Round up of today’s market news

North American News

NASDAQ Hits New Record Close; Mixed Results for Major Indices

Current Close: The NASDAQ Composite closed at a new all-time record of 18,712.75, surpassing the previous July high of 18,647.45. In contrast, the Dow Industrial Average and S&P 500 exhibited mixed performance.

Final Numbers:

• Dow Industrial Average: -154.06 points (-0.36%) at 42,233.51
• S&P 500: +9.56 points (+0.16%) at 5,833.08
• NASDAQ Composite: +145.56 points (+0.78%) at 18,712.75
• Russell 2000: -5.97 points (-0.27%) at 223.08

Earnings Highlights:

Alphabet Inc. (GOOGL):

• EPS: $2.12 (estimate: $1.84)
• Revenue: $88.3 billion (estimate: $86.31 billion)
• After-Hours Trading: Shares up $5.37 (+3.20%) at $175.00

Alphabet’s Q3 results showcased a 15% YoY revenue increase, with growth driven by Google Services and Google Cloud. CEO Sundar Pichai emphasized advancements in AI enhancing Google Search and Cloud adoption. Alphabet also announced a $0.20 dividend payable on December 16.

Visa (V):

• EPS: $2.71 (estimate: $2.58)
• Revenue: $9.6 billion (estimate: $9.49 billion)
• Shares: Up $7.28 (+2.80%) at $289.50

Mondelez International Inc. (MDLZ):

• EPS: $0.99 (estimate: $0.85)
• Revenue: $9.2 billion (estimate: $9.1 billion)
• Shares: Up 3.02%

Stryker Corp. (SYK):

• EPS: $2.87 (estimate: $2.77)
• Revenue: $5.5 billion (estimate: $5.37 billion)
• Shares: Up 2.54%

First Solar Inc. (FSLR):

• EPS: $2.91 (estimate: $3.09)
• Revenue: $0.89 billion (estimate: $1.07 billion)
• Shares: Down -6.0%

Advanced Micro Devices (AMD):

• EPS: $0.92 (estimate: $0.92)
• Revenue: $6.82 billion (estimate: $6.7 billion)
• Shares: Down -6.56%

AMD reported record revenue driven by strong demand in the data center segment but faced declines in gaming and embedded revenue.

Chipotle Mexican Grill Inc. (CMG):

• EPS: $0.28 (estimate: $0.25)
• Revenue: $2.79 billion (estimate: $2.82 billion)
• Shares: Down -7.01%

Snap Inc. (SNAP):

• EPS: $0.08 (estimate: $0.05)
• Revenue: $1.37 billion (estimate: $1.36 billion)
• Shares: Up 9.09%

Market Sentiment

Despite the NASDAQ’s record close, market internals reflected a negative bias, with decliners outpacing advancers by a 2-to-1 margin at the NYSE and by a 4-to-3 margin at the NASDAQ. The Dow Jones Industrial Average declined by 0.4%, while the Russell 2000 fell by 0.3%.

Treasury Yields and Economic Data

Treasury yields moved higher following a strong Consumer Confidence report for October, although they settled little changed after a successful $44 billion 7-year note sale. The 10-year yield settled at 4.27%, while the 2-year yield decreased by two basis points to 4.12%.

Conclusion

The market closed with mixed results, highlighted by the NASDAQ’s achievement of a new record high. Positive earnings from major companies like Alphabet and Visa provided some uplift, while concerns about broader market trends linger. Market participants will continue to monitor upcoming economic data and earnings reports to gauge future movements.

US treasury auctions off $44 billion a 7-year notes at a high yield of 4.215%

• WI level 4.235%

• High yield or .215%
• WI level at the time of the auction 4.235%
• Tail -2.0 basis points vs 6-month average of 0.1 basis points
• Bid to Cover 2.74X vs 6-month average of 2.54X
• Directs (a measure of domestic demand) 20.6% vs. 6-month average of 17.3%
• Indirects (a measure of international demand) 72.0% vs. 6-month average of 70.3%
• Dealers (they take the rest) 7.5% vs. 6-month average of 12.4%

Atlanta Fed final Q3 GDPNow estimate: 2.8% vs 3.3% prior

• The GDP report is due tomorrow

The final Q3 tracker is out from the Atlanta Fed and it’s a sizeable downgrade to 2.8% from 3.3%. The official report is due out tomorrow.

