North American News
Microsoft and Nvidia Drive Surge in Tech Stock Prices to New Peaks
- US stocks have a positive start to the trading week, with Microsoft and Nvidia closing at all-time highs.
The stock market experienced a strong start to the trading week, with major indices seeing significant gains. The notable surge was driven by Microsoft’s impressive performance following the recruitment of top artificial intelligence executives, such as Sam Altman, former head of OpenAI, and Greg Brockman, a cofounder of OpenAI. Microsoft’s strategic move to assemble a new advanced AI research team not only bolstered the technology sector but also propelled stocks like Apple and Nvidia to higher levels. Concurrently, both Microsoft and Nvidia achieved remarkable record-setting closings. Additionally, Apple’s shares are narrowly trailing its historic peak, standing just $7 away from surpassing its all-time high of $198.19.
The NASDAQ index is currently just 1.13% shy of reaching its 2023 peak. Notably, the S&P 500’s information technology sub-index stood out as the top performer within its 11 major sectors, largely propelled by Microsoft’s shares achieving a record high, resulting in a 1.5% increase. Additionally, communication services experienced a noticeable rise of 1.07%, while real estate saw a solid uptick of 0.80%. Conversely, utilities declined by -0.31%, and consumer staples remained unchanged for the day. Impressively, 9 out of the 11 sectors made gains today.
The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all recorded substantial advances, with the S&P 500 edging closer to its year-to-date high, now just 1.31% away from the peak reached in July. November has signaled a resurgence for Wall Street’s primary indexes following three months of instability, as the easing of U.S. inflation has given rise to expectations that the Federal Reserve may pause interest rate hikes. The market is now looking ahead to the potential for interest rate cuts as early as March.
The final numbers shows:
- Dow industrial average rose 203.76 points or 0.58% at 35151.03.
- S&P index was 33.36 points or 0.74% at 4547.39.
- NASDAQ index rose 159.04.41.13 percent at 14284.52.
Each of the major indices are on pace to snap three-month declines. For the trading month
- The Dow industrial average is now up 6.35%.
- The S&P index is now up 8.43%
- The NASDAQ index is up 11.15%
US treasury auctions office $16 billion of 20 year bonds at a high yield of 4.780%
- WI level at the time of the auction was 4.79%
- High Yield: 4.780% vs Previous: 5.245%
- WI level at the time of the auction 4.79%
- Tail: -1.0 bp vs 6-auction average: -0.7bps. Previous: -1.2bps.
- Bid-to-Cover: 2.58 times x vs 6 month average of 2.67X. Previous: 2.59x.
- Dealers: 9.5% versus 6 month average of 10.2%. Previous: 11.9%.
- Directs: 16.5% versus six-month average of 19.7%. Previous: 15.2%.
- Indirects: 74.0% versus six-month average of 70.1%. Previous: 72.9%
Highlights:
- A negative tail which is good
- Bid to cover was average
- Domestic demand was weaker than the six-month average at 16.5%. Not so great
- International demand at 74% was much stronger than the six-month average. Strong demand
- Overall the dealers were left with lower than the six-month average.
US October leading economic indicator -0.8% versus -0.7% expected
- Leading economic indicator for the month of October 2023
- Prior month -0.7%
- leading economic indicator -0.8% versus -0.7% expected
- the leading economic indicator index 103.9
Bank of America forecasts higher for longer Fed Funds rates, sees upside risks
- Add that stronger growth could see even more upside in rates
Bank of America on Fed Funds for next year:
- We revise our rates forecasts higher across the curve
- now forecast 10y UST at 4.25% by end ’24
- Our forecasts are below market forwards but above consensus, especially by end ’24
- Our 2Y forecasts shade risks to a higher cutting trough than US economics baseline. This is due to risks of a higher nominal neutral rate, which the market currently prices. it also reflects risks that skew to a more resilient economy.
BoA on the risks they see:
- skewed to the upside
- We see risk to more growth momentum in rates market, stronger growth will mean higher rates vs our forecast.
- We also see risks from elevated UST supply which could keep long end US rates higher & the curve steeper vs our forecasts.
- Downside risks could stem from a sharper US economic slowdown or another round of bank stress
Fed’s Barkin: Not a big time for offering forward guidance
- Barkin speaking on FOX business
- Not a big time for offering forward guidance.
- Fed will respond to data.
- Overall core inflation numbers are coming down nicely, but I lot of that is for goods.
