U.S. MARKETS:
Full Moon on the 28th! Lunacy abounds! Halloween is ahead. Could be Trick or Treat for the markets as indexes are flirting with big support. If they break, that’s the trick but if they hold, a treat is ahead.
Bitcoin and Crypto are the big story for traders in recent sessions. Though Bitcoin looks much, much higher, don’t be surprised if there is another correction. Long-term players should stay with it!
Stocks managed to finish Tuesday’s session mostly higher but showed a substantial move back to the downside during trading on Wednesday. The tech-heavy Nasdaq led the pullback, plunging to a five-month closing low.
The Nasdaq tumbled 318.65 points or 2.4 percent to 12,821.22, reflecting its worst day since February. The S&P 500 also slumped 60.91 points or 1.4 percent to 4,186.77, its lowest closing level in almost five months, while the narrower Dow fell 105.45 points or 0.3 percent to 33,035.93.
The particularly steep drop by the Nasdaq partly reflected a negative reaction to quarterly results from Alphabet (GOOGL), with the Google parent plummeted by 9.5 percent.
Shares of Google came under pressure after the company reported third quarter earnings that exceeded estimates but weaker than expected revenue from its cloud business.
A renewed increase by treasury yields also weighed on the markets, with the yield on the benchmark ten-year note spiking after ending the previous session little changed.
The surge by yields came as traders looked ahead to the release of key economic data in the coming days, including a preliminary reading on third quarter GDP due to be released on Thursday.
Economists expect the pace of GDP to show a significant acceleration to 4.2 percent in the third quarter from 2.1 percent in the second quarter.
Reports on weekly jobless claims, durable goods orders and pending home sales may also attract attention on Thursday, as traders look for additional clues about the outlook for interest rates.
On Friday, the Commerce Department is due to release a report on personal income and spending that includes readings on inflation said to be preferred by the Federal Reserve
Meanwhile, strong gain by Microsoft (MSFT) helped limit the downside for the Dow, with the software giant jumping by 3.1 percent after reporting better than expected fiscal first quarter results.
Sector News
Semiconductor stocks saw substantial weakness on the day, dragging the Philadelphia Semiconductor Index down by 4.1 percent to a five-month closing low.
Chipmaker Texas Instruments (TXN) posted a steep loss after reporting mixed third quarter results and providing disappointing fourth quarter guidance.
Considerable weakness was also visible among transportation stocks, with the Dow Jones Transportation Average tumbling by 2.4 percent. The average also fell to its lower closing level in almost five months.
Retail stocks also showed a significant move to the downside, resulting in a 2.4 percent slump by the Dow Jones U.S. Retail Index.
Biotechnology, commercial real estate and networking stocks also showed notable moves to the downside amid broad based weakness on Wall Street
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index advanced by 0.7 percent, while China’s Shanghai Composite Index climbed by 0.4 percent.
The major European markets also showed modest moves to the upside on the day. While the German DAX Index inched up by 0.1 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index both rose by 0.3 percent.
In the bond market, treasuries moved sharply lower over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, surged 11.3 basis points to 4.593 percent.
Looking Ahead
Trading on Thursday may be impacted by reaction to a slew of U.S. economic data, including a preliminary reading on third quarter GDP as well as reports on weekly jobless claims, durable goods orders and pending home sales.
On the earnings front, IBM Corp. (IBM) and Facebook parent Meta Platforms (META) are among the companies releasing their quarterly results after the close of today’s trading.
Comcast (CMCSA), Honeywell (HON), Merck (MRK), and UPS (UPS) are also among the companies due to report their quarterly results before the start of trading on Thursday.
Is China Selling U.S. Assets To Buy Gold? – FX Empire
Chinese investors seem to be the first ones to see the writing on the wall, dumping US assets to buy gold. Is this in support of their currency? Or are there geopolitical strategies being employed?
by Vladimir Zernov
According to the recent data from U.S. Treasury, Chinese investors sold $21.2 billion of U.S. assets in the month of August.
While Fed policy outlook was the biggest driver behind the sell-off in Treasuries, it looks that China’s activity contributed to the move that pushed the yield of 30-year Treasuries towards 5.00%.
I have recently written that high Treasury yields may serve as an additional bullish catalyst for gold. Traders are searching for safe-haven assets due to geopolitical tensions. Treasuries are considered to be among the safest assets in the world, but their price is falling for months, and some investors may choose to buy gold.
Chinese investors may be among the first ones to direct their funds to gold markets. There are two main theories about the reasons of China’s rapid selling of U.S. assets.
