Round up of today’s market news

North American News

Nasdaq Posts Biggest Weekly Surge in Over a Year: November 2022 Flashback

• The largest weekly gain in a year

Closing changes on the day:

• S&P 500 up +1.00%
• DJIA +0.7%
• Russell 2000 +2.7%
• Nasdaq Comp +1.4%

On the week:

• S&P 500 up 5.9% — best since Nov 2022
• DJIA +5.1%
• Russell 2000 +7.6% — best since Feb 2021
• Nasdaq Comp +6.6%

US October non-farm payrolls +150K vs +180K expected

• October 2023 US employment data from the non-farm payrolls report
• Prior +336K (revised to 297K)
• Two-month net revision -101K vs +119K prior
• Unemployment rate 3.9% vs 3.8% expected
• Prior unemployment rate 3.8%
• Participation rate 62.7% vs 62.8% prior
• U6 underemployment rate 7.2% vs 7.0% prior
• Average hourly earnings +0.2% m/m vs +0.3% expected
• Average hourly earnings +4.1% y/y vs +4.0% expected
• Average weekly hours vs 34.4 expected
• Change in private payrolls +99K vs +158K expected
• Change in manufacturing payrolls -35K vs -10K expected
• Household survey -348K vs +86K prior
• Birth-death adjustment +412K vs -119K prior

US October ISM services 51.8 vs 53.0 expected

• October 2023 US services survey from the Institute for Supply Management

• Prior was 53.6

Details:

• employment index 50.2 versus 53.4 prior
• new orders index 55.5 versus 51.8 prior
• prices paid index 58.6 versus 58.9 prior
• new export orders 48.8 versus 63.7 prior
• imports 60.0 versus 50.6 prior
• backlog of orders 50.9 versus 48.6 prior
• inventories 49.5 versus 54.2 prior
• supplier deliveries 47.5 versus 50.4 prior
• inventory sentiment 54.4 versus 54.8 prior

Comments in the report:

• “In general, commodity prices are coming down, but some categories,especially labor, are still elevated and will remain so for the immediate future. Suppliers are citing increased labor costs — wages, salaries and benefits — as the biggest reason for their price increases.” [Accommodation & Food Services]
• “Strength in certain construction sectors is leading to continued optimism. Construction equipment and materials are at generally at lower prices and with faster deliveries. However, this is not the case for all materials or equipment; some prices remain high and with long lead (times).” [Construction]
• “Currently, we are continuing as normal. If the economy takes a downturn, that will have a negative effect on our revenue. We are also leery of potential increases in fuel costs due in part to the unrest in the Middle East. If fuel costs rise, it will have a negative impact on our budget as we strive to continue normal operations on our campus.” [Educational Services]
• “Labor pressures continue, particularly in areas that are hard to recruit. Filling front-line and lower-skill labor positions has gotten very expensive because of competition from large companies and logistics providers. Also, middle management roles are harder to recruit for than they have been in some years.” [Health Care & Social Assistance]
• “With (a supplier’s) labor dispute resolved; we’re expecting a return to the same delivery speeds before it started in July. We are in our busy season, and it’s especially busy this year compared to last fall.” [Information]
• “We are taking a cautious approach due to the increase in crude oil prices. Capital projects have been slowed or postponed until oil prices stabilize.We expect this approach to continue through fiscal year2024.” [Management of Companies & Support Services]
• “Due to the Israel-Hamas war, communications with clients in the Middle East are pretty much shut down.” [Professional, Scientific &Technical Services]
• “The United Auto Workers (UAW) strike is having no impact so far — our inventory is in good position for now.”[Retail Trade]
• “The general outlook for our organization is less positive than anticipated from the beginning of the year. Performance expectations were revised upward after a strong start to the year, and the results are not expected to be as high as the revised projections. Performance is impacted in part by our customers’ ability to fill our warehouses with product, and it seems the food manufacturing industry is still working toward increasing output, which has lagged a bit since the pandemic.” [Transportation & Warehousing]
• “Business conditions have become murky as of late, but still going strong. However, certain business units are needing to be reevaluated.” [Utilities]
• “The UAW strike and potential government shutdown have created risk and caution for our customers who have pulled back on purchases beginning this month.” [Wholesale Trade]

One positive part of the report was the rebound in new orders.