- Business contacts on the ground report they are still raising prices faster than before pandemic
- Continue to view inflation as a stubborn which feeds the higher for longer approach
- Skilled trades continue to see wage pressures
- Inflation does seem to be settling but the job is not done
OpenAI staff threatens to quit unless the board resigns
- 710 employees threatened to leave OpenAI.
OpenAI staff reportedly threaten to quit unless the board resigns, according to Reports;
- 710 employees threaten to leave OpenAI and join Microsoft’s (MSFT) AI division run by Sam Altman if the board doesn’t resign and reinstate Altman and Brockman
Microsoft shares which were trading higher in the premarket trading is now trading down, is now trading down $-2.56 or -0.69% at $367.29. Microsoft owns 49% of OpenAI. Microsoft does not have any board seats.
Investors not prepared for 2024: surprising contrarian trades revealed
- Bank of America analysts unveil 12 unexpected investment opportunities for 2024
Bank of America analysts have sifted through their latest survey of money manager funds to find 12 things institutional investors are NOT preparing for in 2024, and the contrarian trade for it for some:
- Improving geopolitics, with 89% of respondents saying risk is above normal
- if geopol does improve the bet should be on lower oil prices
- A hard landing (21% expect)
- look for wider credit spreads, forced selling of tech names
- No landing (7% expect)
- should see cyclicals outperform
- Higher inflation (6% forecasting a higher CPI)
- Higher rates (only 6% are projecting higher short rates)
- sell leverage
- Higher bond yields (18% expect higher long rates)
- Restrictive fiscal policy (9% say policy too restrictive)
- should lead to bond yields falling under 3%
- Yield curve flattens (16% expect)
- Stronger U.S. dollar (12% expect)
- sell emerging markets
- China or the UK outperforms, with ‘short China’ considered the second-most crowded trade and just 14% overweight UK stocks
- Leverage outperforms (6% expect low quality to outperform high quality)
- Magnificent 7 underperforms, with large-cap tech the most crowded trade
Barclays analysts report that US tech stocks are currently trading at significant premium
- Large tech names are among the few seeing EPS estimates move up
Barclays analysts say that US tech stocks are now trading at nearly a 25% premium.
Main points from the note:
- November’s historically strong start led to substantial multiple expansion in tech
- This has left the sector group trading at an even higher premium to long-term median P/E than it was at the end of 3Q
- Large tech names are among the few seeing EPS estimates move up
- While their share prices are increasing even faster.
- tech sector as a whole is now trading at the 95th percentile of its 10-year range
Sam Altman forced out as OpenAI CEO
- Sam Altman might be the most-important executive on the planet
If artificial intelligence is the future, then Sam Altman was the man delivering it.
The CEO of OpenAI, which created ChatGPT, was unceremoniously given his pink slip. The company released a statement that said:
Mr. Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities. The board no longer has confidence in his ability to continue leading OpenAI.
The company said that chief technology officer Mira Murati would take his place on an interim basis.
In a statement, the board of directors said: “OpenAI was deliberately structured to advance our mission: to ensure that artificial general intelligence benefits all humanity. The board remains fully committed to serving this mission.We are grateful for Sam’s many contributions tothe founding and growth of OpenAI. At the same time, we believe new leadership is necessary as we move forward. As the leader of the company’s research, product, and safety functions, Mira is exceptionally qualified to step into the role of interim CEO. We have the utmost confidence in her ability to lead OpenAI during this transition period.”
The statement also noted that Greg Brockman will be stepping down aschairman of the board, suggesting there was some dissent around the decision.
On twitter, Altman said “I loved my time at OpenAi. it was transformative for me personally, and hopefully the world a little bit. most of all i loved working with such talented people. will have more to say about what’s next later.”
Treasury Secretary Yellen: US China recognize they have opportunity to work together
- Treasury Secretary Yellen on CNBC
- US China recognize they have the opportunity to work together.
- Pres. Biden made clear to China’s XI that Taiwan policy has not changed.
- She discussed issues concerning China’s investment in US.
- W Americans still seeing increases in some important prices including food e do have concerns about issues with privacy and social media.
- This matter has not been resolved.
- I think we are making considerable progress and bringing inflation down.
- Americans still seeing increases in some important prices including food.
- Biden administration making investments that will improve conditions in many parts of the country.
- We cannot allow Ukraine to lose battle on the homefront.
- Ukraine is utterly dependent on US aid
- Israel urgently needs aid as well..
- Aid is important for US national security.
- We need to be fiscally responsible and sustainable path for spending and taxation.
- The higher interest rate environment does pose additional challenges for debt reduction
Commodities
Silver forms a bearish tweezers top, seller’s eye $22.00
- Silver is struggling to maintain the upward momentum that started last Monday, currently facing consecutive days of losses.
