Round up of today's market news *

North American News

US Stock Indices End Trading Day with Mixed Results After Volatile Session

Dow closes lower. The S&P and Nasdaq close higher

The major US indices are closing the session with mixed results in what was an up and down trading day.

A snapshot of the closing levels shows:

Dow industrial average -68.56 points or -0.20% at 33550.33
S&P index rose 0.99 points or +0.02% at 4274.53
NASDAQ index rose 29.23 points or 0.22% at 13092.84

Top sectors included

Energy
Industrial
Communication services

The laggards today included

Utilities
Real estate
Healthcare

After the close, Micron reported better-than-expected results for Q4 2023 with

EPS of -1.07, beating the expected -1.18, r
Revenue of $4.40 billion, surpassing the expected $3.91 billion.

However, the company anticipates a Q1 adjusted EPS of -1.07, which is below the expected -0.95, but expects revenue to be $4.40 billion, higher than the anticipated $4.20 billion.

Micron is optimistic about achieving record industry TAM revenue in 2025 due to the proliferation of AI from data centers to Edge. The company is positioning itself for a market recovery in 2024, driven by increasing demand and disciplined supply.

Micron shares closed at $68.24.The shares are trading at $67.58 down -0.97% in after-hours trading..

Atlanta Fed GDPNow growth estimate for Q3 unchanged at 4.9%

Atlanta Fed GDPNow estimate for Q3 growth

The Atlanta Fed GDPNow estiimate for Q3 growth comes in unchanged at 4.9%.

In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2023 is 4.9 percent on September 27, unchanged from September 19 after rounding.After recent releases from the US Census Bureau and the National Association of Realtors, the nowcast of third-quarter gross private domestic investment growth increased from 9.6 percent to 9.9 percent.

US August durable goods orders +0.2% vs -0.5% expected

US August 2023 durable goods orders data
Prior was -5.2%
Non-defense capital goods orders ex-air +0.9% vs 0.0% expected
Prior non-defense capital goods orders ex-air +0.1% (revised to -0.4%)
Ex transport -0.7% vs +0.1% expected
Ex defense -0.7% vs -5.5% prior
Shipments +0.7%

US MBA mortgage applications w.e. 22 September -1.3% vs +5.4% prior

Latest data from the Mortgage Bankers Association for the week ending 22 September 2023

Prior +5.4%
Market index 189.6 vs 192.1 prior
Purchase index 144.8 vs 147.0 prior
Refinance index 411.7 vs 415.4 prior
30-year mortgage rate 7.41% vs 7.31% prior

US sells 5-year notes at 4.659% vs WI at 4.671%

1.2 bps stop through

JP Morgan CEO Dimon is floating the risk of 7% rates: “worst case is 7% with stagflation”

JPMorgan Chase CEO Jamie Dimon was speaking in an interview with the Times of India.Dimon is in Mumbai attending a JPMorgan investor summit.

“I am not sure if the world is prepared for 7%,”
“I ask people in business, ‘Are you prepared for something like 7%?’ The worst case is 7% with stagflation. If they are going to have lower volumes and higher rates, there will be stress in the system,”
Dimon cautioned that another two percentage points of rate hikes would be “more painful” than the last two.

Fed’s Kashkari: Expects Fed to hold rates steady next year

Comments from Kashkari on CNBC
Fed is not trying to create a recession
Economic data suggests Fed not as restrictive as it appears
We are allowing the data to drive Fed decisions
Fed has made a lot of progress on inflation
Data will tell the Fed if more hikes are needed
We want to see workers get better wages
Fed is watching strikes for economic impact
There is a risk that rates might have to go higher
We’re committed to 2% inflation

US bank economists expect credit conditions to weaken over the next six months

The American Bankers Association’s latest Credit Conditions Index was released on Tuesday:

Headline Credit Index fell 2.8 points in Q4 to 4.5, reflecting a consensus among bank economists that credit market conditions will continue to weaken over the next two quarters
Consumer Credit Index worsened 6.5 points to 1.8 in Q4
Business Credit Index improved marginally, by 0.9 points in Q4 to 7.1
“Top bank economists serving on our Economic Advisory Committee are forecasting weak growth in household spending and business investment over the next four quarters before a modest pickup in the second half of next year,” said ABA Chief Economist Sayee Srinivasan. “Accordingly, ABA’s latest Credit Conditions Index indicates that banks will continue to exercise greater caution in lending decisions until at least the end of the year.”

