U.S. Equity Markets ultimately closed in the red but the NASDAQ 100 was the clear laggard as weakness in semis post-AMD (AMD) earnings offset strong Google (GOOGL) earnings. Semis were also hit after Ernst & Young announced it sent a letter of resignation to Super Micro (SMCI), which saw the stock plummet, weighing on Nvidia (NVDA). Elsewhere, highlights included a huge miss in Eli-Lilly (LLY) earnings with weight loss drugs missing estimates, sending the stock down by over 6% by session end. Meanwhile, on a more macro footing, U.S. Economic data was mixed, the ADP saw a huge beat – but some analysts are sceptical to revise their NFP forecasts due to the lack of correlation between the two, while Q3 GDP rose by 2.8%, beneath the 3.0% forecast and prior, but in line with the Atlanta Fed tracking estimate. The Q3 Core PCE rose by 2.2%, above the 2.1% forecast but down from the prior 2.8%. Aside from data, the focus laid on the UK budget, which when fully digested saw Gilts tumble on the inflationary prospects of the budget and heavy supply forecasts (more below). The downside in Gilts weighed on T-notes with the curve ultimately flattening while the 10yr settled flat. Crude prices settled in the Green, supported by a surprise draw in the US inventory data. In FX, the Euro was bid after hot German inflation numbers while Sterling was ultimately sold in the aftermath of the budget; the Japanese Yen was flat ahead of the Bank of Japan overnight. The ADP’s gauge of national employment surprised to the upside in October, printing 233k (beating expectations of 114k); the median change in annual pay for job-stayers eased to 4.6% Y/Y (prev. 4.7%), while the change for job-changers fell to 6.2% Y/Y (prev. 6.6%); ADP’s chief economist said that “even amid hurricane recovery, job growth was strong in October,” adding that “as we round out the year, hiring in the US is proving to be robust and broadly resilient.”. Note, ahead of the October NFP on Friday, Pantheon Macroeconomics stated there is no need to adjust their NFP forecast, given the poor track record of the ADP being able to forecast NFP. Advanced GDP data showed the U.S. economy growing 2.8% in Q3, short of the street consensus of 3.0%, but in line with the Atlanta Fed’s GDPnow tracking estimate. GDP sales rose to 3.0% from 1.9%; consumer spending picked up to 3.7% from 2.8%; the deflator rose 1.8% (exp. 2.0%; prev. 2.5%), while core PCE prices rose to 2.2% in the quarter (exp. 2.1%; prev. 2.8%). “Despite earlier fears that the U.S. economy was headed for recession, growth continued to out-perform other DMs,” Capital Economics writes. However, it notes that while consumption growth accelerated, real personal disposable income increased by a more modest 1.6%. “Normally, we would suggest the latter means the former can’t be sustained, but most recently there has been a pattern of income growth being revised up markedly.” It adds that overall, the economy appears to be doing “just fine.” In terms of the implications for Fed policy, Pantheon Macroeconomics say the solid Q3 data still won’t prevent the Fed from cutting rates further next week (money markets are assigning a 95% probability of a 25bps rate cut at the November 7th confab). Pantheon says that the 2.2% increase in the core PCE deflator in Q3 implies a 0.34% M/M increase in September, assuming no revisions to July and August. “That suggests a slight upside risk to our forecast of 0.26%, but we suspect that much of the gap between the latest monthly and quarterly numbers will be bridged by small upward revisions to the earlier months’ data.” Pantheon says the bigger picture is that underlying inflation is essentially back to the Fed’s 2%, with the far stronger prints in the first half of this year looking increasingly like a blip rather than anything more fundamental, and it expects core inflation to remain in check for the foreseeable future. “With the underlying inflation backdrop looking far more reassuring another strong quarter of growth in Q3 is no barrier to the Fed easing by 25bps next week, not least because the GDP numbers are