North American News
Market Momentum Surges: Dow Approaches Record Peaks,NASDAQ Leads The Way
- Nasdaq leads the way ahead of the FOMC rate meeting and decision tomorrow
The major US indices are up again.
Dow at the highest level since January 2022, and around 1% from all time highs for the index. The Nasdaq led the way today.
The final numbers are showing:
- Dow Industrial Average is up 173.01 points or 0.48% at 36577.95
- S&P index is up 21.26 points or 0.46% at 4643.69
- Nasdaq index is up 100.91 points or 0.70% at 14533.40
- Russell 2000 was not so fortunate with a -2.41 point decline or -0.13% at 1881.26
Yesterday, the so-called Magnificent 7 all fell. Today, all except Tesla and Alphabet outperformed:
- META: Closing Price $334.21, $ Change +$8.93, % Change +2.75%
- NVDA: Closing Price $476.65, $ Change +$10.38, % Change +2.23%
- AMZN: Closing Price $147.35, $ Change +$1.52, % Change +1.04%
- MSFT: Closing Price $374.34, $ Change +$3.04, % Change +0.82%
- AAPL: Closing Price $194.61, $ Change +$1.46, % Change +0.76%
- GOOGL: Closing Price $132.49, $ Change -$0.80, % Change -0.60%
- TSLA: Closing Price $237.01, $ Change -$2.73, % Change -1.14%
Looking at the S&P components, information technology led the way with the 0.83% gain.The energy sector was a blanket with a decline of -1.35%.Crude oil futures got hammered today falling $-2.55.
- Information Technology Sector: Closing Price $3344.07, $ Change +$27.46, % Change +0.83%
- Financials Sector: Closing Price $607.18, $ Change +$4.30, % Change +0.71%
- Materials Sector: Closing Price $520.42, $ Change +$2.93, % Change +0.57%
- Healthcare Sector: Closing Price $1552.28, $ Change +$7.19, % Change +0.47%
- Industrials Sector: Closing Price $931.50, $ Change +$4.25, % Change +0.46%
- Consumer Discretionary Sector: Closing Price $1376.61, $ Change +$5.49, % Change +0.40%
- Telecommunications Sector: Closing Price $235.47, $ Change +$0.44, % Change +0.19%
- Consumer Staples Sector: Closing Price $747.18, $ Change +$2.30, % Change +0.31%
- Real Estate Sector: Closing Price $237.64, $ Change -$0.11, % Change -0.05%
- Utilities Sector: Closing Price $320.38, $ Change -$1.29, % Change -0.40%
- Energy Sector: Closing Price $615.55, $ Change -$8.43, % Change -1.35%
US treasury auctioned off $21 billion of 30 year bonds at a high yield of 4.344%
- WI level at the time of auction 4.347%
- High-yield 4.344%
- WI level at the time of auction 4.347%
- Tail -0.3 basis points versus six-month average of 2.1 basis points
- Bid to cover 2.43X vs six-month average of 2.40X
- Dealers 14.23% vs six-month average of 15.2%
- Directs 17.3% vs six-month average of 18.3%
- Indirects 68.47% vs. six-month average of 66.6%
US November core CPI 4.0% y/y versus 4.0% y/y expected
- US November 2023 consumer price index data
- CPI 3.1y/y +% versus 3.1% expected
- Prior y/y 3.2%
- CPI m/m +0.1% versus 0.0% expected
- Prior m/m 0.0%
Core measures:
- Core CPI m/m +0.3% versus +0.3% expected. Last month 0.2%
- Core CPI y/y 4.0% versus 4.0% expected. Last month was 4.0%
- Shelter +0.4% versus +0.3% last month. Up 6.5% y/y
- Services less rent of shelter +0.6% m/m vs +0.3% prior (+3.5% y/y)
- Real weekly earnings +0.5% vs -0.1% prior
- Food +0.2% m/m vs +0.3% m/m prior
- Food +2.9% y/y
- Energy -2.3% m/m vs -2.5% m/m prior
- Energy -5.4% y/y
- Rents +0.5% m/m vs +0.5% prior
- Owner equivalent rent +0.5% vs +0.4% prior
US November Federal budget deficit $314 billion vs $301 billion expected
- November budget deficit data
- October was -67B
- Last November was -$249 billion
US November NFIB small business optimism index 90.6 vs 90.7 prior
- Latest data released by NFIB – 12 December 2023
- Prior 90.7
This is the 23rd straight month that the index is below its 50-year average of 98. It reinforces the notion that small business sentiment is still rather languishing but not really pointing to any major recession-like signals at least. One thing to note is that NFIB says the net percentage of firms increasing employment has been negative since March, with more firms decreasing jobs than adding them.