More from the report and why the results are of note:

consumer spending has been the driving force behind the U.S. economy but is likely to slow later this year and next year as wage growth cools, pandemic-era savings dwindle and student loan repayments restart
Households have increasingly turned to credit cards to support spending, and credit card delinquency rates are now similar to pre-pandemic levels (but well below levels from the 1990s and 2000s)
Among businesses, commercial and industrial lending has fallen for most of 2023, reflecting a “risk-off” posture among many business owners. EAC forecasts reflect this sentiment, as business investment is expected to grow at just a 1% annualized rate over the next year. Still, financial stress remains relatively low, and resilient consumer demand has boosted business cash flow.

The ABA Credit Conditions Index is a suite of proprietary diffusion indices derived by the American Bankers Association from surveys of bank chief economists from major North American banking institutions.

Since 2002, the bank economists have forecasted credit quality and availability for both businesses and consumers, indicating whether they expect conditions to improve, hold steady, or deteriorate over the ensuing six months.
Readings above (below) 50 indicate that, on net, these expert business analysts expect credit market conditions to improve (deteriorate).
Input from the bank economists is equally weighted in the indices.

Goldman Sachs is warning that multiple US government shut downs are possible

Goldman Sachs says they expect any imminent shutdown to last only 2 to 3 weeks .

However, “more than one shutdown is possible”:

the two parties are far apart on spending proposals
any agreement to reopen the government after the likely shutdown is likely to expire before year-end
this potentially risks another funding lapse

A CBS Report: Members of the US Congress still get paid, quite a lot, during government shutdowns

This helps explain why some of these clowns are so unconcerned about shutting down the government and throwing millions of other people out of work.

Members of the US Congress get paid during a government shutdown:

their pay is enshrined in the Constitution

most members of the House and Senate get paid $174,000 a year

“leaders” and both chambers’ majority and minority leaders, make $193,400.

Report here

Commodities

Gold falls $23 to the lowest since March

Heavy selling hits gold

A fall below $1900 would be a one-month low but the real level to watch is $1884. If that gives way, there isn’t much support until the low $1800s.

It’s given way now with gold down $23 to $1876.That paints a bleak technical picture as Treasury yields continue to rise.

The drop today extends a series of lower highs and lower lows since May. I don’t see much for the gold bulls to cling to on the chart and 10s at 4.58% offer a compelling alternative to gold (or 3-month bills at 5.48% if you’re so inclined).

When the Fed starts signaling rate cuts or the economy starts to significantly slow, gold offers lots of upside but there is no need to catch the falling knife here.

Gold on the brink on latest dip below $1,900

The yellow metal is down 0.4% to near $1,894 currently

Even though Treasury yields are not making new highs today, gold is once again slumping as the dollar remains steady overall. Of note, price is dipping below $1,900 and that is starting to stir up some nerves among buyers surely.

The previous dip earlier this month was held at the $1,900 mark but with it potentially giving way today, it raises fresh concerns about gold’s recent resilience. The August lows around $1,885 will be the next big line in the sand to watch out for as a break there leaves little in the way of a steeper decline in gold.

WTI crude touches above $94, then settles just below in biggest gain since March

WTI crude oil settles up $3.29 to $93.68

Goldman Sachs oil bull Jeff Curie is retiring after 27 years this week and what a sendoff the latest price action is in crude. He predicted higher oil prices all year and they have certainly arrived with crude today touching $94.17. Brent rose as high as $97.06.

