The Heard on the Street Recap: It’s Only Tuesday

Investors were in a jittery state of mind on Tuesday, with Halloween in the rear-view mirror but a Federal Reserve meeting and crucial jobs report on the horizon.

The Fed is widely expected to raise rates by another three-quarter of a percentage point on Wednesday. The key question for markets is whether it will signal any moderation of that pace in tightening in future meetings. Friday’s jobs report could also provide clarity on that front.

Investors didn’t seem inclined to make any big bets just ahead of those events. The Dow Jones Industrial Average slipped 80 points or 0.2% on Tuesday. The S&P 500 fell 0.4% and the Nasdaq dropped 0.9%.

There was some excitement in medical stocks after Johnson & Johnson agreed to acquire heart-device maker Abiomed Inc. in a $16.6 billion deal. Shares of Abiomed soared nearly 50%, in line with the premium offered by J&J. Pfizer gained 3.1% after posting a solid set of results, including higher guidance for Covid-19 vaccine sales, though Eli Lilly fell 2.6% after it cut revenue guidance.

Tech continued to be a weak spot. fell 5.5%, its market capitalization slipping below $1 trillion for the first time since April 2020. Google parent Alphabet declined 4.3%.

Source By: wsj

Markets Wrap

Hong Kong Leads Asia Advance Before Rate Decisions: Markets Wrap

Stocks advanced during the Asian trading session amid higher bond yields and investor focus on central bank decisions and the pace of further interest rate hikes.

An Asian equity gauge surged for the second straight day as the sell-off in Hong Kong and China shares paused. Tech shares gained more than 5% and led a rebound in Hong Kong equities, which on Monday slumped to the lowest since 2009.

Japanese shares climbed as the yen’s weakness supported sentiment for the nation’s exporters. Technology and EV battery companies pushed South Korea’s benchmark index higher.

US equity futures rose after the S&P 500 declined, weighed down by big tech. US Energy shares had whipsawed on news that President Joe Biden would call on Congress to consider tax penalties for producers accruing record profits.

Australia’s central bank raised interest rates by a quarter point as expected. The ASX 200 Index extended gains and Australian sovereign bonds enjoyed a little bit of a relief rally.

The small increase in Australia’s policy rate contrasts with expectations for another jumbo hike from the Federal Reserve on Wednesday.

Treasury yields dropped despite two-year US yields remaining elevated at around 4.4%. Swap markets are pricing in a 75-basis-point hike this week amid the Fed’s most-aggressive tightening campaign in four decades.

“Some bottom fishing activities today after heavy sell-offs” led to the strong rebound in Chinese and Hong Kong stocks, said Banny Lam, head of research at CEB International Investment Corp. “The markets might be volatile in the coming days, however, as investors are waiting for Fed comments about rate outlook on Wednesday. So I’m still cautious at the moment.”

Still, strategists including JPMorgan Chase & Co.’s Marko Kolanovic believe the Fed’s aggressive hiking is nearing an end, providing the prospect of relief for markets. The US will likely raise rates by 50 basis points in December and pause after one more 25-basis-point hike in the first quarter, he said.

Indicators such as the inversion of the yield curve between 10-year and three-month Treasuries “all support a Fed pivot sooner rather than later,” wrote Morgan Stanley’s Michael Wilson.

Looking ahead, Bespoke Investment Group said November has historically been one of the strongest months of the year for US stocks. The S&P 500 has experienced an average gain of 0.82% with positive returns 69% of the time, according to data going back to 1983. Over the last 10 years, the gauge saw a median advance of 1.26% and gains nine out of 10 times.

In currency markets, the yen is back within reach of the 150 level versus the dollar. Japan spent a record 6.3 trillion yen ($42 billion) in October to counter the yen’s sharp slide against the dollar, as it tried to limit speculative moves adding to pressure on the currency.

The offshore yuan declined, edging closer to its weakest on record, as China signaled a looser grip on the currency by weakening the fixing.

“We expect that strong dollar trend will continue at least into mid to early 2023,” Todd Jablonski, chief investment officer of asset allocation at Principal Asset Management, said on Bloomberg Television. “The strong US dollar likely correlates with peak US policy rates in early 2023.”

Elsewhere, oil gained and gold rose.

