Round up of today's market news *

Market Sentiments Tug-of-War as Major Stock Indices Navigate Mixed Monday; All Eyes on Tomorrow’s Unveiling of US CPI Data for Potential Game-Changing Insights

Dow industrial average higher. S&P near unchanged. The NASDAQ index lower

It is a mixed Monday for the major stock indices ahead of the important US CPI data tomorrow.

The final numbers today are showing:

Dow industrial average rose 54.75 points or 0.16% at 34337.88
S&P index fell -3.69 points or -0.08% at 4411.54
NASDAQ index fell -30.37 points or -0.22% at 13767.73

US CPI Preview: Forecasts from seven major banks, still to the high side of the Fed’s target

Headline CPI is set to come out at 0.1% month-on-month in October, a significant retreat from 0.4% in September
The year-on-year number will likely be dragged down from 3.7% to 3.3%
Core CPI is projected to remain at 4.1% YoY and rise by 0.3% MoM, a repeat of last month’s increase

ANZ

We expect core CPI inflation to rise by 0.3% MoM in October.Headline CPI was likely flat on lower energy prices.

TDS

Our forecasts for the October CPI report suggest core inflation gained additional speed for a third month straight: we are projecting an above-consensus 0.36% MoM increase, modestly up from 0.32% in September.We also look for a 0.10% gain for the headline, as inflation will benefit from the sharp retreat in energy prices. Importantly, the report is likely to show that the core goods segment likely added to inflation, while shelter-price gains probably slowed. Note that our unrounded core CPI inflation forecast could easily turn to a 0.3% rounded gain if some of our key assumptions for October don’t come to fruition. Our MoM forecasts imply 3.3%/4.2% YoY for total/core prices.

Commerzbank

At first glance, the US consumer prices for October appear to be showing a significant easing of price pressure.This is because consumer prices have probably only risen by 0.1% compared to September.The YoY rate would then fall from 3.7% to 3.3%. However, the main reason for this is that gasoline has become around 5% cheaper. The more important core rate, which excludes the volatile prices for energy and food, is likely to be 0.3%, as in August and September. Overall, there is a risk that the core rate will even trend towards 0.4%. The YoY rate will remain at 4.1% at best anyway, and a decline in October seems very unlikely. The report would not call into question the downward trend in inflation. However, it would remind us that this process is slow and bumpy. In our view, inflation will not fall back to 2% but will stabilize at around 3%.

Deutsche Bank

We expect headline to come in at only +0.1% MoM due to softer energy prices. We think core edges up to +0.4% from +0.3% last month. If we are correct, the YoY rate will be 3.3% and 4.2%, respectively.

NBF

The energy component is likely to have had a negative impact on the headline index, which should translate into a 0.1% increase for headline prices. If we’re right, the YoY rate could fall from 3.7% to a four-month low of 3.3%.The advance in core prices could have been stronger at 0.3%, which should allow core inflation to remain unchanged on a 12-month basis at a two-year low of 4.1%.

CIBC

October CPI will show that core inflation remains just outside of a range consistent with target, coming in at 0.3% MoM. Weaker energy prices will likely result in a softer headline reading around 0.2% MoM. Inflation will continue to reflect a tug-of-war between firming price pressures in demand-sensitive categories such as core services ex. shelter and easing goods prices from the normalization in supply chains. The Fed will be looking for clues about the persistence of these two forces as it assesses the appropriate degree of monetary restraint. Shelter inflation will also be important to watch as it surprised in September and has been somewhat stickier than expected this year.

Wells Fargo

Since the end of September, gas prices have steadily fallen and food inflation has appeared to move sideways. These dynamics underpin our call for the headline CPI to increase only 0.1% in October. If realized, that would be the smallest monthly gain since May. Yet, the modest rise will likely be overshadowed by continued strength in the core CPI, which we expect to increase 0.3% for the third straight month.

US federal budget deficit for October $-67 billion versus $65 billion expected

Federal budget deficit for October $-67 billion versus $-65 billion estimate
Last month $-171 billion

Philadelphia Fed: Forecasters upgrade growth, job gains and inflation in 2023 and 2024

Survey shows improved US economic outlook with higher growth rates and job gains predicted for 2023 and 2024.

According to a survey by the Federal Reserve Bank of Philadelphia, the U.S. economic outlook has improved slightly compared to three months ago:

Forecasters predict a 1.3 percent annual growth rate for this quarter, up from the previous estimate of 1.2 percent.
For 2023, they expect real GDP to increase by 2.4 percent, and by 1.7 percent in 2024, which is 0.3 and 0.4 percentage points higher than earlier estimates.
The unemployment rate is expected to rise from 3.7 percent in 2023 to 4.0 percent in 2026, with little change from the previous survey.
Job gains are projected to be higher, with monthly rates of 296,500 in 2023 and 120,000 in 2024, up from earlier estimates of 288,600 and 94,800, respectively.

