Round up of today’s market news

North American News

Market Wrap: US Indices Close Near Lows, Earnings Season Heating Up

S&P 500: +15.40 points (+0.27%) at 5823.52
Nasdaq: +48.58 points (+0.26%) at 18567.19
Dow Jones: +273.17 points (+0.65%) at 42387.57

The broader US indices closed higher on the day but ended near their lows, indicating a lack of sustained momentum. The S&P 500 saw an intraday high of 34.80 points, while the Nasdaq struggled to hold above the July high close of 18647.45, despite a daily high increase of 152.40 points. The Dow showed the strongest performance, closing up 273.17 points.

Upcoming Earnings Calendar:

• Tuesday Before Open: SoFi, PayPal, BP, McDonald’s, Pfizer, Royal Caribbean Group
• Tuesday After Close: AMD, Alphabet, Snap Inc., Chipotle, Visa
• Wednesday Before Open: Lilly, Caterpillar, Humana
• Wednesday After Close: Microsoft, Meta, Coinbase, Robinhood
• Thursday Before Open: Uber, Peloton, Merck, ConocoPhillips, SiriusXM, Altria, Mastercard
• Thursday After Close: Amazon, Apple, Intel
• Friday Before Open: FuboTV, Chevron, ExxonMobil, Wayfair

The earnings season is heating up with several major companies set to report, including McDonald’s and Pfizer on Tuesday, and big names like Amazon and Apple on Thursday. Market participants will closely watch these earnings releases for insights into corporate health and future guidance.

PayPal Q3 2024 Earnings Preview

Earnings Release Date: October 29, 2024
Time: 7:00 AM EST
Conference Call: 5:00 PM EST

Consensus EPS Forecast: $1.07
Last Year’s EPS (Q3 2023): $1.30
YoY EPS Decline Estimate: -17.7%

Earnings History:

• Q2 2024: EPS of $1.19 (beat estimates, +23.2% surprise)
• Q1 2024: EPS of $1.10 (exceeded expectations, +18.4% surprise)
• Q4 2023: EPS of $1.11 (in line with forecasts)

Yearly Estimates:

• 2024 Annual EPS Projection: High forecast of $4.58, consensus around $4.44
• Expected Annual Growth Rate: Slowing growth as PayPal faces competitive pressures, particularly in the ‘buy now, pay later’ (BNPL) sector.

Analyst Rating:
PayPal is rated as a “Moderate Buy,” but views are mixed. Analysts are optimistic about steady demand for digital payments, although they caution about competitive pressures and highlight PayPal’s efforts to enhance services, such as its partnership with Fastlane for a better checkout experience.

Market Sentiment & Stock Impact:

• Earnings Reaction History:
  • July 30, 2024 (Q2): Stock gained +3.9% post-earnings
  • May 8, 2023 (Q1): Stock fell -1.3% after mixed results
  • Feb 9, 2023 (Q4): Stock declined -2.0% post-earnings

Average Surprise: +15.7% over the last 4 quarters
Average Price Movement on Earnings Day: +2.5%

As the earnings season unfolds, PayPal’s performance will be closely monitored, particularly given the backdrop of evolving competition in the digital payments space.

US treasury auctions off $70 billion of 5-year notes at a high yield of 4.138%

• WI level at the time of the auction 4.122%

• High yield 4.138
• WI yield at the time of the auction 4.122
• Tail 1.6 basis point 6-auction avg. 0.5bps
• Bid-to-Cover 2.39X vs 6-auction avg. 2.37x
• Dealers 14.2% vs 6-auction avg. 14.4%
• Directs (a measure of domestic demand) 9.50% vs. 6-auction avg. 17.6%
• Indirects (a measure of international demand) 76.4% vs 6-auction avg. 68.0%

US treasury sells $69 billion of 2-year notes at a high yield of 4.130%

• Results of the sale of $69 billion of two-year notes

• Prior was 3.520%
• bid-to-cover ratio 2.50
• high yield 4.130% vs 4.122% pre-sale WI
• awards 74.07% of bids at high
• primary dealers take 17.93%
• direct 23.84%
• indirect 58.23%

This auction was earlier than usual today because the Treasury is also selling 5s at 1 pm ET.

