Nasdaq Markets Outlook

A mostly graphical daily curated roundup of the markets and the economy from Nasdaq's IR team.

| Quote of the day | “There are only three ways to meet the unpaid bills of a nation. The first is taxation. The second is repudiation. The third is inflation.” Herbert Hoover

| Powell to speak today | Bond Traders Are Betting for a Seventh Time on a Fed Shift to Rate Cuts -BBG | TYields falling (2024 = election year + concerns about the economy)

* source: Yardeni Research

* source: Nasdaq Economic Research, Michael Normyle

* source: CNBC

economic data surprises falling across the board...

* source: Goldman Sachs Global Investment Research

central banks are turning dovish...as economic + labor data softening...

| the rise of The Bond Vigilantes | "A new secular theme in the 2020s is bigger government, a big reason why bond yields have risen so dramatically in recent years." -BofA's Michael Hartnett

* source: BofA's Michael Hartnett

| "tech got a boost [yesterday] on move lower in bonds as Magnificent 7 breaks back out (MSFT hit new all time high, up 8 days in a row)" -Piper Sandler

* source: CNBC

* source: Grindstone Intelligence

| rising default rates (4.5% vs 4.1% historical avg) ... Can corporate America cope with its vast debt pile? -FT | "Businesses that grew accustomed to cheap debt during more than a decade of ultra-low interest rates must now adjust to a world where financing costs more."

US credit card delinquencies are at 11-year highs, and in credit markets we can see that US defaults are edging ahead of Europe now -Jim Reid, Deutsche Bank

| Food for thought... | "In the past 15 years revolutionary monetary policies of QE, ZIRP, NIRP, YCC (1343 rate cuts, $23tn of asset purchases by central banks) caused an unprecedented decline in short- and long-term interest rates; this collapse in the price of money was unambiguously positive for financial assets, particularly US stocks & HY bonds." -BofA's Michael Hartnett

* source: BofA's Michael Hartnett

1) KEY TAKEAWAYS

1) Equities + Dollar HIGHER | Oil + TYields LOWER

THEMES: 55 S&P 500 companies report this week | Elevated Q3 earnings beat rates + stable 2024 earnings estimates | Equity bounce on the back of a meaningful rate reprieve as softer macro data = bad news is good news | Dovish Powell takeaways and less hawkish BoJ policy tweak | Outsized CTA short positioning helped both stocks and bond rally | Seasonality and Buybacks = better momentum for market | Recession signaling from yield curve now steepening? | Continued geopolitical uncertainties | Broader indices trading above key moving averages, how long can this last? | Consumers showing signs of weakness | Money starting to flow back into markets from money market funds = more risk taking environment | Still no consensus among House Republicans regarding a stopgap measure to keep government open beyond 17-Nov | Busy week of Fedspeak | Elevated note auctions this week, will there be demand?

-by Shon Wilk

DJ +0.2% S&P500 +0.2% Nasdaq +0.1% R2K -0.2% Cdn TSX -0.1%

Stoxx Europe 600 +0.5% APAC stocks HIGHER, 10YR TYield = 4.593%

Dollar HIGHER, Gold $1,961, WTI -1%, $77; Brent -0%, $81, Bitcoin $35,312

* source: CNBC

2) Unforgiving market...

S&P500 companies see largest negative price reaction to negative EPS surprises since 2011 -FDS

* source: Factset Insight

3) Financial Conditions index remain tighter than average but has eased slightly...

* source: Goldman Sachs Global Investment Research

4) This week:

-University of Michigan's consumer survey

-Fed's SLOOS report.

-Q3 GDP in the UK and economic activity indicators in Germany.

-wages in Japan and inflation and trade reports in China.

-Central banks will also be in focus with appearances from heads of the Fed, the ECB, the BoJ and the BoE, as well as the RBA decision. Notable earnings include Walt Disney, Saudi Aramco, AstraZeneca and Uber.

2) ESG, COMPILED BY NATHAN GREENE

'ESG' Is Too Important to Ax, Investors Say - Financial Post

-Using environmental, social and governance metrics is now mainstream, according to 89% of investors who responded to a survey published Wednesday by Bloomberg. And 57% said the “ESG” label shouldn’t be replaced by something less incendiary, despite the backlash.

-Overall, the survey found that 85% of investors think ESG leads to “better returns, resilient portfolios and enhanced fundamental analysis.” Among executives surveyed, 84% said ESG helps them “shape a more robust corporate strategy.”

France Restricts ESG Fund Labels to Target Fossil-Fuel Industry - BNN

-France will only let funds use the national ESG label if they blacklist fossil-fuel companies that are expanding production.

-Finance Minister Bruno Le Maire said excluding oil and gas companies with expansion plans is “essential” to fighting climate change, according to a statement on Tuesday. The change will make it easier for green investors to know what they’re really getting.

3) MARKETS, MACRO, CORPORATE NEWS

• Fed officials want more time to assess impact of rise in yields-BBG
• Central bankers split whether war-related energy price jump fuel rates-FT
• BOJ Ueda signals chance of exit from easy policy before real wages rise-RTRS
• ECB must remain ‘vigilant’ due to uncertain outlook, Nagel says-BBG
• ECB can cut rates when clear inflation beaten, Kazaks tells TV3-BBG
• Bond traders are betting for a seventh time on a Fed shift to rate cuts-BBG
• Frustrations over housing market bleed into Americans' view of economy-YF
• US consumers keep tapping credit even as more fall behind on payments-BBG
• Commercial real estate lending plunged 50% last quarter-INS
• German inflation eases to 3.0% in October-RTRS
• Japan business mood improves, but global stress dims outlook-RTRS
• Analysis: Israel targets Hamas tunnels in new phase of Gaza war-RTRS
• Biden tells Bibi 3-day fighting pause could help secure release hostages-AXIOS
• Saudi Minister says Israel talks hinge on Palestinian question-BBG
• Xi to meet US business leaders for dinner in San Francisco-BBG
• As shutdown looms, US House Republicans search for stopgap solution-RTRS
• SEC’s Gensler sounds fresh alarm on leverage in treasuries market-BBG
• US calls for new limits to Wall Street bank backstop after March crisis-BBG
• China's 2023 growth target within reach -c.bank governor-RTRS
• China’s oil demand outlook is worsening as winter approaches-BBG
• Global asset managers talk up China as long-term bet-RTRS
• Rockstar plans to announce much anticipated ‘Grand Theft Auto VI’-BBG
• Sphere CFO quit after MSG boss James Dolan’s ‘yelling, screaming’-NYPOST
• Japan business mood improves, but global stress dims outlook-RTRS
• Amazon developing ‘Olympus’ AI to narrow gap with Microsoft, OpenAI-INFO
• Goldman Sachs plans to offload GM credit card – source-RTRS
• Nintendo raises outlook and game sales target for the ybear-BBG
• Apple delays work on next year’s iPhone, Mac software to fix bugs-BBG
• Automakers delay electric vehicle spending as demand slows-NYT
• UBS launches first AT1 bonds since Credit Suisse takeover-FT

Oil/Energy Headlines: 1) US 2023 oil output to rise by less than forecast, consumption to fall -EIA-RTRS 2) Venezuela's oil output to rise modestly after US sanctions relief -EIA-RTRS 3) Global fossil fuel production plans far exceed climate targets, U.N. says-RTRS 4) UK pledges annual oil and gas licensing rounds to slow output decline-PLATTS 5) Britain targets Russian gold, oil sectors in new sanctions-RTRS