Apple pushes stocks higher despite disquieting economic data.

• Apple pushes stocks higher despite disquieting economic data.

• UBS says the famed 60/40 stock-bond portfolio is ripe for its best outlook in years.

• Joe Biden chides Exxon Mobil CEO Darren Woods over investor payouts as profits surge. (perhaps he should set a windfall tax then!)

• Biden questions Putin claim that he wouldn’t use nuclear weapons.

• Kremlin forces are on the attack again in northeastern Ukraine.

• Private lender cuts Canada mortgage business as defaults rise.

• New England utility urges emergency declaration over gas shortage.

• Flu season hits early in US with high hospitalizations and child deaths.

• Scientists unveil discovery that could end China’s rare-earths dominance.

• China ramps up lockdowns and Covid-19 restrictions across the country.

• Fed officials poised for fourth straight rate hike to tame inflation.

• Oil and gas mega-conference, ADIPEC and Aramco earnings.

• The Bank of England to begin actively selling sovereign bonds.

• Second round of voting in Brazil’s tightening presidential election. 

• Russia pulls out of the Ukraine grain deal.

• Goldman predicts US interest rates will go even higher. 

• Lula is victorious in Brazilian elections.

• Ukraine will ship grain despite Russia pulling out of a security deal.

• Questions continue to swirl over security breaches by Home Secretary Suella Braverman, calling into doubt Sunak’s political judgment in reappointing her to the position

• More strain ahead for China’s economy.

• Qatar takes jab at Europe on gas prices cap.

• Breaking away from Draghi’s policies.

HAPPY HALLOWEEN!!!!!

Central bank meetings, especially the FOMC will possibly define market direction until the end of the year. Plus we also have NFP and of course the U.S midterm elections next week which could see Biden lose control of one or both of the Houses! I have never really understood midterms (I am from the UK) as the potential is there to practically leave the government neutralised for two years with very little getting passed by government, leaving Biden with only Executive Orders (please correct me if I am wrong!).

Russia pulling out of the grain’s agreement will see grain prices spike again, increasing food prices, yet again.

Today is the end of the month so expect some portfolio rebalancing. Markets are starting the week red, which is no surprise considering their rally on Friday and the Fed raising rates again on Wednesday.

If you trade futures, the CME are adding 5 more sectors to the S+P mini index, providing more opportunities when a crisis hits or there is a need to hedge your stock portfolio.

Global News

Investors just got over a hectic week, contending with a blitz of earnings from some of America’s biggest companies as well as a pile of uncertain economic and geopolitical news, but what’s coming may be even worse. In the span of just seven trading sessions, there will be four major events that could shape the market’s outlook for the rest of the year. On Nov. 2, the Federal Reserve will announce its latest interest-rate decision and give hints about its path forward. Two days later, the October jobs report will provide an important look at how much hiring is slowing. On Nov. 8, the mid-term elections may usher in a change in which party controls Congress. And finally, on Nov. 10 there’s the consumer price index, a report that’s played a key role in shaping expectations for the Fed’s path. BB

US stocks ended a turbulent week with a sizable gain as Apple buoyed technology shares and a smattering of economic data suggested a wee bit of progress is being made in the Federal Reserve’s battle against inflation BB

· Paychecks are surging so much in some US cities that a wage-price spiral is now firmly embedded in the economies of metro areas with the highest rates of inflation.

· That’s deflating. One of the Fed’s preferred underlying inflation measures, the core personal consumption expenditures price index excluding food and energy rose 5.1% from a year ago, while the overall gauge was up 6.2%.

• The data indicate that inflation is still well-elevated and not cooling nearly as quickly as the Fed would like, solidifying bets that the central bank will raise rates by another 75 basis points next week and keeps a similar-sized move on the table for December.

• Those moves all but lay the groundwork for interest rates reaching 5% by March 2023, which would probably lead to a US and global recession. BB

Twitter employees were seen leaving the company’s San Francisco headquarters Friday, many carrying boxes of their belongings. The company has scheduled an employee meeting for next Wednesday, a person familiar said. In the meantime, Twitter will form a content moderation council. “No major content decisions or account reinstatements will happen before that council convenes,” Elon Musk tweeted. BB

Exxon Mobil, which along with the rest of Big Oil has been under intense criticism for raking in massive profits from high gasoline prices as Americans suffer at the pump, has now responded to President Joe Biden’s repeated assaults on the fossil-fuel industry. In particular, Exxon Chief Executive Officer Darren Woods bristled at accusations the company hasn’t been returning some its unprecedented profits to the American people in a time of crisis. Woods proclaimed that he is—in the form of dividends paid to those who hold Exxon shares. BB

Much of the focus on China’s momentous Communist Party congress has been on President Xi Jinping’s tightening grip on power, but that risks obscuring hints dropped during the gathering about how Beijing may be prioritizing economic growth in the coming years.

