U.S. Indexes closed lower on Tuesday, with weakness seen in the wake of reports in the Information that internal data shows the financial challenge of renting out NVIDIA (NVDA) chips and its impact on margins. This hit the large-cap tech sectors and weighed on Indices before then hovering into the close. Oracle also sold off aggressively but closed off lows as several analysts were out defending the name, describing it as a buying opportunity. The downside in equities resulted in upside in T-notes, while Gold had been pushing higher anyway, with futures hitting USD 4,000/oz. Gold did briefly move off highs, tracking other metals (silver and copper), but managed to reclaim the brief bout of weakness, while silver and copper did not. In FX, the Dollar climbed further, supported by a weaker Euro and Yen as the currencies continue to take a beating after the French PM resignation and Takachai winning the LDP leadership election. However, the New Zealand Dollar underperformed ahead of RBNZ tonight, where market pricing is leaning towards a 50bps rate cut. As I go to post, the RBNZ have cut rates by 50 basis points. Oil prices were choppy in thin news flow, ultimately settling flat. Data highlights saw the New York Fed SCE post higher inflation expectations in the one and five-year forecasts, while the RCM/TIPP Economic Optimism index declined slightly – neither sparked a market reaction. Fed speak saw Miran continue to toe a dovish line while Kashkari appeared more concerned about inflation than the labour market. Elsewhere, the 3-year T-note auction was well received. New York One and Three-year-ahead inflation expectations rose to 3.4% (prev. 3.2%) and to 3.0% (prev. 2.9%), respectively. The three-year-ahead inflation expectation was unchanged at 3.0%. Concerning labour, one-year ahead earnings growth expectations fell 0.1% to 2.4%, its lowest reading since April 2021. The mean probability that the unemployment rate will be higher one year from now increased 2% to 41.1%, the mean perceived probability of losing one’s job in the next 12 months rose 0.4% to 14.9%, and the perceived probability of finding a job in the next three months if one’s current job was lost rebounded from a series low of 44.9% in August to 47.4%. Regarding households, the expected growth in household income was unchanged at 2.9% (in line with TTM avg), while nominal household spending growth expectations fell 0.3% to 4.7%. Expectations about year-ahead financial situations deteriorated slightly, with a smaller share of respondents reporting that their households are expecting to be better off a year from now. For stocks, the perceived probability that US stock prices will be higher 12 months from now jumped 0.9% to 39.8%. The gauge of US consumer confidence slipped slightly in October to 48.3 from 48.7, marking two consecutive months below 50, signalling continued pessimism. The report also notes it is below the 297-month historical average of 49.2. Within the survey, investor confidence declined 2.0%, while non-investor confidence rose 1.2%. Meanwhile, the Personal Financial Outlook improved to 55.6 from 53.4. The Confidence in Federal Economic Policies declined to 46.4 from 47.3. Looking ahead, the six-month economic outlook index fell to 42.8 from 45.5. It also highlights that the Financial-Related Stress Index fell to 63.3 from 65.3, noting that a reading above 50 signals increased stress. The last time it was sub-50 was in February 2020, before the COVID pandemic. Meanwhile, this month’s reading is above the 60.4 average since December 2007, signalling heightened financial stress relative to the long-term average. Raghavan Mauyr, President of TechnoMetrica, which conducted the survey, said, ” Concerns about inflation and the impact of tariffs remain high, with food prices standing out as the leading economic worry.” Fed Member Miran remains optimistic going forward, citing the removal of uncertainty and a more sanguine inflation outlook than other Fed members. Miran believes average recent inflation should moderate and does not see tariffs driving inflation by that much. Keep in mind, these are all well-known views of the Fed dove. Miran remarked on other known views, noting the real neutral rate is likely 0.5%, and he has a preference for policy to be forward-looking, given the lags of policy impact. Miran is optimistic the Fed will have the needed data by the October FOMC but added that private data does not fill the gap. Kashkari the Minneapolis Fed president says it is too soon to know if inflation will be sticky from tariffs, noting data is sending some stagflation signals. He is bullish on labour as workers have a very important role in the economy. He also said there is a lack of evidence supporting declarations of AI replacing workers. He believes it is far too soon to know the impact of AI on the economy. On rates, he reiterated that the Fed is committed to making decisions based on data and analysis, not political considerations. He is not convinced that a few rate cuts will translate to lower mortgage rates, and if the Fed were to drastically lower rates, he would expect the economy to have a burst of high inflation. Kashkari added that if there’s massive demand for investment in data centres, that will push up interest rates. Elsewhere, Oil closed higher by 0.3% and Gold by +0.5%.
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For anyone following my Platinum Service it made 470 points yesterday and is now ahead by 310 points for October after closing September with a gain of 3774 points after ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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