Traders Market Weekly: Bull or Bear Trap Ahead of the Fed?

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  • #46237
    TradersCom
    Keymaster

    October 17 – Reuters (Davide Barbuscia): “Government bonds may not offer much protection in a recession if surging inflation pressures central banks to continue tightening monetary policy, the BlackRock Investment Institute said. Risks of a global recession have increased as central banks around the world tighten monetary policy to bring down consumer prices… ‘Investors traditionally take cover in sovereign bonds, but we see this recession playbook as obsolete … Result: We stay underweight Treasuries,’ they said, adding they expect government bond yields – which move inversely to prices – will keep rising.”

    #46256
    Truman
    Participant

    Monday – October 24

    SPAC watch – It may be a busy week for SPAC deals with votes scheduled for the Avista Public Acquisition Corp. II (AHPA) deal to take antibody discovery business OmniAb public, Provident Acquisition’s (PAQC) deal to take beauty tech firm Perfect Corp. public, Endurance Acquisition’s (EDNC) deal to take satellite chip company SatixFy public, and Mana Capital Acquisition’s (MAAQ) deal to take biotech firm Cardio Diagnostics public. The SPACs could start trading by the end of the week if the votes are not delayed.

    All week – The Nevada Gaming Control Board is due to report gaming win tallies for September. Analysts will be looking for more confirmation that Strip operators MGM Resorts (MGM) and Caesars Entertainment (CZR) are tracking strong despite the macroeconomic backdrop.

    All day – Caterpillar (CAT) will display four electric machine prototypes at a trade show in Munich, Germany. Some analysts have the event circled as a potential share price catalyst just ahead of CAT’s earnings.

    11:30 a.m. SRAX (SRAX) will provide a business update that includes an update on the current fillings and a Q&A session

    11:30 a.m. Accuray Incorporated (ARAY) will host a key opinion leader discussion with analysts and investors in conjunction with the American Society of Radiation Oncology Annual Meeting.

    #46257
    Truman
    Participant

    Tuesday – October 25

    All day – The three-day LD Micro 15th Annual Main Event Conference will begin. The long list of companies scheduled to present including Backblaze (BLZE), BitNile Holdings (NILE), Blue Star Foods Corp. (BSFC), Comstock (LODE), Electrameccanica Vehicles (SOLO), Energous Corporation (WATT), Riot Blockchain (RIOT), Salem Media Group (SALM), Ayro (AYRO), and Fathom Holdings (FTHM). The conference has led to some share price pops in the past for companies in the spotlight

    12:00 p.m. Atai Life Sciences (ATAI) will host a R&D Day event with presentations and KOL discussions.

    #46258
    Truman
    Participant

    Wednesday – October 26

    All day – The Mobileye Global (MBLY) is expected to start trading. The Intel (INTC) self-driving subsidiary is expected to be valued at close to $16B in the IPO.

    All day – Wayfair (W) will host a second Way Day this year. The shopping event is promoting discounts of up to 80% off items spanning furniture and decor, seasonal decor, housewares and more. The retail sector in general is on watch this holiday season for heavy markdowns to clear inventory. Those markdown efforts are considered a margin risk for Q4 earnings.

    All day – The ThinkEquity Conference will take place in New York City. Participants include Nano Dimension Ltd. (NNDM), Blink Charging (BLNK), Citius Pharmaceuticals (CTXR), Draganfly (DPRO), Plus Therapeutics (PSTV), and Sono-Tek Corporation (SOTK).

    All day – McDonald’s (MCD) will start sell Krispy Kreme (DNUT) doughnuts in select restaurants for the first time. The fast-food restaurant operator said the test will help it learn more about how teaming up with Krispy Kreme would affect its operations. If rolled out broadly, a McDonald’s-Krispy Kreme partnership could create a new twist in the breakfast daypart for Dunkin Donuts and Starbucks (SBUX).

    10:30 a.m. Boeing (BA) will hold its earnings conference call. Analysts expect Boeing execs to discuss free cash flow projections and the impact of supply chain issues on production

    #46259
    Truman
    Participant

    Thursday – October 27

    All day – The IEA will publishe its World Energy Outlook. Crude Oil Futures (CL1:COM) and oil stocks have seen jolts in the past when the outlook surprised.

