North American News
S&P 500 Hits New 52-Week High, NASDAQ Closes At It’s Highest Level For This Year
- Major stock indices up for the sixth consecutive week
US equities were slated to open softer but found bids early and that continued throughout the day as stocks posted a sixth week of gains. Mixed in was a UMich consumer sentiment report. The strong headline wasn’t the real story though as both short and long-term inflation metrics dropped, adding to the disinflation narrative that’s percolating.
The week ahead will build up to the Fed and ECB rate decisions, along with some important Treasury auctions.
Major US indices closed higher and in the process:
- S&P index traded to a new 52-week high and closed at the highest level since January 2022
- Nasdaq index closed at a new 2023 high and closed at the highest level since January 2022
- Dow Industrial Average closed at its highest level since the end of December 2021
A look at the final numbers shows:
- Dow Industrial Average rose 130.49 points or 0.36% at 36247.80
- S&P index rose 18.78 points or 0.41% at 4604.36
- Nasdaq index closed 63.97 points or 0.45% at 14403.96
The Russell 2000 rose 0.97%
For the trading week:
- Dow Industrial Average rose 0.01%
- S&P index rose 0.21%
- Nasdaq index rose 0.69%
The so called “Magnificent 7” mostly outperformed with the exception of Amazon and Alphabet. Alphabet moved lower on the day.Nvidia was the biggest winner with a gain of 1.95%:
- NVIDIA Corp (NVDA): Price $475.03, Change +$9.07, +1.95%
- Meta Platforms Inc (META): Price $332.71, Change +$6.12, +1.87%
- Microsoft Corp (MSFT): Price $374.33, Change +$3.38, +0.91%
- Apple Inc (AAPL): Price $195.64, Change +$1.47, +0.76%
- Tesla Inc (TSLA): Price $243.76, Change +$1.12, +0.46%
- Amazon.com Inc (AMZN): Price $147.35, Change +$0.55, +0.37%
- Alphabet Inc (GOOGL): Price $134.97, Change -$1.96, -1.43%
- For the trading week the Magnificent 7:
- Nvidia +1.58%
- Meta +2.44%meta +2.44%
- Microsoft -0.07%
- Apple +2.34%
- Tesla +2.10%
- Amazon +0.31%
- Alphabet +2.37%
Looking at the S&P components:
- SPN (S&P 500 Index): Price $623.21, Change +$6.87, +1.11%
- S5INFT (Information Technology Sector): Price $3302.75, Change +$29.54, +0.90%
- S5C0ND (Consumer Discretionary Sector): Price $1369.42, Change +$5.87, +0.43%
- SPF (S&P 500 Futures): Price $598.80, Change +$2.97, +0.50%
- S5INDU (Industrial Sector): Price $918.96, Change +$3.03, +0.33%
- S5MATR (Materials Sector): Price $513.86, Change +$1.70, +0.33%
- S5HLTH (Health Sector): Price $1535.67, Change +$2.76, +0.18%
- S5TELS (Telecommunication Services Sector): Price $237.51, Change -$0.37, -0.16%
- S5REAS (Real Estate Sector): Price $237.00, Change -$0.52, -0.22%
- S5UTIL (Utilities Sector): Price $319.57, Change -$0.69, -0.22%
- S5C0NS (Consumer Staples Sector): Price $737.74, Change -$4.86, -0.65%
US November non-farm payrolls +199K vs +180K expected
- November 2023 US employment data from the non-farm payrolls report
- Prior +180K (unrevised)
- Two-month net revision -35K vs -101K prior
- Unemployment rate +3.7% vs 3.9% expected
- Prior unemployment rate 3.9%
- Participation rate 62.8% vs 62.7% prior
- U6 underemployment rate 7.0% vs 7.2% prior
- Average hourly earnings +0.4% m/m vs +0.3% expected
- Average hourly earnings +4.0% y/y vs +4.1% expected
- Average weekly hours 34.4 vs 34.3 expected
- Change in private payrolls +150K vs +153K expected
- Change in manufacturing payrolls +28K vs +30K expected
- Household survey +747K vs -348K prior
- Birth-death adjustment +4K vs +412K prior
US December UMich consumer sentiment 69.4 vs 62.0 expected
- US December UMich consumer sentiment
- Prior was 61.3
- Prior was 74.0 vs 68.5 expected
- Current conditions 74.0 vs 68.5 expected
- Expectations 66.4 vs 57.0 expected
- One -year inflation 3.1% vs 4.5% prior
- Five-year inflation 2.8% vs 3.2% prior
The jobs report will keep the Fed patient – CIBC
- The US added 199K jobs in November
The November jobs report showed there is still some sizzle left in the labour market, CIBC notes after today’s release.