Fed rate cut in March too soon but remains a possibility – BofA
- BofA argues that the inflation data today should support expectations for a first rate cut as early as June next year
The firm forecasts an increase in core consumer price inflation by 0.32% on the month in November, largely due to “swings in volatile components”.Elaborating on that, BofA says:
“We expect used car prices to increase because wholesale pricestemporarily rose in both August and September amid concerns over the UAW strike. Meanwhile, we are looking for an increase in lodging away from home largely due to expectations for reversion to the mean after a large drop in October.”
Impact of US CPI data to near-term monetary policy outlook should be limited – Nomura
- Nomura argues that the Fed is “unlikely to react strongly to a single month of data”
The firm expects core consumer price inflation to move up by 0.3% in November, similar to economist estimates, citing a rebound in some of the volatile components that declined in October, including used vehicle prices and airline fares.
“An expected rebound in monthly core CPI inflation would suggest the disinflation process is bumpy. However, the underlying disinflation trend remains intact, in our view, as new vehicle prices probably continued to decline, reflecting higher sales incentives and tighter credit conditions. Also, rent inflation remained soft… Beyond November, we think credit tightening in auto loan markets and imbalances in rental housingmarkets are likely to weigh on core inflation in the coming months, maintaining the disinflation trend.”
Goldman Sachs Asset Management sees potential dip in stocks, advises buying
- Any higher for longer dip should be bought says GS
Goldman Sachs Asset Management says that there is potential for some weakness in stocks following the prolonged rally that began in October, given the market is adjusting to the chance the FOMC holds rates higher for longer.
But, that any resulting dip should be bought:
- “If the market trades down, it is a good opportunity to rebalance or buy the dip”
- “It’s too early to be underweighting the risk premium of equities.”
- still like quality large caps
- are “cautiously optimistic” on longer duration bonds
CitiGroup forecasts higher S&P 500 in 2024: says to brace for Increased volatility & BTD
- Citing, in part, an improvement in earnings
Citgroup have forecast higher for the S&P 500 in 2024 in their Outlook Report.
Analysts at the bank have set a base case projection at 5100 by the end of next year. Citing:
- “a broadening beyond 2023’s Growth leadership is necessary for further S&P 500 gains”
- “on improving earnings growth, even as recession risk lingers” (see EPS rising to 10.4%)
- expecting increased volatility but “investors should be prepared to buy into pullbacks”
Further ahead:
- “Our concern is that fiscal restraint enters the 2025 picture either via higher tax proposals or lower spending as debt ceiling issues resurface”
Info comes via CNBC
Commodities
Silver struggles at 50-DMA and slumps below $23.00
- Silver extended its losses to seven consecutive days and stayed below $23.00.
- If silver drops below $22.70, further downside is seen below $22.00.
- Bulls reclaiming $23.00 could pave the way for a recovery.
Silver price erased earlier gains and turned negative, down 0.30% following a softer US inflation report, which initially bolstered silver’s prices. Nevertheless, as US Treasury bond yields pared its losses, the grey metal lost its shine. The white metal is trading at $22.74, retesting a two-month-old support trendline.
Silver remains neutral to downward bias, at the brisk of accelerating its downtrend if sellers push prices below the above-mentioned trendline. Once done, the next demand area would be the November 13 swing low of $21.88, followed by the October 6 daily low of $20.69.
Gold tumbles after hitting daily high near $2000, eyes on Fed decision
- Gold price hits a daily high of $1996.73 but loses momentum in the aftermath of a mixed US inflation report.
- US CPI reveals disinflation in the US, with annual and monthly readings posting mixed results.