Key events this week:

  • US construction spending, ISM manufacturing index, Tuesday
  • EIA crude oil inventory report, Wednesday
  • Federal Reserve rate decision, Wednesday
  • US MBA mortgage applications, ADP employment, Wednesday
  • Bank of England rate decision, Thursday
  • US factory orders, durable goods, trade, initial jobless claims, ISM services index, Thursday
  • ECB President Christine Lagarde speaks, Thursday
  • US nonfarm payrolls, unemployment, Friday

Some of the main moves in markets:


  • S&P 500 futures rose 0.4% of 12:37 p.m. in Tokyo. The S&P 500 fell 0.8% on Monday
  • Nasdaq 100 futures rose 0.4%. The Nasdaq 100 fell 1.2%
  • Japan’s Topix index rose 0.5%
  • South Korea’s Kospi index rose 1.5%
  • Hong Kong’s Hang Seng Index rose 2.7%
  • China’s Shanghai Composite Index rose 0.9%
  • Australia’s S&P/ASX 200 Index rose 1.2%


  • The Bloomberg Dollar Spot Index fell 0.2%
  • The euro rose 0.2% to $0.9903
  • The Japanese yen rose 0.3% to 148.24 per dollar
  • The offshore yuan rose 0.1% to 7.3255 per dollar


  • Bitcoin rose 0.7% to $20,556.5
  • Ether rose 2.1% to $1,597.43


  • The yield on 10-year Treasuries declined three basis points to 4.02%
  • Yields on Australia’s 10-year bonds rose two basis points to 3.77%


  • West Texas Intermediate crude rose 0.8% to $87.20 a barrel
  • Spot gold rose 0.3% to $1,638.26 an ounce

Source By: Bloomberg


Stocks Mixed Before Earnings, Central Bank Moves: Markets Wrap

Stocks were mixed at the start of another busy week of earnings and key central bank decisions.

Europe’s Stoxx 600 index fluctuated, while US futures declined after posting their best two-week rally since November 2020. Chipmakers and Chinese stocks listed in the US fell in premarket trading.

The dollar rose and the yen fell as traders positioned for another large interest-rate hike by the Federal Reserve this week, widening the policy divergence with the Bank of Japan. The euro and the pound also declined.

The yield on the 10-year Treasuries rose to 4.06% after surging by nine basis points on Friday. Yields on UK gilts also advanced ahead of what could be the Bank of England’s biggest interest-rate hike in more than 30 years.

Meanwhile, wheat soared after Russia pulled out of a grain-export deal even as vessels continued to depart from Ukraine.

Euro-area inflation surged to a fresh all-time high, while the bloc’s economy lost momentum — reinforcing fears that a recession is now all-but unavoidable. That’s after a core gauge of US inflation accelerated in September, bolstering the case for more tightening.

Fed Chairman Jerome Powell “should be a bit less hawkish”at his press conference on Wednesday compared to after the last meeting, according to Yardeni Research. With the expectation that another 75 basis points is penciled in this week, “Powell will have to acknowledge that the federal funds rate is now further into restrictive territory and will be even more so come the FOMC’s December meeting,” it said in a note.

Economists surveyed by Bloomberg expect Fed officials will maintain its hawkish stance, laying the groundwork for interest rates reaching around 5% by March 2023, potentially leading to a US and global recession.

Brazilian assets are set to weaken on Monday after Luiz Inacio Lula da Silva won the presidential election. The extent of the market drop will depend on whether President Jair Bolsonaro will concede as a contested election would likely trigger larger losses.

European natural gas fell after two days of gains as unseasonably warm weather reduces demand and eases concerns about shortages for the winter and oil edged lower as weak economic data from China fanned concerns about energy demand, but it was still set for the first monthly advance since May on OPEC+’s planned supply cuts.

Gold headed for its seventh straight month of declines, the longest losing streak since at least the late 1960s.

Key events this week:

  • Companies reporting earnings this week include: Moderna, Pfizer, Airbnb, AIG, Maersk, Barrick Gold, BMW, Bharti Airtel, BP, ConocoPhillips, Estee Lauder, Ferrari, ING, Intercontinental Exchange, KKR, Mitsui, Newmont, Petrobras, Qualcomm, Restaurant Brands, Saudi Arabian Oil, SoftBank, Sony, Starbucks, Toyota, Uber and Yum! Brands.
  • Reserve Bank of Australia policy decision, Tuesday
  • US construction spending, ISM manufacturing index, Tuesday
  • EIA crude oil inventory report, Wednesday
  • Federal Reserve rate decision, Wednesday
  • US MBA mortgage applications, ADP employment, Wednesday
  • Bank of England rate decision, Thursday
  • US factory orders, durable goods, trade, initial jobless claims, ISM services index, Thursday
  • ECB President Christine Lagarde speaks, Thursday
  • US nonfarm payrolls, unemployment, Friday