Dallas Fed October manufacturing business index -3 vs -9 prior

• Texas-area manufacturing data

• Prior was -9.0
• Output (production) +14.6 vs -3.2 prior
• New orders -3.7 vs -5.2 prior
• Employment -5.1 vs +2.9 prior
• Outlook -3.3 vs -6.4 prior
• Prices paid for raw materials +16.3 vs +18.2 prior
• Prices received +7.4 vs +8.4 prior
• Wages +23.5 vs +18.5 prior

Comments in the report:

Chemical manufacturing

• Interest rate impacts continue to put pressure on the overall construction markets and auto industry, which are major customers of the basic materials space.
• Chinese producers are selling chemicals products at prices that are, in some cases, lower than our production costs in the U.S.

Computer and electronic product manufacturing

• We need more interest rate cuts on leasing capital equipment to see a difference in our industry. Rates are still too high.

Fabricated metal product manufacturing

• We are expecting a continued period of lower demand and production over the next six to 12 months. We have flexed down our workforce and supplier purchases accordingly.

Food manufacturing

• We are experiencing inflation-related increases in the cost of doing business across the spectrum of operations with no real way to recoup or have margin protection.
• Sales volume is below projections for fourth quarter 2024. Geopolitical instability is increasing throughout the world, and the U.S. presidential election may create more instability.
• We are seeing increased demand for our products, which is driving the increase in our production.

Furniture and related product manufacturing

• We have continuous problems with homeless encampments and property damage at our business location. The city of Dallas holds property owners responsible for cleaning up encampment sites, which are gone one day and back the next. We have to start the entire process over again. This is definitely time wasted for productivity as we have to use our own employees to clean up the sites.

Machinery manufacturing

• Business remains slow; however, we are hopeful that after the election, business will pick up (if the “right” candidate wins).
• Geopolitical conflict and aggression wreaks havoc with our planning. Our own election outcome cannot be known soon enough. We have prospective deals of significance on hold pending who takes office. Overall, it’s been a really rough year through no apparent fault of our own, but our pivots have yet to yield favorable results despite being as nimble as possible. Hopefully, 2025 will be a year of jubilation!

Miscellaneous manufacturing

• A prominent slowing of business began in October 2023, and it has continued to trend lower month over month for the last 12 months.
• We are looking forward to some unity in the country and getting past the election and back to business. We need interest rates to come down and stay low for planning 2025, otherwise we will be having a challenging environment next year.

Paper manufacturing

• Orders and the outlook are trending down at the time.

Primary metal manufacturing

• We are investing in plant, equipment and processes to add new product offerings to improve business conditions.

Printing and related support activities

• We are now in month two of much slower business activity, something we have avoided for the previous 10 months. Hopefully, things will pick up soon, or else we will need to reduce head count in the plant. Naturally, this comes just as a huge capital expenditure machine has arrived and is in the process of being installed and training beginning.

Textile product mills

• We’ve had a strong October across all buying sectors, which makes us feel better about the short-term market. Long-term uncertainty is still high and unchanged; we’ve heard there’s a lot of uncertainty with the election and a potential East Coast dock strike.

Transportation equipment manufacturing

• Our outlook is predicated on the election outcome.

Boeing said to be planning a US$15bn+ capital raising – as soon as Monday

• Boeing reports

Reports that Boeing is planning a US$15bn+ capital raising – as soon as Monday (US time).

Reports that McDonald’s (MCD) is to resume selling Quarter Pounders in all restaurants

CNN reporting that MCD is to resume selling Quarter Pounders in all restaurants.