Prompt spreads (CL1 vs CL2) have been widening rapidly, including +90-cents today and that highlights how crude is flowing out of storage. If that wasn’t enough, risk assets throughout the world are getting beaten up this month and crude is going higher and higher. That’s a strong sign of independent tightness in the oil market and that’s backed up by estimates showing 2-3 million barrels per day of underproduction.

WTI crude oil is trading up $2.14 or 2.37% at $92.53

EIA data to come

The price of WTI crude oil is trading up $2.27 or 2.51% at $92.65.The high price reached $92.72 which is the highest level since November 7.

Looking at the hourly chart above, the price moved above the swing high from September 19 at $92.43. Staying above is more bullish.

Yesterday the low price bottomed at $80.19. At that price, the price tested a key swing area between $88.07 and $88.37. Support buyers came in in that area and pushed the price higher breaking above the 100 and 200-hour moving averages in the process.

Fundamentally, durable goods orders showed better-than-expected strength. Concerns about supplies or also helping to push the price higher. moving average the price based against the 200-hour moving average before extending to the upside.

JP Morgan says rising oil prices could lead to demand destruction

JP Morgan analysts on slower inflation – say that firms that benefited from the inflationary spike in the past two years may lose the power to charge higher prices for their goods and services, which is a headwind for their stocks and the equity markets in the remainder of 2023.

However, the analysts argue that rising energy inflation is likely to have the same impact:

rising oil prices could lead to demand destruction, another headwind for corporates’ pricing power

EIA crude oil inventories for September 22 week -2.170M versus -0.320M estimate

Weekly EIA oil inventory data for the week of September 22, 2023

Crude oil inventory draw of -2.170M vs -0.320M estimate. The private report showed a draw of -1.6 million barrels.
Distillates build of 0.398M vs -1.298M estimate. The private report showed a drawdown of -1.7 million barrels.
Gasoline build of 1.027M vs -0.120M estimate
Refining capacity -2.4% versus -0.4% expected
Cushing inventories -0.943M versus -2.064M last week
production unchanged at 12.9 million barrels

ING says oil prices above $100 / barrel not sustainable. Hit to demand, political pressure

Brent oil chart update

In brief from an ING note on oil and the implications of the high price for central banks.

Surging oil prices have become the new concern for central banks, aggravating the current trilemma: how to balance slowing economies, still too-high inflation and the delayed impact of unprecedented rate hikes.
the recent surge in oil prices will make things even more complicated as it will both worsen the economic slowdown but also push up inflation (or at least reduce the disinflationary trend)
Our commodities analyst … expects oil prices to break above 100 USD/b in the near term as supply cuts by OPEC+ countries more than offset weaker demand due to the global economy’s slowdown. However, he doesn’t see oil prices remaining above 100 USD/b for long as weaker demand and political pressure to increase supply should help to bring oil prices back to levels slightly above 90 USD/b.

EU News

European equity close: Stock markets inch closer to the summer lows

Closing changes for the main European bourses

The selling slowed today but we’re nearing some important technical levels.

Daily changes:

Stoxx 600 -0.2%
German DAX -0.3%
Francis CAC -0.1%
UK’s FTSE 100 -0.5%
Spain’s IBEX -0.4%
Italy’s FTSE MIB -0.3%

Eurozone August M3 money supply -1.3% vs -1.0% y/y expected

Latest data released by the ECB – 27 September 2023
Prior -0.4%

Germany October GfK consumer sentiment -26.5 vs -26.0 expected

Latest data released by GfK – 27 September 2023
Prior -25.5; revised to -25.6

Switzerland September Credit Suisse investor sentiment -27.6 vs -38.6 prior

Latest data released by Credit Suisse and CFA Society Switzerland – 27 September 2023
Prior -38.6

France September consumer confidence 83 vs 84 expected

Latest data released by INSEE – 27 September 2023
Prior 85

France prioritises inflation fight with 2024 budget bill

The French government is to raise welfare and pension payouts next year

And that is largely to help households counteract inflation pressures while at the same time trying to rein in public finances, as announced by French finance minister, Bruno Le Maire. He warned that as price caps on gas and power prices are slowly being unwound, the government alone cannot bear the cost of the inflation fight.