GDP targets were once so sacrosanct that they spurred Chinese officials to adjust monetary, fiscal and regulatory settings to ensure they were met. More recently however, growth objectives have become less fixed. This year’s onetime target of about 5.5%, for example, was effectively set aside amid continuing Covid-19 lockdowns.

But in his report to the congress last week, Xi sought to reaffirm that economic development remains the party’s “top priority,” reprising a decades-old slogan he has largely avoided over the past five years. Xi’s use of the development-first slogan, Citigroup Inc. wrote in a note, “should help dispel concerns that China might shift away from economic growth to ideological pursuits.”  BB

The contradictions in the US economy keep piling up. Economic output rebounded following two quarterly contractions, in part because of resilient consumers and business. Inflation remains stubbornly high, but unemployment is at historic lows. Companies are still vexed by supply-chain bottlenecks, but inventories are piling up. The housing market has tanked, but people are spending on goods and services. The mixed bag may mean the Federal Reserve will stay the course with another jumbo rate hike next week, and some economists are still betting the central bank’s strategy will bring on a recession. The European Central Bank, also facing a potential contraction, lifted its policy rate by 75 basis points this week and signaled it’s making progress in its inflation battle. The continent, bracing for an energy shortfall this winter as Russian chokes off supply, has for now found itself with surprise gas surplus. Take all the predictions with a grain of salt, Allison Schrager writes in Bloomberg Opinion. “We’re in unprecedented times, and it’s just as likely we’ll slog along full of uncertainty as it is that inflation will lead to a deep recession.” BB

The tech earnings gloom got even darker this week. Amazon warned of its slowest holiday season ever, Meta’s $676 billion rout forced it from the ranks of the world’s 20 largest companies, and chipmakers are warning of a supply glut and tumbling prices. The result: Cost cuts are coming. And even though Apple did just enough to avoid the misery, concern remain about how many people will actually buy its iPhones. BB

Leftist leader Luiz Inacio Lula da Silva has beaten incumbent Jair Bolsonaro in Brazil’s presidential election, in a dramatic comeback for the left-wing politician who was languishing in a jail cell just three years ago. All eyes now will be on how Bolsonaro responds and how quickly the US government decides to recognize the result and congratulate Lula. Bolsonaro has questioned the electronic voting system and raised the specter of potential fraud allegations. BB

Goldman Sachs economists now expect the US Federal Reserve to raise interest rates even higher than previously predicted. The central bank will lift its benchmark rate to a range of 4.75% to 5% in March, 25 basis points more than earlier expected, they say.  BB

China's official manufacturing PMI recorded a contraction in activity (49.2) in October, down from the very modest expansion (50.1) indicated in September. The non-manufacturing PMI index also registered a contraction, falling to 48.7 in October, down from 50.6 in September a month ago. ING

Ukraine, Turkey and the UN agreed to have vessels carrying food from Ukrainian ports sail today, despite Russia withdrawing from a deal to allow safe passage. Under the pact, 16 vessels will use the "maritime humanitarian corridor." Moscow pulled out of the deal after strikes on its Black Sea fleet. BB

Christine Lagarde told RTE that "defeating inflation is our mantra, our mission, our mandate," and she cited inflation to justify higher rates. Klaas Knot told Buitenhof TV that a recession is looking increasingly likely, but he'd still favor a hike of 50 or 75 bps in December.BB

Commodities

Grain prices may spike when markets open after Russia pulled out of a deal to allow Ukrainian crop shipments. Moscow blamed strikes on its naval fleet, and suggested without evidence that drone attacks were launched from Odesa, epicenter of the export program. A Russian official said it's "ready to completely replace Ukrainian grain on the world market." Turkey and the UN are trying to save the pact. BB

Exxon's record-smashing Q3 profit nearly matches Apple's - Exxon Mobil Corp on Friday smashed expectations as soaring energy prices fueled a record-breaking quarterly profit, nearly matching that of tech giant Apple. Its $19.66 billion third-quarter net profit far exceeded recently raised Wall Street forecasts as skyrocketing natural gas and high oil prices put its earnings within reach of Apple's $20.7 billion net for the same period. 

