It was a choppy session to end the week with Thursday’s risk-off tone initially seeping into Friday’s trade amid ongoing concerns over AI valuations and following more weak data with the University of Michigan Consumer Survey painting a bleak picture of consumer sentiment amid the government shutdown. Stocks hit lows just after Europe left for the day before the downside gradually started to pare. A lift was seen in late trade on the Democrats offering a compromise by proposing a one-year extension of Obamacare subsidies to end the government shutdown. However, Republicans swiftly rejected this – but stocks stayed near highs into the closing bell with the S&P closing unchanged while the RSP and RUSSELL 2000 outperformed. The NASDAQ 100 lagged as big tech stocks were still pressured ex-Amazon, with NVIDIA weighed on after reports the US is to block NVIDIA’s sale of scaled-back AI chips to China. In FX, the U.S. Dollar was sold on weak US data again but off lows on the end of government shutdown hopes while the Canadian Dollar was the clear outperformer after a very strong jobs report. The Japanese Yen lagged amid the turn around in the risk-tone. T-Notes were little changed by settlement but upside was seen during the downbeat part of the session, with weakness seen as the risk environment improved. Attention this week is on supply. Crude and Gold prices were also choppy amid the choppy risk tone but Gold held onto its gains and traded either side of $4000, while crude settled green but closed the week red for the fifth time in six weeks. The Preliminary University of Michigan data for November was dismal. Sentiment fell to 50.3 from 53.6, and beneath the expected 53.2, while both Conditions and Expectations fell beneath the bottom end of the forecast range with the latter even tumbling into contractionary territory. Numerically, Conditions printed 52.3 (exp. 59.2, prev. 58.6) and Expectations 49.0 (exp. 50.3, prev. 50.3). 1yr inflation expectations ticked higher to 4.7% from 4.6%, with 5yr moving lower to 3.6% from 3.9%. Surveys of Consumers Director Hsu noted that with the government shutdown dragging on, consumers are now expressing worries about potential negative consequences for the economy. November’s fall in sentiment was widespread throughout the population, seen across age, income, and political affiliation. Hsu does note there was one key exception: consumers with the largest third of stock holdings posted a notable 11% increase in sentiment, supported by continued strength in stock markets. The October New York Fed SCE saw inflation expectations ease to 3.2% from 3.4% in the one-year forecast, while 3-year and 5-year forecasts were maintained at 3.0%. Unemployment rate and job finding expectations worsened, while job loss expectations slightly improved. Spending and household income growth expectations remained largely unchanged. Perceptions and expectations about credit availability improved, but respondents were somewhat less optimistic about their future household financial situation. The highlight of the report was that consumers’ perceptions of the jobs market worsened, while inflation perceptions improved – which would support the argument of doves on the Fed that they need to act and focus on the labour side of the mandate, but the hawks believe the Fed is missing more greatly on the inflation side. Vice Chair Jefferson said that policy decisions are taken meeting by meeting, and he added he supported the 25bps cut last week, as we already knew due to the vote composition. Jefferson noted policy rate is somewhat restrictive after the latest cut, and the Fed will proceed slowly as policy approaches neutral. He noted risks have shifted with downside employment risks rising. On data, Jefferson remarked the Fed still has a lot of data on the economy despite lack of official reports, and has enough data to make policy, but said it is not a question that official data is the gold standard. Finally, New York Fed President Williams said the Fed may soon embark on reserve management bond buying, which is technical, not a signal on monetary policy. He added the fed rate control toolkit has been working well, and he expects standing repo facilities to see active use as needed. Elsewhere, Oil closed higher by 0.5% while Gold ended a volatile week’s trading with a gain of 0.6% on Friday.
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For anyone following my Platinum Service it made 1272 points on Friday and is now ahead by 2507 points for November, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while 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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