- The formation of a ‘tweezers-top’ chart pattern in silver suggests a potential for further decline, with the current price at $23.48, down by 0.92%.
- If sellers maintain control and keep the price below $24.00, a pullback towards the 200-DMA is likely, with further potential decline towards the $23.00 mark.
Silver struggles to extend its rally that began last Monday, posting back-to-back days of losses, due to a risk-on impulse, despite overall US Dollar weakness across the board. From a price action standpoint, the white metal formed a ‘tweezers-top’ chart pattern, which warrants further downward action is expected; hence why silver is trading at $23.48, down 0.92%.
After forming the ‘tweezers top’, the white metal resumed its downtrend but it was capped by the 200-day moving average (DMA) at $23.28 before resuming above the November 16 daily low of $23.28. A daily close above the latter could open the door to re-test the $24.00 figure.
WTI crude oil futures settle at $77.60
- Up $1.71 or 2.25%
Crude oil futures are settling the day at $77.60. That’s up $1.71 or 2.25%. On Friday, the price of crude all rebounded 4.04%. However, for the trading week, the price was still down -1.46%.
Goldman: It’s model suggest OPEC+ could make deeper cuts when they meet on November 26
Goldman Sachs says:
- Their statistical model of OPEC decisions suggests that deeper cuts should not be ruled out
Having said that Goldman Sachs:
- Baseline forecast is that the existing group production cuts stay in place in 2024
- Expects unilateral Saudi cut of 1 million barrels per day will be extended through Q2 2024 and reversed only gradually beginning in July
Is OPEC+ considering output cuts? White House adviser says Arab states won’t weaponize oil
- Amidst chatter about further output cuts, debate that OPEC+ cuts may not take place.
Ahead of oil futures trading opening for the week, there is some chatter about that OPC+ will not be considering further reductions in output at their meeting his week on November 26.
Earlier reports were that further cuts are being weighed.
There is some talk that such cuts will not take place. Its difficult to get too much of a read on this chatter but just posting it as a heads-up.
The Financial Times have reported on comments from Amos Hochstein, the White House’s chief energy adviser, saying that the Arab states will not “weaponise” oil. The FT is gated but, in brief, Hochstein argues that relations between Biden and the Gulf States are good and that therefore oil production cuts will not be used as a weapon. Hochstein did concede though that the situation is ‘evolving’.
Saudi Aramco discovers two new natural gas fields in Saudi Arabia
- Boosting Energy Reserves
Saudi Energy Minister Prince Abdulaziz bin Salman announced the discovery of two new gas fields
- in the Eastern Province
- and the Empty Quarter
respectively.
EU News
As a European traders look to exit, major stock indices close with mixed results
- German DAX and UK’s FTSE 100 are lower
As London/European traders look to exit, the major European stock indices are ending the day with mixed results:
- German DAX, -0.11%
- France CAC +0.18%
- UK FTSE 100 -0.11%
- Spain’s Ibex +0.79%
- Italy’s FTSE MIB +0.15%
Germany October PPI -0.1% vs -0.1% m/m expected
- Latest data released by Destatis – 20 November 2023
- Prior -0.2%
SNB total sight deposits w.e. 17 November CHF 476.9 bn vs CHF 476.3 bn prior
- Latest data released by the SNB – 20 November 2023
- Domestic sight deposits CHF 467.7 bn vs CHF 467.5 bn prior
BOE Bailey: Far to early to be thinking about rate cuts
- BOE Bailey speaking
BOE Bailey:
- Far too early to be thinking about rate cuts
- Returning inflation to 2% target remains our absolute priority
- When inflation is high, we take no chances
- The tragic events in the Middle East have added upside risk to energy prices
- Labor market remains tight despite softening recently
- Wage inflation remains elevated.
- We must be alert to any second-round effects of higher food and energy prices
- The evolution of food prices will matter for wage growth looking ahead
- The squeeze on real incomes from higher food and energy prices may still be influencing wage demands
- Inflation data for October released last week were welcome news, it’s much too early to declare victory.
- We must watch for further signs of inflation, persistence and that may require interest rates to rise again.
