Nasdaq Markets Outlook

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

"The bond vigilantes have been sleepy for a long time here, but they're waking up, and that's a danger for the economy and that's a danger for the stock market." -Ed Yardeni

| "Today we will get fresh reads on economic growth with the release of ISM and Markit U.S. PMIs." -Piper Sandler

| UMichigan’s consumer confidence fell "with sentiment remaining at recessionary levels...inflation expectations continue to trend lower despite rising gas prices" -Oxford Economics

* source: Oxford Economics

| "The Biggest Picture: 520 central bank rate hikes past 24 months likely ain’t finished breaking stuff…stay bearish/defensive & sell the last hike." -BofA's Michael Hartnett, The Flow Show

* BofA's Michael Hartnett, The Flow Show

| "Equities and bonds both fell in Q3 on renewed stagflation fears ...equities are at the mercy of a more disorderly rates market." -Barclays' Emmanuel Cau

* source: Barclays' Emmanuel Cau

| THEMES: persistent moderate inflation a risk | yield back-up + dollar rising | Fed = hawkish skip + rate cut expectations dialed back | "this year has been all about owning quality growth stocks" + high interest coverage stocks | a bifurcated market: wide gap between large cap and small cap performance | monetary tightening = equities compete w/ cash & bonds | drag on the economy = auto strikes, government shutdown, student loan payments ... | continued strong labor market | consumer confidence weakening

| Earnings season around the corner, can corporates hold up? | October seasonally weak for markets | Can the consumer hold up with higher rates biting + gas & food prices rising?

-by Shon Wilk, Nasdaq

1) KEY TAKEAWAYS

1) Equities MIXED, Oil LOWER, TYields HIGHER

| government shutdown averted | biggest monthly selloff in Sept since last Dec | bearish steepening of the curve (10 year treasury yields jumped ~50 bp last month) | concerns that inflation can reaccelerate.

DJ -0.3% S&P500 -0.1% Nasdaq +0.4% R2K -0.6% Cdn TSX -0.6%

Stoxx Europe 600 -0.5% APAC stocks MIXED, 10YR TYield = 4.641%

Dollar HIGHER, Gold $1,833, WTI -1%, $90; Brent -0%, $92, Bitcoin $28,433

2) Trade in ‘fear gauge’ at high as investors hedge amid fragile markets -FT

* source: Goldman Sachs Global Investment Research

3) 'the index is expensive, but the average stock is not" -BofA's Savita

* source: BofA's Savita

* source: Goldman Sachs Global Investment Research

* source: BofA's Savita

4) flows into fixed income + equities have been tepid at best...

* source: Barclays' Emmanuel Cau

5) The Pain Trade is NOT Over...

* source: Piper Sandler, Nancy Lazar

6) another bad week for Utilities and defensive stocks...energy rising as oil prices climb...not a bad week for small caps

* source: Factset, prepared by Gavin Zaentz

* source: Piper Sandler

7) THIS WEEK:

"Apart from the jobs report, key data releases also include the ISM indices. Investors will also focus on wages and business conditions gauges in Japan as well as the PMIs in China this weekend.

Central bank speakers next week include Fed Chair Powell and ECB President Lagarde." -Deutsche Bank

* source: Grindstone Intelligence

2) ESG, COMPILED BY NATHAN GREENE

Barclays Says EU Review of ESG Can Hit Fund Flows ‘Meaningfully’ - BNN

-Asset managers selling funds into the European Union risk having client flows “meaningfully” disrupted as regulators in the bloc consider a major overhaul of ESG investing rules, according to analysts at Barclays Plc.

Big Oil, heavy industry discuss emission curbs ahead of COP28 - Reuters

-The meeting, convened by COP28 president Sultan al-Jaber, was attended by U.S. Climate Envoy John Kerry and tackled issues such as commercializing hydrogen, scaling up carbon capture technologies, methane elimination and increasing renewable energy, a statement by COP28 said.

-Ahead of COP28, countries remain divided between those demanding a deal to phase out planet-warming fossil fuels and nations insisting on preserving a role for coal, oil and natural gas.

3) MARKETS, MACRO, CORPORATE NEWS

• Traders win reprieve after ‘political circus’ of shutdown fight-BBG
• Goldman sees earnings-led rally in big tech stocks after rout-BBG
• Trade in ‘fear gauge’ at high as investors hedge amid fragile markets-FT
• China stock investors say worst yet to come in property crisis-BBG
• Wall Street bankers hope for dealmaking rebound after boom and bust-FT
• BOJ discussed factors exiting easy policy Sept meeting; 10-yr JGBs falter-FT
• BOJ to buy additional bonds to curb rise in sovereign yields-BBG
• ‘Last mile’ of disinflation the hardest, warns ECB deputy head-FT
• Banks warned over impact of high rates-TIMES
• Some Democrats fear Bidenomics branding is backfiring-AXIOS
• Why a US recession is still likely — and coming soon-BBG
• Euro zone factory activity stuck in steep downturn-RTRS
• UK factory activity slows sharply in September – PMI-RTRS
• Australian home prices stay strong as RBA seen standing pat-BBG
• Japan's factory activity extends declines in September – PMI-RTRS
• Japan's business mood improves, capex firm in boost economic outlook-RTRS
• China’s manufacturing grows on stronger domestic demand-CAI
• (2nd LD) S. Korea's drop in exports eases in Sept. on chip sales recovery-YNA
• Biden seeks reassure Ukraine as war aid becomes US political battleground-FT
• Leaked doc shows Biden admin more worried about Ukraine corruption-POL
• Global supply chains key for China and Germany, He Lifeng says-BBG
• SoftBank-backed Lululemon rival Vuori said to plan IPO next year-BBG
• UBS not aware of DOJ probe into sanctions-related compliance failures-RTRS
• Exclusive: TDC weighs strategic options amid consolidation, sources say-RTRS
• Weight-loss drugmaker Carmot Therapeutics is considering IPO-BBG
• LVMH billionaire Bernard Arnault probed over possible money laundering-BBG
• Symbio interloper hires Goldman, Superloop cools its jets-AFR
• Credit Suisse, Mozambique secure out-of-court 'tuna bond' settlement-RTRS
• Cloud startup Thought Machine mulls London float-TIMES
• Pacific Current block trades after Regal walks-AFR
• BAE systems wins £4 billion UK contract for nuclear submarines-BBG

Oil/Energy Headlines: 1) Yellen concerned about evasion of Russia oil cap while prices climb-BBG 2) Iraq oil pipe will resume within a week, Turkey Minister says-BBG 3) Column-Asia's crude oil imports slip in Sept as price hike bites: Russell-RTRS 4) OPEC optimistic on demand, calls for more oil and gas investment-RTRS