Workers union is expected to announce a new tentative labor contract with Ford

WSJ citing “people with knowledge of the talks”

10-year Treasury yields close in on the 5% mark again

Bonds continue to puke as the selling has been rather unrelenting

Just when you thought that the backing off from 5% might trigger a bit more of a retracement, it all but lasted a day – more or less.10-year Treasury yields hit above 5% for the first time since 2007 on Monday before falling to near 4.80% subsequently.But now, we’re talking about a return towards the former again as yields are up another 2 bps today to 4.977% currently.

Goldman Sachs says a 2 to 3 week November US government shutdown is its base case

Goldman Sachs notes after the US House elected a speaker.

The election of a speaker does not substantially change our view on a shutdown in Q4. While operating under a temporary speaker created uncertainty, if the November 17 deadline had been reached with only a temporary speaker, the most likely outcome would have been another temporary extension, we think.
With a newly elected speaker, it seems likely that House Republicans will press to cut spending by up to $120bn, which will make a longer-term spending deal difficult.
Differences over Ukraine funding will also likely complicate spending talks. That said, recent developments in Israel lower the odds of a shutdown in November, all else equal.
For now, we view a shutdown in November as a close call but retain a shutdown of up to 2-3 weeks as our base case, reducing GDP growth in Q4 by around 0.5pp and adding the same amount in 2024Q1.

Iran Foreign Minister: US/Iran does not want expansion of Israelite – Hamas war

Geopolitical risks remain high

The Iran foreign minister:

Says to the US, that Iran does not want expansion of Israel-Hamas war.
If the genocide in Gaza continues, the US will not be spared from “this fire”
Hamas is ready to release civilian prisoners, the world should support release of 6000 Palestinian prisoners

BOC’s Macklem: We may not have to raise rates further

Comments from Macklem on CBC Radio
The economy is not overheated anymore and if inflation cools as projected, we won’t have to raise rates further

Bank of Canada interest rate pause continued, with a “clear hiking bias”

The Bank of Canada left its overnight rate unchanged at 5%, although other events overtook the news on it:

Via, RBC, their ‘Bottom Line” response, in brief:

CPI readings still running well above the 2% target, the BoC is firmly focused on getting inflation under control.Slower than expected progress is a concern.But evidence continues to build that interest rates are already restrictive enough to continue to cool the economy, and alleviate price pressures.
consumers in the coming quarters are expected to further cut spending as more of them contend with rising borrowing costs
a weaker global economic backdrop is also expected to slow export and investment activities with Canadian businesses, who are already facing tighter financial conditions following a rise in longer-maturity bond yields
The BoC will be cautious about starting to ease off the monetary policy brakes too quickly – we expect the overnight rate will be held at 5% through the first half of next year, with modest rate cuts to follow starting in Q3 2024.

Commodities

Gold Lurching towards $2,000 amidst downside swoons

Spot Gold continues to grind towards the upside, though regular downside pullbacks muddling the picture.
Gold hit a high of $1,993.55 for the week in early Thursday trading before slipping to $1,971.
A bumper US GDP reading has Gold reaching higher once more as investors fear more inflation.

The Gold chart is looking topside once more as spot prices find a floor after US GDP figures beat the street, and a firm US economy is set to keep the Fed at bay on future rate cuts.

Despite a slight miss in unemployment claims, the US economy continues to churn out better-than-expected economic figures, and a notable lack of meaningful downturn indicators means the Fed will have to keep rates higher for longer. Investors hoping for a quick return to rate cuts by the Fed continue to be disappointed by the resilient US economy.

Silver hovers around $22.80, grapples with 50-DMA in lackluster trade

Silver price seesaw from daily high of $23.69 to low of $22.88, closing at $22.81.
Key resistance levels at 50-DMA of $22.94 and 200-DMA of $23.29 cap potential rally attempts.
Downside support at $23.00, with further levels at the October 26 low of $22.44 and 20-day EMA of $22.21.

