Traders Market Weekly: Inflation and the Fed

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    Hong Kong is expected to reduce coronavirus quarantine requirements and may also ease entry restrictions for visitors.
    China may ease more rules related to the property sector. Japan will reportedly look to raise JPY1 trln in new taxes to pay for higher defense spending.
    Japan’s Q3 GDP -0.2% qtr/qtr (expected -0.3%; last 1.1%); -0.8% yr/yr (expected -1.1%; last -1.2%). Q3 GDP Capital Expenditure 1.5% qtr/qtr, as expected (last 2.0%). October Current Account deficit JPY610 bln (expected surplus of JPY350 bln; last surplus of JPY670 bln). November Economy Watchers Current Index 48.1 (expected 50.7; last 49.9)
    Australia’s October trade surplus AUD12.22 bln (expected surplus of AUD12.10 bln; last surplus of AUD12.44 bln). October Imports -1.0% m/m (last 7.0%) and Exports -1.0% (last 0.3%)


    Major European indices trade on a modestly lower note while Spain’s IBEX (-0.4%) underperforms with utility companies leading the weakness.

    —Equity Markets—

    STOXX Europe 600: +0.1%
    Germany’s DAX: -0.2%
    U.K.’s FTSE 100: +0.1%
    France’s CAC 40: -0.1%
    Italy’s FTSE MIB: UNCH
    Spain’s IBEX 35: -0.4%


    The European Commission is preparing its ninth set of sanctions on Russia.
    European Central Bank staff is reportedly considering a strike after being offered pay raises below the rate of inflation.
    Officials in the Netherlands are reportedly planning to restrict technology exports to China.
    U.K.’s November RICS House Price Balance -25% (expected -10%; last -2%)


    Exxon Mobil (XOM 102.27, +1.62, +1.6%): provides corporate plan update; expects to double earnings and cash flow potential by 2027, share repurchase program expanded up to $50 bln through 2024
    Hershey Foods (HSY 240.89, +4.20, +1.8%): upgraded to Buy from Neutral at UBS
    Salesforce (CRM 129.38, -1.10, -0.8%): Robert W. Baird downgraded to Neutral from Outperform
    GameStop (GME 22.20, -0.06, -0.3%): misses by $0.03, misses on revs
    New York Times (NYT 34.83, +0.32, +0.9%): 1000 employees will strike today, according to Bloomberg
    Verint Systems (VRNT 36.47, -0.91, -2.4%): beats by $0.08, misses on revs; guides FY23 EPS in-line, revs below consensus; also announces new $200 million share buyback program
    Greif (GEF 66.10, -4.17, -5.9%): misses by $0.11, misses on revs
    Ciena (CIEN 50.60, +7.36, +17.0%): beats by $0.54, beats on revs
    Tesla (TSLA 170.80, -3.24, -1.9%): Elon Musk’s bankers could provide him with new margin loans supported by Tesla stock, according to Bloomberg
    Unilever (UL 50.58, -0.24, -0.5%): mulling sale of US ice cream brands for $3 bln, according to Bloomberg


    Dow +245.63 at 33848.89, Nasdaq +98.27 at 10996.67, S&P +29.89 at 3964.23

    The stock market opened on a more upbeat note after a weak start to the month.

    Broad buying interest has ten of the 11 S&P 500 sectors trading up.

    Energy (+1.9%) sits atop the leaderboard, boosted by rising oil prices. WTI crude oil futures are up 2.4% to $73.76/bbl.

    Consumer staples sector (-0.1%) is the lone holdout in negative territory.

    Advancers lead decliners by a greater than 3-to-1 margin at the NYSE and a 2-to-1 margin at the Nasdaq.

    Mega cap stocks are relatively strong today, boosting index gains. The Vanguard Mega Cap Growth ETF (MGK) is up 0.9%.


    Initial claims for the week ending December 3 increased by 4,000 to 230,000 (consensus 220,000) and continuing claims for the week ending November 26 increased by 62,000 to 1.671 million.

    The key takeaway from the report is that continuing jobless claims hit their highest level since February 2022, suggesting perhaps that it is becoming more difficult to find a job as employers are taking a more cautious-minded approach with their hiring plans.

    Treasury yields rose noticeably recently.

    The 10-yr note yield is up seven basis points to 3.49% and the 2-yr note yield is up seven basis points to 4.31%.


    Initial claims for the week ending December 3 increased by 4,000 to 230,000 (consensus 220,000) and continuing claims for the week ending November 26 increased by 62,000 to 1.671 million.

    The four-week moving average for initial claims increased by 1,000 to 230,000.
    The four-week moving average for continuing claims increased by 43,250 to 1,582,250.
    The total number of continued weeks claimed for benefits in all programs for the week ending November 19 was 1,284,024, a decrease of 83,896 from the previous week. In the same week a year ago, there were 1,947,630 weekly claims filed for benefits in all programs.


