North American News
Nasdaq Surges By 1.37%, Major Indices Edge Higher Into The Close
- Nasdaq index up on the week. S&P and Dow Industrial Average down marginally
Major US stock indices moved higher with the Nasdaq index outperforming. The Dow Industrial Average lagged. A snapshot of the close levels shows:
- Dow Industrial Average rose 62.95 points or 0.17% at 36117.39
- S&P index rose 36.23 points or 0.80% at 4585.58
- Nasdaq index rose 193.27 points or 1.37% at 14339.98
The Magnificent 7 all advanced with Alphabet leading the way with a gain of 5.32%. Microsoft lagged but was still up 0.56%.
- GOOGL: 136.94 up +$6.92 or 5.32%
- META: 326.63 up $9.18 or +2.89%
- NVDA: 466.03 up +$11.00 or +2.42%
- AMZN: 146.80 up +2.32 or +1.61%
- TSLA: 242.60 up +$3.23 or +1.35%
- AAPL: 194.17 up +$1.90 or +0.99%
- MSFT: 370.85 up +$2.05 or 0.56%
All chip stocks were up strongly today:
- Nvidia rose 2.42%
- AMD rose 9.84%
- Intel rose 2.06%
- Taiwan Semiconductor rose 1.47%
- Qualcomm rose 2.25%
Atlanta Fed GDPNow dips to 1.2% from 1.3% previously
- The Atlanta Fed model for Q4 growth shows a small dip in its latest estimate
The Atlanta Fed GDPNow model estimate for Q4 growth dipped to 1.2% from 1.3% yesterday.In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2023 is 1.2 percent on December 7, down from 1.3 percent on December 6 after rounding.After this morning’s wholesale trade release from the US Census Bureau, the nowcast of fourth-quarter real gross private domestic investment growth decreased from -2.9 percent to -3.0 percent.
US initial jobless claims 220K versus 222K estimate in the current week
- US initial jobless claims and continuing claims for the current week
- Prior week 219K versus 218K previously reported
- initial jobless claims 220K versus 222K estimate
- 4-week moving average 220.75K vs 220.25K last week
- Continuing claims 1.861M versus 1.910M estimate
- Prior week 1.925M revised down from 1.927M last week
- 4-week moving average of continuing claims 1.872M versus 1.865M last week.
US October wholesale sales -1.3% vs +2.2% prior
- US October wholesale sales and inventory data
- Prior was +2.2% (revised to +2.0%)
- Inventories -0.4% vs -0.2% expected
- Stock to sales 1.34 months vs 1.33 months prior
US October consumer credit outstanding +5.13B vs +9.00B expected
- US October 2023 consumer credit growth
- Prior was +9.06B
Manheim US November used vehicle index -2.1% m/m
- Another month of used car price declines
In October, used car prices fell 2.3% and they’ve fallen another 2.1% in November, according to Manheim.
On a year-over-year basis, prices fell 5.8%.
“While November’s decline was only slightly less than October’s, the move lower was on our radar, given the typical seasonal downward trend that paused in August and September,” said Chris Frey, senior manager ofEconomic and Industry Insights for Cox Automotive.“Prices still have a chance of rising slightly in December, though we’re not predicting an odd spike or trough. Rather, we’re expecting a measured movement through the end of the month and the year, which should get us close to the January forecast for a 4% year-over-year decline by December 2023.”
The U.S. Treasury has announced their coupon auctions for next week
- Supply remains a concern for traders
Although yields have moved sharply to the downside of late, there still is a watchful eye on the supply of treasuries and the demand for treasuries especially from foreign investors. Concerns that the ever-increasing supply will crowd out other borrowers and lead to higher rates is a concern.
The U.S. Treasury has announced their coupon auctions for next week.They will auction off 3, 10, and 30-year bonds (re-openings for 10 and 30 year issues) that will all settle on December 15.
- $50 billion of three-year notes on Monday, December 11
- $37 billion of 10 year notes (reopening) also on December 11
- $21 billion of 30 year bonds (reopening on Tuesday, December 12
Federal Reserve: US household net worth falls to $151 trillion in Q3 2023
- Dip in the US household net worth in Q3
The US Federal Reserve is reporting that US household net worth fell to $151 trillion in Q3 2023:
- The net worth of households and nonprofits decreased to $151.0 trillion in the third quarter of 2023.
- The value of corporate equities (directly and indirectly held) fell by $1.7 trillion,
- Real estate values increased by $0.5 trillion.