In their own words:

“After this morning’s Advance Economic Indicators release from the US Census Bureau, the nowcast of the contribution of net exports to third-quarter real GDP growth fell from 0.04 percentage points to -0.38 percentage points,” the report said.

US October consumer confidence 108.7 vs 99.5 expected

• Surge in consumer confidence

• Prior was 98.7 (revised to 99.2)
• Present Situation Index 138.0 vs. 124.3 prior
• Expectations Index 89.1 vs 81.7 prior

Comments:

“The proportion of consumers anticipating a recession over the next 12 months dropped to its lowest level since the question was first asked in July 2022, as did the percentage of consumers believing the economy was already in recession. Consumers’ assessments of their Family’s Current Financial Situation were unchanged, but optimism for the next six months reached a series high.”

Case Shiller August home price data +0.4% versus 0.2% expected

• US home prices data from Case Shiller for August 2024

• Prior month 0.3%
• Case Schiller month-on-month home price index +0.4% versus 0.2% estimate
• Not seasonally adjusted month-on-month -0.3% vs 0.0% last month
• YoY NSA +5.2% versus +5.1% estimate. Prior month 5.9%

US JOLTs job openings 7.443M vs 8.000M estimate

• JOLTs job openings for September 2024

• Prior month 8.040M revised lower to 7.861M
• Job openings 7.443M vs 8.000M estimate. Lowest since January 2021
• Vacancy rate 4.5% versus 4.7% last month (revised from 4.8%)
• Quits rate 1.9% versus 2.0% (revised from 1.9%) last month
• Separations rate x.x% versus 3.1% last month

Details:

• Job openings are down 1.9 million over the year
• Job openings rate is at 4.5%

• Job openings decreased in:
  • Health care and social assistance: -178,000
  • State and local government, excluding education: -79,000
  • Federal government: -28,000
• Job openings increased in:
  • Finance and insurance: +85,000

• Hires:
  • Number and rate of hires remained steady at 5.6 million and 3.5%, respectively.
• Separations:
  • Total Separations
    • Unchanged at 5.2 million in September; down by 326,000 over the year.
    • Total separations rate steady at 3.3%.
  • Quits: STEADY, but down on the year
    • Remained at 3.1 million; down by 525,000 over the year.
    • Quits rate unchanged at 1.9%.
    • Decreases observed in professional and business services (-94,000).
    • Increases seen in:
      • State and local government, excluding education: +22,000
      • Real estate and rental and leasing: +18,000
  • Layoffs and Discharges:
    • Stable at 1.8 million; increased by 238,000 over the year.
    • Layoffs and discharges rate rose to 1.2%.
    • Increases in durable goods manufacturing: +46,000
    • Decreases in state and local government, excluding education: -20,000
  • Other Separations
    • Little change, remaining at 292,000 in September.

• Job openings for August revised down by 179,000 to 7.9 million
• Hires revised up by 118,000 to 5.4 million
• Total separations revised up by 171,000 to 5.2 million
  • Quits revised up by 94,000 to 3.2 million
  • Layoffs and discharges revised up by 60,000 to 1.7 million

US wholesale inventories or September -0.1% versus revised 0.2% last month

• US wholesale inventories for September 2024

• Prior month 0.2% (revised from 0.1%)

• Advance Wholesale Inventories
  • Wholesale inventories for September were estimated at an end-of-month level of $905.0 billion, down 0.1 percent from August 2024
  • Up 0.5 percent from September 2023
• Advance Retail Inventories
  • Retail inventories for September were estimated at an end-of-month level of $824.3 billion, up 0.8 percent from August 2024
  • Up 6.5 percent from September 2023

US advance goods trade balance $-108.23 billion versus $-95.9 billion estimate

• US advance goods trade balance for September 2024

• Prior month $-94.22 billion
• International trade deficit was $108.2 billion in September, up $14.0 billion from August
• Exports of goods for September were $174.2 billion, $3.6 billion less than August exports
• Imports of goods for September were $282.4 billion, $10.4 billion more than August imports

Dallas Fed services sector outlook +2.0 vs -2.6 prior

• Texas services sector survey

• Revenue index +9.2 vs +10.1 prior
• Employment -0.2 vs +2.0 prior
• Wages and benefits 16.3 vs 12.3 prior
• Retail sales survey -11.4 vs -8.9 prior

Comments in the report:

Utilities

• We feel that the pace of general business has increased on the positive side.