The data showed 199K jobs added, better than 180K.The unemployment rate also fell to 3.7% from 3.9% in a surprise.
Today’s report will raise some eyebrows in theFOMC and is a reminder that the labour market remains tight.But with inflation persistence less of a challenge, the Fed will remain patient. As inflation and expected inflation edge down, monetary policy will continue to become more restrictive without further tightening of nominal policy rates because real policy rates will slightly increase.
As for the implications, CIBC said the report strengthens their call for the Fed to hold rates throughout most of 2024.
Oxford Economics predicts push back on rate cut expectations in the upcoming FOMC meeting
- Bond and stock market leaps higher in November have loosened financial conditions
A note from Oxford Economics cited by Dow Jones / Market Watch. The chief US economist at the analyst firm says that bond and stock market moves in November, the big rallies in each, has made financial conditions much looser again:
- “The decline in yields and surge in equity prices more than fully unwinds the tightening in conditions seen since the September FOMC meeting”
- expects the Fed next week to “push back against the idea that rate cuts could come onto the agenda anytime soon,” but also to “err on the side of leaving rates high for too long.”
- and says that may translate into a first rate cut not until September 2024
Barclays analysts predict single-digit returns for US equities in 2024
- Analysts at Barclays have an S&P500 target of 4800 for 2024.
Analysts at Barclays have an S&P500 target of 4800 for 2024.
They say that 2023 was a “roller coaster”, proving that the current cycle is anything but normal. For 2024:
“We expect US equities to deliver single-digit returns next year”
US Treasury Secretary Yellen satisfactied with the strong performance Fed and the US economy
- U.S. Treasury Secretary Janet Yellen speaking from mexico
U.S. Treasury Secretary Janet Yellen spoke from Mexico on Thursday:
- said the US Federal Reserve is performing strongly
- she was feeling very satisfied about the path that the US economy is on
Canada financial regulator maintains banks’ domestic stability buffer at 3.5%
Canada’s financial regulator on Friday said it was maintaining the amount of capital the country’s biggest lenders must hold, saying its previous actions had bolstered the big six banks’ capital reserve.
The Office of the Superintendent of Financial Institutions said (OSFI) maintained the domestic stability buffer (DSB) at 3.5%, and said it would continue to closely monitor financial system developments and could raise the DSB to a level no higher than the top of the current range of 0% to 4% if vulnerabilities intensify.
“Over the last year, OSFI has increased the DSB by 100 basis points. … We believe this action has bolstered the banking system’s capacity to absorb losses if current vulnerabilities materialize into actual losses,” Superintendent Peter Routledge said.
Info via Reuters.
Commodities
Silver tanks over 3%, breaks key support levels as bears eye $23.00
- Silver confirms a downtrend by breaking below 200, 100, and 50-day moving averages.
- Downtrend signals potential testing of November 13 swing low at $21.88 unless buyers intervene to lift the spot price.
- On the upside, buyers must reclaim $23.00 to challenge and surpass broken DMAs, potentially targeting $24.00.