Forecasters anticipate changes in inflation rates as follows:

The current-quarter headline CPI inflation is expected to average 3.3 percent at an annual rate, up from the previous estimate of 2.9 percent.
Headline PCE inflation for the current quarter is also projected to be slightly higher at an annual rate of 2.9 percent.
However, the predictions for current-quarter core CPI and core PCE inflation are lower compared to previous estimates.
Projections for inflation in 2024 and 2025 remain largely unchanged from previous estimates.

Over the next decade (2023 to 2032):

Headline CPI inflation is expected to average 2.40 percent annually, which is consistent with the previous estimate.
The corresponding estimate for 10-year annual-average PCE inflation is 2.22 percent, slightly higher than the previous survey’s estimate.

NY Fed economic expectations: Inflation expectations dip modestly

Fed Reserve of New York economic expectations

In October, the New York Federal Reserve reported the following economic expectations:

Labor markets and household finance are largely stable.
The year-ahead home price is expected to rise at 3%, unchanged from the previous estimate.
Year-ahead gas prices are expected to rise at 5%, slightly higher than September’s 4.8%.
The five-year ahead expected inflation rate is at 2.7%, down from September’s 2.8%.
Three-year ahead expected inflation remains steady at 3%.
Year-ahead expected inflation is projected to be 3.6%, down from September’s 3.7%.

Barclays say the cure for plunging bond prices may be worse than the disease

Barclays says global bonds will kepp dropping unless there’s a significant equities fall

An analyst note from Barclays on Friday last week on the cascade lower for bonds:

“There is no magic level of yields that, when reached, will automatically draw in enough buyers to spark a sustained bond rally,”
“In the short term, we can think of one scenario where bonds rally materially. If risk assets fall sharply in the coming weeks.”
“The magnitude of the bond selloff has been so stunning that stocks are arguably more expensive than a month ago, from a valuation standpoint”
“We believe that the eventual path to bonds’ stabilizing lies through a further re-pricing lower of risk assets.”
The Fed is unlikely to dial back its quantitative tightening program (and thus the Fed will remain a net seller of Treasuries)The increase in bond supply due to the rising deficit is also driving up the term premium

Morgan Stanley and Goldman Sachs diverge on Fed rate cut forecasts

Morgan Stanley predicts deeper, faster cuts from the FOMC than do Goldman Sachs.

Morgan Stanley economists are forecasting that Federal Open Market Committee (FOMC) will make deep interest-rate cuts over the next two years as inflation cools.

Goldman Sachs, on the other hand, expect fewer reductions and a later start.

Bloomberg have a piece up comparing the divergent views. Bloomberg is gated but the main points are:

MS expect the Fed to start cutting rates in June 2024

then cut again in September and every meeting from Q4 2024 onward
cut by 25-basis point each time
will therefore take Fed Funds down to 2.375% by the end of 2025

Goldman Sachs’ projection

initial 25-basis-point reduction in Q4 2024
one cut per quarter through to the middle of 2026
total of 175 basis points in cuts
taking Fed Funds down to a 3.5%-3.75% target range

Goldman Sachs forecasts 2024 US economic growth at 2.1%

Biden and Xi’s high-stakes meeting in San Francisco amidst rising global tension

US President Joe Biden and Chinese President Xi Jinping to discuss pressing issues including the Israel-Hamas war, Taiwan, and election interference.

US President Joe Biden and Chinese President Xi Jinping will meet on Wednesday, November 15

in San Francisco, on the sidelines of the Asia-Pacific Economic Cooperation summit (this commenced on the 11th and will continue through to the 17th)
only their second face-to-face meeting during the Biden presidency

Gold edges high on US Dollar weakness, ahead of US CPI

Gold see’s a modest increase of 0.30%, trading at $1944.95, influenced by the weakening US Dollar and declining US Treasury bond yields.
The market’s focus is on the upcoming US CPI release, with expectations of a slight cooling in inflation rates
Gold traders are also paying attention to upcoming speeches from Federal Reserve officials

Gold price encounters some buyers and rises some 0.30% on Monday, late in the New York session, amidst overall US Dollar weakness, sponsored by a drop in US Treasury bond yields. Therefore, gold is trading at $1944.95 after hitting a daily low of $1928.10.