    10:00 a.m. Walmart (WMT) will host a discussion on the company’s responsible sourcing strategy. Execs will discuss the company’s investments in responsible sourcing and its work with others to realize the economic promise of supply chains and address specific systemic risks.

    1:00 p.m. Charles Schwab Corporation (SCHW) will conduct a Fall Business Update for institutional investors. The event is designed to keep the investment community keep abreast of recent developments and management’s strategic focus.

    #46260
    Truman
    Participant

    Friday – October 28

    All day – The deadline hits for Elon Musk’s acquisition of Twitter (TWTR) to close. While some drama could still be in the mix, a closing could have some implications for Tesla (TSLA).

    All day – The FDA’s Oncologic Drugs Advisory Committee will meet to review Y-mAbs Therapeutics’ (YMAB) Biological License Application for its omburtama product candidate.

    8:30 a.m. Inflation watchers will monitor the Q3 Employment Cost Index release with economists anticipating a slight deceleration to +1.2% Q/Q from +1.3% in Q2.

    12:30 p.m. Illumina (ILMN) will host its second annual virtual Environment, Social and Corporate Governance investor event.

    #46261
    Truman
    Participant

    Equity indices in the Asia-Pacific region began the week on a mixed note while markets in India, New Zealand, and Singapore were closed for holidays.

    —Equity Markets—

    Japan’s Nikkei: +0.3%
    Hong Kong’s Hang Seng: -6.4%
    China’s Shanghai Composite: -2.0%
    India’s Sensex: CLOSED
    South Korea’s Kospi: +1.0%
    Australia’s ASX All Ordinaries: +1.6%

    #46262
    Truman
    Participant

    Hong Kong’s Hang Seng fell more than 6.0% with property and technology names leading the retreat.
    FT speculated that Japan spent more than $30 bln to intervene in the currency market last week. China’s President Jinping started his third term. South Korea is facing a potential union worker strike at three shipyards.
    China’s September Retail Sales 2.5% yr/yr (expected 3.3%; last 5.4%), September Industrial Production 6.3% yr/yr (expected 4.5%; last 4.2%), September Fixed Asset Investment 5.9% yr/yr (expected 6.0%; last 5.8%), and September House Prices -1.5% yr/yr (last -1.3%). September trade surplus $84.74 bln (expected $81.00 bln; last $79.39 bln). September Exports 5.7% yr/yr (expected 4.1%; last 7.1%) and Imports 0.3% yr/yr (expected 1.0%; last 0.3%). Q3 GDP 3.9% qtr/qtr (expected 3.5%; last -2.7%); 3.9% yr/yr (expected 3.4%; last 0.4%). September Unemployment Rate 5.5% (expected 5.2%; last 5.3%)
    Japan’s flash October Manufacturing PMI 50.7 (expected 51.3; last 50.8) and flash Services PMI 53.0 (last 52.2)
    Australia’s flash October Manufacturing PMI 52.8 (last 53.5) and flash Services PMI 49.0 (last 50.6)

    #46263
    Truman
    Participant

    Major European indices trade in the green.

    —Equity Markets—

    STOXX Europe 600: +1.4%
    Germany’s DAX: +1.9%
    U.K.’s FTSE 100: +0.6%
    France’s CAC 40: +1.9%
    Italy’s FTSE MIB: +2.1%
    Spain’s IBEX 35: +2.1%

