MARKET REPORT
(Unburdened by what has been)
Old Bourse Riga
You were found in clear conditions. But you’re handsome in the Fog.
“Voters seem to forget when politicians ‘give’ you money, it is the voters’ money they have already taken.”
Day in Review:
Today:
(Kamalanomics: Govt-manipulated data with un-reported historic downward revisions to make the economy look more favorable):
DATA:
– CPI: Rate (slowed, Aug was 2.5%) 2.4% for Sept vs EXP 2.3%.
– The core rate unexpectedly edged up to 3.3% vs EXP 3.2%.
– The headline and the core monthly rates also topped forecasts
– Higher prints for services less energy, in addition to food, strengthened concerns that price growth may be sticky above target and force more restrictive rates by the Fed.
– Real wages are down since the start of the Biden-Harris administration
So price of things UP Annnnnnd LESS money to afford things. Is that how its meant to work??
– Initial Jobless claims surprised on the upside, reaching a fresh 14-month high of 258,000 initial jobless claims were filed in the week ending Oct. 5, up from 225,000 the week prior and above the 230,000 economists had expected (highest number since August 2023) Hurricane/strike caveats.
– The odds for a 25bps reduction in the fed funds rate in November currently hold at 87%
– The next test is the next jobs report due out Nov. 1, just days before the Fed’s next policy meeting of Nov. 6-7
COMPANIES:
– Canada’s TD Bank (-5.04%) to plead guilty to US charges it failed to properly monitor money laundering
– TD to pay $3B in settlement to Justice Dept.
– TD Bank decreased to a 4-week low of 83.19 CAD. Over the past 4 weeks, TD Bank gained 0.28%, and in the last 12 months, it increased 3.46%
– Delta Air Lines were down 1.8% after the airliner provided disappointing fourth-quarter revenue guidance
– Nvidia (+1.38%) increased to a 13-week high of 134.54 USD. Over the past 4 weeks, Nvidia Corporation gained 24.36%, and in the last 12 months, it increased 193.38%
– AMD (-4.6%) debuted its latest artificial intelligence chips during its Advancing AI 2024 event in San Francisco, Calif., on Thursday.
– The flurry of announcements comes as AMD continues to battle AI market leader Nvidia and looks to take greater market share from longtime rival Intel (-1.57%) in the server CPU space.
GENERAL:
– Milton swamps Florida. 3.4m without power:
– New York Fed President John Williams “but we’ve seen this pretty steady process of inflation moving downward”
– Bank of Chicago President Austan Goolsbee “the overall trend” for inflation over 12 to 18 months was clearly moving down
– Richmond Fed, Thomas Barkin, said inflation was “definitely headed in the right direction.”
– The outlier on Thursday was Raphael Bostic, president of the Atlanta Fed. In an interview with the Wall Street Journal he revealed that, in projections released in September, he had called for one additional quarter-point cut this year. The Fed has two remaining meetings in 2024. “I am totally comfortable with skipping a meeting if the data suggests that’s appropriate,” he said.
Rate cut expectations pushed lower 2024 but higher 2025:
– Mortgage rates: The average rate on a 30-year fixed-rate loan jumped to 6.32% for the week through Wednesday, according to Freddie Mac, up from 6.12% a week earlier. It’s the biggest week-over-week increase since April. Average 15-year loans rose to 5.41% from 5.25%.
– Trump slams rate cut ‘It was too big a cut’
– The accounts from the last ECB monetary policy meeting in September showed ECB wanted to keep options open for the next meetings and adopting a cautious stance for the next move. The central bank is expected to lower interest rates by 25bps next week, which would be the third reduction this year.
– Euro Bourses closed MIXED (CAC/DAX down, FTSE flat, Italy up)
– Canada’s trade deficit widened to CAD $1.10 billion in August, the largest since May, driven by a 1.0% drop in exports, particularly a 4.1% decline in crude oil shipments, the nation’s top export.
