U.S. Indexes closed mixed, with the NASDAQ 100 outperforming while both the Rusell and Dow lagged. Upside in the S&P and NASDAQ was primarily due to the heavy cap tech stocks, with Amazon (AMZN) lifting the Indices after it inked a USD 38 billion deal with OpenAI to supply NVIDIA (NVDA) chips. However, breadth in the market was weak with only Consumer Discretionary, Tech and Utilities posting gains while the equal-weight S&P 500 (RSP) was sold. Elsewhere, T-notes settled flat in choppy trade, selling off from morning highs on a slew of IG deals, including a chunky USD 17.5 billion from Google parent Alphabet. In FX, the U.S. Dollar saw marginal gains, but the Swiss Franc was the clear laggard after soft inflation metrics in Switzerland. Oil prices settled slightly firmer in choppy trade. Oil gapped higher after the OPEC+ agreement on Sunday, which hiked output by 137k BPD as expected in December, but to pause in Q1. Meanwhile, US President Trump threatened strikes in Nigeria due to the killing of Christians in the country. Economic data saw a miss in the ISM Manufacturing PMI report, but the Atlanta Fed GDP upgraded its Q3 growth estimate in wake of the data; set to be updated on Wednesday after the ISM Services PMI report. The October Manufacturing PMI fell to 48.7 from 49.1 in September, despite expectations for an increase to 49.5. The New Orders Index contracted for the second month in October, following one month of growth; the figure of 49.4 rose from the 48.9 recorded in September. The Production Index dropped 2.8 points to 48.2. Backlog of orders rose 1.7 pts to 47.9. Meanwhile, Prices Paid remained in expansionary territory, but the pace of acceleration fell to 58.0 from 61.9, below the 61.5 forecast and low estimate of 60.0. ISM Chair Spence said that the drop in the headline was led by the drop in production and inventories. Regarding the manufacturing side of the economy and GDP, Spence noted that 58% of the sector’s GDP contracted in October, down from 67% in September. However, the percentage of GDP in strong contraction is at 41%, up 13% from September. Following the report, the Atlanta Fed GDPNow model was tracking growth in Q3 at an annualised rate of 4.0%, up from the prior 3.9% estimate after Monday’s data. Fed Member Cook (voter) said yesterday: The recent cut was appropriate, given job market risks and noted that risks to both sides of the mandate are elevated. She described current policy as modestly restrictive and still positioned to reduce inflation pressures, though inflation remains elevated and subject to upside risks, particularly from tariffs. While the labour market is still solid, she is monitoring for signs of trouble, citing slowing hiring and payroll growth tied to labour supply shifts. She emphasised commitment to the 2% inflation target and said inflation should move there once tariff impacts pass through, though the pass-through is still ongoing. She also warned that AI could have large negative consequences for the labour market. Given the lack of data, she said it is important to be timely and use the most current incoming data for the December rate decision. She also said she is attentive to inflation expectations through the NY Fed and other surveys and would be ready to act if inflation proves more persistent. However, she is worried about the labour market because of the fact that it can deteriorate very quickly. Fed Governor Miran (voter) explained his reasoning behind the 50bps dissent at last week’s FOMC meeting, where the committee cut by 25bps. Miran’s reasoning was more or less the same as his dissent in September. Miran reiterated the view that the Fed is too restrictive, “no need to maintain restrictive policy for extended period.” Miran also cited views of a lower neutral rate. When asked why he did not support a 75bps rate cut, Miran said he is just making the case that he does not think that the economy is dysfunctional right now. Mirgan argues it is a mistake to make conclusions about policy from financial conditions alone. Finally, Goolsbee (voter) believes the level where rates will ultimately settle is a fair bit below current levels, but emphasised that rates should come down with inflation, not ahead of it. While still seeing some job market concerns, he has become more worried about inflation than employment risks, particularly in services. Goolsbee also noted that the economy remains strong overall, though in a period of transition, and warned against frontloading rate cuts. Stated that the threshold for cutting is now higher than at the last two meetings and wants to see clear evidence that inflation is coming down. Goolsbee added that the golden path for the economy is still possible, noting the economy has been pretty strong with weakness in specific sectors. He added that the housing market has been weak for some time. Elsewhere, both Oil and Gold closed flat.
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 made 635 points yesterday on the first trading session 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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