Nasdaq Markets Outlook

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

TODAY: Window Dressing/Month & Quarter End Rebalancing 

| "September has lived up to its reputation as the worst month of the year for markets" -Deutsche Bank, Jim Reid

US Treasury yields fall = Euro zone inflation falls to lowest in 2 years as economy slows -RTRS

sticky to better than expected inflation data | PCE (Fed’s favorite indicator) rose less than expected in August +0.1% MoM / +3.9% YoY |including food + energy +0.4% MoM, +3.5% YoY

"Bonds continue to look oversold after the equally-sharpest rise in the global median real yield seen in at least 60 years." -Simon White, BBG

one of the sharpest rise in yields - what will it break?

* source: Yardeni Research

* source: Goldman Sachs Global Investment Research

job market remains tight... "Initial jobless claims remain at low levels, a sign that while labor market conditions are cooling, the job market is still characterized by very few layoffs." -Oxford Economics

* source: Oxford Economics

slowing economy? | economic data surprises weakening...

* source: Goldman Sachs Global Investment Research

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 + HIGHER, Oil MIXED + TYields LOWER | UAW strike against automakers continues | US government shutdown this weekend?

DJ +0.6% S&P500 +0.6% Nasdaq +0.9% R2K +0.8% Cdn TSX +0.7% Stoxx Europe 600 +1.2% APAC stocks MIXED, 10YR TYield = 4.512% Dollar LOWER, Gold $1,874, WTI -0%, $92; Brent +0%, $95, Bitcoin $27,021

2) Higher mortgage rates take their toll on pending home sales 

* source: Oxford Economics

3) Will consumers be under pressure? | "Less Cash & Tighter Lending Standards … Bad News For Spending" -Nancy Lazar, Piper Sandler

* source: Piper Sandler, Nancy Lazar

4) NEXT WEEK: 

"Apart from the jobs report, next week's 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

2) ESG, COMPILED BY NATHAN GREENE

Unrelenting Fed Hikes Are Good News for Asia ESG Investors - BNN

-Asia’s climate and ESG-labeled equity exchange-traded funds are attracting the most inflows versus US and European peers since at least 2010. Fund launches are up. Even ESG funds sold in Europe are steadily increasing their exposure to Asia.

-Asian companies are sheltered — at least on a relative basis — from the high-and-rising rates that are putting pressure on green energy investments. Valuations are “very reasonable” and the region is “way under-investigated, way less hyped as a whole,” compared with developed countries said Vicki Chi, a Hong Kong-based portfolio manager at Robeco.

Investors warn British PM over climate policy moves - Reuters

-The chiefs of several investor-focused groups and firms with more than $1.5 trillion in combined assets have written to British Prime Minister Rishi Sunak to warn him against watering down the country's climate policies.

-"We urge the government to uphold ambition and avoid backsliding on key climate policies.... In the absence of strong policy incentives from government, there is a significant risk that investment will flow to the regions and nations that are taking a more consistent, long-term approach," the investors wrote.

3) MARKETS, MACRO, CORPORATE NEWS

• Eurozone inflation hits two-year low-FT
• Inflation in Japan's capital slows but pressures persist-RTRS
• Automakers grow frustrated over pace of UAW negotiations-CNBC
• UK job market cooling from overheated level, recruiters say-RTRS
• French and Italian borrowing costs hit highest levels in a decade-TELE
• Public plays key role in Fed's economic influence, Powell says-MSN
• New Zealand consumer confidence lifts slightly, remains low-RTRS
• Biggest selloff in 25 years hits Japan bonds as BOJ loosens grip-BBG
• RBA to hold rates at 4.10% in October, deliver one final hike by end-2023-RTRS
• RBNZ to hold rates in Oct but stayin "watch, worry and wait" mode-RTRS
• Shutdown looms as US Senate, House advance separate spending plans-RTRS
• Hard-liners plot to replaceMcCarthy w/ a deputy as shutdown looms-WASHPO
• Senior US, China diplomats meet in Washington effort maintain dialogue-RTRS
• US-Saudi defence pact tied to Israel deal, Palestinian demands put aside-RTRS
• China trade council asks U.S. to "carefully consider" tech investment ban-RTRS
• Scholz dismisses fears of trade war with China over EVs probe-BBG
• Japan’s 30-year bond yield reaches highest level since 2013-BBG
• China’s economy improves in September, satellite data show-BBG
• Chinalooks torelax rules for some data exports-NIKKEI
• Microsoft discussed selling Bing to Apple as Google replacement-BBG
• ESPN nears broadcast deal with Tiger Woods’ golf league-FT
• BlackBerry sees ‘better than 50-50’ shot at wrapping review soon-BBG
• Diamond Sports seeks to cut NBA, NHL fees in last-ditch bid-NYPOST
• Bain Capital weighs deal for Advent’s CCC insurance software-BBG
• Portugal: Lufthansa interested in TAP sell-off-MB
• Trump’s sale of Bronx golf course to Bally’s worth as much as $100M-NYPOST
• Apax in exclusive talks to buy WGSN from London-listed Ascential-SKY
• Nike beats profit estimates, pledges to boost focus on running shoes-RTRS
• Larry Fink sees large opportunities for deals to transform BlackRock-BBG
• Microsoft discussed selling Bing to Apple as Google replacement-BBG
• Boeing CEO:Travel demand recovery ‘more resilient’ than he imagined-CNBC

Oil/Energy Headlines: 1)Unexpected China demand, output cuts behind surge in oil prices-NIKKEI 2) Plunging US oil supply is driving up prices around the world-BBG 3) Biden's 5-year offshore oil plan to have historically few lease sales, none in 2024, sources say-RTRS 4) Plunging US oil supply is driving up prices around the world-BBG 5) India imports of Russian, Iraqi oil rebound in September-RTRS 6) Russia considers fuel export quotas to tackle high prices-RTRS 7) South Korea takes less Saudi, US crude in Aug as economic indicators paint weak oil demand outlook-PLATTS