Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
Market volatility continues, following falls earlier in the week, now we see a boost for US markets, as hopes of a debt ceiling resolution appears closer.
Plus there was more positive news on the Regional Banking issues.
That said, Fed Officials are still taking rates higher and earnings are looking weaker as consumers pull back, so recession is still a potential risk.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The continued pressures on US Regional Banks highlight the risks created by the changed interest rate environment – even if the scenarios are different from the 2007-8 GFC. But banks are under pressure as margins are compressed, and are needing to revisit their strategies, as both ANZ and Macquarie reposted this week. In fact, a credit crunch could well be on the cards.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The leading indicators relating to the US economy are screaming Stagflation, as the FED meets this coming week. Yet rates are likely to go higher to tackle rising costs, even as a credit crunch in underway. Not pretty.
The latest edition of our finance and property news digest with a distinctively Australian flavour.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts
A recent survey of Texas bankers provides a significant indication of the potential economic slow-down which is underway in the USA. While it is possible Texas may be an outlier, it does chime with other recent data, as household savings balances are being substituted for personal credit, lending standards are being tightened, and commercial credit is throttled back. Combined this is another significant indicator of a potential recession ahead.
The US Treasury is fast approaching the debt ceiling, which begs the question – what then? Will Government spending be crimped, will the ceiling be raised again, or will more unconventional strategies be deployed?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
In this week’s market update we as always start in the US, cross to Europe, Asia and end in Australia. Markets have started to look through the recession fears it seems, banking on the Fed slowing its rake hikes, and reversing later in 2023.
Yet the signals are still mixed, and earnings are clearly under pressure in many market sectors. But it does seem to me to be a question about seeing the wood for the trees. The bigger trend on markets still is pointing lower, despite the short term moves higher. We are not, I think out of the woods yet… remembering Central Banks over nearly 20 years have tried to engineer growth through massive stimulation and debt, and economies have been distorted beyond belief. As support is removed, asset values are still over done, and the cost of debt rises.
The Dow cut losses to close higher Friday, as investors bought the early-day dip in banks following a string of better-than-expected results, though concerns about a weaker economy linger. In the end the S&P 500 and Nasdaq finished at their highest levels in a month on Friday, leaving the S&P 500 up 4.2% so far in 2023.
For the week, the S&P 500 gained 2.7% and the Dow rose 2%. The Nasdaq increased 4.8% in its biggest weekly percentage gain since Nov. 11. The CBOE Volatility index -Wall Street’s fear gauge -closed at a one-year low. The U.S. stock market will be closed Monday for the Martin Luther King Jr. Day holiday.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
In the immediate run up to the Christmas break, on U.S. exchanges 9.81 billion shares changed hands, compared with the 11.16 billion averages for the last 20 sessions. So, we can expect to see some price action on lower volumes, and no real surprise that Wall Street’s three main stock indexes closed higher on Wednesday for their biggest daily gains so far in December with help from upbeat Nike and FedEx quarterly earnings, as well as improving consumer confidence and easing inflation expectations from investors.
Beaten-down tech stocks were snapped up as the climb in Treasury yields cooled following data showing that consumer confidence rose more than expected.
The Dow Jones Industrial Average rose 1.6%, to 33,376.48, the S&P 500 gained 1.49%, to 3,878.44 and the NASDAQ Composite added 1.54%, to 10,709.37.
The Conference Board’s consumer confidence gauge jumped to 108.3 from 101.4, beating economists’ forecast for a reading of 101.0.
Data showing a strong consumer sentiment, a key indicator of consumer spending, which drives the bulk of economic growth, eased fears about a recession, maybe….
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
A deep dive on the latest US CPI figures ahead of the Federal Reserve decision tomorrow. Numberwang is at work again, if you look carefully.
Interesting that markets and media seem to take the top level data at face value. Wonder why?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The Markets boomed on Thursday with the S&P 500 and NASDAQ racking up their biggest daily percentage gains in over 2-1/2 years after a better-than-expected inflation read in October sparked speculation the Federal Reserve might become less aggressive with interest rate hikes. Note though, not a pivot a slowing! More than 90% of stocks in the benchmark were in the green.
As a result, stocks in sectors across the board surged as the latest consumer price data cheered investors worried that ongoing interest rate hikes could hobble the U.S. economy.
“This is a big deal,” said King Lip, chief strategist at Baker Avenue Asset Management in San Francisco. “We have been calling the peak of inflation for the last couple of months and just have been incredibly frustrated that it hasn’t shown up in the data. For the first time, it has actually shown up in the data.”
This crimped Treasury yields and sparking a sea of the green in tech stocks amid hopes for the Federal Reserve to lean less hawkish on rate hikes and lower interest rates translating to better earnings returns later.
In the end, The Dow Jones Industrial Average gained 3.7%, the NASDAQ was up 7.4%, and the S&P 500 gained 5.5%. The Dow has now recovered about 17% from its closing low on Sept. 30, and it remains down about 9% from its record high close in early January.
The Labor Department reported that the consumer price index was up 7.7% from a year earlier, the smallest annual advance since the start of the year and down from 8.2% in September. Core prices, which exclude food and energy and are regarded as a better underlying indicator of inflation, advanced 6.3%, pulling back from a 40-year high. In fact, year-over-year, core CPI jumped 6.3%, along with several other months this year, the worst since 1982.
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
As Central Bank Rate Fest rolls on from the RBA on Tuesday, as expected the FED lifted the US interest rate target by 75 basis points overnight and reaffirmed continued hikes ahead. Later tonight we will get the Bank of England announcement, which is also expected to hike big.
The Fed’s unanimous decision lifted the target for the benchmark federal funds rate to a range of 3.75% to 4%, its highest level since 2008. “Slower for longer,” declared JP Morgan Chase & Co, chief US economist Michael Feroli in a note to clients. “The Fed opened the door to dialing down the size of the next hike but did so without easing up financial conditions.”
As a result, U.S. stocks ended sharply lower on Wednesday, with the S&P 500 suffering its worst rout on a Fed decision day since January 2021, as comments from Fed Chair Jerome Powell shattered initial optimism over a Fed policy statement that raised interest rates by 75 basis points but signaled that smaller rate hikes may be on the horizon.
The FED said its battle against inflation will require borrowing costs to rise further, yet signaled it may be nearing an inflection point in what has become the swiftest tightening of U.S. monetary policy in 40 years.
“It’s as if investors came to a haunted house and got candy, but once they unwrapped it, saw it was soggy broccoli,” said Max Gokhman, chief investment officer at AlphaTrAI.
The latest edition of our finance and property news digest with a distinctively Australian flavour.
Go to the Walk The World Universe at https://walktheworld.com.au/
