Asian Stocks Up Before U.S. Inflation Data

Asian Stocks Up Before U.S. Inflation Data: Asian stocks have significantly risen with the climb of the world’s largest technology companies,
leading to new global stock market highs ahead of the anticipated U.S. inflation data.

 

Content

Rise in Japan and Australia

Performance of Technology Companies

Calm Markets Amid Data Flow

U.S. Inflation Trend

Interest Rate Cut Expectations

Implications of China’s Decision

Jerome Powell’s Statements

Krishna Guha’s Perspective

Economic Reports in Asia

 

 

 

Rise in Japan and Australia

Stocks in Japan and Australia rose, reflecting the bullish wave experienced on Wall Street on Wednesday.
The S&P 500 and Nasdaq 100 indices increased by more than 1%, with global stock indices reaching new record levels.
The S&P 500 index has risen in the last seven sessions, marking its longest winning streak since November.

 

Performance of Technology Companies

The surge in U.S. stocks accelerated in the final minutes of trading, focused on companies like Nvidia and Apple.
The iPhone manufacturer announced plans to ship 10% more new devices this year after a challenging 2023.
Taiwan Semiconductor Manufacturing, the sole supplier of the most advanced chips for Nvidia and Apple,
reported that its second-quarter sales grew at the fastest pace since 2022.

 

Calm Markets Amid Data Flow

Mark Hackett from Nationwide stated that markets “remain remarkably calm despite the data flow this week,
including Fed Chairman Powell’s testimony before Congress over the past two days,
the upcoming consumer and producer price index reports, and the beginning of the earnings season.”

 

U.S. Inflation Trend

The U.S. core consumer price index, which excludes food and energy costs and is seen as a preferred inflation measure,
is expected to rise by 0.2% in June for the second consecutive month.
This would represent the smallest back-to-back increase since August,
a more acceptable pace for Federal Reserve officials.

Anna Wong from Bloomberg Economics said,
“The June CPI report appears to be another report that can be described as very good,”
adding that “it should bolster the FOMC’s confidence regarding the inflation path,
paving the way for the Fed to start cutting rates in September.”

 

 

 

Interest Rate Cut Expectations

Swap contracts are pricing in two rate cuts by the Federal Reserve in 2024,
with the first cut likely in September.
The U.S. dollar strength index remained largely unchanged today
despite gains in the yen, Australian dollar, and New Zealand dollar against it.

 

Implications of China’s Decision

In Asia, investors will examine the impact of the Chinese Securities Regulatory Commission’s decision
to tighten short-selling rules and high-frequency trading using
advanced algorithms in an attempt to eliminate improper arbitrage and maintain market stability.

 

Jerome Powell’s Statements

As Wall Street prepares for the consumer price index release, Jerome Powell
told Congress that the Federal Reserve does not need a sub-2% inflation rate
to begin cutting rates and that officials still have more work.
Powell noted that the labor market has “slowed significantly.”
Powell discussed “good ways to go” in reducing the balance sheet,
affirming that the commercial real estate market does not threaten financial stability.

 

Krishna Guha’s Perspective

Krishna Guha from Evercore believes that “the main takeaway from Powell’s testimony is that the
Fed’s risk assessment is changing in a way that, if supported and sustained by data,
will lead to a rate cut in September.”

 

Economic Reports in Asia

Today, it will be packed with economic reports from Asia, including Thailand’s consumer confidence index,
Japan’s machinery orders, monetary policy decisions in Malaysia and South Korea,
and new figures on the money supply and lending in China.

Australian and New Zealand bonds showed little change in early trading while oil prices rose.
Gold prices remained largely stable after climbing for the second consecutive session yesterday.

 

Asian Stocks Up Before U.S. Inflation Data

 

Decline in Tech Stocks Could Be the Next Challenge for Wall Street

Decline in Tech Stocks Could Be the Next Challenge for Wall Street

Bank of America Warnings: Risks Facing Investors Increasing Their Growth Stock Holdings

 

 

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A More Balanced View

 

 

 

 

 

 

 

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Strategic analysts at Bank of America have warned that investors relying on the continued dominance of tech giants to drive stock market gains may face significant challenges when other sectors start to recover and catch up.