- Domestic nonfinancial debt outstanding was $73.0 trillion at the end of the third quarter, with household debt at $19.8 trillion, nonfinancial business debt at $21.2 trillion, and total government debt at $32.0 trillion.
- The growth rate of domestic nonfinancial debt slowed to 5.2 percent annually in the third quarter of 2023, down from 6.3 percent in the previous quarter.
- Household debt grew by 2.5 percent annually in the third quarter. Within this, consumer credit grew at a rate of 1.1 percent, and mortgage debt (excluding charge-offs) increased by 2.5 percent annually.
- Nonfinancial business debt rose at a slower annual rate of 1.5 percent in the third quarter, compared to 1.8 percent in the preceding quarter.
- Federal government debt’s growth rate decreased to 10.6 percent annually in the third quarter, from 12.7 percent in the previous quarter.
- State and local government debt saw a contraction at an annual rate of 0.3 percent in the third quarter, following a 2.8 percent expansion in the previous quarter.
In Q2, the household net worth was reported at $152.3 trillion.The decline this quarter snapped a three-quarter rise.
Reports that SpaceX close to finalizing tender offer at $95 / share, company value $175bn
Newswires and social media reports, citing unnamed sources:
- SpaceX is weighing offering shares at about $95/share
- terms and the size of the tender offer could change depending on interest from insider sellers and buyers
- US$175 billion valuation
- $175bn is a premium to the $150 billion valuation the company obtained through a tender offer over the northern summer
ANZ forecasts that the Federal Open Market Committee will announce dot plot cuts
- Powell to emphasize patience
- ANZ are forecasting dot polt cuts at the Federal Open Market Committee (FOMC) meeting next week
expect the FOMC will lower the 2023 and 2024 dot plot - dot plot could be cut by 50+bp
- Powell will need to maintain hawkish guidance during the transition to lower growth and inflation so is likely to stress patience
- long run estimate for Fed Funds could rise
- extended moderation in inflation is raising confidence that aggregate price gains will return to target
- but progress on inflation is uneven across different cohorts and will take time to become balanced at 2.0%
- Inflation has performed better than the Federal Open Market Committee forecast in September
Saying that Fed Funds have not reached predicted levels even though inflation is lower
US Treas Sec Yellen urges bond traders to read data thoughtfully for informed market moves
- US Treasury Secretary Yellen – important that traders interpret economic data carefully
US Treasury Secretary Yellen remarks hitting the news:
- Fed wants to create financial conditions consistent with bringingdown inflation, state of markets feeds into that
- Unclear what role increased Treasury supply had in recent rise in longer-term rates
- Says bond markets anticipating fed moves can be helpful complement to monetary policy if participants are ‘thoughtful’ when reading data
- Difficult to disentangle expectations about fiscal, monetary path from other factors affecting treasury term premium
BOC Gravelle: Acknowledged a welcome improvement in Oct inflation measures but more to do
- Acknowledging improvements in October inflation, BOC’s Gravelle stresses the urgent need for Canada to address housing imbalances and increase supply.
Below are the highlights from his speech where he acknowledged a welcome improvement in October inflation measures but emphasized the need for further progress to achieve price stability:
- Shelter Price Inflation: Gravelle noted that housing imbalances have serious consequences for shelter price inflation, contributing 1.8 percentage points to the total October inflation rate of 3.1%.
- Housing Supply Response: Emphasized the need for Canada to have more homes and a housing supply that is more responsive to increases in demand.
- Demographic Demand and Supply Issues: Pointed out that a jump in demographic demand, coupled with existing structural supply issues, could explain why rent inflation continues to climb.
- Government Collaboration: Stressed the importance of all levels of government working together on housing policies to boost supply.
- Capacity and Flexibility: Urged the reduction of barriers to adding capacity and ensuring market flexibility to meet future changes in housing demand.
- Housing and Inflation: Warned that without more house building, inflationary pressures in the shelter sector could continue to build.
- Rent Inflation: Highlighted that rent inflation reached a 40-year high in October, with housing supply not keeping pace with recent increases in immigration.
- Housing Activity: Reported that housing activity grew 8.3% in Q3 but remains far below the level needed to meet growing housing needs.
- Immigration’s Impact: Commented that recent increases in immigration have boosted near-term consumption but haven’t significantly affected inflation.
- Economic Balance: Noted that the economy is now roughly in balance, with a focus on monitoring inflation expectations, wage growth, and corporate pricing behavior.