Of note, they will be incorporating a new tax on toll road operators and airport operators while implementing a global corporate tax to generate more revenue – both totaling to roughly €2.1 billion by 2025.

ECB’s Elderson: Interest rates have not necessarily peaked

Remarks by ECB executive board member, Frank Elderson

Unfortunately for him, it doesn’t seem like the governing council members are all too interested in pursuing another rate hike – at least for now. Not least especially with economic conditions souring in 2H 2023.

Other News

China August Industrial Profits -11.7% YTD y/y (prior -15.5%)

State-owned enterprises earnings -16.5% YTD y/y
Private-sector companies -4.6%

People’s Bank of China says it’ll accelerate macro policy adjustments

People’s Bank of China hold its meeting on Q3 monetary policy:

will step up macro policy adjustments
to focus on expanding domestic demand, boosting confidence
to implement monetary policy precisely and forcefully
will keep yuan exchange rate basically stable

Nomura raises China GDP forecast to 4.8%

An important signal

It’s been a brutal month for markets but sentiment around China has improved.

On Friday we get the Chinese non-manufacturing PMI and that’s followed by a week of holidays and a big week of data from Oct 10-17.

China can still achieve economic growth of above 5% this year – PBOC advisor

Remarks via Reuters, citing a Chinese central bank advisor

If the headline figure is the official tagline, then you can expect China to somehow “achieve” that as they always do. But how they do so and the details are something that will always be in the shadows. As for whether or not China can steer clear of falling into the same pit as Japan, it will remain to be seen in the decades to come. But for now, the demographics trend certainly is not encouraging.

China has placed the Chairman of troubled property firm Evergrande ‘under police control’

Bloomberg with the info citing unnamed sources.

Details are sparse:

China Evergrande’s billionaire chairman and founder Hui Ka Yan has been placed under police control.
Sources say he was taken away earlier this month and is being monitored at a designated location

Australian August monthly inflation data 5.2% y/y (vs. 5.2% expected)

Australian August monthly CPI 5.2% y/y

expected 5.2%
prior 4.9%
the m/m rise was 0.6% from 0.3% in July

For core measures:

August CPI excluding Fruit and vegetables, Automotive fuel, and Holiday travel and accommodation 5.5% y/y

prior 5.8% in July
this drip lower in underlying inflation will be welcomed by the RBA

Trimmed mean CPI 5.6%

prior also 5.6%

Rising Australian inflation, “its not safe to conclude that the RBA rate cycle has peaked”

Reserve Bank of Australia Governor Lowe

ING’s response (in brief):

Australia: Inflation back on the rise

While this is mostly down to less helpful base effects, international energy prices and excise duty hikes, it is not safe to conclude that the RBA rate cycle has peaked
We think that if the RBA is going to hike again, it will need to be this year, as we don’t believe the current inflation backsliding will last beyond the year-end. So we’d expect these cash rate futures to start pricing in more tightening sooner over the coming months, as headline inflation continues to go in the wrong direction. That may also provide some additional lift to the AUD, though for that, we also would like to see some generalised USD weakness, and the US inflation and rates story is very similar to that of Australia, so we aren’t taking that for granted.

ANZ expect a more hawkish tone from the Reserve Bank of New Zealand next week

The main point from ANZ’s preview of the RBNZ meeting coming up next week:

We expect the RBNZ to keep the OCR unchanged at 5.5% at next week’s Monetary Policy Review (MPR), while striking a more hawkish tone.

Data since the August Monetary Policy Statement (MPS) has overall been stronger than anticipated, dairy prices aside. Potential wealth effects from the reheating housing market are concerning.

We continue to expect a hike at the November meeting and risks are tilting towards even more being required in 2024.