Professional, scientific and technical services

• It’s very hard to tell if the delays in starting new projects are due to unease about the election and any disruptions in its aftermath–meaning things will go back to normal once the dust settles–or whether there is something more systemic going on that reflects a longer-term downturn in IT consulting demand.
• We saw a slight improvement in revenue. We are not sure it’s sustainable.
• We are seeing many cyber scams and phishing attempts. Scammers are getting very clever, and it’s more difficult to identify.
• Post-U.S. election, the U.S. and global economies are likely to improve, per our global customer feedback.
• Still fair amount of uncertainty, especially regarding availability of capital (debt and equity) to upstream oil and gas industry. We do retained search as well as outsource recruiting for companies that have consistent needs over an extended period of time. October was a tough month. As was September, but October was worse. This year has been difficult in general. We know that companies want and need to hire, but they don’t mind waiting for the right person to come along rather than using a proactive process that will save them a lot of time. We hope that after the elections, people will have an increased sense of stability and optimism.
• It is difficult to evaluate activity. We’re not sure if the hesitation about investment is because of the election, inflation or overbuilding of speculative industrial space.
• Our biggest limiting factor has been our ability to find good engineers. In the last couple of months, that seems to be getting easier. We have made some good movement in hiring.
• There is an increase in wire fraud, and we have hired a third-party company to help with this. This is an extra expense but one we feel is necessary to prevent theft. There is also an increase in identity fraud, specifically seller fraud. The change in labor laws has increased our employee expense as well.
• Business is slowing down noticeably.
• The election results or uncertainty around the results is making our clients hesitant to hire our company.
• The cost of labor in the food industry has forced the professional service industry to raise wages for entry-level workers to remain competitive. Meanwhile, high interest rates have caused many entities to slow delivery or stop construction and renovation projects, resulting in an overall slowing of business.

Management of companies and enterprises

• There’s an overwhelming amount of time and money spent trying to stay in compliance with rules and regulations.
• The election is so close. Once that is behind us, we are very optimistic, regardless of the candidate at the top of the ticket that wins the election.

Administrative and support services

• Expectation of lower interest rates looks promising. Recent increases in 10- and 20-year treasuries are concerning.
• Corporate travel tends to slow down in our market during the fourth quarter of federal election cycles.
• Difficult to fill in the circle on revenue and employee projections for six months from now when we are still not through the election. We are cautiously optimistic, but we are not investing in additional technology or tools until we can determine where the dust settles economically post-election. There has been a slight uptick in hiring from our clients; however, the roles are one-off, difficult-to-fill roles that require unique skill sets. We have not seen an uptick in hiring for professional mainstream roles in accounting, finance, HR, marketing or administrative capacities. Candidates are still receiving multiple offers because there is still a shortage of strong, experienced candidates for professional positions.

Educational services

• The political environment will remain highly uncertain until at least after the election, and possibly through January. This has some direct impact on our business.

Accommodation

• Our food cost continues to be high, especially for commodities like orange juice. Our outlook for the first quarter of 2025 is good but is being hurt by a renovation that will take out 60 rooms from our inventory beginning in early January.

Personal and laundry services

• We think there is uncertainty about the presidential election.

Rental and leasing services

• Blanket tariffs and mass deportations would be horrible for the Texas business community. We hope that professional economists will prevail over populists and keep the business conditions strong, regardless of who wins the general election.

Air transportation

• Hurricanes have impacted travel.

Support activities for transportation

• Uncertainty may not have changed, but optimism has improved.

Warehousing and storage

• We believe our outlook for the near and midterm remains pretty consistent. We do expect higher selling costs and costs to provide services, including the wages we pay, in the new year as inflation continues to put pressure on the business.

Publishing industries (except internet)

• Across 2024 we saw a slowdown in new business activity. We are hopeful that this turns around as optimism returns to the market. As a business-to-business company, we rely on the willingness and ability of companies to forward invest in new capabilities, which they have not and will not do in periods of economic uncertainty. We are still feeling the impacts of the rate environment and volatile consumer spending environment of the last 18 to 24 months. We are hopeful this will change, but we also believe that positive economic signals and appropriate Federal Reserve action are required in order to hasten the return of optimism.

Data processing, hosting, and related services

• As buyers wait to make decisions until after the election and any post-election repercussions, the market feels very soft. As such, our decisions on hiring and investments are on hold.