- Inflation Path: Stressed the importance of indicators in assessing whether inflation is on a sustained path to the 2% target.
Canada October building permits +2.3% vs +2.9% expected
- Canadian October 2023 building permit data
- Prior was -6.5% (revised to -8.1%)
- Oct permit value $11.2B vs $11.2B prior
- Residential permits +0.6% vs +4.3% m/m prior
- Non-residential +5.3% vs -21.0% prior
BoA forecasts the Bank of Canada to initiate rate cuts in June 2024
- With further decrease to 3.75% by year-end
BoA forecast the Bank of Canada to begin its rate cut cycle in june of 2024.
BoA sees the first cut in June 2024
- then to 3.75% by the end of 2024
- citing inflation to further decelerate towards target
BoA cites risk to their view as:
- earlier than June cuts
- more cuts than the expert
- perhaps both
Commodities
Silver edges lower following lower Jobless Claims
- The white metal continued its downward path and fell to $23.75, below its 20-day SMA.
- US Initial Jobless Claims for the first week of December were better than expected.
- US bond yields are rising ahead of key labor reports on Friday.
In Thursday’s session, Silver continued declining and tallied a third consecutive day of losses, falling to $23.75. The precious metal price is being pushed down after US yields rose following the release of US jobless claims, which came in lower than predicted. The performance was further boosted by a steady US Dollar (USD).
Crude oil futures settle at $69.34
- Down four cents or -0.06%
Crude oil is settling at $69.34. It is down four cents or -0.06% on the day. The high price reached $70.48 the low price was down at $68.80. The low price reached the lowest level going back to June 28. For the year, the price is now down -13.47%. That’s the largest year-on-year decline since 2020, when the price fell 20.54%. In 2021, the price rebounded 55.01%, and last year the price rose 6.71%.
Market participants are now looking forward to the U.S. jobs report due on Friday for further direction in the oil market. The markets are more concerned about global growth.
Natural Gas off the lows as US session triggers turnaround
- Natural Gas faces downside as demand remains subdued while supply builds bigger by the day.
- Natural Gas prices could sinks to $2.
- The US Dollar snaps its three-day-winning streak after BoJ surprise comments.
Natural Gas is facing more downturn as the economic balance is shifting towards a supply surplus. All pipes are open and gas is flowing from all regions to Europe at normal to some even elevated volumes, which means that Europe is set to survive this winter fairely easily. Meanwhile the US has jacked up its oil and gas production, to further run down oil and gas prices in global markets, with US President Joe Biden seeking to set a positive tone for the Democrats in the upcoming presidential elections late 2024.
EU News
European indices close lower, German DAX snaps seven-day run to the upside
- Major European indices, including German DAX and France CAC, end the day with decreases while UK FTSE 100 remains relatively stable. Overall, most indices are still higher for the trading week.
The major European indices are closing the day lower. The German DAX snapped a seven-day run to the upside which saw the index move to new all-time highs.
- German DAX: Last at 16,628.98, decreased by 27.47 points, a change of -0.16%.
- France CAC: Last at 7,428.53, decreased by 7.47 points, a change of -0.10%.
- UK FTSE 100: Last at 7,513.73, decreased by 1.66 points, a change of -0.02%.
- Spain’s Ibex: Last at 10,146.01, decreased by 112.10 points, a change of -1.09%
- Italy’s FTSE MIB: Last at 30,121.77, decreased -204.52 points a change of -0.67%
For the trading week most of the indices are still higher:
- German DAX, +1.41%
- France CAC +1.12%
- UK FTSE 100, -0.21%
- Spain’s Ibex, +0.05%
Eurozone Q3 final GDP -0.1% vs -0.1% q/q second estimate
- Latest data released by Eurostat – 7 December 2023
- GDP 0.0% vs +0.1% y/y second estimate
Euro area GDP is confirmed to see a marginal contraction in Q3. Looking at the breakdown, household consumption contributed +0.2% with government final expenditure contributing +0.1% on the quarter. This was offset by changes in inventories, which was -0.3%, while there were negligible contributions from gross fixed capital formation and external balance.
US November Challenger layoffs 45.51k vs 36.84k prior
- Latest data released by Challenger, Gray, and Christmas Inc – 7 December 2023
- Prior 36.84k
Compared to the same month last year, job cuts are down by roughly 41% but then again there was an exceptional number of tech layoffs in November of 2022. So, there’s that to consider. The 45,510 layoffs last month brings the year-to-date total to 686,860 and that’s roughly a 115% increase to the year-to-date total for last year through to November.