• Beef patties in Colorado have tested negative for E.coli.
• MCD had temporarily halted Quarter Pounder sales in a dozen U.S. states last week after an outbreak linked to the burgers
• no trace of the E. coli bacteria were found in McDonald’s Quarter Pounder beef patties
• the source of the outbreak is still under investigation, with slivered onions suspected
• “The issue appears to be contained to a particular ingredient and geography, and we remain very confident that any contaminated product related to this outbreak has been removed from our supply chain,” McDonald’s said

BOC’s Macklem: Productivity is key to raising Canada’s living standards

• Comment from Macklem

• We will have to discover the neutral rate over time

Macklem is participating in a fireside chat at a Toronto event so headlines could trickle out. There hasn’t been much to digest though since last week’s BOC meeting.

Commodities

Silver Update: Steady Above $33.50, Eyes Resistance at $34.00

Current Price: $33.79
Daily Change: +0.30%

Silver prices are holding firm above $33.50, currently trading at $33.79. Despite positive momentum and the Relative Strength Index (RSI) remaining in bullish territory, the metal struggles to break through the $34.00 resistance level.

Technical Outlook
Silver’s technical indicators suggest a bullish stance, yet it has failed to surpass the October 25 daily peak of $34.01, creating the potential for a ‘bullish harami’ candle pattern. Momentum remains positive, indicating that a test of $34.00 could be imminent.

Should silver manage to break past $34.00, the next targets would be:

• Year-to-Date (YTD) High: $34.86
• October 2012 Peak: $35.40

Conversely, if silver dips below the October 25 swing low of $33.09, it could face further declines towards:

• October 17 Pivot Low: $31.32
• 50-Day Simple Moving Average (SMA): $30.82

Market Influences
Silver’s ability to maintain its gains is challenged by rising U.S. 10-year Treasury yields, currently at 4.260%. The interplay between interest rates and precious metals will remain a focal point for traders.

As silver tests critical resistance levels, market participants will closely monitor both technical signals and broader economic indicators to gauge future price movements.

Crude oil futures settle at $67.38

• Down $4.40 or -6.13%

Crude oil futures are settling the day at $67.38. That is down -$4.40 or -6.13%. The low reached $66.94. The high price reached $68.84.

The declines were in response to the limited Israeli retaliatory strike on Iran, which avoided oil facilities.

However, there is other fundamental influences which can support or weaken prices going forward.

• Counter to the retaliation is concerns about the duration of the conflict and potential new strikes may be a support for oil but later.
• A decline in crude oil stored on tankers is bullish for prices,
• Weak demand in China and increased Libyan output are bearish factors.
• OPEC+ agreed to pause production hikes, but Saudi Arabia may abandon its $100/bbl target to regain market share.

Citi lowers its Q4 2024 Brent forecast to US$70/bbl (from $74/bbl)

• Citi cites perceptions of a diminished threat to supply

Info comes via Reuters, updating the Citi outlook for oil.

• Lowers 0-3 month Brent oil target price to $70/bbl (from $74/bbl)
• Lowers Q4 2024 Brent forecast to $70/bbl (from $74/bbl)
• Recent Israel military action is unlikely to be seen by the market as leading to an escalation that impacts oil supply
• We expect a lower geopolitical risk premium in our base case, than we previously assumed

EU News

UK October CBI retailing reported sales -6 vs 4 prior

• Latest data released by CBI – 28 October 2024
• Prior 4

After a brief respite in September, the UK retail sales balance heads back into negative territory for the month of October.

SNB total sight deposits w.e. 25 October CHF 457.4 bn vs CHF 462.3 bn prior

• Latest data released by the SNB – 28 October 2024
• Domestic sight deposits CHF 449.4 bn vs CHF 454.1 bn prior

Swiss sight deposits fell again in the past week, moving back in line with levels seen about two to three months back. SNB taking their foot off the pedal? Here’s the trend:

Economist poll of the Bank of England shows cut next week but uncertainty on December

• All economists see a November 7 cut

All 72 economists surveyed by Reuters expect the Bank of England to lower rates to 4.75% next week but what happens at the subsequent meeting on December 19 is far less certain.

Of the 72, there are 46 who predict no change and 26 predict a cut. The majority expecting a hold runs counter to market pricing, which is 82% for a December cut, and higher than that if you assume the BOE delivers next week.