- How long a restrictive stance will be needed will ultimately depend on what incoming data tells us
- The MPC ‘s latest projections indicate that monetary policy is likely need to be restrictive for quite some time yet
ECB de Cos: ECB is not expected to return to for guidance on monetary policy
- ECB de Cos speaking
- ECB is not expected return to for guidance on monetary policy
- it is absolutely premature to start talking about interest rates cuts
Moody’s upgrades Portugal and affirms Italy’s Ratings
- Moody’s has upgraded Portugal’s ratings to A3 and affirmed Italy’s Ratings At Baa3
Rating actions from Moody’s noted, some positive news for these euro countries:
- Moody’s upgrades Portugal’s ratings to A3 and changes Outlook to Stable
- Moody’s affirms Italy’s Ratings At Baa3, and changes the Outlook to Stable from Negative
Meanwhile DBRS Morningstar has confirmed the UK At AA, with a stable trend.
UK PM Sunak: We can only cut taxes once we control inflation and debt
- Remarks by UK prime minister, Rishi Sunak
- Now that inflation is halved, we can begin the next phase and turn attention to tax cuts
- We can’t do everything all at once, need to prioritise
- We can and will deliver tax cuts over time
- But we must avoid doing anything that risks the fight against inflation
Other News
HSBC lifts 2023, 2024 China GDP growth forecast
- Everyone is turning more optimistic about China’s prospects now
As we get into Q4, just about everyone is coming around to the idea that the Chinese economy has bottomed out. HSBC is the latest to revise higher their forecasts for China following their lower revisions in September.
They now see 2023 GDP growth forecast at 5.2% from 4.9% previously and 2024 at 4.9% from 4.6% previously.
PBOC Loan Prime Rates (LPR) remain unchanged at today’s rate setting, as expected
- The one-year rate remains at 3.45% while the five-year rate stands at 4.20%
People’s Bank of China policy rate setting, no change. As expected.
LPRs left at:
- 3.45% for the one year
- 4.20% for the five year
Australia – iron ore transport – train drivers to take industrial action
- Iron ore is a key (the #1) Australian export.
Train drivers at BHP’s iron ore operations in Western Australia will begin industrial action.
- 397 will take action starting Friday November 25
- protesting “unpredictable” treatment of working conditions
- The drivers operate trains taking millions of tonnes of iron ore from BHP’s Pilbara mines near Newman to Port Hedland
Pimco makes bold yen buying move, forecasting Bank of Japan monetary tightening
- Hedge fund giant Pimco expects the BoJ to tighten monetary policy amidst rising inflation.
Bloomberg carry the report saying that giant hedge fund Pimco is buying the yen, projecting that the Bank of Japan will be pressured into tightening monetary policy as inflation quickens.
Via the report (Bloomberg is gated, this in brief)
- Pimco started building a long yen position above 140 from a few months ago
Emmanuel Sharef, a Pimco fund manager said
- “As we continue to see inflation in Japan rising and being steadily above their target, they will want to move in the direction of abandoning or changing their yield-curve control policies and eventually there might be a need for a hike,”
- “Inflation in the US is coming down, and inflation in Japan is still elevated.Within our framework, that naturally creates a yen long.”
- “I can’t predict exactly what they’re going to do but the need is there to continue to tighten policy in some form,”
- “It could take the form of an additional easing step that’s more gradual. It could take the form of an abandonment of YCC and then eventually potentially a hike as well.”
Japan finance minister Suzuki says once-in-a-lifetime chance to beat deflation
Suzuki comments hitting news sites:
- now is a once-in-a-lifetime chance to beat deflation
- bright signs emerging in Japan’s economy
Cryptocurrency News
XRP price has one last chance to undo the damage as it comes close to losing recent 31% gains
- Ripple was defeated by Polkadot, which emerged as the foremost crypto asset banks are exposed to.
- The Basel Committee on Banking Supervision report, made up of 19 banks, noted $10.2 billion worth of crypto asset exposure.
- XRP price has been on a downtrend since the beginning of the month and is close to losing the key support of $0.600.
XRP price has noted consistent declines for the past two weeks after marking a considerable rally early on in November. One of the biggest catalysts when it comes to price action is the use cases of Ripple and XRP among banks, as well as their exposure to this altcoin. However, by the looks of it, Ripple has lost that crown to Polkadot.
Ripple loses to Polkadot
Ripple, according to a recent report from The Basel Committee on Banking Supervision (BCBS), has been eclipsed by Polkadot. The Committee is a bank regulation authority with about 45 top banks across the globe as members.
Bitcoin surges as Javier Milei triumphs in Argentina’s Presidential Election
- Milei plans to replace the Argentine peso with the US dollar. BTC goes up anyway.
Bitcoin has jumped higher after Javier Milei wins Argentina’s presidential election. One of Milei’s key policy plans is to end the Argentine peso and adopt the US dollar as the country’s currency. Which would not seem to have a crypto implication such as a rise for leader Bitcoin.
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