Crude oil settles at $78.26

Up $1.09 or 1.41%

The WTI crude oil futures are settling at $78.26.That’s up $1.09 or 1.41%. The low price reached $76.26. The high price was at $78.49.

Technically the price moved back above its 200 day moving average at $78.45 intraday after trading below it for the 1st time since July 24 last week.

The price has now settled below that moving average for 5 consecutive days. It would require moving and staying above the 200-day moving average to give the buyers some hope.

The rebound in prices today was supported by a shift in risk sentiment during the U.S. session and a need for consolidation following three consecutive weekly losses for oil benchmarks.

Barclays analysts slash Brent crude oil price forecast, but say demand concerns overblown

Barclays analysts have lowered their oil price forecast for Brent crude futures by $4/bbl

Posting this ICYMI, analysts at Barclays lowered their oil price forecast for Brent crude futures next year by $4/b to $93/bbl.

“We lower our 2024 Brent forecast by $4/bbl but maintain our above-curve and consensus view on prices.”
said that the 2024 forecast is still $14/bbl ahead of the Brent forward curve
added that the recent selloff in oil may be overdone

Barclays citing:

weakening demand outlook in the US and China clashing with concerns of an escalation and potential supply disruption in the Middle East
concerns over the strength of the global economy were compounded last week by data showing a surprise spike in US oil stocks, and economic weakness in China
“Demand concerns have returned recently but based on our assessment of the aggregate data, these might be misplaced”

OPEC dispels negative sentiment in latest oil market report

OPEC says that oil market fundamentals remain strong and dismisses recent negative opinions

2023 world oil demand growth forecast raised to 2.46 mil bpd (previously 2.44 mil bpd)
2024 world oil demand growth forecast unchanged at 2.25 mil bpd
2023, 2024 world economic growth forecasts unchanged

The bloc says that global oil market fundamentals remain strong despite “exaggerated negative sentiments”. Adding that despite overblown pessimism towards China’s oil demand performance, Chinese crude imports remain “very healthy”. On prices, OPEC says that while it has trended lower in recent weeks, it is mainly driven by speculative behaviour.

Iraq Kurdistan region oil exports look set to resume – talks with Turkey, oil firms, Kurds

Iraq negotiating with the Kurd Govmt, oil companies, Turkey on oil production and pipeline

A weekend report that Iraq expects to reach an agreement with the Kurdistan Regional Government (KRG) and foreign oil companies to resume oil production from the Kurdish region’s oilfields within three days.

Via a statement from Iraqi oil minister Hayan Abdel-Ghani.

Iraq has reached an understanding with Turkey in relation to resumption of northern oil exports through the Iraq-Turkey pipeline

EU News

Higher close for the major European indices to start the new trading week

Gains led by Italy and Spain

The major European indices are closing the session higher to start the new trading week.

German DAX, +0.73%
France, +0.60%
UK’s FTSE 100, +0.89%
Spain’s Ibex +0.96%
Italy’s FTSE MIB +1.38%

UK data – Rightmove House Price index for November -1.7% m/m (prior +0.5%)

Rightmove House Price index for November

-1.7% m/m

prior +0.5%

-1.3% y/y

prior -0.8%

SNB total sight deposits w.e. 10 November CHF 476.3 bn vs CHF 474.6 bn prior

Latest data released by the SNB – 13 November 2023
Domestic sight deposits CHF 467.5 bn vs CHF 465.0 bn prior

Bank of Italy: Economic indicators suggest activity remains weak in Q4

Bank of Italy on their economy

The Bank of Italy is on the wires saying:

Economic indicators just that activity remains weak in the 4th quarter
They continue to see estimates of 0.7% growth for this year

BOE Mann: Research points to higher inflation from climate shocks, policies and spillovers

Bank of England Mann speaking

BOE Mann:

Research points to increased inflation, increased inflation persistence, and increased inflation volatility associated with climate shocks, policies, and spillovers
Carbon price shocks lead to more inflation persistence and then oil price shocks
Redistribution of revenues from carbon taxes or emission certificate auctions have economic effects of direct interest to central banks

German industry sees improvement as supply situation nears pre-crisis level – Ifo

Material shortages in the German manufacturing sector have eased but demand conditions remain worrisome

In October, only 18.2% of companies reported problems in the latest survey by Ifo – down from 24.0% in September. According to the economic institute, this sees that “things are almost back to pre-crisis levels”. Adding that “companies should plan now for future shortages, diversify their supply chains and increase inventory levels”.

This does indicate that the material shortages in the German manufacturing sector have eased but there is still no optimistic development when it comes to the worsening demand outlook I’m afraid.