UK November Halifax house prices +0.5% vs +1.1% m/m prior
- Latest data released by Halifax – 7 December 2023
- Prior +1.1%
Germany October industrial production -0.4% vs +0.2% m/m expected
- Latest data released by Destatis – 7 December 2023
- Prior -1.4%; revised to -1.3%
German factory output declined once more with a notable miss on estimates, owing mostly to the performance of the “manufacture of machinery and equipment” sector. Output was down by 6.3% on the month in itself there but there were also declines in many other sectors, including construction in October.
France October trade balance -€8.6 billion vs -€8.9 billion prior
- Latest data released by the French customs office – 7 December 2023
- Prior -€8.9 billion
Switzerland November seasonally adjusted unemployment rate 2.1% vs 2.2% expected
- Latest data released by the Federal Statistics Office – 7 December 2023
- Prior 2.1%
BOE to hold bank rate at 5.25% through to Q2 2024 – Reuters poll
- The latest Reuters poll on economists shows that the first BOE rate cut is only seen in Q3 next year
It’s a mixed call though, with roughly 48% of respondents predicting the first rate cut to come in Q3 (although this number is up from 38% in the November poll). Meanwhile, around 30% (or 20/68 economists) are penciling in the first rate cut to come in Q2 next year. The year-end rate forecast is seen at 4.50% and that is also similar to last month’s poll.
What to expect from the European Central Bank: Rate cuts and inflation predictions
- Analysts’ predictions include a eurozone economy winter recession
Expectations of what’s to come from the European Central Bank next week and into 2024 via the most recent poll of analysts by Reuters.
- All 90 economists in the poll said the deposit rate would stay at 4.0% at the European Central Bank meeting on December 14
Expectations further out:
- eurozone economy to enter a short and shallow winter recession
- 51 of 90 predict at least one rate cut sometime before the July ECB meeting
- medians show a 25 basis point cut in each quarter of next year starting Q2, which compares with market pricing is for around 150 basis points of cuts starting in March
- these predicted 75 basis points worth of cuts from the ECB is less than that expected from the Fed (according to an earlier survey by Reuters for Fed expectations)
- Headline inflation predicted to decline over the coming quarters but still remain above the ECB’s 2% target until at least 2025
ICYMI: ECB’s Villeroy says disinflation is happening quicker than thought, mulls 2024 cuts
- Bank of France Governor Villeroy on the possibility of an ECB rate cut in 2024.
Bank of France Governor and therefore European Central Bank Governing Council member Villeroy was speaking with a French paper in an interview published on Wednesday:
- “disinflation is happening more quickly than we thought”
- “This is why, barring any shocks, there will not be any new rise in rates.The question of a rate cut could arise in 2024, but not right now”
Asia-Pacific-World News
China Nov. USD trade figures show exports beat expectations while imports missed
- Mixed results reflect concerns about the domestic economy’s recovery
Chinese trade data for November 2023
In US dollar terms:
Trade Balance 68.39bn
- vs. expected 58.0bn and prior 56.5bn
Exports +0.5% y/y
- expected -1.1%, prior -6.4%
Imports -0.6% y/y
- expected +3.3% and prior +3.0%
For the YTD:
January – November trade balance is 748bn USD
- exports -5.2% y/y
- imports -6.0% y/y
Chinese financial media: Analysts see space for interest rate & reserve requirement cuts
- China Securities Journal with reports from analysts
China Securities Journal with reports from analysts seeing scope for cuts to interest rats and the RRR.
China issues strong warning to the UK after new sanctions are imposed
- China warned the UK it “will be met with a firm response”.
China has responded to the UK announcing new sanctions on individuals and groups “supporting and funding Putin’s war machine”.
The UK’s sanctions targeted 31 people and entities, including three Chinese entities for supplying sanctioned goods.
- China warned the UK that any action harming China’s interests “will be met with a firm response”.
- China urged the UK to “correct its mistakes and withdraw the sanctions on Chinese firms”.
Australian trade balance for October is a smaller than expected surplus
- Weak Australian economic growth is a worry for policy makers
The surplus is just under the central estimate.
That’s a big drop for imports from the previous month and will raise worries about weak Australian economic growth after yesterday’s Q3 GDP was a miss.
