North American News
US Stock Indices Kick Off the Week with Modest Gains: Investors Eye Positive Start
- NASDAQ index up for the 7th consecutive day. S&P up for the 6th day
The major indices closed modestly higher to start the trading week. The NASDAQ is now up for the 7th consecutive day. The S&P and the Dow industrial average rose for the 6th consecutive day. Last week the major indices had their best week of the year.
The final numbers today are showing:
- Dow Industrial Average Rosa 34.54 points or 0.10% at 34095.87
- S&P index rose 7.64 points or 0.18% at 4365.99
- NASDAQ index rose 40.49 points or 0.30% at 13518.77
Looking at some of the big movers today:
- Nvidia rose 1.66%
- Apple rose 1.52%
- Microsoft rose 1.06%
- Amazon rose 0.87%
- Chipotle rose 1.35%
- Costco rose 1.59%
Some losers today included:
- Caterpillar fell -1.03%
- Ford fell -2.37%
- GM fell -2.22%
- Tesla fell -0.31%
- as they fell -1.19%
Fed senior loan officer survey: Banks tightened standards during Q3 for commercial loans
- Highlights of the Fed’s senior loan officer survey
- Banks reported tighter lending standards and weaker demand for commercial and industrial loans across all firm sizes in the third quarter of 2023.
- Commercial real estate loans also saw tightened standards and reduced demand.
- Residential real estate loans and home equity lines of credit experienced stricter standards, except for government-backed residential mortgages, which remained unchanged.
- Demand for all categories of residential real estate loans weakened, with significant net shares of banks reporting a decline.
- Credit card, auto, and other consumer loans saw tightened lending standards and a weakening demand.
- Special questions revealed banks were less likely to approve credit card and auto loans for borrowers with lower FICO scores compared to the beginning of the year.
- Economic outlook, risk tolerance, credit quality, and funding costs were the primary reasons banks cited for tightening lending standards.
Hedge funds pile into US stock rally at fastest pace in 2 years – Goldman Sachs
- Hedge funds last week “aggressively” bought U.S. stocks at the fastest pace in two years, said a Goldman Sachs note, with traders jumping into a stock rally fuelled by hopes that the U.S. central bank rate pause might stick.
Hedge funds pile into US stock rally at fastest pace in 2 years – Goldman Sachs
Hedge funds last week “aggressively” bought U.S. stocks at the fastest pace in two years, said a Goldman Sachs note, with traders jumping into a stock rally fuelled by hopes that the U.S. central bank rate pause might stick.
Global funds bought up U.S. equities in the week up to Nov. 3, in the largest five-day buying spree since December 2021, according to Goldman’s prime brokerage trading desk in a note dated on Friday.
Fed’s Cook: Expectations of near-term policy rates do not appear to be driving long end
- Comments from Cook
- Residential and commercial property prices remain above levels historically associated with fundamentals
- If commercial mortgage delinquency rates force sales, committal real estate prices ‘could decline sharply’
- Business borrowing is at high levels, but measures of debt servicing capacity remain strong overall due to profits and limited impact of high rates so far
- In terms of debt, household sector looks quite resilient, though there are emerging signs of stress for those with weak credit
- Vulnerabilities among non-banks could amplify stress of tightened financial conditions and slowing economy
- Fed cannot anticipate all risks but can build resilience to shocks; particularly important to enhance resilience of large banks
- says she hopes current policy enough to return inflation to 2%
Barclays forecast an Federal Open Market Committee (FOMC) January rate hike (Dec prior)
Via Reuters info:
- Barclays expects the U.S. Federal Reserve to deliver a 25 basis point interest rate increase in January 2024
- earlier had expected a rate hike in December 2023
Cited:
- softer-than-expected October employment data
- dovish Fed commentary
“We continue to think the FOMC (Federal Open Market Committee) will need to proceed with additional tightening and will have to maintain a higher rate path than expected by the market, with no rate cut prior to September 2024”
U.S. Treasury’s Yellen to meet Chinese vice premier ahead of APEC summit
- U.S. Treasury Secretary Janet Yellen will meet with Chinese Vice Premier He Lifeng in San Francisco this week to try to deepen a fledgling economic dialogue between the world’s two largest economies ahead of a U.S.-hosted summit of Pacific Rim leaders.
U.S. Treasury Secretary Janet Yellen will meet with Chinese Vice Premier He Lifeng in San Francisco this week to try to deepen a fledgling economic dialogue between the world’s two largest economies ahead of a U.S.-hosted summit of Pacific Rim leaders. The Treasury said the Nov. 9-10 meetings will also convene the new economic and financial forums launched in October by the Treasury and China’s finance ministry and central bank.