Credit intermediation and related activities

• Not sure the rate decrease was warranted at this time. Inflation has not been cooled far enough to say it will not come back, forcing rates even much higher in the future. If this happens the Federal Reserve will most certainly cause a recession.
• We are beginning to see an increase in the number of loan inquiries from commercial property owners who have bank loans with balloon maturities that the banks have previously been willing to roll over but are now unwilling. Historically, banks have been willing to extend maturities once or twice if a balance for a loan underwritten in a much lower interest rate environment cannot be refinanced in a higher interest rate environment absent a material paydown in the loan balance. We are also beginning to see commercial real estate investment brokers presenting sales packages on behalf of banks for real estate owned property. Most long-term lenders have not materially reduced their quoted interest rates in the past three weeks.
• We see a decrease in our costs due to a drop in our funding costs.
• The geopolitical environment has created unstable economic conditions, making a forecast hard to predict. The best tactic at the moment is to squat and wait. Consumers are suffering from the high cost of food products and the price jump in insurance premiums.

Securities, commodity contracts and other financial investments and related activities

• We have not seen any change in current market conditions from September to October. We remain hopeful that we will eventually be able to resume business once we have more rate cuts, which will help improve financing costs for new development.
• Ag sector income is up slightly. Retail sales are flat, tourism is down slightly.
• We’re seeing general slowdown as we approach the election. Probably normal.
• Demand remains stable. Reduction in the federal funds rate by 50 basis points has improved business outlook, confidence and profitability.

Real estate

• It has been flat across the board.
• Buyers do not like uncertainty. Two wars going on is a concern for where to invest money.
• Folks are just grinding it out right now, not spending more than they have to, looking forward to additional rate decreases, hoping expectations don’t have to be lowered any further, and anxious to see what our next president will do.
• Capital markets conditions are improving for real estate dealmaking, and we expect 2025 to be an improvement over 2024.

Insurance carriers and related activities

• We’ll reassess next month after the election.

Texas Retail Outlook Survey

Electronics and appliance stores

• People with money are still sitting on the sidelines. People without money are suffering.
• Presidential election will cause some concern.

Motor vehicle and parts dealers

• Trends are very concerning. Operating profits are down 20 percent. Gross revenue declined, and expenses are up significantly.
• Consumer traffic for higher cost products is decreasing. Our business is caught in the middle of inflated pricing, stubbornly high interest rates and high monthly payments.

Merchant wholesalers, nondurable goods

• The election will bring change to the marketplace, no matter the outcome. If policies move toward a more protectionist bend (import tariffs), we could experience some blowback on our exports. If the dollar strengthens, we will see our customers trim their orders or order frequency. A weak dollar is good for our export business.

Nonstore retailers

• Hiring new truck drivers is the biggest problem our company faces. Our employees are aging, and we are worried for the future because we can’t find any qualified truck drivers. Part of the problem is the labor pool. One guy who applied had 20 jobs in 10 years. Also, it is competition with high oilfield salaries.

Food services and drinking places

• Lack of business travel to downtowns and general low office occupancy continue to impact revenue. Cost of goods sold and labor costs remain high. Insurance and other operating costs are increasing. This is one of the toughest markets we have endured in 45 years of operations.
• The election is impacting the outlook for the remainder of this year and next.
• Although we are concerned about the outcome of U.S. elections, we are hopeful the swing either way will not create more uncertainly in the economy. Election and tax policy are going to be key in determining future plans.

Broadcom and OpenAI developing new AI chip

• OpenAI has also said that they have reserved 2026 TSMC manufacturing capacity to manufacture the chips

• OpenAI is using AMD chips alongside Nvidia chips
• company has dropped the foundry plans for now due to cost and time needed to build a network
• Plans instead to focus on in-house chip design efforts

BlackRock CEO says Fed will cut at least by 25 bps before year-end

• Remarks by BlackRock CEO, Larry Fink

Fink argues that “it is fair to say the Fed will make at least a 25 bps rate cut by the end of 2024”. And that falls within the forecast made by his firm, arguing for a 25 bps to 50 bps move before the year is done with.

However, Fink warns that “we have greater embedded inflation than we have ever seen”. And given that backdrop, “rates will not be as low as forecast”.

