Hey folks, as autumn approaches, and for most of us, the days getting shorter, the markets continue to press higher as I had indicated they would. But we should remain cautious at this time. Get my take below in this week’s round-up.
WEEKLY SOUND BITES:
The broader indices traded relatively sideways this week, however the S&P and NASDAQ hit new all-time highs with the busiest week for Q3 Earnings. Both AAPL and AMZN missed which saw their stocks pull back a bit while Tesla’s deal with Hertz moved it over the 1000 mark.
As Wall Street digested the latest quarterly results, recent economic data and the fact that GDP growth has slowed dramatically to 2.0% which was a sharp slowdown from Q2 GDP at 6.7%. Speaking of US growth, the Atlanta Fed cut its third-quarter GDP forecast to 0.2% this week, which has many economists fearful that the U.S. is on the verge of recession. There have been several reasons for the recent dip in U.S. GDP growth. Primarily, the COVID-19 Delta variant, port bottlenecks, supply chain glitches and rising inflation have all been blamed for the abrupt deceleration in U.S. economic growth. We also saw weekly jobless claims falling modestly more than consensus to a new pandemic-era low of 281,000. Wages and salaries got their biggest bump in at least 20 years last quarter, the Labor Department said. Pay surged 1.5% in Q3 and benefits grew 0.9%, both much higher than the pace in Q2. And with 10.4 million open jobs as of August, America’s workers have rarely been in a better position to command higher salaries. US economic officials maintain that inflation will recede, but pressure is growing on the central bank to raise rates to cool off prices
The evidence of slowing growth helped drive a retreat in intermediate- and long-term U.S. Treasury yields. Investment-grade corporate bond credit spreads—the additional yield offered over Treasuries and an inverse measure of the sector’s relative appeal—tightened through midweek as several issuers posted generally encouraging corporate earnings.
The European Union’s statistical arm issued a preliminary estimate, indicating that the eurozone economy grew 2.2% sequentially in the third quarter—an uptick from the 2.1% expansion recorded in the second quarter and above the 2.0% consensus estimate. The initial estimate from Eurostat pegged the headline eurozone inflation rate at 4.1% in October—the highest level in 13 years and above the market’s expectations. ECB President “Queen Bee” Lagarde acknowledged that inflation could “take longer to decline than initially expected” but reiterated the view that the rate of consumer price increases should slow to less than 2% by 2023.
As the Bank of Japan (BoJ) maintained its dovish stance, the yen also finished relatively unchanged from the prior week. As widely expected, the BoJ kept interest rates and its asset purchase program unchanged at its October monetary policy meeting unlike most other Central Banks looking to tighten their monetary policies. The BoJ also cut its projection for economic growth this fiscal year expecting GDP to expand by 3.4%, compared with 3.8% it had projected in July. And finally, Japan’s factory output shrank for the third straight month in September, falling 5.4% versus expectations of a 3.2% drop.
And in China, their tight grip on their Tech Sector continues with Beijing’s clampdown continues with restrictions on companies with more than 1 million users with a security review before they can send user-related data abroad.
Don’t Be A Rat Brain Trader – Be the Red Strip Zebra !!
Trade Smart !
hpb