- Traders await the Federal Reserve’s decision, with money market futures expecting the Fed to hold rates, eyeing 100 basis points of rate cuts for 2024.
Gold price lost its bright after hitting a daily high of $1996.73, though it dropped in the aftermath of a softish inflation report in the US, ahead of the upcoming Fed monetary policy decision. The yellow metal exchanged hands at $1979,40, down 0.11%
Crude oil settles at $68.61. Lowest level since June 28
- Down $-2.71 or -3.8%
The price of crude oil fell sharply and traded to the lowest level going back to June 28.The low for the day reached $68.22. The high reached $71.96.
Looking at the daily chart, the price is getting closer to swinging area support going back to the end of May and into June between $66.80 and $67.05. The low price from 2023 comes in at $63.64.For the year, the price of crude oil is now down -14.60%.
Market focus will now shift to the upcoming weekly private oil inventory data which will be released at 4:30 PM ET.Tomorrow, the EIA inventory data will be released at 10:30 AM, with expectations for crude oil inventories to show a draw of -0.650M barrels.
Oil API survey of inventory shows larger headline draw than was expected
- Privately surveyed oil stock data reveals a bigger draw than anticipated
- Crude -2.349 million (-1.5 million exp.)
- Gasoline +5.8 million
- Distillates +300,000
- Cushing +1.4 million
- SPR moves: none
Oil price forecast raised to $80 per barrel for 2024, OPEC+ cuts to supply cited
- Fitch analysts raise oil price forecasts to $80 per barrel for ’24, from previously at $75
Oil price forecasts have been raised for 2024 to $80 per barrel by analysts at Fitch (the rating agency), ICYMI:
- from previously forecast $75
- the forecast for 2025 was left at $75
Citing OPEC+ moves on supply cuts:
- “Weak global growth in 2024 could prompt further OPEC+ cuts if the oil market shifts decisively into surplus, but the latest deal at end-November highlighted reluctance to bring output much lower”
- expects global growth to drop 2.1% in 2024
- the market is likely to witness a deficit is likely to remain in H1 2024, provided the OPEC+ countries comply with previously announced production cuts
- Russian export volumes have continued to remain resilient despite sanctions
- US shale production growth is expected to moderate in 2024
Analysts expect OPEC+ to maintain supply cuts through 2024, oil to trade $70-80 range
- Prolonged supply cuts in store
ICYMI – Analysts at Citigroup say that OPEC+ will need to maintain its latest supply cuts throughout 2024 if they want to to keep global oil markets in balance. The analysts add that the cartel can “can balance this market and keep prices at $70 to $80 if they all work together”.
Comments come from an interview with Bloomberg Television.
EU News
European equity close Ends Mostly flat, Spain lags
- Closing changes for the main European bourses
- Stoxx 600 -0.2%
- German DAX flat
- UK FTSE 100 +0.1%
- French CAC -0.1%
- Italy MIB -0.3%
- Spain IBEX -0.8%
Germany December ZEW survey current conditions -77.1 vs -76.0 expected
- Latest data released by ZEW – 12 December 2023
- Prior -79.8
- Outlook 12.8 vs 8.8 expected
- Prior 9.8
Germany November wholesale price index -0.2% vs -0.7% m/m prior
- Latest data released by Destatis – 12 December 2023
A further drop in wholesale prices on the month is a welcome development with lower prices for mineral oil products contributing in that manner. Just take note that the indices of wholesale selling prices will be rebased to 2021 as of reference month April 2024, with the first results for the new base year to be released in May 2024.
UK November payrolls change -12k vs 33k prior
- Latest data released by ONS – 12 December 2023
- Prior 33k; revised to 39k
- October ILO unemployment rate 4.2% vs 4.2% expected
- Prior 4.2%
- October employment change 50k
- Prior 54k
- October average weekly earnings +7.2% vs +7.7% 3m/y expected
- Prior +7.9%; revised to +8.0%
- October average weekly earnings (ex bonus) +7.3% vs +7.4% 3m/y expected
- Prior +7.7%; revised to +7.8%
Goldman Sachs predicts European STOXX 600 to soar with lower rates in store at the ECB
- They expect the index to rise despite weaker growth, citing a potential rate cut
Goldman Sachs’ analysts have lifted their 2024 forecast for the European STOXX 600 index to 500
GS cite their expectation of a boost from lower European Central Bank interest rates:
- “We find that lower inflation combined with lower rates is typically associated with modestly higher valuations,”
- “On average, since 1973 European equities have delivered 7% real per annum price returns in an environment of 1-3% inflation and falling.”