Goldman Sachs like US equities higher through year-end

• Not just seasonals

Goldman Sachs analysts on why US stocks are set to gain for the rest of the year:

• seasonals – Monday starts “the best trading period of the year for U.S. equities also during election years”
• end of October means less selling from mutual funds and pensions
• US corporates return to buying – GS says the largest buyer of the equity market are U.S. Corporates (“repurchase window” for U.S. companies to buy back their own stock “started Monday “with 50% of corporates in the open window”)
• diminished volatility (CBOE Volatility Index down)
• contrarian call against a “global consensus on Wall Street” that stock prices will fall after the presidential election

Wharton finance professor says Fed could pause next week if NFP comes in hot

• Siegel view

Wharton finance professor Jeremy Siegel says that the Federal Open Market Committee (FOMC) could leave Fed Funds unchanged (announcement due November 7) if there is a substantial upside surprise to the nonfarm payrol headline on Friday (November 1)

Siegel spoke with CNBC last week:

• “If we get a strong labor market report for the month of October, there’s going to be a lot of people, a lot of the FOMC members, that are going to say maybe we should pause at this particular juncture,”
• Siegel sees three to four cuts ahead during the easing cycle
• rates will probably be elevated in the long run
• stock market looks strong
• economy remains resilient

US reportedly have been declining to change language when discussing Taiwan independence

• China has been wanting the US to change their tone on the matter but the latter has been said to decline to make the change

It is being reported by Reuters that China president Xi Jinping had asked US president Joe Biden to change the language that the latter uses when discussing its position on Taiwan independence. The request came about last year, in which China wanted the US to explicitly say that they “oppose Taiwan independence” rather than mention that they “do not support independence for Taiwan”. Xi’s aides are also reported to have followed up on the matter in further requesting the change but the US has declined to do so.

For some context, even though the US does mention that they “do not support independence for Taiwan”, they do maintain unofficial relations with the island and is their most important backer as well as arms supplier. So, it is a case of actions speaking louder than words here.

Bank of America technical analysts like S&P 500 through to the end of the year

• Snippet from BoA on why the benchmark index will rise into year end

In brief, the argument from the analysts at Bank of America is bullish seasonality:

• if S&P 500 is up YTD to end of October (not there yet, but looks likely!) the index is nearly 80% of the time for the November-December period
  • median returns of 4% and 4.27% respectively
• pattern occurs even in election years … November and December are even better in these years

BOC’s Macklem: We anticipate cutting further if economy follows our forecasts

• Comments from the Bank of Canada governor

• If the economy evolves broadly in line with our forecast, we anticipate cutting our policy rate further to support demand and keep inflation on target.

Commodities

Private survey of oil inventories shows a headline draw

• Weekly US petroleum private inventories

• API Inventory
• Crude -573,000 (exp. +2.3 million)
• Gasoline -282,000
• Distillates -1.463 million
• Cushing +320,000
• SPR +1.2 million

Palladium price continues to rise – Commerzbank

The price of Palladium continued its upward trend that began on Thursday at the start of the new trading week. It reached its highest level in more than 10 months today at $1,240 per troy ounce, Commerzbank’s commodity analyst Carsten Fritsch notes.  

Extent of the current price rise seems excessive

“This means that the price of Palladium has risen by more than 15% in just over three trading days. On Friday, we reported on the trigger for the price jump, namely the US government’s call to the G7 to consider further ways to reduce Russian revenues in the metals sector, including restrictions on Palladium exports. The price increase was likely to have been exacerbated by the covering of speculative short positions.”

“According to the CFTC, net short positions on 22 October were still around 5,500 contracts. However, positions had already been scaled back in the preceding weeks. By comparison, the record level for net short positions was reached at the beginning of August at 16,300 contracts. It seems that the speculative investors have become less pessimistic in their price expectations for Palladium.”

“There are further arguments for this, in addition to the feared restriction of Russian Palladium supplies. The low price levels of Platinum and Palladium are likely to lead to production curtailments in South Africa. Fears that the transition to e-mobility could mean that hardly any Palladium will be needed in car production just a few years from now have proved to be exaggerated. Nevertheless, the extent of the current price rise seems excessive to us.”

Oil: Set-up for a tactical rebound is strengthening – TDS

Energy supply risk premia continues to melt out of crude oil prices, but the set-up for a tactical rebound is strengthening, TDS’ Senior Commodity Strategist Daniel Ghali notes.