Canada October Ivey PMI 51.9 vs 53.1 prior
- Canada Ivey PMI for October 2023
- Prior was 53.1
- Non-seasonally adjusted 53.4 vs 54.2 prior
Bank of Canada survey: Market participants see first rate cut in April
- Highlights of the Bank of Canada survey of market participants
- Median 2024 estimate 1.2%
- Probability of a recession in 6-12 months at 48%
- End 2024 CPI seen at 2.2%
- First cut seen in April, second in July, third in Sept
- Year end 2024 rate seen at 4.00% (vs 5.00% now)
- Year end 2025 seen at 2.88%
- 75% of participants said risks skewed towards higher rates
- End 2024 Canadian 5-year yield seen at 3.15% (vs 3.85% currently)
Commodities
Gold price falls on cheerful sentiment, no advancement in Middle East tensions
- Gold price pares some gains as US long-term bond yields rebound.
- The precious metal fails to hold gains inspired by soft US Nonfarm Payrolls data.
- Investors anticipate the Fed is done hiking interest rates.
Gold trades around $1,985 on Monday, retreating from Friday’s highs at over $2,000, as US long-term bond yields rebound.The yellow metal is paring back some of the gains registered on Friday after the release of the US employment report for October, which showed softer growth in both jobs and wages. Despite the recent retreat, Gold’s downside remains cushioned by persistent geopolitical tensions in the Middle East as the Israeli authorities reject the proposal for a ceasefire, keeping safe-haven bids firm.
Crude oil futures settle at $80.82
- Up $0.31 or 0.39%
Crude oil futures are settling at $80.82. That’s up $0.31 or 0.39%.
- Oil prices rallied on Monday due to extended production cuts confirmed by Saudi Arabia and Russia.
- Both Saudi Arabia and Russia agreed to continue their voluntary output cuts until the end of the year.
The price traded between its recent five-day high and low prices. The low price for the last 5 days has been down at $80.10 while the high price reached up to $83.60. Today’s range was $80.66 to $82.24.
Reports that Saudi has cut its oil prices to Europe, raised for the US
Saudi Aramco kept its December official selling price (OSP) for Arab Light grade to Asia unchanged from November:
- OSP for Arab Light $4 a barrel over the Oman/Dubai average
- a pause after five months of price hikes
- price change is in line with market expectations, as refiners facing weak oil processing margins and supply uncertainties
- raised Extra Light crude price to Asia for a third month, by 70 cents to $4.05 a barrel over Oman/Dubai quotes
Saudi Aramco cut its December Arab Light OSP to northwest Europe by $2.30 a barrel to $4.90 a barrel above ICE Brent
- OSP of Arab Light to the United States was raised by $1.30 to $8.75 versus ASCI in December
Oil up as Saudi Arabia and Russia stick to supply cuts
- Oil prices rose on Monday after top exporters Saudi Arabia and Russia reaffirmed their commitment to extra voluntary oil supply cuts until the end of the year.
Oil prices rose on Monday after top exporters Saudi Arabia and Russia reaffirmed their commitment to extra voluntary oil supply cuts until the end of the year.
Oil was rebounding after both benchmarks lost about 6% in the week to Nov. 3.
Saudi Arabia confirmed on Sunday it would continue with its additional voluntary cut of 1 million barrels per day (bpd) in December to keep output around 9 million bpd, a ministry of energy source said.
EU News
European equity close: UK with a modest gain but losses elsewhere
- Closing changes in Europe
- Stoxx 600 -0.1%
- German DAX -0.3%
- UK FTSE 100 +0.1%
- French CAC -0.5%
- Italy MIB -0.3%
- Spain IBEX -0.6%
Eurozone Services PMI Actual:47.8 Forecast:47.8 Previous:47.8
- Eurozone Services PMI Actual:47.8 Forecast:47.8 Previous:47.8
Euro zone economy started Q4 on back foot, stoking recession fears. The downturn in euro zone business activity accelerated last month as demand in the dominant services industry weakened further, a survey showed on Monday, suggesting there is a growing chance of a recession in the 20-country currency union.
EU Sentix Investor Confidence Actual:-18.6 Forecast:-22.2 Previous:-21.9
- Sentix Investor Confidence Actual:-18.6 Forecast:-22.2 Previous:-21.9
EU Sentix Investor Confidence Actual:-18.6 Forecast:-22.2 Previous:-21.9
UK Construction PMI Actual:45.6 Forecast:46.0 Previous:45.0
- UK Construction PMI Actual:45.6 Forecast:46.0 Previous:45.0
UK construction sector shrinks again as house-building slumps.Britain’s construction industry suffered a second month of shrinkage in October as higher borrowing costs hit house-builders and worries about the weak economy put clients off new investment, a survey showed on Monday.