subject to big – and endless – revisions, and job growth is trending downwards, September’s strong print aside.” In fact, Pantheon thinks that a clearer deterioration in the growth and labour market in the coming months will encourage the Fed to move more forcefully. US Pending Home sales rose by 7.4%, above the consensus rise of 1.0% and above the top end of analyst forecast ranges, which saw the highest estimate of 6.0%. The 7.4% rise took the index to 75.8 from 70.6, the highest level since March. Pending sales climbed in all four major US regions, led by the West, while Y/Y contract signings grew in the Northeast and West but were unchanged in the Midwest and South. The NAR Chief Economist Yun stated that M/M “Contract signings rose across all regions of the country as buyers took advantage of the combination of lower mortgage rates in late summer and more inventory choices,” noting that “Further gains are expected if the economy continues to add jobs, inventory levels grow, and mortgage rates hold steady.” The report also highlights that the Chief Economist expects the median existing-home price will rise to USD 410,700 in 2025 and to USD 420,000 in 2026, meanwhile, the annual 30-year fixed mortgage rate will slide to 5.9% in 2025 but then move higher to 6.1% in 2026. Finally, the U.K. Budget was released yesterday: Chancellor Reeves outlined a larger-than-expected headline tax measure which is largely at the function of a hefty change to employer NI levels. Furthermore, Reeves changed the fiscal rules largely as expected. Within the budget, updates around draught beer, soft drinks, vaping, housing and retail/leisure property rates sparked some action in respective stocks. As a whole, the OBR assessed the budget as favourable for near-term growth but then largely unchanged from the prior views towards the end of the forecast period. From this, it is worth cautioning that the time-lag of Labour investment measures might mean that while the budget is medium/long-term expansionary, the benefit of this hasn’t been realised in the forecast period. The modest 5yr growth assessment is likely the primary factor behind Reeves having headroom of just GBP 15.7 billion under her borrowing rule. Furthermore, the “golden rule” has headroom of just GBP 9.9 billion, a figure which is near to the “historically small” figure at the Spring budget and could be subject to a downward-revision, or possible removal, on any negative update/shock to the Treasury’s revenue generation. Elsewhere, Oil closed higher by 2.53% while Gold surged to yet another new all-time highs with a gain of 0.40%.
To mark my 3075th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 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 83 points yesterday and is now ahead by 2179 points for October after ending September with a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 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
Equities
The S&P 500 closed 0.33% lower at a price of 5813.
The Dow Jones Industrial Average closed 91 points lower for a 0.22% loss at a price of 42,141.
The NASDAQ 100 closed 0.79% lower at a price of 20,387.
The Stoxx Europe 600 Index closed 1.25% lower.
Yesterday, the MSCI Asia Pacific closed 0.6% higher.
Yesterday, the Nikkei closed 0.96% higher at a price of 39,277.
Currencies
The Bloomberg Dollar Spot Index closed 0.30% lower.
The Euro closed 0.4% higher at $1.0868.
The British Pound closed 0.2% lower at 1.2985.
The Japanese Yen rose 0.1% closing at $153.20.
Bonds
Germany’s 10-year yield closed 6 basis points higher 2.40%.
Britain’s 10-year yield closed 5 basis points higher at 4.36%.
U.S.10 Year Treasury closed 1 basis points higher at 4.26%.
Commodities
West Texas Intermediate crude closed 2.53% higher at $68.91 a barrel.
Gold closed 0.40% higher at $2786 an ounce.
This morning on the Economic Front we have German Retail Sales at 7.00 am followed by Euro-Zone CPI at 10.00 am. Next, we have U.S. Personal Income/Spending, Weekly Jobless Claims and the Employment Cost Index at 12.30 pm. Finally at 1.45 pm we have the Chicago Purchasing Managers Index.