Silver is almost flat during Thursday’s session after seesawing in a volatile day, reaching a daily high of $23.69 before diving towards its low of $22.88. As the Wall Street close looms, the white metal trades at $22.81, registering losses of 0.12%.

The daily chart portrays the pair as neutral to downward biased, as silver sits below the 50 and 200-day moving averages (DMAs), which would cap any rallies intents at $22.94 (50-DMA) and $23.29 (200-DMA). If those two levels are cleared, the next stop would be the top of the Bollinger-Band at $23.71, followed by $24.00.

WTI crude oil futures settle at $83.21

Down $2.18 or -2.55%

The price of WTI crude futures are settling at $83.21.That is down $-2.18 or -2.55% on the day. Lower stocks are starting to weigh more on crude oil from a potential decline in demand as expectations for consumers slow their purchases after the go-go third-quarter which saw GDP advance by 4.9%.

Technically, the low price today reached $82.62. That remains within the lower swing area between $82.35 and $83.32. A break below $82.35 should open up the door for a run toward the 100-day moving average at $80.85 over time.

EU News

European indices close lower led by the German DAX

German DAX falls over 1%

Major European indices are closing lower on the day. The declines are led by the German DAX which fell -1.08%.. The decline today sent the index lower for the week with one day left.

A snapshot of the closing levels shows:

German DAX, -1.08%. For the trading week, the index is down -0.46%
Frances CAC, -0.38%.For the week, the index is holding onto a gain of 1.07%
UK’s FTSE 100 -0.81%.For the trading week, it is down -0.64%
Spain Ibex -0.24%.For the trading week the index is down -0.73%
Italy’s FTSE MIB +0.29%.For the trading week the index is down -0.82%.

ECB leaves key interest rates unchanged in October monetary policy meeting

ECB announces their latest monetary policy decision – 26 October 2023
Main refinancing rate 4.50% vs 4.50% expected
Prior 4.50%
Deposit facility rate 4.00% vs 4.00% expected
Prior 4.00%
Marginal lending facility 4.75%
Prior 4.75%
Incoming information has broadly confirmed previous assessment of medium-term inflation outlook
Inflation is still expected to stay too high for too long
Past interest rate increases continue to be transmitted forcefully into financing conditions
This is increasingly dampening demand and thereby helps push down inflation
Key interest rates re at levels that, maintained for a sufficiently long duration, will make a substantial contribution to ensure that inflation returns to its 2% medium-term target in a timely manner
Future decisions will ensure that policy rates will be set at sufficiently restrictive levels for as long as necessary

UK October CBI retailing reported sales -36 vs -14 prior

Latest data released by CBI – 26 October 2023
Prior -14

German firms remain pessimistic about business prospects for the year ahead

The latest findings from a DIHK poll of more than 24,000 companies

Only 13% of companies expect business to improve in the next 12 months
35% of companies expect a deterioration in business conditions instead
But current business situation is assessed more positively (30%) than negatively (21%)
51% of companies see current economic policy as a problem for their own development

Lagarde opening statement: Past hikes are increasingly dampening demand

Comments from Lagarde in her opening statement
Rates will make a ‘substantial contribution’ to curbing inflation
The eurozone economy remains weak
Tighter conditions are weighing on investment and savings; highlights drag from industrial sector
Economy is likely to remain weak for the remainder of this year
There are signs that the labor market is weakening
Food price inflation slowed again, though it remains high by historical standards
Risks to economic growth remain tilted to the downside
Domestic price pressures remain strong
Credit dynamics have weakened further

Lagarde Q&A: Now is not the time for foward guidance, it’s time for data dependency

Comments from Lagarde in the Q&A
PEPP wasn’t discussed at this meeting
Our determination to bring inflation to 2% is intact
Rise in yields is a spillover that we take into account, it helps bring inflation down
What we are seeing is a very-strong transmission of our monetary policy in the banking system in particular

ECB sources: policymakers agreed to debate PEPP reinvestment end date

ECB kept rates unchanged today

ECB sources:

Agreed to debate PEPP reinvestment end date this winter, and minimum reserves as part of the framework review.
ECB policymakers decided to delay discussions about ending bond purchases until early 2024.
There was no discussion about stopping reinvestments of cash from maturing bonds in the Pandemic Emergency Purchase Programme (PEPP) during the recent meeting.
The PEPP debate is expected to take place sometime during the winter.
The issue of the proportion of commercial banks’ deposits to park at their central bank and the remuneration of these mandatory reserves will be addressed later.
Reinvestments are not expected to end abruptly, and the ECB may follow a gradual approach.
Some policymakers want to increase the portion of deposits that banks must park at their national central bank.
The ECB is conducting an operational framework review that includes discussions on minimum reserve rules.

Other News

US President Biden and Chinese Foreign Minister Wang Yi expected to meet on Friday

Reuters cite two US officials for the info.

China’s foreign minister will meet with Biden’s national security adviser Jake Sullivan at the White House on Friday.

A meeting with Biden may then follow.

Reuters says that the White House declined to comment.

The groundwork is being laid for Biden and Chinese Communist Party Chair Xi to meet in November at the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco.Xi and Biden last met at a summit in Bali in November 2022.

Wang will be in Washington from today through to Saturday.He’ll also meet with Secretary of State Antony Blinken.

Australian Q3 Export prices -3.1% q/q (prior -8.5%)& Import prices +0.8% q/q (prior -0.8%)

That jump in import prices above estimates is another inflationary impulse.

RBA Bullock on inflation: “we’re wary”. On rates: “not sure if job is done”

Reserve Bank of Australia handwringing continues … have not yet decided whether a rate rise is needed

More again from Reserve Bank of Australia Governor Bullock, pretty much repeating herself using different words.

We are wary on inflation
We have made it clear we might have to hike interest rates again
says still considering whether CPI was a “material” change to outlook
She says the Bank is still thinking about if yesterday’s inflation data showed a “material” increase.
Would not like to say if CPI makes a rate rise more likely
CPI was a little higher than expected, but about where we thought it’d be
The CPI was a little higher than we expected
But CPI was about where we thought it would come
Goods prices coming down, but services inflation remains persistent
Services inflation is higher than what we are comfortable with
Will have to build this into our forecasts

Westpac now forecasting a November Reserve Bank of Australia rate hike

An Reserve Bank of Australia forecast from WPAC focused on the upcoming meeting on November 7.

In brief:

Inflation is declining, but not fast enough for the RBA to hold rates unchanged, given their recent rhetoric.
There are arguments either side, so this month’s expected rate rise does not necessarily imply that rates will increase again in December.
Has the RBA seen enough to move? At 1.2% in the quarter, both headline and trimmed mean inflation was a little higher than the Westpac team expected.
We assessed that it would take a significant upside surprise to induce the RBA Board to raise rates at the November meeting. A 0.1% difference might not seem like a lot, but the underlying detail was sobering.

Failure to act on high CPI threatens to damage the Reserve Bank of Australia’s credibility

TD says the response to yesterday’s inflation data in Australia needs to be an RBA rate hike.

Q3 CPI data handily beat the RBA’s and analyst forecasts
Along with the Q2 trimmed mean measure being revised up and strong signs of domestic inflation, there is now a clear signal for monetary policy to respond
We now expect the RBA to hike 25 bps at next month’s meeting to 4.35% on the target cash rate
We believe failing to act could harm the RBA’s credibility

UBS forecasts a November RBA interest rate hike, and likely more to come after that

UBS response to Wednesday’s upside surprise in Australian inflation data, its Australian economist forecasts a 25bp Reserve Bank of Australia cash rate hike at its November 7 meeting:

“RBA Governor Bullock’s speech last night effectively specified they ‘will not hesitate to raise the cash rate further’ – implying a hike of 25bp at their November meeting – ‘if there is a material upward revision to the outlook for inflation’”
“UBS has for several months highlighted the material risk the RBA could hike rates in November, particularly if CPI was higher than expected. Well, that’s the case now.