Asia-Pacific-World News
China says will consolidate and enhance economic recovery
- Remarks from the Chinese state media after the end of the Central Economic Work Conference
- To keep liquidity reasonably ample
- Proactive fiscal policy will be enhanced with improving efficiency
- Will make efforts in expanding domestic demand, spur consumption with potential
- Will promote steady decline in cost of social financing, enhance consistency of macro policy orientation
- To strengthen supervision of implementation of policies
- Necessary to accurately grasp policy orientation of next year’s economic work
UK firms delaying new investments in China amidst slowing economy
- UK businesses are downgrading the importance of China
A majority of surveyed UK firms are delaying making new investments in China according to the British Chamber of Commerce in China.
- 60% see a slowing Chinese economy as a bigger challenge than the COVID curbs in place until late last year
- While the “peak pessimism” recorded during the pandemic is easing, British businesses are delaying making new investment in China amid a stuttering economic recovery and are downgrading the importance of the world’s No. 2 economy to their global operations
- “In previous years, 80% (of firms) were investing more because of market potential, but it feels like we’re now entering a phase of real clarity,” Julian Fisher, the chamber’s chair said. “(Firms) are a lot more pragmatic and there’s a lot less speculation,”
China lifts restrictions on Australian meat imports -ends suspensions on 3 meat suppliers
- China removing some tariffs on Australian products a tailwind for AUD, a sentiment boost
News crossing that China has ended its restrictions on imports of meat from Australia. ‘Suspensions’ on 3 meat suppliers removed.
CCP leaders discuss growth targets, stimulus proposals today
- The annual Central Economic Work Conference got underway on Monday and continues Tuesday
Chinese Communist Party leaders met on Monday to discuss the economic growth target and stimulus proposals.
The annual Central Economic Work Conference is attended by Communist Party leader Xi Jingping and other senior officials. The meeting is expected to continue next Tuesday.
The most recent indications we’ve had from the Chinese Politburo is that fiscal policy will be boosted moderately, and will remain “flexible, moderate, precise, and effective”.
The economic growth target for 2024 is expected somewhere in the range of 4.5% to 5.5%, with ‘around 5%, the same as 2023 seeming most likely.
While this meeting yesterday and today is expected to decide on targets and policy these won’t be announced publicly until China’s annual parliament meeting, usually expected to be held in March.
Australian November business confidence -9 (prior -2)
National Australia Bank Business Survey for November 2023
- business confidence -9 (prior -2), its lowest since the pandemic
- business conditions + 9 (prior 13)
Sub measures:
- sales fell 6 points, although remained strong at +13
- profitability fell 5 points to +6
- employment firm at +8
- capacity utilisation remained high at 83.9%
- labour costs accelerated to a 2.2% quarterly rate in November
NAB says:
- “For the consumer exposed sectors, you really need to go back to the global financial crisis to see confidence this weak in retail and recreation & personal services”
- “We will be closely watching to see if the weakness in confidence is sustained and whether a trend emerges in conditions, but for now it points to ongoing soft growth in Q4”
- “The hope is that with activity slowing the easing in pricepressures becomes more evident in early 2024”
Australia’s mid-year budget update expected to include approximately A$10bn in savings
- Australia’s Mid-Year Economic and Fiscal Outlook (the mid-year budget update) on Wednesday
Australia’s Mid-Year Economic and Fiscal Outlook (the mid-year budget update) is likely to include around A$10 billion in savings.
- Its due on Wednesday, 13 December 2023
Finance Minister Katy Gallagher :
- ” … our responsible approach will ensure we are not putting upwards pressure on inflation”
- “We are continuing to show restraint and to find savings and reprioritisations to account for new spending, some of which is unavoidable,”
Australian December consumer sentiment +2.7% m/m
- Consumer sentiment in Australia surges in December, hitting an 8-month high
The Westpac indicator for December 2023 rises to 82.1, an eight-month high
- from 79.9 in November
WPAC make the same point on their index:
- “The gloom that deepened last month has lifted slightly heading into year-end’
- “But consumers remain far from upbeat”
Australian weekly consumer confidence measure hits it highest since February
- Inflation expectations dropped.
