Nasdaq Markets Outlook

| Quote of the day | “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it." Albert Einstein

| all eyes on job market | ACHTUNG! "Important job market metrics are starting to flash “early recession” signals." -Jake Oubina, Piper Sandler

* source: CNBC

| lots of eyes on SLOOS (bank lending standards) = tightened but to a lesser degree | "banks’ lending standards are pro-cyclical – they ease AS the economy improves, they tighten AS the economy deteriorates...the better (worse) the economic outlook, the easier (tighter) banks are willing to lend" -Michael Kantrowitz

* source: Oxford Economics

| "SLOOS (bank lending standards) still at levels pretty much only seen when US recessions were imminent or already in full swing" -Jim Reid, Deutsche Bank | SLOOS leads GDP by a couple quarters - recession in 2024?

* source: Jim Reid, Deutsche Bank

| recent contrarian buying? but sentiment still meh...

* source: JP Morgan

| ACHTUNG! Bond market volatility is elevated...spillover effects? will it break something?

* source: Deutsche Bank

| Food for thought... | I see nothing but more economic growth and expanded living standards if played properly (free markets) | as per Adam Smith = one of the determining factors of the wealth of nations is population growth...

* source: BofA

| final phase of earnings | "Q3 results look stronger in the US (helped by Discretionary)than Europe. Margins resiliency has helped to ease the pain to Q3 earnings, offsetting the soft patch from sales. Guidance too portrays a higher than usual caution on top line than earnings, especially from Cyclicals. EPS revisions continue to trend lower." -Emmanuel Cau, Barclays

but earnings trouble ahead?... "During the month of October, analysts lowered EPS estimates for the fourth quarter by a larger margin than average." -Factset Insight

* source: Factset Insight

1) KEY TAKEAWAYS

1) Equities + Oil + TYields MOSTLY LOWER | Dollar HIGHER

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

-by Shon Wilk

DJ -0.2% S&P500 -0.2% Nasdaq +0.2% R2K -0.8% Cdn TSX -0.5%

Stoxx Europe 600 -0.0% APAC stocks HIGHER, 10YR TYield = 4.593%

Dollar HIGHER, Gold $1,985, WTI -3%, $79; Brent -3%, $83, Bitcoin $34,826

* source: Goldman Sachs Global Investment Research

2) Nasdaq Investor Flows by Bill Bailey + Mashaal Tahir

Surprisingly, long-only, institutional investors were mostly taking profits or paring risk back again in last week’s trading as the market rallied sharply for the best week of the year.

The only sector they were net buyers of was Real Estate.

Retail traders were also sellers of equities as they moved out of the Financials and Health sectors specifically. Likely as concerns bubble up over the banks carrying some additional stress on their books with interest rate pressure.

Hedge Funds emerged as the net buyers of equities over the weekly period as much of it is related to covering their shorts positions with concentrated activity in the Industrials, Materials and Energy sectors

Hedge funds pile into U.S. stock rally at fastest pace in 2 years: Goldman Sachs -G&M

* source: Nasdaq Investor Flows

3) central banks are turning dovish...as economic and labor data softening...

* source: JP Morgan

4) Performance...

* source: Goldman Sachs Global Investment Research

5) 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

Danish Funds Call for EU Due Diligence Law to Apply to Banks - BNN

Danish pension funds are calling for all financial institutions to be included within the scope of an EU proposal that would hold companies liable for environmental and social damage stemming from their value chains.
The EU Parliament and member states are currently negotiating the final wording of the Corporate Sustainability Due Diligence Directive. One of the most divisive issues is whether to include banks, insurers, asset managers and investors.

ESG Fund Flows & Performance by Barclays' Emmanuel Cau

ESG Fund flows continue to lag other equity funds, however, the % of ESG funds outperforming has improved compared to prior years (2022, 2021).

* source: Barclays' Emmanuel Cau

3) MARKETS, MACRO, CORPORATE NEWS

• S&P 500 nears its next roadblock after the best week in a year-BBG
• Record-setting push into both ends of yield curve set to pay off-BBG
• Fed’s Kashkari says too soon to declare victory on inflation-BBG
• Australia's central bank raises rates 12-year high-RTRS
• UK inflation will soon fall to match rest of world, BOE official says-BBG
• China’s import surprise offers hope as recovery risks linger-BBG
• Falling pork prices threaten to push China back into deflation-FT
• IMF upgrades China's 2023, 2024 GDP growth forecasts-RTRS
• Japanese wage growth strengthens for first time in four months-BBG
• German industry shrinks more than expected amid recession risks-BBG
• UK retail spending growth drops in run-up to Christmas-FT
• Fed says tight credit standards, weak demand persist at US banks-BBG
• The US banking system is still vulnerable, NY Fed blog says-BBG
• Israeli forces cut off north Gaza to isolate Hamas-POL
• Israel plans ‘indefinite’ controls over Gaza, says Benjamin Netanyahu-FT
• Civilians trapped in Gaza are running out of food, fuel and hope-BBG
• US plans to transfer $320 million in precision bomb equipment to Israel in sale approved earlier this year-CNN
• China culls spend in response to US trade hostility-FT
• US Congress is on track to be the most polarized ever, data shows-RTRS
• Shutdown deadline poses test for US Congress: Is compromise possible?-RTRS
• Will US voters believe they are better off with Biden?-FT
• Joe Biden’s weak polling numbers spark alarm among Democrats-FT
• Siemens AG seeks discount for Siemens Energy's stake in Indian JV-RTRS
• Carlyle to sell Japanese cosmetics supplier Tokiwa in $1 bln deal-RTRS
• Shein considering an offer for Topshop-TIMES
• Adnoc, OMV move closer to forming €30 billion chemical giant-BBG
• Ireland to cut AIB stake to 41% in latest share sale-RTRS
• Proxy firm ISS recommends vote in favour of Origin Energy bid-RTRS
• Japan's Daiwa Securities buys Irish M&A advisory IBI-NIKKEI
• Man United investors left in the dark over club’s fate, says top shareholder-FT
• WeWork goes bankrupt, signs pact with creditors to cut debt-BBG

Oil/Energy Headlines: 1) China's imports unexpectedly grow-RTRS 2) Investors dump crude oil and distillates as Mideast risk recedes-RTRS 3) OPEC+ Remains Positive on Oil Demand Growth Before Meeting-BBG 4) Oil giant Saudi Aramco’s profit slides 23% in third quarter on lower crude prices, volumes-CNBC