 

In a memo written by experts including Michael Hartnett and Elias Galos, they pointed out that the current outperformance of growth stocks in terms of value, along with the improvement in market breadth — a technical analysis method that measures the strength or weakness of movements in a major stock index — could be the next challenge for investors, potentially putting them against the prevailing market trend.

 

Galos added via email that other potential tough spots on the horizon include a decline in U.S. stocks and a widening gap between investment-grade bond yields compared to Treasury bonds.

 

 

 

 

 

 

 

A More Balanced View

Strategists have taken a more neutral stance on the rally that
pushed the S&P 500 to a record high this year,
after it had been trending significantly downward in 2023.

 

The gains were mainly driven by a rise in shares of major technology companies,
which recently received an additional boost from a strong earnings report from Nvidia.
Data released last week by Goldman Sachs’ primary brokerage unit showed that hedge
funds’ exposure to major tech companies reached an all-time high.

 

Meanwhile, the S&P 500 Value Index, which tracks value stocks, has risen less than 4% this year,
compared to a 15% jump in the Growth Index.
The S&P 500 Equal Weight Index — which mitigates the impact of major tech companies —
is trading at its lowest level since 2009 relative to the benchmark index, according to Bloomberg data.

 

 

 

Decline in Tech Stocks Could Be the Next Challenge for Wall Street

 

Tesla Experiences Record Sales Shortfall Impacting Electric Vehicle Market

Tesla Experiences Record Sales Shortfall Impacting Electric Vehicle Market: In a shocking flip of events, Tesla

faced skepticism from Wall Street analysts as the first quarter drew close, leading to lowered delivery forecasts.
However, these adjustments fell significantly short.
Under Elon Musk’s leadership, Tesla reported a mere 386,810 vehicle deliveries in the initial quarter,
falling short of Bloomberg’s average projection by an unprecedented margin based on seven-year data.
This resulted in a 4.9% decrease in Tesla’s stock value on Tuesday in New York,
contributing to a 33% decline in 2024, marking one of the poorest performances in the S&P 500 Index.

 

Topics

Slowing in growth

Decrease in Tesla deliveries

Differences between production and delivery

leading global electric vehicle seller

 

 

 

Slowing in growth

The quarter was fraught with challenges.
Tesla Initially indicated a considerable slowdown in growth due to rising interest rates,
making its vehicles less accessible to many despite price reductions.
Additionally, the company faced operational disruptions at its Berlin facility.
Musk’s controversial posts on the social platform X potentially deterred potential customers,
while the competition in China’s electric vehicle market intensified.

 

Decrease in Tesla deliveries.

Contrary to expectations of increased sales compared to the previous year, Tesla’s deliveries saw an 8.5% decrease.
Gene Munster from Deepwater Asset Management commented on the situation as decidedly negative,
highlighting concerns over demand, persistently high interest rates, and the potential impact of Musk’s public image on U.S. sales.

Tesla attributed the downturn partly to the transition to an improved Model 3 sedan version,
which, combined with the Model Y SUV, represented 96% of quarterly deliveries.
The company also mentioned shipping delays related
to the Red Sea and a suspected arson at its German plant affecting production.

 

 

Differences between production and delivery

Notably, Tesla produced 46,561 more vehicles than it sold during the quarter,

one of its most significant production-to-delivery disparities.
Despite reducing his sales forecast for Tesla twice in the weeks leading up to the announcement,
Emmanuel Rosner from Deutsche Bank still overestimated
The sales are over 24,000 vehicles, suggesting a potential demand issue.

Tesla, which doesn’t disclose regional sales data, primarily operates in the U.S. and China,
manufacturing various models in California, Shanghai, Austin, and near Berlin.
The recent introduction of the Cybertruck, a stainless steel pickup, adds to its lineup,
However, this model’s specific production and delivery figures are not provided separately.

