Stocks higher this past week, but on very bad breadth with declining stocks outpacing advancers on the New York Stock Exchange 1923 to 910 and on the NASDAQ Composite 3231 to 1725. Nothing to get overly concerned about, but just something to watch as several tailwinds remain in the form of better than expected Q3 Corporate Earnings Reports, an easing Fed (see below) and cooling trade tensions between the United States and China.
- The Fed came, they met, and they cut the Fed Funds rate by 0.25% to a range of 3.75% to 4.00% on Wednesday at the conclusion of their two-day meeting. However, during a post-meeting press conference, Fed Chair Jerome Powell urged caution in regard to another cut in December when the Fed is scheduled to next meet. In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”
- Speaking at an APEC CEO summit in South Korea, Nvidia (NVDA) CEO Jensen Huang says that Artificial Intelligence (AI) has “now achieved a virtual cycle. The AIs get better. More people use it. More people use it, it makes more profit, creates more factories, which allows us to create even better AIs, which allows more people to use it. The virtual cycle of AI has been designed, and this is the reason why you’re seeing the world’s capex going so fast.” This cap ex-plosion has also led to a market cap explosion in chip companies as well as hyper scalers.
- Microsoft founder and former CEO Bill Gates hassomewhat abandoned the “Climate Disaster” rhetoric stating that “climate is super important but has to be considered in terms of overall human welfare.” Gates cited disease and poverty on two areas that demand more attention.
- Citing “consistent macroeconomic pressures” for their missed estimates on revenue, Chipotle (CMG) CEO Scott Boatwright also noted that given the fact that the fast casual Mexican restaurant chain tends to skew younger, “we’re not losing that customer. They’re just coming less often.”
- According to a decision from Federal Court Judge Jack McConnell, SNAP benefits must be paid. McConnell said that “there is no doubt, and it is beyond argument, that irreparable harm will begin to occur if it hasn’t already occurred in the terror it has caused some people about the availability of funding for food for their family.” Blame the left. Blame the right. Blame the government bloat. Either way, the events leading up to this have been caused by both parties abdicating their responsibilities to their fellow Americans.
It’s The Economy…”
- The Conference Board’s Consumer Confidence Indexfell to 94.6 (-13.7% y/y) during October from 95.6 in September, marking the third consecutive monthly decline. The present situation indexrose to 129.3 in October from 127.5 (-5.0% y/y) while the expectations componentfell to 71.5 during October from 74.4 during September (-22.2% y/y). Those surveyed saying that jobs are “hard to get”rose to 18.4% of respondents during October from 18.2% in September while those claiming that jobs were “plentiful”inched up to 27.8% of respondents from 26.9% during those same months.
- The University of Michigan reported that its Final October Reading of Consumer Sentimentfell to 53.6 (-24.0% y/y) from a preliminary October 55.0 as well as from a final September 55.1. The final October expectations componentfell to 50.3 (-32.1% y/y) from a preliminary October 51.2 and from a final September 51.7. Lastly,thefinal October current conditions componentslipped to 58.6 (-9.7% y/y) from a final September 60.4 as well as from a preliminary September 61.2. According to the Survey of Consumers Director, Joanne Hsu, “a modest increase in sentiment among younger consumers was by decreases among middle-age and older consumers, Current personal finances inched up, while expected personal finances receded.” (Source, Univ of Michigan)
Economic Reportsscheduled to be released this week, include the following – on Monday, the October Manufacturing Sector Index from the Institute for Supply Management (ISM) and September Construction Spending; on Tuesday, September Factory Orders, the September U.S. Trade Deficit and the Job Openings and Labor Turnover Survey (JOLTS); on Wednesday, the September Services Sector Index from the Institute for Supply Management; on Thursday, Q3 U.S. Productivity, the Weekly Report of Initial Claims for Unemployment Benefits and September Wholesale Inventories; and on Friday October Non-Farm Payrolls; October Unemployment Rate; Preliminary November Consumer Sentiment and September Consumer Credit.
Q3 Earnings Season is ramping up. Companies expected to report quarterly earnings this week, to includeBerkshire Hathaway (BRKB), Palantir (PLTR), Advanced Micro Devices (AMD), Shopify (SHOP), Uber (UBER), Arista Networks (ANET), Amgen (AMGN), Eaton (ETN), Pfizer (PFE), Spotify (SPOT), Robinhood Markets (HOOD), Qualcomm (QCOM), ARM Holdings (ARM), Novo Nordisk (NVO), McDonalds (MCD), Toyota Motor (TM) and Constellation Energy (CEG)