    OKAY WALL STREET — let’s get this SANTA rally back on track
    even though it’s not built on best current or future ECON conditions – lol
    Still BUMBLES BOUNCE … here’s a few from FAV group for Christmas songs
    Turn all lights out except the tree & crank to max 🙂


    Dow 33,781.48 183.56 0.55%
    S&P 500 3,963.51 29.59 0.75%
    Nasdaq 11,082.00 123.45 1.13%
    VIX 22.30 -0.38 -1.68%
    Gold 1,800.80 2.80 0.16%
    Oil 71.61 -0.40 -0.56%



    Equity indices in the Asia-Pacific region ended the week on a higher note.

    —Equity Markets—

    Japan’s Nikkei: +1.2% (+0.4% for the week)
    Hong Kong’s Hang Seng: +2.3% (+6.6% for the week)
    China’s Shanghai Composite: +0.3% (+1.6% for the week)
    India’s Sensex: +0.3% (-0.5% for the week)
    South Korea’s Kospi: +0.8% (-1.9% for the week)
    Australia’s ASX All Ordinaries: +0.5% (-1.3% for the week)


    There was more speculation that the Chinese government will announce additional measures aimed at boosting the property sector.
    Japan’s Finance Minister Suzuki said that defense spending will need to reach JPY4 trln per annum.
    China’s Premier Li acknowledged the rising risk of a global recession, but also said that the Chinese economy is in stable state after reversing a decline in Q3.
    China’s November CPI -0.2% m/m, as expected (last 0.1%); 1.6% yr/yr, as expected (last 2.1%). November PPI -1.3% yr/yr (expected -1.4%; last -1.3%)
    South Korea’s October Current Account surplus $880 mln (last surplus of $1.58 bln)
    New Zealand’s November Electronic Card Retail Sales 0.3% m/m (last 1.0%); 7.1% yr/yr (last 16.6%). Q3 Manufacturing Sales Volume 3.1% qtr/qtr (last -4.9%)


    Major European indices trade near their flat lines while Italy’s MIB (-0.3%) underperforms amid relative weakness in bank stocks.

    —Equity Markets—

    STOXX Europe 600: +0.4% (-1.4% week-to-date)
    Germany’s DAX: +0.5% (-1.3% week-to-date)
    U.K.’s FTSE 100: -0.1% (-1.2% week-to-date)
    France’s CAC 40: +0.1% (-1.4% week-to-date)
    Italy’s FTSE MIB: -0.3% (-2.0% week-to-date)
    Spain’s IBEX 35: +0.4% (-1.5% week-to-date)
    D filing


    The British government is expected to announce significant changes to financial regulations, including a loosening of rules on banks.
    Credit Suisse completed a CHF4 bln capital raise.
    Expectations for a 50-bps rate hike from the ECB on December 15 are being solidified.
    Spain’s October Industrial Production 2.5% yr/yr (expected 2.8%; last 3.6%)


    Microsoft (MSFT 248.31, +0.91, +0.4%): named a top pick for 2023 by Goldman Sachs
    Netflix (NFLX 318.75, +8.49, +2.7%): upgraded to Overweight from Equal Weight at Wells Fargo
    Costco (COST 479.00, -2.42, -0.5%): misses by $0.06, misses on revs
    Vail Resorts (MTN 255.46, +4.25, +1.7%): misses by $0.11, beats on revs; reaffirms FY23 net income guidance and resort reported EBITDA guidance
    Broadcom (AVGO 553.00, +21.92, +4.1%): beats by $0.16, reports revs in-line; guides JanQ revs above consensus; will resume authorized share repurchases for remaining $13 bln; increasing quarterly dividend 12% to $4.60/share
    RH (RH 270.10, +3.72, +1.4%): beats by $0.97, beats on revs; raises low end of FY23 revenue growth guidance range, raises adj. operating margin guidance
    Vale S.A. (VALE 16.75, +0.32, +2.0%): upgraded to Overweight from Equal Weight at Morgan Stanley
    DocuSign (DOCU 48.63, +4.88, +11.2%): beats by $0.15, beats on revs, beats on billings; guides Q4 revs slightly below consensus; Billings rose 17% yr/yr to $659.4 mln vs $584-594 mln prior guidance.
    lululemon athletica (LULU 349.15, -25.36, -6.8%): beats by $0.04, beats on revs, comps of +22%; guides Q4 EPS in-line, revs in-line; expects to double net revs to $12.5 bln by 2026
    Bath & Body Works (BBWI 43.91, +1.76, +4.2%): Third Point discloses 6.02% stake per 13D filing


    Equity futures took a sharp turn lower after the November Producer Price Index came in hotter-than-expected.

    The S&P 500 futures are down 10 points and are trading 0.2% below fair value.
    The Nasdaq 100 futures are down 35 points and are trading 0.2% below fair value.
    The Dow Jones Industrial Average futures are down 66 points and are trading 0.1% below fair value.

    Producer Price Index rose 0.3% month-over-month in November (consensus 0.2%) following a revised 0.3% increase in October (from 0.2%). The core Producer Price Index, which excludes food and energy, rose 0.4% month-over-month in November (consensus 0.2%) following a revised 0.1% increase in October (from 0.0%).

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