Rebound risks are strengthening

“Traders have concluded that this chapter of the conflict in the Middle East has ended, despite continued risks surrounding a potential tit-for-tat escalation and, regardless of its limited implications for global oil markets, some evidence that energy infrastructure in the Abadan refinery may have been damaged during the attacks.”

“Our return decomposition framework highlights that over the course of yesterday’s session alone, supply risk premia sapped approximately -4.5% from Brent crude prices, whereas CTA selling activity added nearly -1% to the down move. Looking forward, however, the set-up for a rebound is strengthening.”

“Trend following algos are now ‘max short’, continued evidence of reflationary tailwinds in demand may ultimately provide a cross-current to continued headwinds from supply risk, and our simulations of future prices suggest that nearly all scenarios over the coming week will lead to algo buying activity in Brent crude markets.”

4 Big reasons that UBS target US$2850 for gold

• TL;DR, rate cuts & central bank demand

UBS says not to be too concerned about record high gold prices and the 30%+ rise so far this year:

• prices will continue to rise in the months ahead

UBS forecast $2850 by mid-2025. In brief, UBS cite gold continuing to benefit from rate cuts:

• Federal Reserve easing cycle is still at an early stage … expect more cuts in 2024 (100bp in total!) & another 100bps in 2025
• Global rate cuts too – China, Canada’, ECB, and more

Politics:

• gold’s political hedging utility could blunt near-term dollar upside risks if former President Donald Trump wins the US election
• Federal Reserve’s rate-cutting cycle driving financial investment demand
• Ongoing central bank buying

EU News

European major indices closing the day in the red

• Major indices down -0.25% to -0.91%

The major European indices are closing the day in the red after all the indices closed higher yesterday.

The closing levels are showing:

• German DAX, -0.25%
• France’s CAC -0.61%
• UK FTSe100 -0.80%
• Spain’s Ibex -0.91%
• Italy’s FTSE MIB -0.26%

In the European debt market:

• Germany 2.338%, +5.5 basis points
• France 3.080%, +7.5 basis
• UK 4.316%, +6.4 basis points
• Spain 3.035%, +5.1 basis points
• Italy 3.563%, +6.8 basis points

Over the month of October,. 10 year yields are higher:

• Germany, +20.7 basis points
• France, +16.2 basis points
• UK, +32.0 basis points
• Spain +9.5 basis points
• Italy, +11.6 basis points

Germany November GfK consumer sentiment -18.3 vs -20.5 expected

• Latest data released by GfK – 29 October 2024
• Prior -21.2; revised to -21.0

Despite worries surrounding the economy, Germany’s consumer climate climbs to its highest level since April 2022 in the latest reading here. Looking at the details, both income expectations and the willingness to buy showed an improvement for the second time in a row. But despite a pick up in the headline reading, it is still at a relatively low level historically. GfK notes that:

“The level of Consumer Climate remains very low. The uncertainty caused by crises, wars and rising prices is still very much present and is preventing factors that encourage consumption, e.g. the real income growth, from taking full effect. Reports of a rising number of company insolvencies and plans to cut jobs or relocate production abroad are also preventing a more significant recovery in consumer sentiment.”

UK September mortgage approvals 65.65k vs 65.00k expected

• Latest data released by the BOE – 29 October 2024

• Prior 64.86k; revised to 64.96k
• Net consumer credit £1.2 billion vs £1.3 billion expected
• Prior £1.3 billion

Mortgage approvals rose to the highest level since August 2022 but on net, individual mortgage debt fell by £0.3 billion, to £2.5 billion in September. Meanwhile, annual consumer credit growth dipped slightly to 7.5% – down from 7.7% in August.

UK inflation indicator: BRC Shop Price Index fell faster in October

• -0.8% y/y (expected -0.5%, prior -0.6%)

BRC Shop Price Index in October 2024 fell at the fastest pace in more than three years:

-0.8% y/y

• expected -0.5%, prior -0.6%
• eighth time in nine months that the pace of price growth has weakened

British Retail Consortium data. BRC sound a note of caution:

• “Households will welcome the continued easing of price inflation,”
• “But this downward trajectory is vulnerable to ongoing geopolitical tensions, the impact of climate change on food supplies, and costs from planned and trailed government regulation.”