US October S&P Global final services PMI 50.6 vs 50.9 prelim

• Final reading on the US services sector from S&P Global

• Prior was 50.2
• Composite 50.7 vs 51.0 prelim
• Prior composite 50.2
• business confidence rose to the strongest in four months,
• Input prices and output charges increased at the weakest rates in three years
• New orders fell for the third month running, albeit at only a slight pace

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:

“The PMI survey paints a far more subdued picture of US economic health than the latest bumper GDP numbers, with October seeing very muted growth of business activity for a third successive month. A summer-surge in service sector activity, fueled by rising consumer spending, has stalled. Manufacturing is meanwhile also struggling to regain momentum amid weak global demand. As such, the survey data are broadly consistent with GDP rising at an annual rate of around 1.5%.

“An upside to the weak demand environment is the further cooling of price pressures in October, which brings the Fed’s 2% target into focus for the first time in three years.

“The brighter outlook for inflation and hopes of a commensurate peaking of interest rates have helped lift business confidence in year-ahead prospects, but new business inflows need to pick up in both services as well as manufacturing to ensure robust growth can be sustained as we head towards the end of the year.”

Fed’s Bostic: Policy is likely in the right place given the economic outlook

• Comments from the Atlanta Fed President
• Pleased with jobs number, it’s consistent with the outlook
• Hoping for minimal pain for the economy
• Fed has time to watch and be patient with data
• Credit is definitely tight and more will happen on that front
• I do think we can get to 2% inflation without seeing a recession

Fed’s Barkin: It was welcome to see lessening pressure in the jobs data

• Comments from the Fed’s Barkin
• The labor market is in better balance now
• Fed has more data to see before next rate decision, I won’t prejudice it
• Fed is focused on seeing inflation come down
• I’d like to think that markets are respond to data
• There’s some evidence price setters see declining power, but many still have it
• Really pleased by recent productivity data
• Good chance consumer economics are in a good place
• Office and older office real estate is under pressure
• Rate cuts are still a way off in my mind
• Says he doesn’t know if Fed has reached peak of hike cycle

Fitch: large US regional bank ratings are mostly stable

• Fitch speaks to US regional bank risk

Fitch is on the wires saying that:

• US regional bank ratings are mostly stable
• Ratings headroom diminished

Treasury Secretary Yellen defends criticism on rates and government funding

• U.S. Treasury Secretary Janet Yellen responded to comments from billionaire Stanley Druckenmiller regarding her handling of low-interest rates.
• Druckenmiller had criticized Yellen for not taking advantage of low-interest rates, suggesting that she could have issued longer-term bonds at higher yields.
• Yellen emphasized that the U.S. Treasury has been lengthening the maturity of its portfolio, and the duration of the portfolio is among the longest. You
• Druckenmiller’s criticism was centered around the issuance of 2-year bonds at 15 basis points when he believed longer-term bonds could have been issued at higher yields, such as 10-year or 30-year bonds at 70 and 180 basis points, respectively.

Canada October employment +17.5K vs +22.5K expected

• Canadian October 2023 jobs report

• Prior +63.8K
• Unemployment rate 5.7% vs. 5.6% expected. Last month 5.5%.
• Full-time employment -3.3K vs +15.8K last month
• part-time employment +20.8K vs. +47.9k last month.
• Participation rate 65.6% vs 65.5% last month.
• Average hourly wages permanent employees 5.0% vs 5.3% y/ last month

Canadian October S&P Global services PMI 46.6 vs 47.8 prior

• This is a new release from S&P Global

• Prior was 47.8
• The latest decline in business activity was closely linked by panellists to a reduced level of new work.
• Companies reported that new work received was down for a third month in a row, and to the greatest extent for over a year.
• Panellists widely commented on raising typical wage levels in October, largely to help staff with living expenses and to retain workers

This is a new release from S&P Global but the data collected for it goes back to 2017.

Paul Smith, Economics Director at S&P Global Market Intelligence, said:

“The first public release of the S&P Global Canada Services PMI showed that the nation’s vast services economy, the key contributor to overall economic output in Canada, remained mired in contraction territory during October. Moreover, operating conditions faced by service providers are worsening at a greater pace, with both activity and new business declining to their greatest degrees since August 2022.