RBNZ says it expects defaults to increase in agricultural lending portfolios

Reserve Bank of New Zealand statement:

Agricultural sector facing difficult economic conditions due to low prices, high operating expenses and increased debt servicing costs
Defaults in banks’ agricultural lending portfolios are currently low, they are expected to increase

Poll: BOJ set to put an end to negative rates in 2024

The latest from Reuters’ poll on economists on the BOJ outlook

25 of 28 economists expect BOJ to keep policy steady next week
The other 3 economists expect a start of easy policy unwinding
63% of economists expect BOJ to end negative interest rates in 2024 (up from 52% in September, and 41% in August)
The remainder expect the end of negative rates to be 2025 or later
69% of economists expect BOJ to end YCC by the end of 2024 (down from 78% in September)

Japan PM Kishida: Income, individual resident tax cuts desirable to hasten deflation exit

Remarks by Japan prime minister, Fumio Kishida
FX intervention not a contradiction of policy
Intervention does not contradict policy of shifting money away from savings towards investment
BOJ holds ETFs, JGBs as part of monetary policy
It is up to the BOJ to decide whether to sell its ETF holdings

He adds that he wants to compile the economic stimulus package for this by 2 November.

Senior Japan official: ‘excessive’ FX volatility, FX should move stably with fundamentals

By ‘FX’ he mens yen, OK?

Japan Deputy Chief Cabinet Secretary Murai:

Important for currencies to move stably reflecting fundamentals
Excessive FX volatility undesirable
Won’t comment on forex levels
No comment on currency intervention
Will continue to take fully appropriate steps on FX

Cryptocurrency News

Cardano price might have to wait until Q3 2024 to mark new all-time high

Cardano price reached its ATH back in August 2021 and would need another 925% increase to breach it.
Peter Brandt suggests that while the Bitcoin bottom is in, new ATHs should not be expected until Q3 2024.
ADA still has some bullish steam left in it following the 17% rally this week, which could enable it to breach the 200-day EMA.

Cardano price has been moving in line with the rest of the crypto market, rising considerably in the past couple of days. But this increase is infinitesimal in comparison to what is needed for ADA to see new highs. However, according to analyst, this could happen by late next year.

Cardano price could see more green

Cardano price in the past week has risen by 16.9% to trade at $0.284 at the time of writing.This increase has pushed the token through some crucial barriers, such as the 50 and 100-day Exponential Moving Averages (EMA). The altcoin is now aiming to flip the $0.298 resistance level into a support floor, which is in confluence with the 200-day EMA.

Floki Inu rips 10% higher ahead of TokenFi launch as network looks to capitalize on tokenization

Floki Inu price is up 10% on skyrocketing trading volume.
FLOKI must break above $0.00003369 to continue uptrend, steered by hype around October 27 TokenFi launch.
The network will premiere the TokenFi token, with launch preceding Floki staking program.
Invalidation of the bullish thesis will happen if the meme coin breaks and closes below $0.00002391.

Floki Inu (FLOKI) price managed to break from consolidation under a critical resistance, rallying behind its peer meme coins like Dogecoin (DOGE), Shiba Inu (SHIB) and Pepe coin (PEPE).Nevertheless, FLOKI remains the top gainer, which comes on the back of a key network milestone.

Floki Inu network to launch TokenFi for its staking program

The FLOKI Decentralized Autonomous Organization (DAO) has revealed plans to launch TokenFi, a crypto and asset tokenization platform, as part of the efforts to capitalize on the tokenization industry, which is projected to hit $16 trillion by the end of 2030. The ticker for the TokenFi ecosystem will be $TOKEN. A total supply of 10 billion tokens will be split across Binance Smart Chain (BSC) and Ether (ETH), each having around 5 billion tokens.

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Round up of today’s market news

ByBilals Tech