DIHK warns that German economy is set to stagnate in 2025

• DIHK is the German Chamber of Commerce and Industry, and they expect the economy to contract this year as well

In their latest forecasts today, DIHK is slashing their outlook on the German economy and anticipating a 0.2% contraction for this year. As for 2025, they are expecting zero growth in the economy in what will be a third year without any real growth in GDP.

“We are not just dealing with a cyclical, but a stubborn structural crisis in Germany. We are greatly concerned about how much Germany is becoming an economic burden for Europe and can no longer fulfil its role as an economic workhorse.”

Their latest survey also shows that 31% of firms are expecting the business situation to worsen in the months ahead, and that figure is up from 26% in the last survey. 

UK reportedly open to restarting key trade dialogue with China

• Politico reports on the matter

One of the key trade dialogues between the UK and China was the Joint Economic and Trade Commission (JETCO). That was meant to facilitate bilateral trade and investment between the two countries but was put on ice by the last UK government following China’s actions on Hong Kong back in 2022.

It is being reported now that the incumbent UK government is “open” to explore the trade dialogue again “where cooperation is possible with China”. That according to business and trade secretary, Jonathan Reynolds, at least. But he does say that they will have to engage the conversation on their own terms. Adding that:

“Obviously, what I want to know is, if JETCO were to be reinstated, would it be a substantive way to resolve some of these (ongoing trade) issues?”

The full piece can be found here. 

Asia-Pacific-World News

China mulls approving fresh fiscal package worth over ¥10 trillion next week

• Reuters reports, citing two sources with knowledge of the matter

It is being reported that Beijing is looking to approve next week the issuance of over ¥10 trillion in extra debt over the next few years in order to revive economic conditions. And the package will be expected to be further bolstered if Trump wins the US election.

For some context, China’s top legislative body i.e. the National People’s Congress (NPC) is said to be meeting next week with the announcement set to follow on 8 November, according to the sources.

The package is believed to include ¥6 trillion raised via special sovereign bonds, in order to address local government debt risks. The remaining ¥4 trillion will be more related to the property sector. That being said, the sources are cautioning that the plans are not finalised yet and are still subject to changes.

PBOC sets USD/ CNY reference rate for today at 7.1283 (vs. estimate at 7.1271)

• PBOC CNY reference rate setting for the trading session ahead.

In open market operations (OMOs):

• PBOC injects 382bn yuan via 7-day RR, sets rate at 1.5%
• 159bn yuan mature today
• net injection is 224bn yuan

Reports that China’s Luckin Coffee to enter US market – plans to undercut Starbuck prices

• Luckin launch into the US said to be early 2025

Luckin Coffee is China’s largest coffee chain.

The reports are that it is planning to enter the US market and undercut rivals including Starbucks with its low-priced drinks. FT with the info (gated).

The firm has not commented on the reports.

Australian weekly Consumer Confidence 86.4 (prior 87.5)

• ANZ-Roy Morgan Consumer Confidence

ANZ-Roy Morgan Consumer Confidence for the week drops to 86.4

• prior week was 87.5

ANZ see a bright spot:

• on a four-week moving average basis, confidence is at a 20-month high

Japan’s Toyota & NTT to invest $3.26 bn R&D to create AI software to improve self-driving

• Toyota Motor and Nippon Telegraph and Telephone will develop automotive software that uses artificial intelligence to anticipate accidents and take control of the car

Nikkei (gated) have the report.

In brief:

• Toyota Motor and Japan’s Nippon Telegraph and Telephone (NTT) will invest 500 billion yen ($3.26 billion) in research and development to create artificial intelligence software to improve self-driving
• the software will use AI to anticipate accidents and take control of the vehicle
• aiming to have a working system ready by 2028 and provide it to other automakers

Japan finance minister Kato closely watching FX moves including those drive by speculators

• Japan finance minister Kato:

• Won’t comment on forex levels
• Important for currencies to move in stable manner reflecting fundamentals
• Closely watching fx moves, including those driven by speculators, with a higher sense of vigilance

Japan September jobs report: Unemployment rate

Japan Unemployment Rate (Sep)

• Actual: 2.4%
• Expected: 2.5%
• Previous: 2.5%

Japan Jobs/applications ratio (Sep)

• Actual: 1.24
• Expected: 1.23
• Previous: 1.23

Japan DPP head says BOJ should avoid big policy change now b/c real wages standing still

