An alarming spike in JOLTS job openings saw U.S. Equity Markets and Treasury Bonds crushed yesterday as the recent sell-off accelerated into the close. The data was released as the first suspected intervention in USD/JPY in twelve months saw USD/YEN plunge 300 points in a few minutes before stabilising, trading at 149 this morning. 10-Year Treasuries are trading 20 points higher in the past 24 hours at 4.87%. This move higher saw the NASDAQ 100 lead Tuesday’s decline with a loss of 1.63%. Federal Reserve Governor Michelle Bowman reiterated her stance that the central bank may need several interest-rate hikes to reach its 2% inflation target. Her comments come despite some of the biggest price slumps seen in three years, according to data from August. Bowman is concerned that high energy prices could erase the Fed’s progress in recent months. She remains sceptical that the trend is sustainable and believes the headway made on inflation will probably slow, given the recent rate-hike pause. The Institute for Supply Management’s (“ISM”) Manufacturing Purchasing Managers’ Index (“PMI”) rose nearly 3% from August to a reading of 49 in September. The recent data marks the slowest contraction (i.e., a reading below 50) in factory activity since November 2022. The Index was boosted by the Increased employment and the strongest production growth since last July boosted the index. The improvement suggests that the worst may be behind American manufacturers as they inch toward the contraction/expansion threshold. The era of monetary tightening is likely over, according to the billionaire hedge-fund manager of Pershing Square. At the same time, Ackman says he is seeing economic cracks forming, thanks to an overzealous Fed. High mortgage and credit-card rates are key factors slowing the “still solid” but “definitely weakening” economy. Ackman also predicts a rocky future for commercial real estate investors as their debt will be repriced to align with the current climate. According to Bloomberg’s Market Live Pulse survey, the majority of respondents think it will take a “severe crash” for the commercial real estate market to recover. Even more, roughly 73% of respondents believe the bottom won’t come until midway through 2024. Extreme rate hikes, courtesy of the Fed, have continued to wreak havoc on the sector by drastically increasing the cost of financing. Lenders are also having more trouble offloading their commitments since most buyers don’t think the market is close to bottoming out. However, according to a Barclay’s analyst, a serious downturn in commercial real estate won’t likely affect overall market stability because the debt is spread out across a wide array of investors to absorb losses. Tesla (TSLA) saw global electric-vehicle (“EV”) deliveries drop during the third quarter as the carmaker prepared factories for new production. The figure came in below Wall Street expectations, dropping to 435,059 vehicles, down from the 466,140 vehicles delivered in the second quarter. Despite the dip in deliveries, the company is still on track to produce and sell more than 1.8 million vehicles in 2023. Tesla has maintained its sales by reducing car prices throughout the year. The company will likely reveal more details during its quarterly earnings report scheduled for October 18. European Markets closed lower. The Bank of England’s (“BOE”) Catherine Mann cautioned against softening the fight against inflation. She firmly believes that the central bank forecasts a “fundamentally different” future “from the ones I consider likely.” She also emphasised that her forecast is on the upper end of the BOE’s projections. Mann argued that tighter monetary policy is needed to fight more frequent inflation shocks and to rein in stubbornly high demand and price pressures. In Asia, despite the suspected intervention in USD/JPY by the Bank of Japan, the Nikkei got crushed, closing lower this morning by 2.28%. Elsewhere, Oil rose 0.75% while Gold fell a further 0.2%, closing at a price of $1824.
To mark my 2875th 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 lost 460 points yesterday and is now down 665 points for October after closing September with a small gain of 228 points, after finishing August with 1485 points gain 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 3164 points in February, 4687 points in January 2054 points in December, 4789 points in November and 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 1.37% lower at a price of 4230.
The Dow Jones Industrial Average closed 429 points lower for a 1.29% loss at a price of 33,002.
The NASDAQ 100 closed 1.63% lower at a price of 14,565.
The Stoxx Europe 600 Index closed 1.10% lower.
This morning, the MSCI Asia Pacific closed 0.8% lower.
This morning, the Nikkei closed 2.28% lower at a price of 30,526.
Currencies
The Bloomberg Dollar Spot Index closed 0.09% higher.
The Euro closed 0.1% lower at $1.0473.
The British Pound closed 0.1% lower at 120.76.
The Japanese Yen rose 0.7% closing at $148.79.
Bonds
Germany’s 10-year yield closed 5 basis points higher at 2.97%.
Britain’s 10-year yield closed 3 basis points higher at 4.56%.
U.S.10 Year Treasury closed 11 basis points higher at 4.80%.
Commodities
West Texas Intermediate crude closed 0.75% higher at $89.49 a barrel.
Gold closed 0.2% lower at $1824.10 an ounce.