First, China needs to support the local currency, yuan. The country’s currency settled near multi-year lows against the U.S. dollar as investors focused on the problems of China’s economy. Selling dollar-denominated assets to provide support to yuan makes perfect sense. If China is selling U.S. assets to prop up its local currency, gold will get limited support.
GOLD TRADING ABOVE THE 150 MOVING AVERAGE – A ONGOING POSITIVE. POTENTIAL FOR NEW ALL TIME HIGHS SOON!
Most wars start on New Moons. Full Moon ahead!
HEADLINE: CHINA IS BUYING GOLD
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Mark Leibovit’s Market Forecast for the Major Markets
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CRYPTO UPDATE AS OF OCTOBER 25, 2023:
Buy bonds & gold, be underweight equities: JPMorgan strategist -Yahoo! Finance
JPMorgan’s Chief Global Markets Strategist Marco Kolanovic is all in on Safe Haven Investments as tensions in the Middle East heat up. Now, in a note to clients, Kolanovic reiterated that he is underweight equities and recommended buying bonds and gold, saying, quote, “While it remains uncertain whether bonds have bottomed, we add back 1% to our government bond allocation given geopolitical risk, cheap valuations, and less pronounced positioning.”
So not necessarily anything new that we’re hearing from Marco Kolanovic. But again, just a warning here to the Street just in terms of what exactly the next couple of months could look like when we talk about the pressure that we could potentially see on equities. We’ve seen many strategists here rein in some of their year end price targets for the S&P, what that looks like going into 2024 and how this all plays out. Obviously, a huge issue for investors. And we’re seeing that reflected from some of these analyst calls on the Street.
The S&P 500 is in a historic bubble and could crash by 63%, markets guru John Hussman warns -Business Insider
The S&P 500 is poised to drop 63%; this according to market guru John Hussman. Overvalued markets, coupled with a cracking economy, make this no surprise to many; however, it seems many investors think the party can keep raging. This “reckless speculation” may ultimately be their undoing.
by Theron Mohamed
franklin”Market valuations stand at one of the three great bubble extremes in US history,” rivaling the peaks of 1929 and 2000, the veteran investor and financial historian said in his latest research note. Those two previous periods of reckless speculation ended disastrously, and the current bubble is likely to unwind in similar fashion, he added.
The Hussman Investment Trust president based his bleak outlook on an analysis of stock-market returns over the last century or so. He cautioned that virtually every market cycle in history has ended with projected S&P 500 total returns returning to historical norms.
“At present, that would require a market loss on the order of -63% in the S&P 500,” he wrote, raising the prospect that the benchmark stock index could fall to around 1,600 points, its lowest level since 2013.
“That’s not a forecast, but it certainly is a historically-consistent estimate of the potential downside risk created by more than a decade of Fed-induced yield-seeking speculation,” he continued. “Buckle up.”
The war in Ukraine, along with the unprecedented attacks in Israel by Palestinian militant group Hamas last weekend, may have “far-reaching impacts on energy and food markets, global trade and geopolitical relationships,” Dimon said in a statement accompanying the bank’s third-quarter earnings release. “Thismay be the most dangerous time the world has seen in decades,” Jamie Dimon said. – Megan Henney, “JPMorgan CEO Jamie Dimon warns: ‘This May be the Most Dangerous Time the World has seen in Decades’: Sounds Alarm over Economic Outlook Amid Israel-Hamas War,” www.foxbusiness.com,
October 13, 2023.
Billionaire investor Ray Dalio said there’s a 50-50 chance a world war will break out in light of the Israel-Hamas conflict.
“In my opinion, this war has a high risk of leading to several other conflicts of different types in a number of places, and it is likely to have harmful effects that will extend beyond those in Israel and Gaza,” Dalio wrote in an essay titled “Another Step Toward International War,” which he posted Thursday on LinkedIn.
“Primarily for those reasons, it appears to me that the odds of transitioning from the contained conflicts to a more uncontained hot world war that includes the major powers have risen from 35% to about 50% over the last two years.”
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What about the January Barometer?
The January Barometer calls for a positive year-end outcome, but a lot can happen between now and then. Please check with previous editions discussing the calculation of the Barometer.
https://tinyurl.com/2rd9wv52
OPPORTUNITY TO ACCESS MARK LEIBOVIT’S PROPRIETARY VOLUME REVERSAL INDICATOR – THIS IS THE ONLY PLACE TO DO IT!
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COME ON, DAD. IT’S TIME TO EAT
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