This was exacerbated by falling energy prices amid weaker stimulus from China.
Additionally, expectations for softening labor market data, due Friday, have fueled speculation of further monetary easing by the Bank of Canada.
– The Canadian dollar weakened past 1.37 per USD in October, hitting a nine-week low as foreign currency inflows diminished and the US dollar strengthened
– Awaiting Israel response to Iran
– Tesla robo-taxi event coming up
Top commodity gainers are Gasoline (4.06%), Natural Gas EU Dutch TTF (4.03%), Natural Gas UK GBP (3.83%), Brent Crude Oil (3.50%) and Crude Oil WTI (3.31%).
– Top commodity gainers are Platinum (1.71%), Silver (1.68%), Copper (0.96%) and Gold (0.65%)
– Top commodity gainers are Cheese (9.16%), Coffee (2.34%) and Cocoa (1.68%). Biggest losers are Orange Juice (-3.83%), Canola (-0.86%) and Lumber (-0.84%).
– Equities down, Treasuries steepen, Crude up, Dollar flat
Coming Up:
– German CPI (Final), UK GDP Estimate, Services, Manufacturing Output, US PPI, Canadian Unemployment, UoM Inflation Prelim
– BoC SCE & Outlook Survey; Fitch Credit Review on France
Speakers:
– Fed’s Goolsbee, Logan, Bowman
Earnings:
– JPMorgan, BlackRock, Wells Fargo, Bank of New York Mellon, Fastenal
MAJORS:
DX:
– The dollar rallied for the 8th day in a row – the last time this happened, The Fed had just started hiking rates in April 2022!
– Two-way action after US data, whereby jobless claims soared to 258k (exp. 230k, prev. 225k), albeit with Hurricane/strike caveats, and US CPI was hot across the board.
Later in the session the Greenback rose to session highs of 103.170 in wake of a hawkish set of remarks from Fed’s Bostic who in an interview with the WSJ said “I am totally comfortable with skipping a meeting if the data suggests that’s appropriate”, and speaking after the US CPI, added “This choppiness to me is along the lines of maybe we should take a pause in November. I’m definitely open to that.”
Looking to the to the tail end of the week, PPI, UoM prelim, and big banks earnings are on Friday
YEN:
Yen saw very modest strength in the European morning after BoJ Deputy Governor Himino said “If the outlook for economic activity and prices presented in July report is achieved, BoJ will accordingly raise interest rates”
EUR:
– the latest ECB minutes didn’t add too much to the debate as the narrative, and echoed by officials since, seems to be that officials are not yet ready to declare victory on inflation with an increasing focus on the risks to the growth outlook
EQUITIES:
EUR:
– Euro Stoxx 50 -0.24% at 4,949, DAX -0.23% at 19,145, CAC 40 -0.24% at 7,516, FTSE 100 -0.07% at 8,218
US:
– SPX -0.21% at 5,780, NDX -0.13% at 20,242, DJIA -0.14% at 42,512, RUT -0.55% at 2,188
Sectors (S to W): Energy +0.79%, Materials +0.21%, Technology +0.08%, Consumer Discretionary -0.26%, Utilities -0.31%, Financials -0.32%, Health Care -0.35%, Industrials -0.54%, Consumer Staples -0.54%, Communication Services -0.61%, Real Estate -0.89%.
GOLD/SILVER:
– Even at record highs, the gold market faces a triple top as it has only achieved 30% annual gains three times in the last 30 years: the first in 2007 when prices rallied 31%, the second in 2010 when prices rose by 30%, and this year.
While gold reached its 30% milestone in September, prices have struggled in recent weeks as markets quickly shifted their expectations away from aggressive interest rate cuts during the Federal Reserve’s new easing cycle.
December gold futures last traded at $2,640 an ounce, up 27% year-to-date. As for what could push gold back to the 30% level, 10% of the market is driven by unknown demand in opaque over-the-counter (OTC) markets and unreported central bank demand.