 

leading global electric vehicle seller

Despite these hurdles, Tesla regained its position as the leading global electric vehicle seller,
overtaking China’s BYD Co. BYD reported 300,114 battery-electric vehicle
deliveries in the first quarter and 626,263 vehicles, including plug-in hybrids.

 

Tesla Experiences Record Sales Shortfall Impacting Electric Vehicle Market

The awakening of the American markets

The Awakening of the American Markets Propels Wall Street to New Record Highs

U.S. stocks continue their historic upward trajectory, with the S&P 500 index closing near the milestone of 5000 points.

 

 

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Expectations

 

 

 

 

 

 

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Stock prices rose on Wednesday, driven by major technology companies, while 10-year Treasury bond issues helped alleviate concerns about supply.
Bond prices remained stable, showing little significant change.

Stocks have sustained their sharp rise from their lowest levels in October 2022,
fueled by traders’ optimism about ongoing economic improvement and corporate earnings.Investors ignored concerns about high valuations and sluggish trading in February, leading the S&P 500 index to achieve new record levels.

Mark Haefele of UBS noted that the market is overcoming concerns even amid challenges such as changes in Federal Reserve policy and geopolitical tensions.Despite expectations of a seasonal economic downturn, market conditions have visibly improved, indicating strong momentum.

Positive sentiments for U.S. stocks were reinforced by a government decision to sell bonds over ten years,
exceeding $42 billion with yields below expectations.This is considered a sign of market confidence in the Federal Reserve’s continued interest rate cuts this year.

Peter Bookvar, the founder of The Boock Report, highlighted the significant success of the 10-year bond auction.

 

Wall Street

also received statements from Federal Reserve officials, emphasizing the need to avoid rushing into interest rate cuts.
Adriana Kugler expressed optimism about the ongoing inflation slowdown, stating that there is no urgent need to reduce borrowing costs. Susan Collins,
the president of the Federal Reserve in Boston, mentioned the need for additional evidence of inflation stability before considering interest rate cuts.

Neel Kashkari, the president of the Federal Reserve in Minneapolis,
added that a few more months’ data on inflation should be examined before making any decisions on easing monetary policy.

Solita Marcelli of UBS Global Wealth Management anticipated continued strong economic growth in the United States and expected improvements in Europe,
supporting stocks.
She indicated a positive environment paving the way for the Federal Reserve to start lowering interest rates from May,
by 100 basis points by year-end.

In this context, the MSCI World Index for advanced stock markets rose to record levels,
following the lead of all major U.S. stock indices.

 

 

 

 

Expectations

Strong economic growth in the United States and expected recovery in Europe are expected to support the markets.
However, there are indications of saturation in some market sectors, according to strategists at Barclays.

As one of the world’s largest exchange-traded funds approaches a crucial turning point after a strong 22% rise since late October,
there may be opportunities for further gains in the coming weeks. The Invesco QQQ Trust Series 1 (QQQ), which tracks the Nasdaq 100 index,
is trading near key resistance levels from three years ago,
making it a competitor to the broader SPDR S&P 500 ETF (SPY), known as “SPY.”

If the fund decisively breaks through the February 2021 resistance level, QQQ’s performance is expected to significantly outpace SPY in the coming period.
With the confirmation of the upward trend for QQQ, it may reach new record levels, according to Bloomberg Intelligence’s Anthony Feld’s estimates.

 

 

Performance of Key Indices:

  • S&P 500 rose by 0.8% as of 4 pm New York time.
  • Nasdaq 100 increased by 1%.
  • MSCI World Index rose by 0.6%.
  • 10-year Treasury bond yield rose by two basis points to 4.12%.
  • Bitcoin price increased by 2.3% to $44,161.79.

 

The Awakening of the American Markets

Losses in the US stock market

Losses in the US stock market: The rise in Treasury bond yields and statements
from Federal Reserve Chairman Jerome Powell,
affirmed the need for more evidence of sustainable inflation before lowering interest rates, leading to a decline in US stocks.