Germany Services PMI Actual:48.2 Forecast:48.0 Previous:50.3
- Germany Services PMI Actual:48.2 Forecast:48.0 Previous:50.3
German service sector activity contracts in October
The German service sector slipped back into contraction in October amid persistent weakness in demand, a survey showed on Monday.
German Factory Orders (MoM) (Sep) Actual: 0.2% Expected: -1.0% Previous: 3.9%
- German Factory Orders (MoM) (Sep) $EUR Actual: 0.2% Expected: -1.0% Previous: 3.9%
German industrial orders edge up in September
German Factory Orders (MoM) (Sep) $EUR
- Actual: 0.2%
- Expected: -1.0%
- Previous: 3.9%
A Reuters poll of analysts had pointed to a fall of 1.0%.
France Services PMI Actual:45.2 Forecast:46.1 Previous:44.4
- France Services PMI Actual:45.2 Forecast:46.1 Previous:44.4
French services activity shrinks in October as demand flags
France’s services sector activity shrank steadily in October on weak demand, a business survey showed on Monday, highlighting the headwinds facing the euro zone’s second-biggest economy.
Italy Services PMI Actual:47.7 Forecast:48.5 Previous:49.9
- Italy Services PMI Actual:47.7 Forecast:48.5 Previous:49.9
Italy service sector shrinks in Oct at fastest rate in a year. The Italian services sector contracted for a third month running in October and at its fastest pace in a year, a survey showed on Monday, signalling persistent weakness in the euro zone’s third-largest economy.
Spain HCOB Spain Services PMI (Oct): Actual: 51.1 Expected: 49.3 Previous: 50.5
- Spain HCOB Spain Services PMI (Oct): Actual: 51.1 Expected: 49.3 Previous: 50.5
Spain HCOB Spain Services PMI (Oct) $EUR
- Actual: 51.1
- Expected: 49.3
- Previous: 50.5
BOE Chief Economist Pill: UK inflation remains too high
BOEs chief economist Pill is on the wires saying:
- UK inflation remains too high
- UK rate policy does remain restrictive
- Sees more signs of slowing activity
- Higher UK rates are hitting the supply side
- BOE is still working to bring inflation down to 2%
- We are going to see UK inflation for 2 more comparable levels with the rest of the world in pretty short order
- We can’t make promises about monetary policy outlook
- We need to retain agility on monetary policy.
- We still do not know economic implications of conflict in middle east
ECB Holzman: I belong to those that think we should be ready to hike again if needed
- ECB Holzmann speaking
- I definitely belong to those that think we should be very careful, that we should stand ready to hike again if needed.
- Not really worried about the growth outlook because despite rate hikes we still have stagflation,
- It could be much, much worse and we are in pretty good shape there
- Don’t expect any reduction in rates soon, eventually it will happen but for the time being I don’t see it
- We need to stay vigilant
Wave of cancellations in German housing construction at new high -Ifo
- Germany’s residential construction sector was again hit by a wave of cancellations in October, according to a survey published on Monday that showed a record number of firms reporting abandoned projects.
Wave of cancellations in German housing construction at new high -Ifo
Germany’s residential construction sector was again hit by a wave of cancellations in October, according to a survey published on Monday that showed a record number of firms reporting abandoned projects.
In October, 22.2% percent of companies reported cancelled projects, up from 21.4% the previous month, the Ifo economic institute said.
“It’s getting worse all the time, with more and more projects failing due to higher interest rates and elevated construction prices,” says Klaus Wohlrabe, Ifo head of surveys.
“In residential construction, new business remains very low and companies’ order backlogs are diminishing.”
Tesla rises after report of plan to build €25,000 car at German plant $TSLA
- Shares of Tesla $TSLA rise 2.8% to $226.16 premarket
Tesla rises after report of plan to build 25,000-euro car at German plant. It marks a long-awaited development for the electric vehicle maker which is aiming for mass uptake of its cars
WSJ: Tesla raises wages for German workers
The Wall Street Journal with the story on wge gains chasing inflation:
- Tesla is boosting factory worker pay in Germany amid an aggressive unionization drive
- Tesla has been under pressure from Germany’s powerful IG Metall union, which is trying to organize the plant and get Tesla to agree to a union contract.