OIL:
– WTI crude oil futures surged by 3.5% to settle at $75.8 per barrel, driven by rising US fuel demand as Hurricane Milton struck Florida, concerns over Middle East supply disruptions, and expectations of growing energy demand in the US and China.
Hurricane Milton knocked out power to over 3.4 million homes and businesses, while nearly a quarter of fuel stations across the state ran out of gasoline. This disruption in one of the world’s largest oil-consuming regions contributed to the jump in prices.
Israeli Defense Minister vowed that any response to Iran would be “lethal, precise, and surprising.”
On the supply side, EIA data showed a 5.8 million barrel rise in US crude inventories, surpassing the expected 2.0 million.
Further weighing on prices is a weak demand outlook, reinforced by China’s recent briefing, which provided few specifics on additional stimulus measures.
BONDS:
– Two-year Treasury yields, more closely tied to Fed rate decisions than longer tenors, are off sessions lows to just under 4%. That helped diminish the degree of steepening in the yield curve from extremes of earlier in the day.
Also on Thursday, the sale of 30-year bonds at auction saw a strong reception, which included a record allotment to indirect bidders. The long-end out the curve outperformed after the latest auction results, causing some re-flattening of the yield curve.
If this week’s 3Y auction was subpar, yesterday’s 10Y was mediocre, then today’s 30Y auction was an absolute stunner. In fact, one could saw it was the strongest 30Y auction on record.
Starting at the top, the high yield was 4.389%, up sharply from last month’s 4.015% and the highest since July’s 4.405%
– Short end outperformed which steepened the yield curve significantly, erasing all the post-payrolls flattening
US 1-MO: 4.811 +0.007
US 6-MO: 4.469 -0.001
US 1-YR: 4.226 -0.027
US 5-YR: 3.892 -0.014
US 10-YR: 4.071 +0.004
US 30-YR: 4.366 +0.038
2’s/10’s: 0.10 +0.05
CRYPTO
– Sean Farrell, Head of Digital Asset Strategy at Fundstrat reiterates BTC call at $115k by year end
– Grounded not just in crypto-specific factors but also broader macroeconomic trends: He pointed out that global central banks are now in a cutting cycle, which historically has boded well for liquidity-sensitive assets like Bitcoin. “Global central banks…have started to cut. Over 50% of central banks globally are cutting. That is great for global liquidity and liquidity-sensitive assets,” he said.
– This, paired with the potential for U.S. fiscal policy shifts, is contributing to what he sees as an overall bullish environment.
– Host of The Wolf of All Streets podcast, Scott Melker:
– Top altcoin pick: “Ethereum has the most utility, people building on it, and stablecoin usage.” He also mentioned Ethereum’s regulatory standing, saying, “It’s the most regulatory compliant next to bitcoin.”
– second choice was Solana, which is often referred to as the “ETH killer.” He explained, “If we’re looking at growth rate versus Ethereum, Solana is winning,” and pointed out that PayPal’s stablecoin development on Solana boosts its credibility.
– He continued with his third pick, Sui, labeling it a potential “Solana killer” based on recent performance, highlighting its surge in daily transactions and total value locked (TVL).
– SEC lawsuit against digital asset market maker Cumberland DRW sparked more regulatory FUD):
KEEP DOING WHATS WORKING, STOP WHAT ISNT
Best of luck out there. Let the market come to you
Post of the day:
https://www.youtube.com/watch?v=8RVLim5tVwU
If you cant spend 2.5hrs 😉:
https://www.youtube.com/shorts/XYbcU3mtKxU
Song of the day:
https://www.youtube.com/watch?v=pseaVFFtHFU
Joke of the Day:
https://www.youtube.com/watch?v=FlqbgEM56t8
(Seize all assets of Duke and Duke enterprises)
I can be contacted should anyone have any questions, input at [email protected] during US hours of EST 9am until 5pm
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