Silver price is collapsing more than 3% in the day, breaking key support levels on its way south, set to finish the week with losses of more than 9.50%. At the time of writing, silver is trading at $22.97 after hitting a daily high of $23.89.
Silver’s daily chart confirms the grey metal’s downtrend after breaching the 200, 100, and 50-day moving averages (DMAs), each at $23,49, $23.24, and $23.06. That said unless buyers lift the spot price, that would set the stage for a test of the November 13 swing low of $21.88.
Gold tests recent lows as US Payrolls data cool hopes of Fed cuts
- Gold pulls lower as US Nonfarm Payrolls increase above expectations in November.
- The Precious metal is testing recent lows amid a stronger US Dollar.
- Higher US yields are expected to support the Dollar and weigh on Gold.
Gold has been pulled lower ahead of Friday’s European session opening, as the US Nonfarm Payrolls (NFP) report, beat expectations, which has cooled investors’ hopes that the Federal Reserve (FED) might stsar cutting rates ahead of schedule.
Nonfarm employment increased in the US In November with 199,000 new jobs, following a 150,000 increase in October, and beating market expectations of a 180,000 reading.Beyond that, wage inflation accelerated at a 0.4% pace, from the 0.2% seen last month.
Crude oil settles at $71.23
- The price is up $1.89 or 2.73%. The 200-week MA comes in at $70.32.
The price of WTI crude oil futures are settling the week at $71.23. That’s up $1.89 or 2.73%. Monday, Tuesday and Wednesday saw the price tumble from Friday’s close of $74.07 to a low-price reached yesterday (before rebounding) at $68.80. The rebound today retraced some of the declines. However, for the week, the price is still down -2.58%.
Baker Hughes US oil rig count -2
- Two fewer oil drilling rigs in the US
- Oil rigs at 503 vs 505 prior
- Gas rigs +3
WTI recovers above $70.00 on Russia-Saudi joint statement on output cuts
- WTI prices rebound to $70.85 after hitting the the six-month lows.
- Saudi Arabia and Russia called on all OPEC+ members to join an agreement on production cuts for the stability of global oil markets.
- China’s Crude oil Imports declined 9% year on year in November.
- Oil traders await the US Nonfarm Payrolls report on Friday.
WTI, the US crude oil benchmark, is trading around $70.85 on Friday.WTI bounces off the six-month lows as Russia and Saudi Arabia asked the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) members to adhere to production output cuts.
On Thursday, Saudi Arabia and Russia, the world’s two largest oil exporters, called on all OPEC+ members to join an agreement on production cuts for the stability of global oil markets.That being said, the positive development surrounding the OPEC+ output cut might lift the WTI prices.
EU News
Germany November final CPI +3.2% vs +3.2% y/y prelim
- Latest data released by Destatis – 8 December 2023
- Prior +3.8%
- HICP +2.3% vs +2.3% y/y prelim
- Prior +3.0%
UK public inflation expectations for the year ahead seen at 3.3% – BOE survey
- The highlights of the BOE inflation attitudes survey in November 2023
- Inflation expectations for the year ahead seen at 3.3% (previously 3.6% in August)
- Inflation expectations for 5 years’ time seen at 3.2% (previously 2.9%)
- Median estimate of the current rate of inflation seen at 7.5% (previously 8.6%)
- 40% of respondents thought interest rates should ‘go down’ (unchanged)
- 11% of respondents thought interest rates should ‘go up’ (previously 13%)
EU reportedly considers restarting WTO case against the US on steel tariffs
- Bloomberg reports on the matter
The report says that the EU is considering to reopen a case at the WTO against the US over a steel and aluminum dispute that saw both sides hit each other with tariffs of over $10 billion of goods, citing people familiar with the matter. That being said, the EU is said to be refraining from immediately re-imposing retaliatory tariffs on American goods amid the dispute.