Some of the main moves in markets:


  • The Stoxx Europe 600 was little changed as of 10:15 a.m. London time
  • Futures on the S&P 500 fell 0.5%
  • Futures on the Nasdaq 100 fell 0.7%
  • Futures on the Dow Jones Industrial Average fell 0.4%
  • The MSCI Asia Pacific Index fell 1.7%
  • The MSCI Emerging Markets Index fell 1.6%


  • The Bloomberg Dollar Spot Index rose 0.4%
  • The euro fell 0.3% to $0.9936
  • The Japanese yen fell 0.6% to 148.49 per dollar
  • The offshore yuan fell 0.7% to 7.3172 per dollar
  • The British pound fell 0.5% to $1.1553


  • Bitcoin rose 0.2% to $20,731.43
  • Ether rose 1.4% to $1,618.01


  • The yield on 10-year Treasuries advanced five basis points to 4.06%
  • Germany’s 10-year yield advanced four basis points to 2.15%
  • Britain’s 10-year yield advanced one basis point to 3.49%


  • Brent crude fell 1.3% to $94.52 a barrel
  • Spot gold fell 0.4% to $1,637.73 an ounce

Source By: Bloomberg


Where Are Markets Headed? Six Pros Take Their Best Guess

A massive selloff in bonds. A plunge in tech stocks. The implosion of cryptocurrencies. The highest inflation in four decades.

Amid a brutal and uncertain climate, we asked six heavyweights in the world of finance to share their thoughts on the state of the markets, how they have handled this year’s carnage and what they anticipate in the future.

The market watchers disagreed on some fundamental issues. Jeremy Grantham, best known for predicting the market crashes of 2000 and 2008, gave many reasons to be pessimistic even after the initial bursting of what he called “a super bubble.” Investing pioneer Rob Arnott, the founder of Research Affiliates, agrees the market hasn’t yet hit bottom. Lloyd Blankfein, the former chief executive of Wall Street giant Goldman Sachs Group Inc., GS 1.38%increase; green up pointing triangle says things aren’t as bad as they seem.

Most do agree this wild ride isn’t going to smooth out anytime soon.

Wait for peak fear

Investors should wait until markets have hit their bottom to buy, says Mr. Arnott. And that hasn’t happened yet, in his opinion.

Buy too early, and your investments will fall further. Buy too late, and you will have missed the best opportunity to make a profit.

U.S. stocks still look expensive to Mr. Arnott, the son of a pastor who turned a love of computers, math and research into investment advisory business Research Affiliates. He is known within his industry as the “godfather of smart beta,” a reference to funds that allocate money based on factors like companies’ dividend payments, sales, or volatility.

The problem is, identifying the moment of peak fear—when investors have gotten so pessimistic there’s nowhere for prices to go but up—almost always boils down to guesswork, Mr. Arnott said.

He is convinced U.S. stocks haven’t hit their trough. Why? The Shiller price-to-earnings ratio—a measure of the market’s overall valuation named after Nobel Prize-winning Yale economist Robert Shiller—shows that equities are still relatively pricey. The S&P 500 is trading well below its peaks during the dot-com bust and post-pandemic rally but far above the range reached during the worst of the 2007-09 financial crisis. That doesn’t seem to suggest that investors have reached the point of capitulation.

“I’ve been called a permabear,” he said. “But I’m a bear on things that are expensive. I don’t want to bother buying them, even if they could go higher.

Mr. Blankfein, who steered Goldman Sachs through the brutal 2008-09 financial crisis, said the market’s outlook may not be as dire as many believe.

“The bad news is so stacked up that people are under-appreciating the fact that there are several plausible pieces of good news that could affect the market positively,” he said, citing a change in Russia’s approach to the war in Ukraine, the release of more oil by Saudi Arabia and a pause in rate hikes by the Fed. “Markets are not just the current economy, they look ahead.”

This year’s selloff has been equally punishing for many stocks, he said. “Move into those you wished you owned but were too expensive.”

Mr. Blankfein said it’s worth remembering the challenges of the moment always seem worse than those of the past, if only because the past is resolved. And history, like the markets, has cycles.

