Markets -- Seeking Alpha
Indicators: -- Tradingview // Bloomberg Terminal
Inside the stock market
Developed Markets outperform, while EMs are lagging
Capital intensive sectors lag, while consumer sectors outperform
Certain consumer stocks like Starbucks are reversing sharply.
Yield Curve
US and Europe further flattening, while US is flattening more aggressively in the long-end.
Credit
ICE BofA EM Corp. Plus Index Option Adj. Spread rose to November highs.
U.S. Indices: Dow +1.4% to 36,328. S&P 500 +2.% to 4,698. Nasdaq +3.1% to 15,972. Russell 2000 +6.1% to 2,437. CBOE Volatility Index +1.4% to 16.48.
S&P 500 Sectors: Consumer Staples +2.4%. Utilities +0.4%. Financials -0.6%. Telecom +1.4%. Healthcare -0.7%. Industrials +1.8%. Information Technology +3.3%. Materials +3.2%. Energy +1.3%. Consumer Discretionary +5.%.
World Indices: London +0.9% to 7,304. France +3.1% to 7,041. Germany +2.3% to 16,054. Japan +2.5% to 29,612. China -1.6% to 3,492. Hong Kong -2.% to 24,871. India +1.3% to 60,068.
Commodities and Bonds: Crude Oil WTI -2.9% to $81.17/bbl. Gold +2.% to $1,820./oz. Natural Gas +3.6% to 5.622. Ten-Year Treasury Yield +0.9% to 131.83.
Forex and Cryptos: EUR/USD +0.06%. USD/JPY -0.53%. GBP/USD -1.4%. Bitcoin -0.9%. Litecoin +4.9%. Ethereum +4.%. Ripple +7.6%.
Economics & Major News
ISM Manufacturing PMI for October came close to consensus at 60.8, cooling down a little bit from 61.1
FED, BOE and RBA held their interest rates steady (as expected) at 0.25, 0.1 and 0.1 percent respectively.
US Non-farm payrolls came in at 531K vs. 450K expected.
Canada Ivey PMI for October was considerably down at 59.3 vs. 70.4 previously.
Chinese exports for October were higher at 27.1% vs. 24.5% expected, while imports were down at 20.6% vs. 25% expected.
BDI is coming back but individual shipping rates are still elevated
Coronavirus
Pfizer stock soared after the company said its Covid-19 pill cut the risk of hospitalization or death by 89% in a trial of high-risk non-hospitalized adults, besting by a substantial margin the efficacy of Merck ‘s highly-touted Covid-19 pill molnupiravir. -- Barrons
USA & Canada fall in death numbers while Europe, especially Germany and UK are rising. -- Our World in Data
More News
Clean energy investors this week set their sights on the COP26, a U.N.-sponsored climate summit in Glasgow. The goal of the COP26 is to finalize the 2015 Paris Agreement, which aimed to limit the rise in average world temperatures to well below 2, preferably to 1.5 degrees Celsius compared with pre-industrial levels. -- Seeking Alpha
The UN has launched a new short-term lending market for African bonds in a move that it says could trim billions of dollars from government borrowing costs across the continent. The liquidity and sustainability facility (LSF) will allow investors to use African debt issued in foreign currencies such as dollars and euros in repo transactions, the organisation said on Wednesday at the COP26 climate conference. -- FT
Sentiment has also been bolstered by signs that large US companies are broadly managing to weather the surge in the prices of raw materials, supply chain bottlenecks and shortages in the labour market. Earnings of companies listed on the S&P 500 rose about 40 per cent in the third quarter from the same period in 2020, according to data collated by FactSet on corporate reports issued in recent weeks. Profit margins slipped to about 12.3 per cent from 12.6 per cent the previous quarter on aggregate, but that was still about 0.7 percentage points better than analysts had anticipated before the earnings season kick-off, according to Goldman Sachs. -- FT
SoftBank founder Masayoshi Son has promised a ¥1tn ($8.8bn) share buyback programme over the next 12 months, yielding to investor pressure after the company’s Vision Fund unit disclosed a record quarterly loss of ¥825.1bn. -- FT
Major U.S. carriers are on track to hire around 4,200 pilots this year and more than 9,000 next year according to FAPA.aero, a Nevada-based career and financial adviser for professional pilots. That would be the busiest year for pilot hiring in more than three decades, according to FAPA’s figures. In 2019, when airlines were hiring at a rapid clip, major U.S. carriers hired about 5,000 pilots. -- WSJ
China: October crude imports were at 8.94mbpd down from 10.03mbpd in September (October 20 was 10.06mbpd, October 19 was 10.76mbpd) -- Twitter: Staunovo
Qatar has placed an order for six new LNG carriers with South Korean shipyards, the latest of several planned batches in a massive shipbuilding program aimed at growing its fleet to handle its upcoming LNG expansion. -- Argusmedia
Next Week
Federal Reserve Chairman Jerome Powell, Boston Federal Reserve Bank President Kenneth Montgomery, Philadelphia Federal Reserve Bank President Patrick Harker and Chicago Federal Reserve Bank President Charles Evans are all on the schedule to give talks. -- Seeking Alpha
German ZEW Economic Sentiment for November is expected at 20
US PPI MoM for November is expected to come at 0.6%
AU Westpac Consumer Confidence (and change) is scheduled for Wednesday. They came previously at 105.6 (-1.5%).