ECB’s Wunsch: It is premature to discuss December policy decision

• Remarks by ECB policymaker, Pierre Wunsch

• No urgency in further accelerating easing of monetary policy
• Temporary, small undershoot of inflation target due to energy price swings is acceptable

ECB’s Knot says mkt maybe a bit over-enthusiastic on Bank rate cuts, on Dec: “we’ll see”

• Dutch central bank chief and ECB Governing Council member Klaas Knot spoke on Saturday

European Central Bank policy rate-setter Knot spoke on Saturday, watering down expectation of a December ECB rate cut just a little:

• “It is important that we keep all options open. Retaining full optionality would act as a hedge against the materialization of risks in either direction to the growth and inflation outlook,”
• “We believe that our meeting-by-meeting and data dependent approach has served us well,”

Knot said that expectation for a December rate cut in the market had increased “quite dramatically” following the recent data (weak purchasing managers’ index and consumption data), but tried to water these down a little:

“We will have to see whether that was a little bit over-enthusiastic or not. We will only know once we do our own calculations again in December”

Asia-Pacific-World News

PBOC sets USD/ CNY reference rate for today at 7.1307 (vs. estimate at 7.1311)

• PBOC CNY reference rate setting for the trading session ahead

In open market operations (OMOs):

• PBOC injects 241bn yuan via 7-day RR, sets rate at 1.5%
• 210bn yuan mature today
• net injection is 31bn yuan

People’s Bank of China launches monthly reverse repo operations to ensure liquidity

• People’s Bank of China statement

The People’s Bank of China says it is to conduct an outright reverse repo operation today, Monday, October 28, 2024

• and will conduct monthly outright reverse repo operations once a month
• with a tenor of less than one year

PBOC says its to maintain and ensure sufficient liquidity

Media comment (Shanghai Securities News):

• New outright reverse repo will cover tenors including three-month and six-month
• New outright reverse repo to improve liquidity adjustments in year ahead
• Introducing new liquidity tool meant to better counteract maturing medium-term lending facility towards year-end

China’s industrial profits collapse in September: -27.1% y/y (vs -17.8% y/y prior)

• China’s National Bureau of Statistics (NBS) slip[ped these out over the weekend:

• industrial profits September, -27.1% y/y
• prior -17.8% in August

earnings -3.5% in the January – September period

• prior +0.5% (January-August period)

according to the National Bureau of Statistics (NBS).

That plunge for industrial profits in September is the biggest monthly decline all year.

NBS says the collapse in industrial profits in September was due to:

• insufficient demand
• sharper decline in producer prices
• higher base of comparison since August

NBS finished on an upbeat note (which is almost obligatory in communist politburo-ruled China):

• recently unveiled policy measures will “foster a favourable environment for the production and operation of industrial enterprises, supporting the recovery and improvement of their profits”

China vice fin min says further stimulus details after National People’s Congress session

• China’s top legislature, the 14th NPC Standing Committee (NPCSC), will convene for its twelfth session from November 4 to 8

China’s top legislature, the 14th NPC Standing Committee (NPCSC), will convene for its twelfth session from November 4 to 8.

The vice finance minister says further details will be announced after this.

• China to step up counter-cyclical fiscal policy
• China confident in achieving around 5% growth target
• Details of fiscal stimulus will undergo a legal process
• Will be announced after the National People’s Congress session

Goldman Sachs: RBNZ could surprise with 75bps rate cut in November

• Goldman Sachs sees minimal impact on AUD/NZD

Key Points:

• Goldman now forecasts two further rate cuts from the RBNZ: 50bps in both November and February, with an elevated risk of a 75bps cut in November.
• New Zealand’s economic fundamentals, including weak labor market indicators, support an aggressive rate-cutting cycle.
• Inflation remains high but has dropped within the RBNZ’s 1-3% target range, likely to ease further due to slower growth and rising unemployment.
• AUD/NZD is unlikely to react significantly as markets are already positioned short on the NZD, suggesting limited downside.

Conclusion:

Goldman Sachs expects the RBNZ to front-load rate cuts given New Zealand’s weaker domestic conditions. While a 75bps cut would be an aggressive move, its impact on AUD/NZD may be muted due to existing market pessimism on NZD, limiting further currency depreciation.