- In Sweden, a smaller industrial union representing Tesla service workers has been on strike and is set to meet with the company on Monday as it pursues a collective bargaining contract.
Other News
China’s clashing priorities behind rare money market distress
- China’s attempts to keep the yuan from falling contributed to last week’s chaos in money markets, sources involved say, pointing to the pressure behind the scenes as Beijing tries to guide its economy and markets through a major slowdown.
China’s attempts to keep the yuan from falling contributed to last week’s chaos in money markets, sources involved say, pointing to the pressure behind the scenes as Beijing tries to guide its economy and markets through a major slowdown.
Routine month-end demand for cash in China’s banking system snowballed into a scramble on Oct. 31 that pushed short-term funding rates as high as 50% in some cases, an incident that authorities are now investigating.
Six participants in the market say a confluence of factors drove fear and confusion across trading rooms in Shanghai and Beijing by late afternoon on that day.
Eventually, the People’s Bank of China (PBOC), its affiliated China Foreign Exchange Trade System (CFETS) and bond clearing houses stepped in, directing lenders, extending trading hours and holding meetings with institutions to calm markets.
The contributing factors were the usual month-end demand for liquidity, cash hoarding in the lead up to a big government bond sale and a market where the biggest banks were already reticent to lend because of a mandate to counter pressure on the yuan.
China, Australia agree to turn the page as tensions ease
- Chinese President Xi Jinping said on Monday that a “healthy and stable” relationship with Australia served each country’s interests, and that it was important to move forward with strategic ties.
Chinese President Xi Jinping said on Monday that a “healthy and stable” relationship with Australia served each country’s interests, and that it was important to move forward with strategic ties.
Mutual benefit is what China wants, Xi told Australian Prime Minister Anthony Albanese, the first Australian leader to visit Beijing since 2016, as both men met at the Great Hall of the People in the heart of the Chinese capital.
China’s January-September imports from Australia increased 8.1% from a year earlier to $116.9 billion, Chinese customs data show.In 2022, imports plunged 12.7% to $142.1 billion.
Global funds dumped another $3 billion in China stocks in Oct – Morgan Stanley
- Global fund managers sold China equities sharply in October despite further steps from authorities aimed at boosting the world’s second-largest economy, according to a report from Morgan Stanley that cited data from fund flow tracker EPFR.
Global funds dumped another $3 billion in China stocks in Oct
Global fund managers sold China equities sharply in October despite further steps from authorities aimed at boosting the world’s second-largest economy, according to a report from Morgan Stanley that cited data from fund flow tracker EPFR.
China and Hong Kong equities saw a combined $3.1 billion in net outflow from active long-only funds last month, a third consecutive month of net selling exceeding $3 billion, the report, seen by Reuters, said.
“The outflows (are) mostly due to regional funds’ rebalancing out of China, in which European-domiciled funds led,” Morgan Stanley analysts led by Gilbert Wong said.
China’s youth employment generally stable, continues to improve – state media
- China’s youth employment is generally stable and continues to improve, the state-owned Xinhua News agency reported on Monday
China’s youth employment generally stable, continues to improve – state media
China’s youth employment is generally stable and continues to improve, the state-owned Xinhua News agency reported on Monday, citing an interview with Minister of Human Resources and Social Security Wang Xiaoping.
The country added 10.22 million new urban jobs in the first nine months, achieving 85% of the annual goal, official data showed.
RBA Shadow Board recommends a rate hike at the monetary policy meeting
The shadow board cits high official inflation data and more:
- Most recently, the monthly consumer price index (CPI) rose 5.6% in the twelve months to September 2023, while the quarterly inflation rate fell to 5.4% year-on-year in Q3, the lowest since the first quarter of 2022.
- The RBA’s Trimmed Mean CPI, which excludes the most volatile items, grew by 5.2% year-on-year, still well above the RBA’s target band of 2-3%.
- The labour market remains remarkably resilient but business confidence is softening further and the global economy, while surprising on the upside, faces considerable challenges, especially geopolitical.
- On balance, the RBA Shadow Board recommends increasing the cash rate in November. It attaches a 62% probability that the overnight rate should increase to a level above 4.10%, a 37% probability that the overnight rate should remain on hold, and a 2% probability that the overnight rate should be lower.
The Reserve Bank of Australia ‘shadow board’ is made up of 9 voting members and 1 non-voting chair:
- all distinguished macroeconomists, offers its own policy recommendation on the Monday before the official RBA decision. Members give probabilistic assessments of the appropriate target rate for each round, which are then aggregated. The higher the percentage attached to a given cash rate, the greater the confidence that this rate is the appropriate target.