OPEC expected to stick to view of long-term oil demand rise - OPEC is likely to maintain its view world oil demand will rise for another decade, longer than many other forecasters predict, in a forthcoming major report, despite the growing role of renewables and electric cars, two OPEC sources said. The Organization of the Petroleum Exporting Countries is scheduled to update its long-term oil demand forecasts in its 2022 World Oil Outlook on Oct. 31.

Grain market braces for price flurry as Black Sea corridor in doubt - Wheat futures are expected to leap on Monday as Russia's withdrawal from a Black Sea corridor agreement puts Ukrainian exports at risk, analysts said. Moscow suspended its participation in the Black Sea deal on Saturday, in response to what it called a major Ukrainian drone attack on its fleet in Russian-annexed Crimea.

U.N., Turkey, Ukraine press ahead with Black Sea grain deal despite Russian pull out - The United Nations, Turkey and Ukraine pressed ahead to implement a Black Sea grain deal and agreed on a transit plan for Monday for 16 vessels to move forward, despite Russia's withdrawal from the pact that has allowed the export of Ukrainian agricultural products to world markets. Russia, which invaded Ukraine on. Feb 24, on Saturday halted its role in the Black Sea deal for an "indefinite term", cutting shipments from one of the world's top grain exporters, because it said it could not "guarantee safety of civilian ships" travelling under the pact after an attack on its Black Sea fleet. 

Stellar copper demand from Chinese solar makers seen slowing in 2023-CRU - Copper demand from China's solar power sector is seen slowing next year after stellar growth in 2022, said consultancy CRU, possibly weighing further on copper prices hit this year by a downbeat global outlook. China's solar and electric vehicle (EV) sectors have fuelled copper demand this year, keeping spot premiums in China strong and limiting a bigger sell-off in copper prices. 

Chile's Codelco profits slump 50% to September, cuts production target - Top global copper producer Codelco reported on Friday a 50.4% drop in pre-tax profit to $2.606 billion for the period between January and September, hit by lower copper prices and decreased production in some of its mines. The Chilean state-owned company said that a "significant drop of 12% in the price of copper sales" compared to the previous year explained almost half of the drop in profits.

Germany set to attach conditions to gas price 'brake', sources say - The German government is likely to insist companies that benefit from a planned "brake" on gas prices meet conditions, such as staying in the country or preserving 90% of the jobs they provide for a year, sources familiar with matter told Reuters. Berlin last month set out an energy relief package, including a gas price brake and a cut in fuel sales tax to help households and small and medium-sized business (SMEs).

Russia says UK navy blew up Nord Stream, London denies involvement - Russia's defence ministry said on Saturday that British navy personnel blew up the Nord Stream gas pipelines last month, a claim that London said was false and designed to distract from Russian military failures in Ukraine. Russia did not give evidence for its claim that a leading NATO member had sabotaged critical Russian infrastructure amid the worst crisis in relations between the West and Russia since the depths of the Cold War. 

Pakistan said to buy 385,000 tonnes wheat in tender - A government agency in Pakistan is believed to have bought about 385,000 tonnes of wheat in an international tender for up to 500,000 tonnes, European traders said on Sunday. The Trading Corporation of Pakistan (TCP) bought an estimated 125,000 tonnes from trading house Aston and 260,000 tonnes from Solaris, all at $373.00 a tonne c&f, traders said in initial assessments.

South Korea’s MFG buys estimated 134,000 T corn in tender - South Korea's Major Feedmill Group (MFG) has purchased an estimated 134,000 tonnes of animal feed corn in an international tender that closed on Friday, European traders said. The corn, expected to be sourced from South America or South Africa, was for arrival in South Korea in February 2023. 

Crypto/Digital

Dogecoin had a strong weekend, at one point on Saturday surging nearly 90% since the Tesla CEO became the Twitter CEO on Thursday.

· While it’s come down from those highs, Dogecoin was trading at $0.115534 on Sunday afternoon, according to CoinGecko. 

· The memecoin’s value has surged over the last four days, when Musk’s long-awaited acquisition became official.

· What’s the connection? Musk has called dogecoin “the people's crypto” and floated allowing users to pay in dogecoin for premium Twitter features. BB

Market levels (all analysis is based on CME futures contracts)

 
DISCLAIMER.

The content of this daily newsletter should only be considered a guide and views, opinions or content contained in this email is provided solely for information purposes and does not constitute investment advice or a solicitation to trade or invest.

Chris Tubby

Senior Director Trading and Education

Symax Fintech