BOJ minutes – discussed if wage hikes would continue while profits weak for many firms

Nothing in these is a game changer. Headlines via Reuters:

Members agreed it was important to check whether wage hikes will continue next year and onward
a few members said chance of firms continuing to raise wages next year was high
one member said there was strong chance corporate wage, price-setting behaviour will be sustained
one member said must check whether wage rises will broaden as 60% of Japan’s small, medium-sized firms run red ink and have weak profit standings
one member said inflation could overshoot expectations as change in corporate behaviour broadens
one member said wages, sales prices could rise at pace unseen in past
one member said many small, medium-sized firms say they have trouble passing on rising costs, which could mean wage growth could lose momentum
members agreed the BOJ must maintain current monetary easing to stably, sustainably hit price target
many members said Japan has stable, sustained achievement of price target, accompanied by wage growth, was not yet in sight
one member said there was still big distance before tweaking negative rate policy
One member said the BOJ must sustain YCC framework in line with commitment it has made in its statement
one member said now is time to wait for trend inflation to heighten
one member said the BOJ could gain clarity in Jan-March next year to determine whether Japan can sustainably hit price target

There is rising speculation that Japanese Prime Minister Kishida may call a snap election

On Tuesday Japanese Prime Minister Kishida mentioned “tax breaks” in outlining his stimulus package.

This has reignited chatter in Japan that he is laying the groundwork for calling a snap election before the end of this year. If so it may well increase pressure on the Bank of Japan and the Ministry of Finance to do something about the weakness of the yen, which is not popular in Japan right now. Its pushing up the price of energy imports.

Cryptocurrency News

SEC Chair Gensler blames crypto industry’s non-compliance for enforcement actions; set to update rules

The Securities and Exchange Commission’s Chair, Gary Gensler, claimed that most crypto tokens are subject to securities laws.
Gensler stated that the non-compliance of the crypto market with securities laws is the reason the market is facing problems.
The members of US House Financial Services Committee have asked the SEC to approve the spot Bitcoin ETF filings “immediately”.

The Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, has repeated his view that the crypto market should not be exempted from securities laws, as according to him, the vast majority of crypto tokens likely meet the investment contract test.

Gensler made his views clear during a testimony before the United States House of Representatives Committee on Financial Services (FSC), in which he discussed the state of the crypto market along with US lawmakers.

SEC Chair attacks crypto market

The SEC Chair went on to blame the crypto industry for the enforcement actions taken by the regulatory body in the past. Gensler stated,

“Given this industry’s wide-ranging non-compliance with the securities laws, it’s not surprising that we’ve seen many problems in these markets…Thus, we have brought a number of enforcement actions some settled, and some in litigation to hold wrongdoers accountable and promote investor protection.

While Gensler did say, during the testimony, that the SEC had come up with new proposals for the crypto market, he did not specify any of them.

Can TRX trigger 30% breakout rally after multiple rejections?

TRON price is at a crossroads as it approaches $0.0862 resistance level.
A breakout could trigger a 30% move to the next key level at $0.1124.
Another rejection could see TRX collect the sell-side liquidity below $0.0718, $0.0644 and $0.0548 levels.

TRON (TRX) price is attempting to overcome a resistance level for the third time this year. Another failure could prove costly for TRX holders, but a breakout could trigger a massive uptrend.

TRON price faces tough decision

TRON price has created a range, extending from $0.0466 to $0.0862 in late May and early June 2022. Since then, TRX has attempted to overcome the range high twice in June and July 2023, but failed to do so. Rejection has led to steep correction both times.

Now, TRON price is approaching the $0.0862 level again with the Relative Strength Index (RSI) hovering just below the overbought level. The Awesome Oscillator (AO) shows bears’ failed attempt to take over as it hovers above the zero level.

Since both indicators are bullish, investors looking to short TRX should be cautious. Instead, traders need to wait for TRON price to make its move above $0.0862. A decisive flip of this hurdle into a support floor could set the stage for it to trigger a 30% rally to $0.1124 hurdle.

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Round up of today’s market news

ByBilals Tech