Australian jobs indicator -3% in October, prior -0.5
ANZ-Indeed Australian Job Ads index fell its hardest, down 3% m/m, in 26 months and to its lowest since January 2022.
The Reserve Bank of Australia meet on Tuesday and a rate hike is widely expected, although market pricing is not as sure as analysts are.The two data points today are not high priority but are nevertheless not smoking guns for a rate hike either.
Australian data – Melbourne Institute Inflation (October) -0.1% m/m (prior 0)
Melbourne Institute Inflation gauge
-0.1% m/m
- prior 0% m/m
5.1% y/y
- prior 5.7%
Trimmed mean 0.0% change m/m and 5.0% y/y (prior 5.1%)
Japan’s union group to seek 6% wage rise at next spring’s talks
- Japan’s largest industrial union UA Zensen will seek a 6% total wage increase, of which 4% will be base pay hikes, at next spring’s negotiations, a union official said on Monday.
Japan’s union group to seek 6% wage rise at next spring’s talks
Japan’s largest industrial union UA Zensen will seek a 6% total wage increase, of which 4% will be base pay hikes, at next spring’s negotiations, a union official said on Monday.
Annual wage negotiations effectively kicked off on Monday and will be concluded on Jan. 23, before Japanese blue-chip companies offer next year’s wage hike plan in March.
Japan October Services PMI 51.6 (prior 53.8)
Jibun / S&P Global October PMIs for Japan:
Services 51.6
- preliminary was 51.1 & 53.8 prior
Composite 50.5
- preliminary was 49.9 vs prior 52.1
Commentary from the report (in brief):
- recent trends suggest that growth is on the wane
- Rates of expansion in activity and new orders were the weakest since the turn of the year in October and softer business confidence suggests that the slowdown could continue as 2023 draws to a close
- the inability ofthe services economy to keep doing the heavy lifting that itwas earlier in the year means that the sustained weakness in manufacturing is bringing wider growth to an end
- new orders stagnated in October, ending an eight-month sequence of expansion
BOJ’s Ueda wants more convincing that wages will keep rising
Bank of Japan Governor Ueda with more remarks:
- We need to have more conviction that wages will keep rising, rising wages lead to service prices and economy remains strong, to ponder exit from easy policy
Once again Ueda indicating that an exit from ultra easy monetary policy is anything but imminent. He does allow himself a wee hedge though:
- There will always be new information coming in, so at any meeting there is a chance of making a certain decision, when asked about chance of BOJ foreseeing inflation sustainably hit 2% target at next policy meeting in December
- Don’t expect 10-year JGB yield to rise sharply above 1% even after last YCC tweak
- says the BOJ will keep YCC, negative short-term rates intact until sustained achievement of 2% inflation is foreseen
And now he is muddying the water:
- If 2024, 2025 inflation forecasts are strong enough, we may be able to judge that sustained achievement of 2% target is in sight even if 2026 forecast is not available
- Hard to say chance of ending zero interest rates this year is zero
Cryptocurrency News
Near Protocol attracts $40 million in investment as NEAR price rallies 65% ahead of developer conference
- NEAR price has surged by 65% in two weeks, reaching $1.59, as Near protocol sees a $40 million investment influx.
- The bullish trend could be attributed to the upcoming developer conference hosted by Near, which is set to begin on Tuesday.
- The anticipation of the conference is revitalizing protocol growth, which had remained subdued since April.
Near price has gained significantly in the past few days even as the broader market cues took a break from being bullish. The altcoin has its developer conference lined up this week, and the anticipation has resulted in not only the price action but also the observation of considerable growth in the protocol.
Near price surges to five-month high
Over the past two weeks, the NEAR price has shot up by more than 65%, bringing the altcoin’s exchange value to $1.59 at the time of writing. Up from $1.00 since mid-October, NEAR is exhibiting no sudden change of trend imminent.
SFUND is the torchbearer of launchpad and poised to pump further
- Amidst the hype surrounding L2 and DeFi protocols, launchpads are showing signs of emerging as a potentially profitable investment.
- Crypto gaming is expected to see investor interest, and one of the biggest gamepads for them is Seedify – the token of which, SFUND, is up by almost 100% in two weeks.
- Launchpad projects during the last bull run yielded gains ranging from 20x to 700x at their peak.
The crypto market is at the cusp of painting green on the charts again. Ahead of the bull run, speculation of a rally regarding many tokens can be observed. At the top of this list are Layer 2 and DeFi tokens, but another category is expected to make it big this time in addition to the latter.
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