Bank of England has urgently requested details on private credit exposure
- The BoE’s Prudential Regulation Authority has identified a top systemic danger
The Bank of England is requiring banks to report private credit exposure.
Reuters reported on the Bank of England’s Prudential Regulation Authority (PRA) having identified risks in private credit and leveraged lending. It has urgently requested details including information on individual clients. Banks such as JP Morgan, Goldman Sachs and Bank of America have been given until the end of this month to respond.
Goldman Sachs forecasts first rate cut from European Central Bank (ECB) in April 2024,
- Goldman Sachs expects the ECB’s deposit rate to reach 2.25% by early 2025.
GS have refined the Q2 call, now nominating the April European Central Bank meeting for the first rate cut. Analsyts expect the ECb will cut by 25bp in April 2024 then by 25bp at each meeting for the balance of the year:
“We view April as somewhat more likely given our expectation for firmer growth, the ongoing strength in wage growth and more data to confirm the slowdown in underlying inflation”
- expect the ECB’s deposit rate to reach 2.25% by early 2025 (its currently 4%)
Asia-Pacific-World News
China’s Politburo says will maintain prudent monetary policy next year
- Remarks from China’s Politburo via state media
- Monetary policy to be more flexible and precise
- Fiscal policy will be more proactive as well next year
- Fiscal policy to be more forceful and efficient
- Will expand domestic demand, deepen reform in key areas
China’s November inflation data will be released over the weekend (CPI and PPI)
- Decline in CPI due to softening food prices, particularly falling pork prices, is expected
China will publish its November inflation data over the weekend.
The CPI has recently turned negative m/m and y/y. Expectations are for another headline CPI CPI drop in November.
RBA: budget pressures affecting households Australia-wide, severe financial stress limited
- Concerns about broader financial stability persist
Reserve Bank of Australia Head of Financial Stability Department, Andrea Brischetto:
- Budget pressures are being felt very broadly across households
- But incidences of severe financial stress are currently limited to much smaller group
- Most borrowers appear well placed to service their debt and cover essential costs
- Much less than 1% of home loans are estimated to currently be in negative equity
- Broader financial stability risks from the household sector appear contained
Australia’s Treasurer has a new monetary policy statement with Reserve Bank of Australia
Treasurer Chalmers comments:
- Agreed on a new monetary policy statement with RBA
- Reserve Bank boardand govt agree that a flexible inflation target is appropriateframework for achieving price stability
- RBA, govt agree that an appropriate goal is consumer price inflation between 2 and 3 per cent
- Reserve Bank boardsets monetary policy such that inflation is expected to return to themidpoint of the target
- The appropriate timeframe for this depends on economic circumstances
- RBA to publish detailed forecast data and assumptions including for the cash rate
- Once the new monetary policy board is operational it will publish an unattributed record of votes and will publish board papers after five years
- Monetary policy board will convene and engage with an expert advisory group on monetary policy to provide the board with a wide range of external views
New Zealand Q3 data: Manufacturing sales volumes -2.7% q/q (prior +2.9%)
New Zealand manufacturing sales volumes down 2.7% in Q3
Dairy and meat products are NZ’s biggest export earners, these declined by 1% in the quarter.
Japan’s 10-year government bond yield has reached a three-week high,
- While attention has been on Ueda this surge in yields reflects investor concerns better
Japan’s 10-year government bond yield has leapt to a three-week high at 0.8%
- 10 year JGB yield up 5 basis points from the previous session
- highest since November 16
Japan data: Oct Wages +1.5% y/y (prior +1.2%), Household spending -2.5% y/y (expected -3%)
Real wages continue to fall with the surge 9for Japan) in inflation rates.
- October real wages -2.3% y/y
- the 19th consecutive month of decline
Household spending m/m fel 0.1% (expected -0.2%). The y/y result is in the screenshot below, also not as big a fall as expected. “Not as bad as expected” remains largely applicable to Japanese economic data.