ECB’s de Guindos: Forward guidance is out of fashion

de Guindos says that the central bank will not prejudge further movements in the policy rate
Expect a temporary rebound in inflation in the coming months
It is likely that euro area economy will remain subdued in the near-term
There are signs that labour market is beginning to weaken
Will be in a better position to reassess inflation outlook and required action in December meeting
Sees general disinflationary process continuing over the medium-term
Will ensure policy remains sufficiently restrictive for as long as necessary

It’s all about being data dependent now and that applies to all major central banks around the globe, unless you’re the BOJ that is. As for the ECB, they’re not really in a flexible spot despite all of their recent remarks. The euro area economy is teetering on the brink of a recession and with credit conditions looking rather strained, they can’t afford to overtighten policy at the moment.

ECB’s Kazaks: Too soon to say that terminal rate has been reached

Remarks by ECB policymaker, Martins Kazaks

Sees risk of spillover into inflation
No clear peak of wage growth seen yet

Other News

China October M2 money supply +10.3% vs +10.3% y/y expected

Latest Chinese credit data for October 2023 has been released

Prior +10.3%
New yuan loans ¥738.4 billion vs ¥665.0 billion expected
Prior ¥2.31 trillion

China considers buying Boeing 737 Max, signals thaw in US relations

China may end its halt on purchasing Boeing 737 Max aircraft

China is considering ending its halt on buying Boeing 737 Max aircraft.

Bloomberg (gated) has the report citing “people familiar with the matter who aren’t authorized to speak publicly.”

Chinese government is considering unveiling a commitment for Boeing’s 737 MAX during the APEC Summit in San Francisco
Part of signalling a recent thaw in relations with the US

Goldman Sachs downgrades Hong Kong stocks

Goldman Sachs have downgraded their view on Hong Kong-traded China stocks.

cut Hong Kong-listed Chinese companies to market-weight
cut Hong Kong firms to underweight
remains overweight on Chinese onshore shares

Citing

low earnings growth and a potential consensus downgrade
slowing growth stemming from the housing sector downturn, high debt levels, and adverse demographics

October CBA household spending falls m/m (rate hikes impacting consumption)

Reserve Bank of Australia rate hikes

Commonwealth Bank of Australia consumer spending information using its data:

CBA Household Spending in October fell 1% m/m
The y/y was still positive at 2%, but down from 3.6% in September

Westpac forecasts that the RBA will hold rates now, but risks loom

Westpac predicts the Reserve Bank of Australia will not raise interest rates further.

Westpac holds the view that the Reserve Bank of Australia will not raise interest rates further from here.

Westpac reasons:

If the real economy continues to evolve as we anticipate, i.e. economic growth remains wellbelow–trend and slack emerges in the labour market, inflationshould continue to decelerate at pace. That will give the RBA Board confidence that policy is working as intended, shifting the focus towards when it is most appropriate to begin easing policy, which we anticipate will be in Q3 2024.

Westpac do acknowledge a risk to this view:

However, if there were to be further material upside surprises to the inflation outlook in the near– term – something that the RBA Board clearly has a low tolerance for – the risk of another interest rate increase is not dismissible.

RBA official says decline in Australian inflation to be slower than previously forecast

RBA official confirms still-strong demand is allowing businesses to pile on price increases.

Reserve Bank of Australia Assistant Governor (Economic) Marion Kohler spoke at a conference on the outlook for the Australian economy, approaches the Bank uses to assess where the economy is relative to full employment, and a review of economic forecasts for the past year.

Decline in inflation to be more gradual than previously thought
Bringing inflation back to target is likely to be more drawn out
Domestically sourced inflation has been widespread and slow to decline
Still-strong levels of demand have allowed businesses to pass on cost increases
Wages growth has picked up, but now appears to have broadly stabilised
Key risks is possibility that high inflation today feeds into inflation expectations
Encouragingly,measures of medium-term inflation expectations consistent with target
Labour marketconditions are easing, but are still tight

RBA Assistant Governor Kohler says there is no doubt that interest rates are restricitive

RBA Assistant Governor reveals on signaling potential economic challenges ahead

There is no doubt that the RBA cash rate is at a restrictive level
There is the risk of shocks, the road ahead could be bumpy

Cyberattack halts operations at major Australian ports: DP World Australia

Major ports in Melbourne, Sydney, Brisbane, and Fremantle hit by a severe cyber incident

Australian ports operator DP World Australia manages nearly half of the goods that flow in and out of the country. Its been hit by a cybersecurity incident that has forced it suspend operations at ports since Friday.