“You think things have never been scarier?” said Mr. Blankfein, who retired from Goldman in 2018. “Really? We lived through the Cuban missile crisis when we were stopping Soviet ships in international waters. These are really the most polarized times? I was around in 1968 when there were assassinations of public figures, when kids were blowing up draft centers, and the National Guard was shooting on campuses. We got through that, we’ll get through this.

“It’s never as bad as your worst fears or as good as your best hopes,” he added.

Justin Baer

Prepare for more chaos

Volatility is here to stay. That’s the view of Paul Britton, founder of investment firm Capstone Investment Advisors and someone who bets on haywire swings across global markets.

He expects rising interest rates to keep stoking turmoil, with few corners of the markets sheltered from the pain. Even bonds, typically thought of as a safer investment than stocks, have grown more volatile.

That makes many investors’ portfolios riskier than they appear, Mr. Britton says. The yield on the 10-year Treasury note, typically thought of as ultrasafe, has recorded some of its largest one-day moves of the past decade in recent months.

Source By:- The Wall Street journal


US Futures Slide as Yields, Big Tech Snap Rally: Markets Wrap

Stocks slid along with US equity futures as disappointing results from tech giants soured sentiment and marred a tentative recovery in equities. Treasury yields rose.

Contracts on the tech-heavy Nasdaq 100 pared losses to trade 0.6% lower on Inc.’s plunge after hours as its sales forecast trailed estimates. S&P 500 futures recouped most of an earlier decline to trade little changed. 

“We are starting to see some companies’ bleeding in terms of forecasts and unfortunately we’re starting to see the big caps in the market disappointing,” Banque Syz CIO Charles-Henry Monchau said in an interview with Bloomberg TV. “Earnings for us is still a headwind.”

Despite the downturn, the S&P 500 is heading for a second week of gains for the first time since August.

The 10-year benchmark Treasury yield briefly surpassed 4% as a rally in government bonds began to fizzle. Government bonds this week were buoyed by hopes that policymakers are preparing a downshift in aggressive rate hikes amid softer economic data.   

The ECB delivered a second straight 75 basis-point hike on Thursday but dropped a prior reference to rate increases continuing for “several meetings,” an outcome that was considered dovish. The central bank has a small margin for error after German inflation unexpectedly accelerated this month to 11.6% from a year earlier — far exceeding all estimates in a Bloomberg survey whose median forecast was 10.9%.

The Bank of Japan held its negative rate Friday, 10-year yield cap and asset purchases at the end of a two-day policy meeting, in line with the view of 49 economists surveyed by Bloomberg.

Economists still expect the Federal Reserve to hike by three-quarters of a percentage point for the fourth time in a row next week — and tighter policy is starting to crimp corporate earnings.

Amazon shares plunged almost 20% in extended trading before paring losses, after the tech giant projected sluggish sales for the holiday quarter. Apple Inc. was steady in post-market trading after posting weaker-than-expected iPhone and services sales for its latest quarter.

Chinese assets also remained in focus, with foreign investors dumping a record amount of mainland China stocks this week and sending Hong Kong equities to a 13-year low. President Xi Jinping’s tightening grip on power hasn’t had the same impact domestically, with mainland investors hunting for bargains in Hong Kong. 

Oil pared its weekly gain as investors shied away from risky assets on a dimming outlook for China and the wider global economy. West Texas Intermediate traded near $88 a barrel.

ESG is one of the largest, and most debated, investment approaches in markets today. Share your views on it. Take Bloomberg’s ESG survey. It’s not long, and we don’t collect your name or any contact information.

Some of the main moves in markets:


  • Futures on the S&P 500 fell 0.1% as of 8:31 a.m. New York time
  • Futures on the Nasdaq 100 fell 0.6%
  • Futures on the Dow Jones Industrial Average rose 0.4%
  • The Stoxx Europe 600 fell 0.2%
  • The MSCI World index fell 0.4%


  • The Bloomberg Dollar Spot Index rose 0.2%
  • The euro was little changed at $0.9966
  • The British pound was little changed at $1.1563
  • The Japanese yen fell 0.7% to 147.27 per dollar


  • Bitcoin fell 0.7% to $20,258.47
  • Ether fell 1% to $1,512.32


  • The yield on 10-year Treasuries advanced six basis points to 3.98%
  • Germany’s 10-year yield advanced 14 basis points to 2.10%
  • Britain’s 10-year yield advanced four basis points to 3.44%


  • West Texas Intermediate crude fell 0.7% to $88.45 a barrel
  • Gold futures fell 0.8% to $1,652 an ounce

Source By:- Bloomberg