“Firms were clear on the reasons behind the challenging market environment they currently face, reporting that elevated prices, the high cost of living and highinterest rates were leading to budget cuts and reduceddiscretionary spending amongst clients.

“This suggests that the Bank of Canada’s sustained period of rising interest rates is having a dampening effect on economic activity. However, data from the PMI survey encapsulates the challenges the central bank currently faces, and why it continues to adopt its hawkish stance.Firstly, the labour market remains tight,with October’s survey suggesting that firms continueto recruit staff, especially skilled workers.Secondly,elevated wage growth is leading to stubbornly highinflation.”

“Whilst the release of new timely PMI data will be welcomed by policymakers, it nonetheless reinforces the current tightrope they have to walk between bringing inflation down on the one hand and avoiding economic recession on the other.”

Commodities

Silver rises sharply as US jobs data softens, conquers $23.00

• Silver prices rebounded sharply, trading at $23.17, buoyed by a softer U.S. labor market report.
• October’s Nonfarm Payrolls and cooling wage growth hint at a less aggressive Fed, boosting silver.
• The dip in U.S. Treasury yields further enhances silver’s attractiveness as a non-yielding asset.

Silver prices bounces off daily lows at $22.59 and climbs more than 1.89% after the US Department of Labor, revealed the US economy added fewer employees to the workforce than expected. Hence, traders are pricing in the Fed would not raise rates further, denting appetite for the dollar.At the time of writing, the white metal is trading at $23.17, a gain of 1.86%.

WTI declines after disappointing US data, Middle East tension easing

• The WTI barrel price declined by more than 2% to $80.70.
• The US reported soft labor market figures.
• Tensions in the Middle East are easing, favouring the price to decline.

At the end of the week, WTI barrel is seeing sharp losses, mainly due to worries on the US economy, the largest Oil consumer, after the release of weak labor and economic activity data.In addition, as the Middle East tensions ease, markets are confident that there won’t be any supply or demand disruptions also contributing to the downward movements.

The US Bureau of Labor Statistics revealed disappointing numbers, as job additions for October from the US economy fell short of expectations at 150,000 vs the 180,000 expected and decelerated from its revised previous figure of 297,000.In addition, the Unemployment Rate rose to 3.9%, above the expected 3.8% while the Average Hourly Earnings increased by 0.2% MoM, lower than the projections and tallied a 4.1% YoY increase.In line with that, if the US continues to reveal that its economy is weakening and that the cumulative effects of the monetary policy are kicking in just now, Oil prices could face further downside as lower energy would be demanded from the largest consumer in the world.

Baker Hughes US oil rig count 496 vs 504 prior

• That’s a sharp one-week drop

• Oil rigs -8
• Gas rigs +1

EU News

European equities didn’t finish as strongly as you’d hope

• Closing changes:

• Stoxx 600 +0.2%
• German DAX +0.3%
• UK FTSE 100 -0.6%
• French CAC -0.1%
• Italy MIB +0.7%
• Spain IBEX +0.4%

On the week:

• Stoxx 600 +3.4%
• German DAX +3.8%
• UK FTSE 100 +1.5%
• French CAC +3.7%
• Italy MIB +5.1%
• Spain IBEX +4.2%

Eurozone September unemployment rate 6.5% vs 6.4% expected

• Eurozone September unemployment report from Eurostat
• Prior was 6.4%

Germany September trade balance €16.5 billion vs €16.3 billion expected

• Latest data released by Destatis – 3 November 2023
• Prior €16.6 billion

UK October final services PMI 49.5 vs 49.2 prelim

• Latest data released by S&P Global – 3 November 2023

• Prior 49.3
• Composite PMI 48.7 vs 48.6 prelim
• Prior 48.5

Little change to the initial estimates as services output continue to be dampened by weaker demand conditions at the start of Q4. Of note, the details show the sharpest decline in new work since November 2022. S&P Global notes that:

“A shallow downturn in UK service sector activitypersisted in October as businesses struggled to make headway against a backdrop of worsening domestic economic conditions and stretched household budgets.

“Forward-looking survey indicators suggested that service providers will continue to skirt with recession. The degree of optimism towards the business outlook was the lowest in 2023 so far, despite relief that interest hikes have taken a pause this autumn.

