U.S. Indexes were bid into the US morning to peak just after the open before momentum turned with equities bottoming out after Europe left for the day. The trough was seen as Tech stocks took a hit, namely NVIDIA (NVDA), seemingly in response to a Reuters article that Anthropic updated its smallest AI model, which is much cheaper than its more expensive models, and performs as well or better. The news revived fears that tech names could be overpaying for AI chips from NVDA when the power needed may not be as much as initially thought – a similar reaction to the Deepseek fears. Elsewhere, there was a lot of focus on US/China relations. The Wall Street Journal reported that China is betting a hit on the US stock market will cause Trump to cave in negotiations. Meanwhile, Bessent and Greer spoke yesterday, both noting that the recent export controls are a global supply chain power grab and act of economic coercion. However, Greer suggested there is room for positive relations with China, and he expects restrictions will not be implemented. In FX, the Dollar was sold with outperformance in Sterling, Swiss Franc and the Japanese Yen, while the Canadian Dollar and U.S. Dollar underperformed. T-Notes bear flattened amid strong data from the New York Fed manufacturing PMI, while there is still a lack of official government data amid the shutdown, which still has no clear route to reopening. Oil prices saw further pressure with US/China and global oversupply fears in focus. Gold prices continued to push to fresh record highs, rising above USD 4,200/oz. Fed Governor Miran stuck to his usual dovish tone, but did acknowledge that moving in greater than 50 basis points increments is not necessary. However, he warned of the rising US/China tensions and noted that there is more downside risk than a week ago. He noted that with the change in the balance of risk, it is more urgent to get to a more neutral policy quickly, warning that the economy is vulnerable to shocks due to restrictive policy. He is less concerned about upside in inflation in the near future and notes the labour market has clearly weakened. He sees substantial disinflation from housing in the coming months. On data, he is hopeful to have data in hand for the October meeting, and he will not rely on the outlook, but he is not seeing anything in alternative data yet to cast doubt on his base case. On the neutral rate, he said AI investment could lead to a higher rate, but there is difficulty in knowing the neutral rate exactly. On the balance sheet, he said it is appropriate to end QT in the not-too-distant future, adding he is not sure what the marginal benefit of additional reductions to the balance sheet would be. Note, with a lack of government data, commentary from the Beige Book may get more attention than usual. It noted economic activity is little changed on balance since the prior report, but the outlook for future economic growth varied by district and sector. On the labour market, employment levels were largely stable in recent weeks, and demand for labour was generally muted across districts and sectors. In most districts, more employers reported lowering headcounts through layoffs and attrition, citing weaker demand, economic uncertainty, and in some cases, AI. Employers who reported hiring generally acknowledged improved labour availability, and some favoured hiring temp/part-time workers over full-time offers. Wages grew across all districts at a modest to moderate pace, while labour cost pressures intensified in recent weeks. The Beige Book has signs of stagflation, with little growth while prices continue to rise. However, employment levels were also largely stable, but more employers reported lowering headcounts. The New York Fed Manufacturing in October soared to 10.7 from -8.7, above the expected -1.4 and the top end of the forecast range. New orders and employment notably improved to +3.7 (prev. -19.6) and +6.2 (prev. -1.2), respectively, but prices paid also jumped to 52.4 from 46.1. Shipments rose back into positive territory, and inventories improved but remained in negative territory. Looking ahead, the six-month business conditions index printed 30.5 (prev. 14.8), but prices paid and received also moved higher. Overall, NY Fed Research Advisor Deltz said, “Manufacturing activity increased modestly, the third increase in the past four months. Price increases picked up and are expected to pick up further in the months ahead, and optimism about the outlook improved noticeably.” Elsewhere, Oil closed flat while Gold surged to yet another new ATH with a gain of 1.68%.
To mark my 3275th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it was made 360 points yesterday and is now ahead by 3675 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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