    #46264
    Truman
    Participant

    Boris Johnson withdrew his name from consideration for leader of the U.K.’s Conservative party, making Rishi Sunak a favorite to win the job. Moody’s lowered the U.K.’s outlook to “negative” from “stable.” The Bank of England plans to hold eight $750 mln bond sales between November 1 and December 31. Workers at the port of Liverpool began a strike that is expected to last two weeks. Germany and the U.K. reported weaker than expected flash Manufacturing PMI readings for October while Services readings from France and the U.K. also missed expectations.
    Eurozone’s October flash Manufacturing PMI 46.6 (expected 47.8; last 48.4) and flash Services PMI 48.2, as expected (last 48.8)
    Germany’s October flash Manufacturing PMI 45.7 (expected 47.0; last 47.8) and flash Services PMI 44.9 (expected 44.7; last 45.0)
    U.K.’s October flash Manufacturing PMI 45.8 (expected 48.0; last 48.4) and flash Services PMI 47.5 (expected 49.6; last 50.0)
    France’s October flash Manufacturing PMI 47.4 (expected 47.1; last 47.7) and flash Services PMI 51.3 (expected 51.5; last 52.9)

    #46265
    Truman
    Participant

    Meta Platforms (META 128.78 -1.23 -0.95%): downgraded to Neutral from Buy at Bank of America
    Wolfspeed (WOLF 110.50 +4.73 +4.47%): upgraded to Overweight from Neutral at JPMorgan
    Tesla (TSLA 210.29 -4.15 -2.2%): lowering China prices, according to Bloomberg; discloses that YTD it recorded $170 million of impairment losses resulting from changes to the carrying value of its bitcoin and gains of $64 million on certain conversions of bitcoin into fiat currency
    SLB (SLB 50.29 -0.12 -0.24%): Schlumberger announced its new name—SLB
    KraneShares CSI China Internet ETF (KWEB 18.79 -2.66 -12.40%): Chinese stocks are being hit hard with President Xi concentrating power over the weekend

    #46266
    Truman
    Participant

    The S&P 500 futures are up 24 points and are trading 0.6% above fair value.
    The Nasdaq 100 futures are up 25 points and are trading 0.3% above fair value.
    The Dow Jones Industrial Average futures are up 299 points and are trading 0.7% above fair value.

    JD.com (JD 35.77, -6.42, -15.2%),
    Pinduoduo Inc. (PDD 48.90, -10.07, -17.1%),
    Alibaba (BABA 64.00, -8.18, -11.3%) all suffer heavy losses ahead of the open after President Xi was elected to a third term, which stoked worries that the state might tighten control over the economy.

    #46267
    Truman
    Participant

    Treasury yields continue to inch higher.

    Dow +199.40 at 31283.99, Nasdaq -86.96 at 10772.61, S&P +6.45 at 3759.27

    The stock market opened on a mixed note. The Nasdaq is flirting with negative territory while the Dow and S&P 500 maintain decent gains.

    Mega cap stocks are weighing down index level performance. The Vanguard Mega Cap Growth ETF (MGK) is down 0.3% versus a 0.4% gain in the S&P 500.

    The 10-yr Treasury note yield is pressing higher, up three basis points to 4.24%.
    The 2-yr note yield is down two basis points to 4.49%.

    #46268
    Truman
    Participant

    Preliminary October IHS Markit Manufacturing PMI came in at 49.9 versus the prior reading of 52.0. Preliminary October IHS Markit Services PMI came in at 46.6 versus the prior reading of 49.3.

    Second-fastest fall in almost two-and-a-half years
    Firms linked the decrease to weak client demand and the impact of inflation and higher interest rates

    Services input price inflation rose
    Prior was 49.3
    Manufacturing 49.9 vs 51.0 expected
    Prior manufacturing 52.0

    Manufacturing new orders fell back into contraction
    Decrease in client demand was sharpest since May 2020
    “Alongside domestic inflationary pressures, total new orders were dampened by challenging economic conditions in key export destinations and dollar strength, as new export orders fell steeply.”
    Composite 47.3 vs 49.3 expected
    Prior composite 49.5

    Firms’ optimism about the outlook meanwhile deteriorated markedly in October. The resulting degree of confidence was among the lowest in the survey history and the weakest for just over two years.

    #46289

    Dow 31,499.62 417.06 1.34%
    S&P 500 3,797.34 44.59 1.19%
    Nasdaq 10,952.61 92.90 0.86%
    VIX 29.85 0.16 0.54%
    Gold 1,653.90 -2.40 -0.14%
    Oil 84.81 -0.24 -0.28%

    Songs of celebration from a FAV album 🙂

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