Morning Brew October 23 2023
Senior Relationship Manager
Friday we saw a burst of risk off sentiment and it will be very interesting to see of the sentiment holds. Fintwit is gloom and doom, calling for a black Monday like in 1987 but we are also approaching the end of October up for a test of the old golden rule Sell in May and go away but remember to come back in November.
Cause of the move on Friday was rising yields – the 10 year is basically at 5% - and a curious disconnect that the USD Index seems to not follow yields at the moment. That basically means that traders are no longer willing to buy Dollars even if pays more.
On Friday, the Dow was down 0.9%, the S&P 500 down 1.3% and the Nasdaq down 1.5%, Regional Banks lost 3.5%. The Volatility index closed at its highest level since March 24th. The Bloomberg Magnificent 7 Index is in a precarious spot.
The US 500 broke the 200 day line to the downside while Silver closed above the 200d Moving average and is currently trading right on it.
The Dollar Index is stuck below 106 at the moment with EURUSD trading a 1.0580, GBPUSD 1.2150 and USDJPY 149.93. USDCHF and EURCHF are 0.8953 and 0.9470. Gold is trading at 1975 and needs to break the 2000/2050 for a clear break but it is has broken out against the Yen, the Yuan and the Aussie. Bitcoin has broken above the 30k and is trading at 30750.
Foxconn, a major supplier of Apple is facing a tax probe in China in what may be a further attempt to restrict Apple`s Sales in China.
We are heading into a busy week with earnings, economic data and central bank decisions while the geopolitical situation remains tense: Israel is attacking Hamas and China sent warships to the middle east. Reactions to the war in the middle East seems to be dominating western politics as well – conservatives were biggest gainer in the Swiss elections yesterday. Last but not least, Jim Jordan dropped out of the race for Speaker of the house, leaving US politics in mayhem.
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ontinue to trade carefully and consider options for directional bets, moves are fast and sharp and great on the right side while painful on the other.
Key Events this week:
- Data, Israel Rate decision, EU Consumer Confidence,
- Earnings Philips, Logitec,
- Data: Australia, Japan, France, Germany, EU, UK, US PMI,
- Earnings Coca Cola, Verizon, GE, 3m; Spotify, GM, Microsoft, Google, Snapchat, Visa, Texas Instruments,
- Data: Australia CPI, DE IFO, Canada Rate decision
- Earnings Boeing, ThermoFischer, T-Mobile, Hilton, General Dynamics, Meta, IBM, Service Now, Mattel,
- Data Japan PPI, Turkey Rate decision, ECB Rate Decision, US Durable Goods and GDP Advance,
- Earnings UPS; Northrop Gruman, Merck, Amazon, Intel, Ford,
- Data US Core PCE, University of Michigan
- Earnings Exxon, Chevron,