Asia FX verbal intervention – South Korea

• An official at the Bank of Korea says:

• on alert for any widening of financial market volatilities, will thoroughly monitor

South Korea’s central bank Governor Rhee Chang-yong:

• won’s recent fall against the dollar is big
• meant that foreign exchange movement should now be back as one of the factors for policy rate consideration

Cryptocurrency News

XRP Holds Steady Amid Criticism of Crypto Regulation

Current Price: XRP trades at $0.5169 on Monday, reflecting little change from the previous day.

Former SEC enforcement lawyer Ladan Stewart has publicly critiqued the SEC and the Biden administration’s approach to crypto regulation. Despite interest from industry players to collaborate with regulators, she suggests that the current environment makes such cooperation challenging.

Market Snapshot
XRP remains stable above $0.5100, showing no significant price fluctuations for the day. Over the past month, XRP has been range-bound, oscillating between $0.6342 and $0.4860. As of now, it is trading at $0.5136.

Insights from Ladan Stewart
Stewart highlighted a sentiment within the crypto industry, indicating that many want to engage with regulators but feel disillusioned by the current leadership of the SEC and the Biden administration. She expressed concerns that this disconnect hinders progress toward regulatory clarity essential for the industry’s growth.

Richard Levin, an attorney from Nelson Mullins, weighed in on the state of crypto regulation, suggesting that a significant improvement could be achieved if the SEC adhered to the Administrative Procedure Act.

Current Legal Landscape
Stewart’s comments come at a pivotal moment for Ripple, as the SEC has appealed the final ruling in its ongoing lawsuit against the company, which has further implications for XRP’s price movement and regulatory framework. Ripple has also filed a cross-appeal, highlighting the ongoing legal complexities surrounding its operations.

As the industry awaits developments in regulatory clarity, XRP’s price and market position continue to reflect the broader sentiment and challenges faced in the evolving crypto landscape.

Crypto Today: Gains for Bitcoin, Ethereum, and XRP Amid Institutional Interest

Current Prices:

• Bitcoin: $68,724
• Ethereum: $2,523
• XRP: $0.5177

Bitcoin and Ethereum experienced modest gains on Monday, with BTC trading less than 7% below its all-time high. XRP remained stable above $0.5100.

Market Updates
Emory University has made headlines as the first endowment to report a $15.8 million position in Bitcoin ETFs, specifically in Grayscale’s Bitcoin Mini Trust, according to an SEC filing. This move signals potential institutional adoption of Bitcoin, providing optimism for BTC holders.

Phantom, a non-custodial crypto wallet, announced a service disruption caused by a backend issue. Meanwhile, Matthew Sigel, VanEck’s Head of Digital Assets Research, expressed a bullish outlook for Bitcoin in 2025 during a CNBC interview.

Cryptocurrency Highlights

• Bitcoin: Currently at $68,724, with $402 million in net inflows recorded for Bitcoin spot ETFs last Friday.
• Ethereum: Holding above the critical level of $2,500, trading at $2,523.
• XRP: Trading steadily at $0.5177.

Industry Developments
Data from Solana Floor indicates that the total market capitalization of Solana-based Liquid Staking Tokens (LSTs) has surpassed $5 billion, marking a new record. Liquid staking allows users to stake their cryptocurrencies while maintaining liquidity for lending or borrowing.

Additionally, Hong Kong’s publicly traded holdings company HKEX is set to launch a series of digital asset indices aligned with the European Benchmark Regulation, providing a unified price benchmark for Bitcoin, calculated daily at 08:00 GMT.

Lookonchain, an on-chain intelligence tracker, reported a significant $7.17 million sale of Solana by Pump.fun, a meme coin launchpad in the Solana ecosystem. Increased selling pressure or large volume sales can typically lead to negative impacts on token prices.

As institutional interest in Bitcoin grows and market dynamics evolve, the performance of major cryptocurrencies will continue to be closely monitored by investors.

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