- Trade Balance MoM Oct: 7,129 vs 7500m expected
- Imports MoM Oct: -1.9%
- Exports MoM Oct: 0.4%
BOJ Gov Ueda: Accommodative financial conditions, stimulus is supporting Japan’s economy
Bank of Japan Governor Ueda:
- Japan’s economy to continue recovering moderately, supported mainly byaccommodative financial conditions and effects of economic stimulus measures
- Uncertainty over japan’s economy extremely high
- Closely watching the impact of financial, forex markets on the Japanese economy, prices
- Challenging situation remains
- It’ll become even more challenging towards the end of this year and into early 2024
- BOJ has not made decision on which interest rate to target once weend negative interest rate policy
- Options includeraising rate applied to financial institutions’ reserves at BOJ, or revert to policy targeting overnight call rate
- Don’t have any specific idea in mind on how much we will raise rates once we end negative rate policy
- Whether to keep interest rate at zero or move it up to 0.1%, and at what pace short-term rates will be hiked after ending negative rate policy, will depend on economic and financial developments at the time
- BOJ to work closely with govt while monitoring currency, financial market moves
- Service spending increasing moderately as a trend
- What’s important from here is for wages to keep rising and underpin consumption
- Achieving 2% trend inflation can be defined as a state where economy, void of new shocks, can see inflation sustained around 2% and wage growth somewhat above that level
- Would be difficult to choose which monetary policy tools to mobilise when exit from stimulus draws near
Survey shows low optimism among Japanese businesses for wage increases
- Only 51% of Japanese businesses believe they can raise wages higher than inflation
Barely half of the firms in the latest Reuters monthly poll of Japanese business have said that they can raise wages higher than inflation.
Reuters highlights:
- 51% said they could raise wages beyond a 2.8% rise in Japan’s core consumer prices in 2024
- 60% said wage increases would be possible only for less than 3%, firms citing much higher costs from energy and materials
Cryptocurrency News
Terra Classic price drops 10% as founder Do Kwon faces extradition to the US
- Terra Luna founder Do Kwon will be extradited to the US, where he will face criminal charges.
- Montenegro has privately said it is set to send Do Kwon to the US following March arrest.
- The former crypto executive was charged in February for orchestrating a multibillion-dollar crypto fraud.
- LUNC price has dropped 8%, while LUNA is down 5% in the aftermath of the news.
Terra Classic (LUNC) price, as well as that of Terra Luna (LUNA), continue to suffer the aftermath of legal troubles of the ecosystem’s founder, Do Kwon, following his arrest in Montenegro.
Terra ecosystem founder Do Kwon faces extradition
Terra Luna founder Do Kwon will be extradited to the US despite efforts by his legal representatives to prevent the outcome.Specifically, the lawyers had appealed a decision made in late November that approved such a handover.
According to a report in The Wall Street Journal, a top Montenegrin justice official has privately verified the extradition plan of Kwon, with the fallen crypto executive facing criminal charges for manipulating the TerraUSD stablecoin.His unscrupulous leadership led to a $40 billion crash in the market, making prosecutors in both the United States and South Korea eager for a trial.The US Securities & Exchange Commission (SEC) charged him in February for “orchestrating a multibillion-dollar crypto asset securities fraud.”
Kwon was arrested in February in a Montenegrin airport attempting to flee the country using falsified documents.His confiscation commenced extradition discussions, with the US and South Korea both pushing for control in the arrest. Nevertheless, he has been in custody since March.
BTC and ETH pause as altcoins take the spotlight
Market picture
Cryptocurrency market capitalisation changed little at the end of trading on Wednesday, remaining close to $1.59 trillion (-0.14% d/d).But this modest result is a show of strength, given the pressure in equity markets, which intensified selling in Bitcoin and Ether.
Meanwhile, Altcoins got their chance to catch up with the leaders. For example, XRP added 2% in 24h) and Cardano added 4%.
XRP has formed an upward trend since mid-October.An attempt to accelerate growth last month failed, but it also failed to break this line at the start of December. In addition to the trend line, the 50-day moving average, the touch of which stops the sell-off for the last 50 days, also turned out to be on the side of buyers.
JP Morgan CEO Dimon urges crypto ban: ‘I’d close It down’
- Reaffirms his opposition to cryptocurrencies and suggests they should be banned
JP Morgan CEO Jamie Dimon spoke in the US Congress at a Senate hearing on Wednesday, alongside seven other big bank CEOs.
Dimon has been a long-time opposer of crypto:
- “I’ve always been deeply opposed to crypto, bitcoin, etc.”
- “If I was the government, I’d close it down”
- cryptocurrency firms should follow the same anti-money laundering laws that big banks are subject to
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