Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
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Key Stories from the past week: A week of new highs
Saxo
Crypto bulls celebrated this week as Bitcoin breached $100,000. Wednesday saw record highs from all three of the major US indices. In terms of economic data, it was all about the labour market in the US with JOLTS, ADP, Jobless claims and NFP painting the picture. Political wobbles in South Korea and France drew some attention. The KOSPI trimming a couple of percent while the CAC40 ticked up indicating the uncertainty there was largely priced in. In commodities, OPEC+ delayed the production hike for the third time creating some price action and investor interest. More below on this week’s key stories.
Milestone level - $100,000
On Thursday, Bitcoin rallied sharply to breach the USD 100k price level for the first time, and even peaked as high as USD 104,278 in the minutes that followed. The sudden surge seemed to arrive on the back of more crypto-friendly administration picks by US President-elect Donald Trump & FED chair Powell’s rhetoric on Bitcoin which seemed to add some sense of legitimacy. Bitcoin is trading up +130% YTD which far outpaces the impressive 28% YTD from S&P 500. Saxo clients remain primarily long (90%) with slightly less long positions WoW which could indicate some profit-taking.
Theme Basket: Crypto & Blockchain
Jobs data, jobs data, and more jobs data
Traders looked to US labour market metrics this week to help shape expectations for the December FOMC meeting. The data was mixed, and Powell gave little new guidance. ADP, JOLTS and NFP indicated resilience, whereas jobless claims came in higher than expected and the November unemployment rate ticked up to 4.2%. The market reaction focused on the concerns for labour weakness - USD and treasury yields came off on Friday. Odds on a December rate cut increased with Fed Fund Futures pricing ~90% chance of 25bps cut.
US November Nonfarm Payrolls
Positive earnings, positive price move
Salesforce reported Q3 results this week which showed an 8% increase in revenue to $9.44 billion beating market expectations. The stock rose 11%. Salesforce seems to be back on a grow path following a profit warning in June. The company is gradually incorporating AI technology into its customer management and marketing automation products and the Q4 outlook suggests that the financial momentum has room to further improve - supported by AI growth and free-cash-flow generation. Saxo Bank experienced a net increase in Salesforce positions over the week.
The Evolving AI Narrative
Investors will continue to watch US indices next week to see if the Santa rally can continue. Key data that will impact sentiment includes US CPI on Wednesday, ECB policy meeting on Thursday, and UK GDP numbers on Friday. On the earnings front, Oracle Corp and BHP kick things off on Monday, and meme stock followers may be interested in Gamestop which reports on Tuesday.
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