operations at the container terminals in Melbourne, Sydney, Brisbane and Western Australia’s Fremantle have all been at a standstill since Friday
cyberattack on systems and also possible data breaches
an Australia government spokes woman: “The cyber incident at DP World is serious and ongoing”
Australian Federal Police investigating the incident

New Zealand Services PMI drops into contraction

New Zealand Services PMI for October reflecting the economic slowdown and election impact

The New Zealand Services PMI for ocot:

BNZ – BusinessNZ Performance of Services Index (PSI)
dropped into contraction at 48.9 from 50.6 in September
below the long-term average of 53.5

BusinessNZ comment on the result:

“Despite the October result falling back into contraction, the proportion of negative comments stood at 58.2% for October, which was down from 61.8% in September and 63.9% in August. Overall, negative comments continued to be strongly dominated by the recent General Election, as well as a general slowdown in the economy”

BNZ comment:

“combined, the PSI (48.9) and PMI (42.5) paint a picture of economic angst. This counsels caution around GDP for Q3, after it posted a surprising gain of 0.9% in Q2”

Japan PPI for October -0.4% m/m (expected 0.0%) and +0.8% y/y (expected +0.9%)

Japan data for Domestic Corporate Goods Price Index drops sharply on the month

Japan PPI for October

-0.4% m/m

expected 0.0%, prior -0.3%

+0.8% y/y

expected +0.9%, prior +2.0%
first time under 1% since February 2021

Cryptocurrency News

XRP price restrained below $0.68, but legal expert says Ripple holds court-issued weapon against Bitcoin maxis

Ripple price faces a rejection for the $0.68 mean threshold of the supply zone extending from $0.65 to $0.71.
XRP could fall 10% to lose the $0.59 support level, shoved lower by selling pressure from a supply barrier.
The bearish outlook will be invalidated once the altcoin breaks and closes above $0.7148, rendering the supply zone into a bullish breaker.
Australia-based Attorney Bill Morgan says Judge Torres gave the XRP community a tool against Bitcoin maxis.

Ripple (XRP) price remains in the woods even as community members continue with their own analysis of the remittance token’s position in the regulatory scene. Over the weekend, a heated debate sprouted, with participants revisiting Judge Analisa Torres’s determination in the Ripple versus US Securities & Exchange Commission (SEC) case.

Bitcoin ETF approval may not come this week, likely to be postponed till January

Bitcoin price corrected lower over the weekend to trade around the $36,800 mark.
The spot ETF window until November 17 will be an important catalyst for BTC; however, per analysts, the approval may not come this time but in January.
MicroStrategy founder Michael Saylor has been indirectly shilling BTC, stating it could 10X in the next 12 months.

Bitcoin price is testing an important support level following the price decline over the weekend. This week is expected to be highly volatile as the window for the Securities and Exchange Commission (SEC) to approve the 12 spot BTC ETF is coming to an end. However, there is a fair chance that things may not turn out to be as fruitful as the market’s expectations.And that is what MicroStrategy founder Michael Saylor is attempting to fix.

Spot Bitcoin ETF may not be approved this week

Bitcoin price has been hinging on the probability of the spot BTC ETF applications receiving approval from the SEC. The initial window of approval began on November 8 and is set to end by November 17, which is the scheduled deadline to rule on all applications. However, the hard deadline is still far away, set for January 10, 2024, when the SEC will have to announce the verdict on the 12 applications at any cost.
With only four days left before the deadline, the SEC still has not provided any clarity or hint at whether they will be approving or rejecting the ETF applications, and the market is reacting negatively. Over the weekend, Bitcoin price declined and is likely to fall further based on Bloomberg ETF analyst James Seyffart’s comments.
Seyffart stated,

“If we are indeed going to see Bitcoin ETF approvals for this wave, I think it’s more likely to happen closer to January than this current window.”

This delay would naturally trigger a rather pessimistic reaction among the investors, which could result in a price fall.
However, Bitcoin evangelist and MicroStrategy founder Michael Saylor is doing his best to keep the bullishness up to counter the effects of the waning bullishness.Statements and tweets hyping up Bitcoin have been suddenly making an appearance, with Saylor even claiming demand for BTC could increase 10X in the next 12 months and the supply could halve.
Furthermore, Saylor took a dig at Gold, calling it dead money as it declined by 3% since MicroStrategy adopted the Bitcoin strategy in August 2010. Since that day, BTC has grown by 214%, which has resulted in the company noting over $1 billion worth of unrealized profits on its holdings. He tweeted a similar observation regarding the S&P 500 Index.

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Round up of today’s market news

ByBilals Tech

North American News