ANZ-Roy Morgan Australian Consumer Confidence weekly survey for the week comes in at 80.8
- prior 76.4
ANZ citing:
- driven by confidence among homeowners
- confidence about the economy has improved
Reserve Bank of Australia Gov Bullock says don’t think falling behind in inflation fight
- Reserve Bank of Australia Governor Bullock emphasizes cautious approach in fighting inflation.
Reserve Bank of Australia Governor Bullock speaking at a payments event:
- Don’t think we are falling behind in inflation fight
- We’re taking a cautious approach and continue to watch data
Bullock says the Bank is taking that cautious approach on lifting rates to preserve the gains on employment. And that the Bank is keen that inflation expectations don’t get “out of control”.
REINZ New Zealand median home sale prices -2.0% y/y
- New Zealand house price data
- Prices down 1.0% y/y
New Zealand and Australian house prices have been immune to interest rate hikes.
New Zealand retail sales indicator +1.6% m/m (prior -0.7%)
Electronic card transactions data for November 2023.
Sales on electronic cards cover about 68% of core retail sales in New Zealand. This is the main indicator for retail sales in NZ.
Japan data: November PPI +0.2% m/m (expected+0.2%) +0.3% y/y (expected 0.1%)
- Discover Japan’s Producer Price Index (PPI), reflecting cost pressures faced by producers
The driver of the yen the past week or so has been feverish, and misplaced, expectations of an imminent Bank of Japan policy pivot. USD/JPY collapsed last Thursday and has recovered almost to where it started to drop.
Cryptocurrency News
XRP price sustains above $0.60 as Ripple roadmap prevents the SEC from circumventing securities law
- Ripple lawsuit ruling by Judge Analisa Torres is considered a roadmap for crypto firms as it applies Howey analysis to digital assets.
- Legal expert J W Verret argues that the facts and circumstances of cryptocurrency offers and sales matter under existing securities law.
- XRP price defends $0.60 level, despite wiping out weekly and monthly gains.
The SEC v. Ripple lawsuit offers legal experts a lens to re-examine the application of existing securities law to digital assets like XRP. Judge Torres’ ruling prevented the SEC’s circumvention of existing laws and enabled adaptive regulation, rather than a stifling approach.
Legal expert J W Verret weighed in on the outcome of the SEC v. Ripple lawsuit and observed that the ruling is a roadmap for crypto firms to navigate regulatory pressures. XRP price defended the $0.60 level, early on Tuesday, despite market wide correction in cryptocurrency prices.
BNB price eyes bullish breakout, open interest in Binance Coin is on the rise
- BNB price has climbed over 4% in the past week, despite legal challenges faced by Binance.
- Open interest in Binance Coin climbed 31% in the past month, indicating that new buyers are interested in BNB.
- BNB price rally past the $260 level could confirm a bullish breakout in the asset.
Binance’s native token Binance Coin (BNB) yielded over 7% weekly gains, the asset is likely to sustain its uptrend, according to on-chain metrics.
While Binance navigates legal challenges, following its $4.3 billion settlement, the exchange’s native token is in an uptrend. BNB is likely to emerge resilient to the regulatory developments against the exchange, posting consistent gains for holders.
North Korean hackers steal $3 Billion: An alarming trend in cybercrime targeting crypto
- Focus on hacking blockchain entities
North Korean-backed state hackers have stolen an estimated US$3 bn over the last six years (since January 2017).
I’ve seen similar reports from time to time so this is not fresh news. Not good news either, especially for those having funds stolen.
US$1.7 billion stolen in 2022 alone
- North Korean state-sponsored hacking groups such as the Lazarus Group focused their attention on blockchain attacks
- intrigued by the potential for hacking blockchain entities due to their reputation as “a rapidly growing financial technology industry that has little oversight and is unprepared for a relentless cyber assault.”
- North Korea originally focused its crypto theft efforts on its neighbor South Korea
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