Nasdaq Markets Outlook

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

#marketseverywhere | "Rates continue to dictate the mood in equities. But so long as growth and earnings stay resilient, we think the stock market can cope with rates volatility. Recent price action corroborates our feedback from clients that positioning is light and pain trade is to the upside." -Barclays' Emmanuel Cau

* source: Barclays' Emmanuel Cau

| moderate (stubborn) inflation a risk, will keep yields elevated | MoM prints need to stay at 0.0% for inflation to hit Fed's target

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

| what drove inflation in September?

* source: Piper Sandler

| Rate hike odds have been falling as Fedspeak has been dovish with the abrupt rise in yields | *FOMC MINUTES SHOW ALL AGREED FED CAN 'PROCEED CAREFULLY'

* source: CME FedWatch Tool, created by Gavin Zaentz

* source: CNBC

| markets expecting rate cuts in 2024 but will it bring back inflation?

* source: Oxford Economics

| Economic Surprise Indexes are somewhat OK (US) to weak (Euro/China) but improving...

* source: Barclays' Emmanuel Cau

| will elevated geopolitical tensions push oil higher?

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

| THEMES: yields peaking for now? = helping market sentiment | stubborn moderate inflation a risk (CPI +PPI >expected) | where is oil going with geopolitical risks building? | Fedspeak turning dovish | Rising Federal Deficit | Optimism around upcoming Q3 earnings season | Q3 Bank earnings better than expected – will this earnings season be better than expected? | disappointing Treasury auctions, causing supply worries.

-by Shon Wilk, Nasdaq

1) KEY TAKEAWAYS

1) Equities + Oil HIGHER / Dollar + TYields LOWER

| geopolitical tension | China stimulus: a new stabilization fund to prop up stock market -BBG | Bank earnings in focus: JPM, C, WFC better than expected earnings | Oil prices rise over 4% after U.S. tightens sanctions on Russian crude sales

NEXT WEEK: "US activity data, Q3 GDP in China and the CPI in Japan. In Europe, the spotlight will be on inflation and labour market indicators in the UK.

From central banks, key events include the Fed's Beige Book, Chair Powell's speech, as well as rate fixings in China. Notable earnings releases include TSMC, Tesla and Lockheed Martin." -Deutsche Bank

DJ +0.4% S&P500 +0.5% Nasdaq +0.1% R2K +0.1% Cdn TSX +0.9%

Stoxx Europe 600 -0.5% APAC stocks LOWER, 10YR TYield = 4.608%

Dollar LOWER, Gold $1,905, WTI +3%, $86; Brent +3%, $89, Bitcoin $26,847

2) job market cooling off but still tight...

* source: Oxford Economics

* source: Grindstone Intelligence

3) US Magnificent 7 = AAPL, MSFT, GOOGL, AMZN, NVDA, META, TSLA
Europe Magnificent 7 =LVMH, L'Oreal, Hermes, Dior, Richemont, Kering, Ferrari

* source: BofA

4) THIS WEEK:

* source: Grindstone Intelligence

2) ESG, COMPILED BY NATHAN GREENE

Banks in Europe Get World’s First ESG Add-On to Capital Rules - BNN 

-The new requirements, outlined in a report published by the EBA on Thursday, mark the first in what’s set to be a continuous reworking of the capital framework within which European banks must operate. The goal is to reflect the increasing threat to financial stability that regulators now see from ESG factors such as climate change and inequality.

-Banks are highly likely to face bigger losses as the economy moves toward net zero emissions, though how big will depend on policies adopted to address climate change. Credit risk would more than double by 2030 in a so-called late push scenario compared with an increase of 60% in an accelerated transition, the ECB said.

The effect of climate policies on firms’ financing and investment: New evidence and policy options - CEPR 

-Firms with good environmental performance (e.g. low emission intensity, high patenting activity in climate mitigation) benefit from a lower cost of debt, particularly when policies are stringent. However, ESG scores appear to be a poor metric for firms’ transition risks.

-Simulations based on empirical estimates suggest mitigation policies may positively impact overall investment by benefitting top green innovators.

3) MARKETS, MACRO, CORPORATE NEWS

• Wider war in Middle East could tip the world economy Into recession-BBG
• China on brink of deflation again reveals still-weak rebound-BBG
• China's narrowing trade slump boosts recovery prospects-RTRS
• Euro industrial output up in August, but sharply down year-on-year-RTRS
• Israel releases images of slain children to support after Hamas attack-RTRS
• Gaza on the brink as air strikes and shortages leave no safe place-FT
• Israel links Gaza aid to hostages' release as humanitarian disaster looms-RTRS
• Iran says crimes against Palestinians to receive response from axis-RTRS
• US says it can deny Iran access to $6bn in funds held in Qatar-FT
• US must be ready for simultaneous wars with China, Russia-RTRS
• US stocks’ Peak-Rate Party spoiled by a Lousy treasury sale-BBG
• BofA says US stocks can avoid big drop if yields stay below 5%-RTRS
• Higher funding costs add stress while banks ready earnings reports-BBG
• China proposes stock stabilisation fund to lift economic confidence-FT
• Fed’s Collins says higher yields could reduce need for rate hikes-BBG
• Rates decisions ‘finely balanced’, says Bank of England chief economist-FT 

• OpenAI nears stock sale at $90B valuation with help of Middle East-NYP
• Deutsche Bahn nears sale of red London bus operator Arriva-FT
• TSMC expects U.S. approval to supply chip tools to its China factory-RTRS
• California preparing lawsuit to block Albertsons-Kroger deal-BBG
• Fidelity has little appetite for Finsbury Food bid-SKY
• Brooks Macdonald lines up defence adviser amid takeover interest-RTRS
• Didi plans 2024 Hong Kong listing in comeback bid-BBG
• Ford says it is 'at the limit' with UAW contract offer-RTRS
• Microsoft's $69 billion Activision Blizzard deal cleared by Britain-RTRS
• Kaiser Permanente resumes talks with healthcare workers union-RTRS
• Boeing, Spirit expand inspections for 737 MAX production defect-RTRS
• Qualcomm cuts jobs in California in effort to reduce costs-BBG
• Dollar General reappoints former CEO Vasos for second stint-RTRS

• Oil/Energy Headlines: 1) US crude oil output hits record after slow recovery from pandemic-RTRS 2) OPEC sticks to 2024 oil demand growth forecast-RTRS 3) Russia fuel exports jump in Sept despite OPEC deal, sanctions, IEA report says-RTRS 4) US sanctions two oil tanker owners for violating Russian price cap -FT 5) Non-Western tankers ship majority of Russian crude as G7 struggles to enforce price cap-Platts 6) Growing tanker fleet, cheaper freight challenge Russian oil price cap-RTRS 7) Russia will never be seen as reliable energy supplier, U.S. energy official says-RTRS