Cash S&P 500
No Change: Given how slow October has been for volatility we have had a decent month, and I am not complaining. Ahead of Tuesday there is no point in taking massive risk as I prefer to watch and then make my next call. The level of debt continues to increase at an unstainable pace. The Fed is back in full stimulus mode and on that basis with market valuations are so high one could easily argue we are right back in one massive asset bubble. No matter who wins the Presidential Election next week either candidate has no choice but to continue to increase debt levels as nobody wants to take fiscal responsibility on their watch as it will lead to the inevitable crash like we had in 1987 and again in 2007. Nobody knows when this market is going to break but as I said yesterday when we see the number of well-respected traders short the Treasury Market and long the U.S. Dollar you have to respect their views. Paul Tudor Jones is one of the most respected traders out there and I have been following his work since he opened ‘’FINEX’’ the open outcry trading centre in Dublin back in 1995 when I was a floor trader on the exchange. My strategy is to continue to sell rips against new highs with a tight T/P level if triggered. I will be a strong buyer of dips per my macro levels that I shared with you in Tuesday’s commentary. Today, I will continue to be a seller on any further rally to 5878/5896 with the same 5911 ‘’Closing Stop’’. The S&P has short-term support from 5760/5776. I will now lower my buy level to this area with a lower 5749 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 5864. If I am taken long, I will have a T/P level at 5792.
EUR/USD
The Euro finally moved higher following a week that saw little or no price action. This move higher saw my revised 1.0869 T/P level triggered on my 1.0830 average long position and I am now flat. The Euro has support below from 1.0740/1.0820 where I will again be a buyer with a lower 1.0685 ‘’Closing Stop’’. If triggered, I will have a T/P level at 1.0870. I still do not want to be short the Euro at this time.
Dollar Index
No Change: I am still short the Dollar from last week at a price of 103.95 with the same 103.50 T/P level. I will add to this position on any further move higher to 104.75 while leaving my 105.25 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
The DAX finally broke lower yesterday as it finished Wednesday with a loss of 1%. I am still flat. This morning the DAX is trading at a price of 19200 as I go to press. We have short-term resistance from 19380/19480. I will now lower my sell level to this area with a lower 19605 ‘’Closing Stop’’. If triggered, I will have a T/P level at 19310. I still do not want to be long the DAX at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash FTSE
The FTSE got hit hard yesterday following a negative reaction to the Labour Government Budget. This move lower saw my 8160-buy level triggered. The FTSE is now outside the bottom of its Daily Bollinger Band. History tells us that this scenario does not last before having a counter rally. I will add to this position at 8090 while leaving my 8035 ‘’Closing Stop’’ unchanged. Meanwhile, I will also leave my T/P level unchanged at 8220. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Having hit a high above 42450 yesterday afternoon the Dow got hit for 300 points into the close as it finished the session on the low of the day. Normally this would be important but as we have seen nothing has mattered over the past two years as all dips are bought. The Dow has strong support from 41570/41830 where I will be an aggressive buyer with a lower 41395 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 42050. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
I am still flat the NDX as the market fell shy of Wednesday’s sell range before having a 200-point fall into the close. Ahead of tomorrow’s key NFP Report I will not chase the NDX lower leaving my 20720/20880 sell range unchanged with the same 21005 ‘’Closing Stop’’. I still do not want to be long the NDX at this time. If this view changes I will be back with a new update for my Platinum Members. If I am taken short, I will have a T/P level at 20610.
December BUND
The much higher than expected German CPI Report saw the Bund fall 150 points from its early morning high. This move lower saw my second buy level at 131.70 triggered for a now 132.10 average long position. I have been harping on for the past few months that Central Banks have been totally wrong in cutting rates and while one hot CPI Report is not a trend it will be interesting to see what the Euro-Zone CPI is like when released at 10.00 am. I will leave my 130.95 ‘’Closing Stop’’ unchanged while lowering my T/P level to 132.50. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold closed at yet another new all-time high and I am still flat. I will now raise my sell level slightly to 2810/2826 with a higher 2841 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 2795. I would rather wait for a correction before setting a new long position. If this view changes I will be back with a new update for my Platinum Members.
Silver Rolling Contract
My Silver plan worked well as the market traded lower to my 33.50 before rallying to my revised 33.94 T/P level and I am now flat. Silver has support below from 32.00/33.00 where I will again be a buyer with a wider 30.95 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 33.80.
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