Nasdaq Markets Outlook

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

#marketseverywhere | BofA's Global Fund Manager Survey: "turns bearish again...hard [economic] landing expectations rising...lower bond yields = consensus next 12 months...investor cash levels rise..."

"In October, FMS investors rotated into energy, commodities, Japan, banks, and tech...and out of staples, EM, Eurozone, utilities."

* source: BofA's Global Fund Manager Survey

| Yields climb on retail sales +0.7% in Sept, much stronger than estimate -CNBC | upward revisions to gains in previous months...

* source: CNBC

* source: Oxford Economics

* source: Yardeni Research

market expecting some rate cuts in 2024

* source: Global Sachs Global Investment Research

| "The post war world has been defined by rising trade. Global integration depends on goods, commodities and data passing through a network of channels." -Deutsche Bank

"As much as 99% of international digital communications - and $10tn of financial transactions a day - pass through fibre optic cables draped on the sea bed. Many are barely thicker than a garden hose and are often in international waters..."

* source: Deutsche Bank

| "Note ongoing disconnect between equity market and growth expectations." -BofA's Global Fund Manager Survey

but profit outlook improving, end of earnings recession?

will CPI and yields fall? may not be a smooth sail...

* source: BofA

| Market Breadth = POOR ... back to Large/Mega Cap Growth

* source: Global Sachs Global Investment Research

| tricky markets to navigate for retail investors...

* source: Piper Sandler

| "There is not a lot of conviction in the market today. Between domestic politics, an escalating geopolitical crisis, and the unknown extent of the lagged effects of tightening, we are in an extremely uncertain backdrop." -Piper Sandler's Michael Kantrowitz

* source: Piper Sandler's Michael Kantrowitz

* source: Goldman Sachs Global Investment Research

| 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 MOSTLY LOWER / TYields HIGHER / Oil + Dollar HIGHER

| more Fedspeak this week... | Biden to visit Israel

DJ -0.2% S&P500 -0.7% Nasdaq -1.3% R2K +0.6% Cdn TSX -0.2%

Stoxx Europe 600 -0.6% APAC stocks HIGHER, 10YR TYield = 4.845%

Dollar HIGHER, Gold $1,927, WTI +0%, $87; Brent +0%, $90, Bitcoin $28,209

* source: Goldman Sachs Global Investment Research

2) Nasdaq Investor Flows by Bill Bailey

long-only investors continue to exhibit ongoing hesitation to participate as buyers...heavy sellers in the healthcare space.

After seeing retailers buying again last week, back on the sidelines with little participation over the past week and turned sour on the tech sector

We continue to see healthy index inflows lead to buying across the board.

* source: Nasdaq Investor Flows, Bill Bailey

3) PERFORMANCE: Large Cap Growth continues to dominate | #QualityMatters

* source: Goldman Sachs Global Investment Research

4) “Even though inflation has slowed, price levels are still very elevated, squeezing consumer real purchasing power, as nominal income gains slow. When shopping, do you notice that coffee price gains have slowed from 20% y/y to just 1.6%? Or do you see they’re 30% above their pre-Covid trend? Obviously the latter.” -Nancy Lazar, Piper Sandler

* source: Nancy Lazar, Piper Sandler

5) THIS 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

* source: Grindstone Intelligence

2) ESG, COMPILED BY NATHAN GREENE

Norway’s $1.4 Trillion Fund Sees More Net Zero Targets Set as Risks Mount - BNN

-Some 64% of emissions released by the 9,000 companies in the fund’s portfolio are covered by net zero 2050 targets as of the end of the first half of 2023.

-“The climate risk outlook has worsened. 2023 has been a real wake-up call for many — these weather events, these droughts and shortages of water and electricity are reshaping competitive advantages across industries around the world and will continue to do so” - Wilhelm Mohn, global head of corporate governance at Norges.

Oil producer Suncor tells Canadian lawmakers it is sticking to climate goals - Reuters

-Canada's second-largest oil producer, Suncor Energy, told Canadian lawmakers on Monday that the company remains committed to cutting carbon emissions, after its CEO's earlier comments raised concerns the company was backtracking on climate pledges.

3) MARKETS, MACRO, CORPORATE NEWS

• Biden to visit Israel as Gaza war deepens humanitarian crisis-RTRS
• Blinken’s whirlwind Israel diplomacy hits hard Mideast realities-BBG
• Hamas seeks Palestinian prisoners' release-RTRS
• Putin arrives in China to meet Xi on rare international trip-BBG
• ECB 'quite some distance' from rate cuts-RTRS
• ECB Is watching oil for inflation risks, Lagarde tells ministers-BBG
• Bank of England easing ‘too strict’ approach to capital rules-LT
• Australia's central bank saw upside risks to inflation at Oct policy meeting-RTRS
• BofA poll shows bearish investors flock to cash, sour on economy-BBG
• Poor result of Japan’s bond sale signals weak demand from banks-BBG
• American work-from-home rates drop to lowest since the pandemic-BBG
• Holiday spending to grow 14% this year, Deloitte survey shows-BBG
• German investor morale brightens in October-RTRS
• New Zealand consumer inflation slows, still exceeds c.bank target-RTRS
• China data likely to show fragile economy in need of support-BBG
• China tells banks to roll over local government debts-RTRS
• Country Garden's entire offshore debt faces default Tuesday-RTRS
• The Trump loyalist close to becoming house speaker-BBG

• Goldman Sachs unhappy with Apple partnership-NYP
• EU to tighten rules for airline mergers-FT
• Activist Starboard takes more than 5% stake in Fortrea Holdings-SA
• Mitsubishi Corp considering bid for Fujitsu's chip unit Shinko Electric-RTRS
• Ambani’s youngest son, Anant, faces proxy firms’ pushback on board seat-BBG
• Activist Palliser Capital targeting Keisei Electric Railway-FT

• Oil/Energy Headlines: 1) Restart of Venezuela, opposition talks could lead to US sanction relief-RTRS 2) Putin visits 'dear friend' Xi in show of no-limits partnership-RTRS 3) Putin and Xi’s strengthening bond has a weakness-RTRS 4) Putin and Xi’s strengthening bond has a weakness-BBG 5) US Oil Drillers Show Signs of Pivoting From Shale to Offshore-BBG 6) Canada to amend environmental law, in line with Supreme Court ruling: ministers-Platts 7) Saudi Aramco CEO: COP28 should focus on cutting fossil fuel emissions, not output-RTRS 8) Big Oil calls Puerto Rico racketeering climate claims 'far-fetched'-RTRS