This morning on the Economic Front we have German, Euro-Zone and U.K Market Services PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed by Euro-Zone PPI and Retail Sales at 10.00 am. Next, we have U.S. MBA Mortgage Applications at 12.00 pm and a speech from ECB Member De Guindos at 12.40 pm. This is followed by U.S. Global Services PMI at 2.45 pm and ISM PMI at 3.00 pm along with Factory Orders. Finally, we have a speech from ECB Member Panetta at 3.00 pm and Fed Member Bowman at 3.25 pm.
Cash S&P 500
A massive spike in Job Openings yesterday saw the S&P get hammered as the Dollar and Bond Yields pushed higher. This morning 10-year Treasuries are trading at a new 16-year high at 4.87%. This move in Bond Yields is almost certainly guaranteed to mean one or two Banks become insolvent over the coming weeks. Interest payments on debt are now exceeding the entire U.S. military budget of $842 billion. None of this is sustainable knowing that the U.S. is heading to over $50 trillion in debt by 2032. This rise in Yields is inviting a recession via over-tightening of credit markets. We saw the BOJ intervene yesterday which will be a help for a lower Dollar. From my experience when a Central Bank intervenes it may lose the first couple of battles but will eventually win the war and drive the Dollar lower as we saw last October. Any sign of a pause in QT by the Fed will also drive yields and the Dollar lower which in turn will put a floor in the S&P. The Fear & Greed Index closed at 17 last night which is Extreme Fear. This is the lowest close since last October before the S&P bottomed. Incredibly the $BPSPX RSI closed at 10 last night while the McClellan Oscillator is becoming oversold, closing at -219 print. Every signal that I follow is extremely oversold. My signals have not worked for the past three weeks but there is no way you can justify a short position against this backdrop. After the S&P hit my second buy level at 4274 for a 4281 average long position I was stopped out of this position before the close at 4235 for a painful loss. I have rebought the S&P overnight and I am now long at an average rate of 4212. The 200 Day Moving Average comes in just below at 4201. It is 12 months since we have been below this key support level. I will have a ‘’Closing Stop’’ on this trade at 4189. My T/P level will be at 4248. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
No Change. I am still long the Euro at an average rate of 1.0510. The 14-Day RSI closed unchanged last night at a still oversold 28 while the Daily Sentiment Index is still in single digits. I will now lower my T/P level to 1.0565 while leaving my 1.0425 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
September Dollar Index
The BOJ intervention in the past 24 hours sees the Dollar trading unchanged this morning at 107.10. I am still short at an average rate of 106.75 with the same 106.40 T/P level. I will leave my 107.55 ‘’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
No Change. I am still long the DAX at 15245 as the market closed above my 15135 ‘’Closing Stop’’. This morning the DAX is trading lower at 15000. I will leave my closing stop unchanged for now and I will have no T/P level as I want to see how the price action develops from here during today’s session.
Cash FTSE
No Change. I am still long the FTSE at an average rate of 7530 with the same 7445 ‘’Closing Stop’’. It is a concern that the FTSE is back trading below its 200-Day Moving Average. The key question is will this be a false break or will the FTSE be able to trade back above 7500 and stabilise. I will leave my 7560 T/P level unchanged for now. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
The Dow is now more oversold on some metrics than during last October’s lows as seemingly we are replaying the exact same script. If you remember it was painful to be long given the tape and the negativity in the press before we bottomed out of nowhere and the Dow rallied 1800 points in two days. Last night the 14 Day RSI for the Dow closed at 24. The last time we had such a low reading was during COVID. I am long the Dow at an average rate of 33325 having cancelled my stop in a late email to my Platinum Members. Given the RSI reading I will continue to have no stop or T/P level on this position. If this view changes I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The late sell-off in the NDX saw the whole of Tuesday’s buy range filled for a now 14580 average long position. I will leave my 14395 ‘’Closing Stop’’ unchanged while lowering my T/P level to 14650. If any of the above levels are hit, I will be back with a new update form my Platinum Members.
December BUND
Higher Treasury Yields sees the Bund trading lower at 126.80 this morning. This move lower saw me add to my existing 127.75 long position at 126.65 where we opened. I am now long at an average rate of 127.20. I will leave my 126.35 ‘’Closing Stop’’ unchanged while lowering my T/P level to 127.95.
Gold Rolling Contract
No Change. I am still long at 1831 with the same 1840 T/P level. I will continue to look to add to this position at 1815 while leaving my 1803 ‘’Closing Stop’’ unchanged.
Silver Rolling Contract
No Change. I am still long Silver from three weeks ago at 24.05. In a change of strategy, I will have no stop or no T/P level on this position. This morning Silver is trading unchanged at 21.05. If this view changes, I will be back with a new update for my Platinum Members.
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