“New orders meanwhile decreased to the greatest extentsince November 2022 as cost of living pressures andelevated interest rates hit consumer spending.Survey respondents also noted that weak business investment patterns and a wait-and-see approach to new projects remained constraints on order books. A return to rising export sales was a positive development in October, with strong demand from clients in the US and Middle East cited as long-term growth drivers.

“Encouragingly, input cost inflation softened to the lowest for more than two-and-a-half years in Octoberas falling raw material prices and supplier discountinghelped to constrain pressures on business expenses. Higher wages and fuel bills were still passed on to clients, which resulted in the strongest increase in average prices charged inflation for three months.”

BOE’s Pill: We held rates because economic restraint needs to be maintained

• Comments from the BOE’s chief economist
• Hold decision reflected view some restrain on economy needed to be maintained
• There is still a need to bear down on inflation
• Balance of economic drivers has switched to supply side
• We can be less sanguine about idea of slowing demand will lead to inflation returning to market
• We have not really entertained the idea of cutting rates

BOE’s Hauser says banks must guard against faster bank runs

• Remarks by BOE policymaker, Andrew Hauser

• Need to ensure banks’ liquidity insurance remains appropriate as technological change increases the risk of larger and faster deposit runs
• Will continue to deepen alternative liquidity sources for banks
• Will look to calibrate BOE liquidity toolkit to return market discipline to banks’ liquidity management

Schnabel:With current monetary policy stance, we expect inflation return to target by 2025

• ECB’s Schnabel speaking

• With our current monetary policy stance, we expect inflation to return to our target by 2025
• The disinflation process during the last mile will be more uncertain, slower and bumpier.
• We cannot close the door to further rate hike’s
• If Middle East conflict remains contained, energy price impact limited

Other News

China’s Caixin Services PMI for Oct. 50.4 versus 51.2 estimate

• China’s Caixin services PMI for October 2023

• Prior month 50.2
• Services PMI 50.4 versus estimate of 51.2
• Composite PMI 50.0 versus 50.9 previously

Details:

• China’s services activity expanded slightly faster in October at 50.4 versus 50.2 last month but below the estimate of 51.2,
• Sales in the services sector grew at the softest rate in 10 months, and employment remained stagnant, while business confidence decreased.
• The services sector accounts for approximately 48% of jobs in China.
• The Caixin/S&P Global services purchasing managers’ index (PMI) increased to 50.4 in October, up from September’s nine-month low of 50.2.However, the pace of expansion was slower than in the first half of the year.
• A reading above 50 indicates expansion, while below 50 indicates contraction.
• New orders in the services sector grew at the weakest pace in 10 months, partly offset by a boost from increased travel during the National Day holiday.
• Foreign demand for Chinese services improved, but the slowdown in sales growth led to cautious hiring practices. Employment in the sector remained unchanged in October.
• Business optimism declined for the fourth consecutive month and was at its lowest level since March 2020.
• Prices charged by services companies increased as they tried to pass on higher input costs to customers, although the rate of input inflation slowed down.
• The composite PMI, which includes both manufacturing and services, declined to 50.0 from 50.9 in September, the lowest reading since December 2022.
• Concerns exist about the weak property sector, declining travel demand, local government debt, and geopolitical tensions affecting China’s economic outlook, despite better-than-expected growth in the third quarter.

Australia retail trade for Q3 0.2% versus -0.2% expected

• Australia’s retail trade for Q3 2023
• Prior month-0.5%
• Retail trade 0.2% vs -0.2% expected

Australia Judo Bank composite PMI final for October 47.6 versus a 47.3 preliminary

• Australia’s Judo Bank composite and services PMI final for October 2023

• Judo Bank composite PMI final 47.6 versus 47.3 preliminary. Last month 51.8
• Judo Bank services PMI final 47.9 versus 47.6 preliminary. Last month 51.5

Reuters Poll: RBA to high cash rate to 4.35% on November 7

• 34 of 39 economists see a hike

A Reuters poll on the Reserve Bank of Australia:

• Reserve Bank of Australia to hike cash rate to 4.35% on November 7
• 35 of 39 economists see a hike
• The first Reserve Bank of Australia cash rate cut to come in Q3 2024. That is later than the Q2 2024 in the October poll