Chinese and US Inflation Rates are also expected on Wednesday, with 1.4% in China, 4.3% for US Core and 5.8 for US Inflation Rate YoY Oct.
Australia expects 4.8% unemployment rate for October.
GB expects 1.5% GDP Growth Rate QoQ Prel. Q3 and 6.8% YoY
The ECB publishes its Macro Economic Projections on Thursday.
US Michigan Consumer Index for November is expected at 72.5
US JOLTs for November are expected at 10.3M
Japan GDP Growth Rate QoQ Prel. Q3 is expected to contract by -0.2%
China Industrial Production YoY for October is expected at 3%#
Funny News
Bild, biggest-selling newspaper, recently branded #ECB chief Lagarde as "Madame Inflation", saying she "wears Chanel clothes" but "mocks the fate of pensioners, employees, and savers." rfi.my/7taN.T -- [Twitter: Holger Zschaepitz]
Regime
Corona is coming back to the people's minds. While the vaccine manufacturers are producing new drugs to calm down the problem, it is questionable, whether they will be able to produce and deliver those in time. The fact that consumer focused equity sectors outperform is a little irritating facing new covid rises. Last week Chair Powell delivered a well-prepared tapering message not spooking the market. Equities did not at all react negatively to that. Tapering is not tightening, so as long as the economy is allowed to recover on its own and not being hindered by sucking away liquidity or lockdowns, it should keep on going. The Inflation Rate seems to keep steady at somewhat 4-5%, and will go lower probably later in 2022, when supply chain issues subside and the Treasury starts taking liquidity away from the market by issuing direct bonds (so far they have been using their account at the Fed to fund). China is an uncertain area. The PBOC tries to inject more liquidity again while economic activity in China clearly slows. The political fight is adding uncertainty and is completely independent to see from the market. One has to keep in mind that there is the Party Congress in 2022.
Scenario in one year
Inflation low, growth high: Supply chain issues have been tackled, the Fed has stopped increasing the balance sheet but is keeping the interest rate low. Biden has his infrastructure bill running. For this, the market should have taken the tapering well. Auto's, Tech, Tourism and Manufacturing should show strong earnings.
Inflation high, growth high: Supply chain issues are still problematic. Wages and inflation expectations have been going considerably higher. The additional costs are given to the consumer. The Fed is raising interest rates but at a slow pace and Bidens Infrastructure bill is running. Commodities would still perform well. Financials as well.
Inflation low, growth low: Supply chain issues are about to go away but are somehow remaining in certain sectors (such as semi-conductors). The Fed is not able to really move, as it could spook inflation but also cannot raise to hammer growth. Biden was not able to really run his infrastructure plan. Bonds are attractive as the current yield is relatively high, compared to before.
Inflation high, growth low: Supply chain issues could not be solved, the Fed raises interest rates to control it. The infrastructure plan was not implemented. Corona is interrupting spending. Inflation protected Bonds are outperforming normal bonds.
Trading
Rare Minerals have been beaten down and look like a good reflation trade.
Energy commodity suppliers have good prospects looking at a restarting economy and a scarcity in energy.
Consumer stocks with small amount spending like coffee shops or transaction providers look interesting assuming corona is getting not out of hand.