Nasdaq Markets Outlook

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

#marketseverywhere |

| "There may be financial and corporate casualties, perhaps serious ones, as the economy unwinds the legacy of unnaturally low rates. But the market exists to price that risk too. Whatever else happens, it’s welcome news that the Fed at long last is letting the market do its vital work again."

-The Wall Street Journal Editorial Board; Welcome Back, Bond Market

The Great Unwind | "Given the uniqueness of the situation it’s impossible to state with utmost confidence what the implications are." -Deutsche Bank, Jim Reid

* source: Deutsche Bank

* source: BofA's Michael Hartnett, The Flow Show

| Dovish Fedspeak over the last several days...TYields plateauing? | Nov + Dec rate hike odds collapsing | Fed officials head toward another pause after bond yields surge -BBG

*FED'S LOGAN: HIGHER YIELDS MAY MEAN LESS NEED TO RAISE RATES

*JEFFERSON: WILL KEEP IN MIND TIGHTENING IMPACT OF HIGHER YIELDS

* source: CNBC

Financial Conditions tightening...

* source: Goldman Sachs Global Investment Research

* source: BofA's Michael Hartnett, The Flow Show

| Good macro news is bad news as it will keep rates higher, anything to put an end to rising rates is bullish for equities...

* source: JP Morgan Asset Management

| Earnings: "While headline index earnings might have stabilized, it has been a tail of two markets with Tech, Discretionary and Comm Services sectors doing much of the heavy lifting" -Piper Sandler

* source: Piper Sandler

| Small business: "Optimism dips in September as inflation remains top problem...owners are pessimistic about future business conditions"

moderate and persistent inflation?

| "Equity markets have been at the whim of rates markets since summer. But while bonds have cheapened, resilient growth and earnings cushion equities, for now. So the battle b/w the two asset classes remains tense." -Barclays' Emmanuel Cau

* source: Barclays' Emmanuel Cau

1) KEY TAKEAWAYS

1) Equities HIGGHER / Oil + Dollar + TYields LOWER | more Fedspeak today + tomorrow 

| China Mulls New Stimulus, Higher Deficit to Meet Growth Goal -BBG

DJ +0.2% S&P500 +0.3% Nasdaq +0.3% R2K +0.7% Cdn TSX +1.0%

Stoxx Europe 600 +1.6% APAC stocks LOWER, 10YR TYield = 4.703%

Dollar LOWER, Gold $1,854, WTI -1%, $86; Brent -0%, $88, Bitcoin $27,369

2) "Given the uncertainty of future growth, investors should continue to navigate cautiously and not take all risk off the table in the case the economy remains resilient for longer."

-JP Morgan Asset Management

* source: Goldman Sachs Global Investment Research

* source: Piper Sandler

2) Performance:

* source: Oppenheimer Asset Management, John Stoltzfus

* source: Goldman Sachs Global Investment Research

3) Will default rates climb as lending standards are tightening?

* source: BofA's Michael Hartnett, The Flow Show

4) 2023 Q3 earnings for S&P 500 | "Consensus expects 2% sales growth, 55 bp of margin contraction to 11.2%, and flat EPS relative to last year. Excluding Energy, S&P 500 earnings are expected to grow by 5%. We maintain our S&P 500 EPS estimate of $224 (+1% growth) for 2023 and $237 (+5% growth) for 2024. We forecast S&P 500 EPS will grow by 5% in 2025." -Goldman Sachs Global Investment Research

* source: Goldman Sachs Global Investment Research

5) "After index-level declines in August and September, breadth is weaker than it's been all year."

* source: Grindstone Intelligence

6) THIS WEEK:

* source: Grindstone Intelligence

2) ESG, COMPILED BY NATHAN GREENE

DWS Executive Warns of ‘Nightmare’ Result as ESG Rules Revamped - Yahoo

-As Europe embarks on a wholesale review of the world’s biggest ESG investing rulebook, Dennis Haensel, head of ESG advisory at DWS Group in Frankfurt, says the complete makeover that some in his industry want would be a terrible mistake. 

-The European Commission launched a consultation into the Sustainable Finance Disclosure Regulation last month, after longstanding complaints from investors and national regulators that its ESG rulebook was full of holes. Some academic studies even suggest that SFDR has helped feed the very greenwashing it was designed to prevent.
 

Bank Watchdog Moves Ahead With New ESG Rule Feared Across Europe - BNN 

-The metric in question is the green asset ratio (GAR), with mandatory disclosure set to kick in from January. Supported by the European Central Bank and lambasted by the finance industry, the ratio reflects the share of a bank’s balance sheet that aligns with the EU’s list of sustainable business activities.

-“The banks are concerned the ratios are going be too low” and “they’re going to look bad because they’re too low,” European Banking Authority Chairman Jose Manuel Campa said in an interview at the EBA’s Paris headquarters.

3) MARKETS, MACRO, CORPORATE NEWS

• Israel pounds Gaza with fiercest air strikes ever, says border secured-RTRS
• EU backtracks on Palestinian aid freeze over Hamas attack-RTRS
• Saudi-China collaboration raises concerns about access to AI chips-FT
• EU plans anti-subsidy probe into Chinese steelmakers –FT-RTRS
• Iran's Khamenei says Tehran was not behind Hamas attack on Israel-RTRS
• ‘It thrust itself upon them’: Israel conflict jolts Joe Biden-FT
• Biden interviewed by special counsel on classified documents probe-BBG
• China mulls new stimulus, higher deficit to meet growth goal-BBG
• China’s economy misses Golden Week glow as property gloom persists-FT
• Country Garden says can't meet all offshore debt payments-RTRS
• Fed officials head toward another pause after bond yields surge-BBG
• BOE’s Mann calls for ‘aggressive’ policy to tackle inflation-BBG
• European Central Bank member says more rate hikes still possible-CNBC
• Janet Yellen sees no market ‘dysfunction’ from US bond rout-FT
• Fertilizer stocks jump with Israel conflict stoking supply concerns-BBG
• IMF urges bank regulators to toughen stance after March turmoil-BBG
• IMF warns of stubborn inflation and weaker global growth in 2024-BBG
• Australia consumer sentiment rises from ultra-low level-BBG
• Bank of America’s wrong-way rate bet hurts Moynihan’s growth pledge-BBG

• Truist is in talks to sell its insurance business for $10 billion-SEMA
• Door maker PGT rebuffs $1.9 bln offer from Koch-backed Miter-sources-RTRS
• Bain Capital postpones Virgin Australia IPO plans, sources say-BBG
• SoftBank’s Masayoshi Son looks for investing redemption-INFO
• London-listed San Leon Energy to unveil $185m Tri-Ri investment-SKY
• Lotte Chemical sells JV stakes in China, eyes other profitable markets-KED
• Evergrande creditors call pulled debt plan ‘complete surprise’-BBG
• Global PC shipments fall 9% in quarter seen as bottom for market-BBG
• Carmakers apply for French EV subsidies under more stringent rules-RTRS
• Unity CEO John Riccitiello is retiring after controversial pricing change-CNBC 

• Oil/Energy Headlines: 1) High oil prices, Iran fallout from Hamas attack bigger worries for Asia than supplies-PLATTS 2) US, Venezuela in talks for fresh oil sanction exemptions -sources-RTRS 3) Middle East conflict spurs bullish rush in oil options market-BBG 4) Oil bulls turned cautious before Middle East conflict-RTRS