Daily Comments

Trouble for Apple spilled over to its suppliers. Asian markets were lower. The Nikkei 225 fell -1.52%, the Shanghai Composite dropped -1.47%. Eurozone Q3 GDP rose by +12.7%, more than expected. European markets were mixed. The DAX slid -0.36%. 10-yr Bunds yield -0.631%. The Q3 Employment Cost Index rose +0.5%. September Personal Income rose +0.9%, Personal Consumption Expenditures were up +1.4%, and the PCE Price Index added +0.25%. October Chicago PMI printed at 61.1 vs. consensus of 58.0, and final Consumer Sentiment was 81.8 vs. 81.2 estimated. Baker-Hughes reported that the U.S. oil rig count for 10/23 is 296, up +9 from the week prior. 10-Year Notes yield 0.874%. The Dec. US$ Index gained +0.07% to 94.045. Dec. gold was up +0.51% to $1,877.50. Dec. crude lost -1.47% to $35.64. After much of big tech posted earnings beats after yesterday’s close, they still sank today. Covid-19 cases continue to make headlines, and fears of more lockdowns fueled a sell off across major stock indices. October was the worst month for stocks since the pandemic outbreak in March. Stocks sold off hard, but within minutes of the close, bounced sharply on month-end window dressing to pare losses.

The BOJ left monetary policy unchanged as expected. Japan’s September retail sales fell -8.7% y/y. Asian markets were mostly lower. The Nikkei 225 fell -0.37% but the Shanghai Composite edged up +0.11%. European markets were mixed. The DAX added +0.16%. 10-yr Bunds yield -0.636%. Initial claims for 10/23 fell to a 7-month low of 751K vs. estimates of 758K. Q3 GDP soared at a record +33.1% annual pace vs. +30.9% consensus. Personal Consumption Expenditures printed at +40.7% vs estimates of +38.9%. September Pending Home Sales were down -2.2% MoM with consensus at +3.5%, and the Index reads 130.0 vs. 132.8 consensus. 10-Year Notes yield 0.828%. The Dec. US$ Index gained +0.57% to 93.940. Dec. gold slid -0.51% to $1,869.60. Dec. crude sank by -3.00% to $36.27. Economist Brian Wesbury notes, “Real GDP rose at a 33.1% annualized rate in the third quarter, the strongest quarter since the ramp up in war spending for World War II. The US economy has recovered to 96.5% of it’s pre-pandemic level of output.” The ES was higher overnight, strengthened during the day and on the close pared some gains.

Traders appear to be focused on how the next phase of the pandemic is likely to play out. Asian markets were mixed. The Nikkei 225 fell -0.29% but the Shanghai Composite moved up +0.46%. With covid-19 cases setting a series of records in some European countries, European stocks sold off. The DAX sank -4.17%. 10-yr Bunds yield -0.624%. The MBA Mortgage Applications Index for 10/23 was up +1.7%. Advance September International Trade in Goods showed the U.S. trade deficit narrowed from $83B to $79.4B, vs. expectations of $83.5B. Retail Inventories printed at +1.6% and Wholesale Inventories at -0.1%. The EIA reported that crude inventories for 10/23 at 4.3M bbls. 10-Year Notes yield 0.771%. The Dec. US$ Index jumped +0.57% to 93.455. Dec. gold lost -1.81% to $1,877.30. Dec. crude plunged by -5.69% to $37.32. After today’s selloff in the ES, the October gains are now gone. The “lockdown trade” is re-emerging. Continued headlines about record case numbers of covid-19 sent stocks lower. Shares of major tech companies also attracted sellers as their CEO’s are testifying before a Senate Commerce Committee. Stocks closed on the lows.