New Zealand elect PM Luxon: Have tremendous progress informally with coalition partners

• Luxon’s national party won 48 seats and would need support from ACT

• Final results from New Zealand’s October 14 election show that the National Party needs support from ACT New Zealand and NZ First to form a government.
• The National Party led by Christopher Luxon secured 48 seats, ACT won 11 seats, resulting in a combined total of 59 seats out of 122 in the parliament.That was short of the 62 seats needed to govern
• New Zealand First party’s – led by Winston Peters – has eight seats and would provide the necessary majority for these three parties to form a coalition government.
• Although the Labour Party conceded defeat in the election, right-wing parties are awaiting the final vote count to confirm coalition agreements and establish the new government.
• The number of parliamentary seats has increased from 121 to 122, with Te Pati Maori winning more electorate seats.
• The final vote includes approximately 603,000 special votes, representing about 21% of the total, including overseas voters and those who cast ballots outside their constituency, which were not initially counted.

Other details:

• The final vote count may hinder Luxon’s new government from implementing its plans.
• Support from a broader range of lawmakers will be needed to pass bills.
• Peters will gain more influence to push his own bills and plans.

Cryptocurrency News

Solana Breakpoint conference delivers 20% gain for SOL holders this year as four-day gathering concludes

• Solana price rallied 20% between October 30 and November 3, moving from $32.91 to the current price of $39.41.
• During the four-day conference, SOL established a peak of $46.90 before a quick retracement as traders booked early profits.  
• Bulls failing to defend the $37.77 support level could see the altcoin spiraling 20%, potentially invalidating the bullish outlook below $32.70.
• Notably, a similar event in 2022 was followed by a 23% crash.

Solana Breakpoint conference, a four-day event that began on October 30, has come to its end, with chatter on Crypto X indicating it was a success.

“We had high expectations and the teams blew us all away,” said one of the attendees on Crypto X.

Solana Breakpoint conference concludes

Solana Breakpoint conference has completed its four-day run, with positive reviews from attendees after what seems to have been an insightful and engaging event. With a massive guest list featuring developers, creators, ecosystem executives, and innovators, the gathering gave industry players the platform to showcase their innovations to the world.

Sam Bankman-Fried’s found guilty of defrauding FTX customers

• Found guilty of defrauding FTX customers by jury in New York

The jury in FTX Founder Sam Bankman-Fried’s trial has reached a verdict.

• Found guilty of defrauding FTX customers by jury in New York
• Found guilty on all 7 criminal accounts he faced at trial

He was found guilty by a jury. Sentencing will be set for March 28, 2024.

Bankman-Fried’s charismatic and successful image had helped FTX become a prominent trading platform with high-profile sponsorships and advertisements.FTX experienced a sudden crash a year ago, resulting in substantial losses for customers.Bankman-Fried faced fraud charges and chose to testify in his own defense during the monthlong trial.The U.S. attorney’s office in Manhattan accused Bankman-Fried of lying to customers, investors, and lenders while misusing funds for various purposes, including political donations and luxury real estate.Former allies of Bankman-Fried testified against him, stating that he directed them to commit crimes.Bankman-Fried’s defense argued that he was a math nerd and entrepreneur trying to navigate the emerging crypto industry, emphasizing that things could get messy in the real world.Despite his testimony, Bankman-Fried’s responses during cross-examination raised doubts about his credibility, with the prosecutor highlighting inconsistencies in his statements.FTX, founded in 2019, grew rapidly but collapsed in November 2022 after the release of a leaked Alameda balance sheet.The trial was presided over by U.S. District Judge Lewis Kaplan, who maintained a firm yet humorous demeanor.The jury, consisting of nine women and three men, ranged in age and backgrounds.Key witnesses, including Bankman-Fried’s inner circle members, corroborated their accounts, supported by contemporaneous documents and chat messages.Bankman-Fried was portrayed as a risk-taker who promoted FTX as a safe trading platform even when he knew it was in trouble.Bankman-Fried claimed he was not involved in Alameda’s operation and only learned of the issues in the fall of 2022.The trial involved tense exchanges between Bankman-Fried and the prosecutor, as they scrutinized his claims.

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