Japan Q3 GDP -0.7% q/q (preliminary was -0.5%, prior +1.2%)
The deflator is a measure of inflation, it came in at 5.3%
- expected 5.1%, prior 5.1%
- External demand contribution to GD was -0.1%
- Domestic consumption contribution was an awful -0.6%
Analyst predicts that the BOJ will end to negative interest rates by March 2024
- The decision may be announced as early as January 22-23 meeting
MUFG are forecasting an end to Bank of Japan negative interest rates by March 2024:
- We expect the BoJ will wind down both NIRP and the policy framework for controlling the 10-year JGB yield sometime in Januar – March 2024.
- We think it could decide that the likelihood of achieving the desired price outlook has “risen sufficiently” as early as the January 22-23 meeting.
- Although the final decision will be made by the Policy Board, the Bank will probably continue preparing the markets through December and early January so that an early announcement does not come as a complete surprise.
Japan finance minister Suzuki says closely watching FX moves
Japan finance minister Suzuki says is closely watching FX moves.
While the yen was rapidly weakening Suzuki was one of a number of Japanese officials jawboning some support for the currency. To their credit the officials held USD/JPY from rising much above 150 without splashing cash on actual intervention (selling USD from reserves to buy yen).
Cryptocurrency News
Cardano hits three-month peak, climbs to $0.50 despite bearish on-chain metrics
- Cardano price rallied to $0.50 early on Friday, hitting a three-month peak.
- Nearly 80% of Cardano wallet addresses are currently profitable, priming ADA for sell-off.
- Cardano retail investors are accumulating ADA tokens while large wallet investors distribute their holdings.
Cardano price climbed to $0.50 after a three-month wait by ADA holders.The Ethereum-alternative token rallied alongside other top cryptocurrencies.Cardano’s price increase is accompanied by a distribution of whale wallet holdings.
VanEck predicts inflow of over $2.4 billion in Bitcoin ETFs in 2024
- VanEck analysts predict an inflow of over $2.4 billion in newly approved US Spot Bitcoin ETFs in Q1 2024.
- Analysts believe Bitcoin price is unlikely to drop below the $30,000 level in the first quarter of next year.
- Analysts argue that Ethereum is unlikely to flip Bitcoin in market capitalization.
New York city based asset manager VanEck published its predictions for Bitcoin and crypto in 2024.
Analysts at the asset management firm have predicted an inflow of $2.4 billion in BTC Exchange Traded Funds (ETF).
VanEck analysts predict mass capital inflow to Bitcoin ETFs
VanEck analysts believe that the long-awaited US recession will finally arrive, alongside the approval of Spot Bitcoin ETFs. While the economy is hit by recession in the first half of the year, BTC price is likely to rally in response to the fourth halving event.
Evaluating the corporate and household debt levels, VanEck analysts have predicted capital inflow of $2.4 billion in Bitcoin ETFs.Analysts arrived at this number by examining relative ratios of the SPDR Gold Shares (GLD) ETF and adjusting it to 2023 dollars.Within the first few days of its launch, GLD ETF saw inflows of around $1 billion.
Bitcoin price notes minor decline as US Nonfarm Payrolls report creation of 199K jobs
- US Nonfarm Payrolls reported an increase in job creation from 150K in October to 199K in November.
- The Federal Reserve is expected to keep the interest rates stable at 5.25% to 5.50% during the next meeting on December 13.
- Bitcoin price, along with the rest of the crypto market, observed a slight decline in the past hour, as expected.
Nonfarm Payrolls data, reported the creation of 199K jobs in the month of November, wildly surpassing the expectations of 180K jobs. This data, while expected to have a significant impact on the market, ended up being a low-impact event on Bitcoin price and other crypto assets.
Bitcoin price remains steady
Bitcoin price, along with the rest of the market, did not observe much change in the price.Trading at $43,559 at the time of writing, BTC staged a minor decline of 0.45% in the past hour.
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