• DPP is a likely coalition partner in the new Japanese government

Japan Democratic Party For People Head Tamaki:

• BOJ should avoid big policy change now with real wages still at standstill
• If there is certainty that wage growth will exceed 4% at next year’s wage negotiations, BOJ can review monetary policy
• Want policymakers to scrutinise whether real wages stably turns positive in guiding fiscal, monetary policy

Bank of Korea Governor says not short on ammunition to stabilise FX

• Bank of Korea Governor Rhee

• will very likely cut 2024 GDP forecast
• sees growth to be around 2.2%-2.3%
• staying cautious on FX movement
• don’t think South Korea is short of ammunition to stabilise the forex market if needed

Cryptocurrency News

Ethereum Poised for Rally as Vitalik Buterin Reveals ‘The Splurge’

Current Price: Ethereum is trading at $2,670, showing a strong 7% increase on Tuesday as it attempts to reclaim the $2,817 resistance level.

Market Context: Despite facing criticism for its underperformance compared to Bitcoin and Solana—both only down approximately 3% and 31% from their all-time highs, respectively—Ethereum remains focused on its long-term potential. The leading altcoin is currently down nearly 50% from its all-time high of $4,878.

Vitalik Buterin’s Roadmap: The Splurge

In a recent six-part blog series, Ethereum co-founder Vitalik Buterin outlined a roadmap addressing the challenges facing the network. The final installment, titled The Splurge, emphasizes four main goals:

1. EVM Stability: Achieving a performant and stable state for the Ethereum Virtual Machine (EVM).
2. Account Abstraction: Implementing in-protocol account abstraction to enhance security and convenience for all users.
3. Transaction Fee Optimization: Enhancing fee economics to increase scalability while minimizing risks.
4. Advanced Cryptography: Exploring cryptographic advancements that could significantly benefit Ethereum in the future.

Previous installments in the series discussed various improvements, such as enhancing staking viability for solo stakers and minimizing the risk of 51% attacks.

Staking Yield Comparison and ETF Flows

Currently, Ethereum’s staking yields have been noted to lag behind those of other leading Layer 1 protocols. According to Kaiko Research, Ethereum’s staking yield is less competitive, with top alternatives like Cosmos, Polkadot, Celestia, and Solana offering rewards between 7% and 21%.

In other developments, US Ethereum exchange-traded funds (ETFs) experienced net outflows of $1.10 million on Monday, according to Coinglass data. This trend may reflect market sentiments as traders reassess Ethereum’s positioning in the broader cryptocurrency landscape.

Outlook

With Buterin’s roadmap suggesting a bullish trajectory for Ethereum, traders will be keenly watching for a potential breakout above the $2,817 resistance. If successful, it could signal a more robust recovery and renewed investor interest in the top Layer 1 blockchain.

Bitcoin Approaches All-Time Highs Amid Political Catalyst

Current Price: Bitcoin is trading above $73,000, recently reaching a high of $73,099, marking the highest level since March 14. The all-time intraday high stands at $73,794, while the highest closing price is recorded at $73,121.

Momentum and Political Influence

The recent price surge has been attributed to political dynamics surrounding the upcoming elections. A potential victory for Donald Trump, who has been a vocal advocate for Bitcoin, is seen as a significant catalyst for the cryptocurrency’s rise. Conversely, a win for Kamala Harris, who has shown a degree of openness toward Bitcoin, may also influence market sentiment, albeit her support might be limited to campaign promises rather than concrete policies.

Technical Analysis: Swing Ceiling Approached

Bitcoin is currently testing a swing area ceiling between $71,958 and $73,794. Traders are presented with two potential scenarios:

1. Sellers Leaning Against the Ceiling: Traders may use the resistance levels as a point to enter short positions, anticipating a rotation lower similar to past occurrences since peaking in March.
2. Buyers Breaking Higher: If buyers can push through the ceiling, it could lead to further upside momentum, potentially breaking the all-time high.

Recent Price Movement

Since hitting a low of $65,000 on October 24, Bitcoin has surged by 11.93%, and since its low of $49,577 on August 5, it has increased by 38.47%. This upward momentum reflects the ongoing consolidation period following significant fluctuations in the market.

Conclusion

As Bitcoin continues to approach its all-time highs, the interplay of political factors and market dynamics will be critical in determining its next move. Investors will be closely monitoring these developments as the cryptocurrency landscape evolves.

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