Market Observations - Oct 10
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Factoid:??A Hershey’s Kiss contains 26 calories, which takes five minutes of walking to burn off.
US Monday Market Wrap:?A new war in the Mid-East cast a dim light on early morning trading. But investors staged a comeback, with markets closing higher. The Dow gained nearly 200 points, the S&P rallied o.6%, and the Nasdaq added 0.40%. Bond markets were closed for the Columbus Day holiday. WTI crude jumped 4%, producing a nice bounce in oil-related stocks. Defense stocks also did well, with NOC gaining 11%; stocks related to tourism went in the opposite direction, with airlines and cruise lines notable losers on the day. All eleven S&P sectors closed green. Energy +3.34% led, and financials +0.06% lagged.
The Organization of the Petroleum Exporting Countries (OPEC) now expects world oil demand to reach 116 million barrels per day (bpd) by 2024, roughly 6 million more than it predicted a year ago. It contrasts the International Energy Agency’s (IEA) outlook that the world is at the “beginning of the end” of the fossil fuel era.
Shipping freight rates remain depressed into the holiday shopping season, with the largest container carriers facing weaker volume as consumers continue to buy fewer goods.
Google announces new generative AI tools for doctors.?The company’s cloud business announced new artificial intelligence-powered search capabilities designed to help clinicians quickly assess information from different data sources. Given information is often stored across multiple systems and formats, the new tool will allow doctors and nurses to search it all in one place. Google plans to offer the tool to health and life sciences organizations through its Vertex AI Search platform.
United Auto Workers (UAW) reject Mack Trucks' offer in a surprise twist.?Roughly 4,000 UAW members rejected the tentative contract agreement with Volvo Group-owned Mack Trucks, opting to strike instead. About 73% of workers voted against the deal, which included a 20% pay raise over five years, a 10% general wage increase in year one for all employees, and a guarantee of no increases in health insurance premiums for the duration of this contract. As strikes continue at the Big Three automakers, the union is asserting its leverage, aiming for a blockbuster deal.
The market continues to monitor developments in Israel and the Middle East. The economic calendar is light today, and the market shows a strong risk appetite. Except for China and South Korea, large bourses in the Asia Pacific rallied. Japan’s indices jumped more than 2% and Australia by 1% to lead the region.
Europe’s SXXP is up 1.5% near midday, which, if sustained, would be the largest gain in nearly a month.
US index futures are firmer. After yesterday’s partial US holiday, US Treasury yields have fallen sharply. The 10-year yield is off 13 bps (to about 4.67%) in the European morning, and the two-year is off almost 9bps to straddle the 5% level. Note that the heavy supply of bills and coupons begins today. Europe’s 10-year benchmark yields are mostly 1-2 bps higher. The 10-year JGB yield eased a few basis points to about 0.77%.
The dollar is mixed. The euro and sterling are trading firmer and above their 20-day moving averages, building on a move that began last week and survived the stronger optics of the US jobs report. The dollar rebounded from slipping below its 20-day moving average against the yen to return to the JPY149 area. The moves seem to be stalling ahead of the US Open. Emerging market currencies are mostly firmer.
Gold gapped higher yesterday and is trading quietly in about a $5 range on either side of $1860.
November WTI also gapped higher yesterday, and it, too, is consolidating. It has been confined to about a $0.70 range on either side of $86.00. Last week’s low was near $81.50.
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The wholesale trade and inventories data and the results of the Fed’s survey of consumer inflation expectations are typically not market movers. This week's main data point is the September CPI, where the headline rate is expected to slow for the first time in 3 months. This week also sees almost a dozen Fed officials speak, though the views are primarily known. The takeaway is that the futures market has about a 20% chance of a hike when the next FOMC meeting concludes on November 1. The market is discounting almost a 37% chance of a hike before year-end. The FOMC minutes from last month’s meeting will be released tomorrow. Remember that the new economic projections showed that 12 of the 19 Fed officials still thought another hike this year would be appropriate. The others expected to stand pat. The median “dot” for 2024 Fed funds was raised to 5.1% from 4.6%. This implies two cuts rather than four were previously signaled in the June iteration. Note that the January 2025 Fed funds futures imply a 4.57% yield. The current effective rate is 5.33%. This suggests the market is discounting three cuts next year.
Crypto Market Rundown:
The global crypto market cap is $1.07T, a 1.62% decrease over the last day. Bitcoin has traded sideways for the past 24 hours, trading at $27,500 for the past day.??
Developer Robin Linus released a white paper titled "BitVM: Compute Anything on Bitcoin." Yes, you read that right. Somebody has created a virtual machine, i.e., a universal computer, to run on Bitcoin — which again will benefit mostly miners.
Top 5 Gainers on Uphold Ascent in the past 24 hours:??
Top 5 Losers on Uphold Ascent in the past 24 hours:??
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Please note that Uphold and its affiliates do not provide investment, tax, or legal advice. This message is for informational purposes only and takes no account of particular personal or market circumstances, and should not be relied upon as investment, tax, or legal advice. For investment, tax, or legal advice and before taking any action you should consult your own advisors. Note that digital assets such as cryptocurrencies present unique risks for investors. Please see our disclaimer regarding risks specific to holding digital assets before investing.