The title says it all. Now come the fixers…strategists are cutting their year-end S&P 500 targets due to geopolitical risks, rate headwinds, and getting it wrong, per Bloomberg. Easier to cut estimates when one-third of your forecast is in the rearview mirror.
The yield on the 10-year UST note fell 8 basis points, after the US Treasury reduced its estimate for federal borrowing for the current quarter, citing stronger-than-expected revenue. Now, it “only” will borrow $776bn in 4Q23 after over $1 trn in 3Q23. Per Reuters, bond funds are headed toward a 3rd year of losses for the first time in roughly 40 years.
The Fed’s preferred wage data point (the Employment Cost Index) could incorporate slowing wage inflation in 3Q23, per BBG, which would support a Fed pause.
GS says, “We have CTAs modeled short -$100bn of global equities (0th%tile) after selling -$41bn last week. In the US, CTAs are short -$25bn of equities after selling – $20bn last week. Per GS model, they CTAs are now sellers of SPX in every scenario over the next week.” Remember yesterday’s rally? The Goldman most shorted basket was unchanged on the day, so shorts stayed put. UBS takes a different stance on CTAs. They say outflows are likely to pause from here, with no major flow expected in the near term. In FX, UBS notes that CTAs have built a very long dollar position over the past 3 mo.
Investors had expected fireworks and got a birthday candle in Japan, whose central bank only made minor changes to its policy settings, per the FT. So, the yen dropped back past 150 per dollar and slid to a 15-year low against the euro—the big action of market movements last night. Japan equities markets rose and close around the middle of its intraday range. But demand is getting hurt by rates, with Japan industrial production rebounding by less than expected, per Reuters.
Nvidia estimates ~$5bn in Chinese orders could go poof due to new US restrictions. BP missed on earnings due to weaker gas trading, per Bloomberg. Samsung beat on profit and expects memory to recovery next year, per Bloomberg. Siemens and Microsoft introduced a jointly developed, AI-powered assistant to help improve human-machine collaboration. They’re building out copilots for manufacturing, infrastructure, transportation, and health care, so watch out workers. I can only imagine what work will look like in 10 years. Alibaba’s cloud service revised its large language model, so the race is on. CAT is down because its order backlog is down, with slowing demand for its machines.
Twitter (X) is now valued at $19bn, per its new employee stock plan, which is less than half what Elon paid for it, per Fortune. Panasonic cut its full year outlook and pointed the finger at slower sales of Tesla EVs, per the FT.
JetBlue is down hard because it had a big loss this quarter, citing air traffic control limits and too many seats with not enough passengers.
Apple announced new iMac, laptops and 3rd-gen Mac processors, per Reuters. I can’t keep up with what version we’re on now.
Pinterest beat on earnings and guided for a better top and bottom line next quarter. Their new ad products are driving better engagement, and the Amazon partnership is ramping faster than expected.
But so is growth. EZ inflation is at a 2-yr low because it’s on the brink of recession, per the Guardian.
China factory activity contracted, per the FT. Hang Seng -1.69%, Shanghai -0.09%, Shenzhen -0.65%, ChiNext -0.48%.