Nasdaq Markets Outlook

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

#marketseverywhere | 

1987 Black Monday: "A bond-market crunch and monetary squeeze together led to a sudden, drastic reassessment of equity-market valuations. The same could happen today, particularly since the current jump in bond yields and monetary squeeze are much more pronounced than in 1987." 

-John Greenwood and Steve H. Hanke, Another Black Monday May Be Around the Corner

* source: JP Morgan

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| "We have argued in our previous reports that the combination of the move up in oil, bond yields and the USD is a challenging one for equity markets" -JP Morgan

* source: JP Morgan

| A recession around the corner? Piper Sandler's Nancy Lazar seems to think so...

* source: Piper Sandler

| where we are in the cycle + "how investors reward cash spending through the economic cycle" = "stocks returning cash to shareholders typically outperform in late-cycle environments"

* source: Goldman Sachs Global Investment Research

| Focus on balance sheet / #QualityMatters | "Amid higher rates, we expect investors will continue to focus on balance sheet strength and avoid companies that are most vulnerable to increased borrow costs. Performance since the start of September has reflected this dynamic as strong balance sheet stocks (GSTHSBAL) outperformed weak balance sheet stocks." 

-Goldman Sachs Global Investment Research

* source: Goldman Sachs Global Investment Research

| as markets slide contrarian buyers stepping in?

* source: JP Morgan

1) KEY TAKEAWAYS

1) Equities + Dollar + TYields HIGHER / Oil LOWER

| Euro Zone flash PMIs = weaker than expected this morning, hitting fresh cycle lows

| Xi visits PBOC (China Bank) to signal focus on economy...

| Seven large US tech companies (Magnificent 7) have driven all of the gains in global stocks this year -FT

DJ +0.8% S&P500 +0.5% Nasdaq +0.5% R2K +0.9% Cdn TSX +0.1%

Stoxx Europe 600 +0.1% APAC stocks MIXED, 10YR TYield = 4.882%

Dollar HIGHER, Gold $1,962, WTI -1%, $85; Brent -1%, $89, Bitcoin $34,394

* source: Goldman Sachs Global Investment Research

* source: CNBC

* source: Goldman Sachs Global Investment Research

* source: CNBC

* source: Piper Sandler

2) Nasdaq Investor Flows - by Bill Bailey

-Hedge Funds were large sellers of equities which supports the data Goldman Sachs recently reported - especially in tech/mega cap names

(Hedge funds have trimmed exposure to megacap tech names in recent days) -RTRS

-Institutional investors continue to be net sellers across the market which is where all focus currently is- notably in the Technology sector

-Individual Retail investors mostly on the sidelines, but largely selling off in the Energy + Financials sectors

-Continued strong index inflows across the market = concentrated activity in the Energy + Technology sectors

* source: Nasdaq Investor Flows

3) This week:

-global flash PMIs on Tuesday will be among the key highlights.

-preliminary US Q3 GDP report + personal income and spending data.

-ECB decision on Thursday

-corporate earnings: focus on Big Tech firms + major oil + healthcare companies.

* source: Grindstone Intelligence

2) ESG, COMPILED BY NATHAN GREENE

Citigroup CEO Jane Fraser Says the ‘New S’ in ESG Is Security - BNN

-“There is a new S in ESG which is security, be it food security, energy security, it could be defense, or financial security,” Fraser said on the first day of Saudi Arabia’s flagship investment conference. “That’s certainly a theme for all CEOs around the world - how to build more resilient companies and countries.”

Dealmakers see Chevron-Hess tie-up as the start of oil ‘arms race’ - FT

-The two biggest US oil companies have set off a race to secure petroleum reserves for the decades ahead, inking multibillion-dollar transactions to snap up the most promising production hotspots despite predictions that demand will peak by 2030.

-The US supermajors have taken a more aggressive stance on future oil production despite growing efforts to decarbonise the global economy. Neither Exxon nor Chevron have pivoted into renewables such as wind and solar, preferring “molecules rather than electrons”, in Wirth’s phrasing. That stands in contrast to their European rivals whose green push might make a significant oil deal more challenging.

3) MARKETS, MACRO, CORPORATE NEWS

• The charts revealing treasuries switching to headache from haven-BBG
• ‘Magnificent Seven’ tech stocks drive US equity domination to new highs-FT
• Hedge funds trim exposure to megacap tech stocks, banks say-RTRS
• Bitcoin soars to 1-1/2-year high on ETF bets-RTRS
• ECB faces pressure to start shrinking a €1.7 trillion bond pile-BBG
• Bank of England rate has peaked, to stay at 5.25% through Q2-RTRS
• Bank of Japan to conduct unscheduled bond-buying operation-RTRS
• RBA won’t hesitate to hike if CPI outlook raised materially-BBG
• Euro zone October PMI at near 3-year low, stirring recession worries-RTRS
• UK businesses stuck in reverse in October, survey shows-RTRS
• UK is losing jobs at the sharpest pace since the pandemic-BBG
• Japan to extend until April 2024 subsidies to curb fuel costs-RTRS
• Israel willing to delay Gaza invasion to discuss large release of hostages-AXIOS
• U.S. readies plans for mass evacuations if Gaza war escalates-WASHPO
• Intelligence shows Iranian-backed militias ready to ramp up their attacks against US forces in the Middle East-CNN
• Ukraine says Israel-Hamas war shows west must ramp up arms production-POL
• US-China economic talks start with first working group meeting-BBG
• China’s Wang to visit Washington this week amid Middle East tensions-BBG
• EU fails to agree on call for ‘humanitarian pause’ to allow aid into Gaza-POL
• German hard-left icon set to start a new populist party-POL
• Xi makes unprecedented PBOC visit in sign of focus on economy-BBG
• China set to approve $137 bln in extra sovereign debt on Tuesday-RTRS
• China growth may fall to 2.9% if property crisis widens, S&P says-BBG
• China sees largest capital outflow since 2016-STAN

• International Flavors mulls $3.5 billion sale of pharma solutions business-BBG
• India's JSW steel boss says 'nothing concrete' with Canada's Teck-RTRS
• Malaysia allow exports processed rare earths, ban raw material-MKTSC

Oil/Energy Headlines: 1) Global oil demand to reach its peak this decade, IEA says-BBG 2) Mega transatlantic oil mergers less likely after Exxon, Chevron deals-RTRS 3) India says 'energy security' guiding factor for future Venezuelan oil imports-PLATTS