Topics

US stocks incur losses

Gold stabilizes after two consecutive sessions of losses

Rise in the dollar against a basket of currencies

 

 

 

US stocks incur losses

US stocks suffer losses due to rising bond yields and Powell’s statements undermining March rate cuts.
Financial markets on Wall Street notably declined today due
to rising Treasury bond yields and statements from Federal Reserve Chairman Jerome Powell,
who affirmed the need for more evidence of sustainable inflation before lowering interest rates.
These statements affected company evaluations and led to declines in stock indices.
On the other hand, data from the Institute for Supply Management
showed positive growth in the US service sector in January, with an increase in input prices.
Despite labour market resilience, doubts remain about the timing of interest rate cuts.
With the rise in Treasury bond yields, traders expect an opportunity to cut interest rates in May and June.
The Dow Jones Industrial Average fell by 38,380 points,
while the S&P 500 index dropped to 4,942 points.
The Nasdaq index fell to 17,613 points.

 

Gold stabilizes after two consecutive sessions of losses

Gold stabilized near $2024 per ounce on Tuesday after two consecutive sessions of decline,
as strong US economic data and tightening bias” from the Federal Reserve weakened bets on interest rate cuts.
Data released on Monday showed that the US service sector’s
growth accelerated to its highest level in four months in January,
exceeding expectations at 53.4, surpassing the forecast of 52.
Previous data also showed that the US economy added 353,000 jobs in January,
significantly more than the 333,000 in December.
This greatly exceeds expectations, which were only about 180,000 jobs. Additionally,
Federal Reserve Chairman Jerome Powell affirmed in an interview
with CBS aired last Sunday that a rate cut in March is unlikely,
similar to comments made last week following the Open Market Committee’s decision.
He added that the central bank will likely move slower on interest rate cuts than the market expects.
Markets now expect a 15% chance of a Federal Reserve interest rate cut
in March and anticipate 115 basis points in total cuts this year,
down from about 150 basis points in early January.

 

Rise in the dollar against a basket of currencies


The dollar rose to its highest level in eight weeks against major currencies yesterday,
as traders’ expectations of significant interest rate cuts by the US Federal Reserve this year waned,
amid continued recovery in the US economy.
At the same time, the yen, Australian dollar,
and the New Zealand dollar fell to their lowest levels in two months during early Asian trading.
The euro fell to its lowest level in over a month against the US dollar.
The euro recorded a value of $1.0782 in the latest transactions.
On the other hand, the British pound fell by 0.18% against the US dollar,
reaching its lowest level since January 17th.

Regarding the US dollar index, it rose to 104.18 points against a basket of currencies,
its highest level since December.
It is worth mentioning that the decline in expectations
for interest rate cuts came as a result of a strong US jobs report released on Friday,
which significantly exceeded market expectations,
reinforcing statements by Fed Chair Jerome Powell at last week’s policy meeting
that an expected rate cut in March is unlikely.
Investors now expect less than a 20% chance that the Fed will start cutting interest rates in March,
compared to about 50% of expectations a week ago

 

Losses in the US stock market

Stocks Maintain Gains Supported by Strong Economic Data

Stocks Maintain Gains Supported by Strong Economic Data

Stocks continue their upward trend, fueled by robust economic data.
A wave of financial results announcements kicks off, with companies like Netflix,
Tesla, and Intel revealing their outcomes earlier this week.
U.S. stocks sustain their rise after reaching a record level last week,
bolstered by strong economic data that enhances the appetite for risk,
despite warnings of intense and rapid buying activities in the market.

 

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Conclusion

 

 

 

 

 

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Stocks have overcome the challenging start they faced earlier in the year,
amidst expectations that the Federal Reserve will reduce interest rates in 2024,
and anticipation that the artificial intelligence boom will support profit growth.
Since reaching the bottom in 2022, the S&P 500 index has shown a remarkable recovery, adding value exceeding $10 trillion.

The earnings season kicks off at its peak this week, with Netflix, Tesla, and Intel expected to announce their financial results.
The outlook remains positive, as David Donabedian, Chief Investment Officer at CIBC Private Wealth,
sees a shift in investors’ perception of the economy as resilient, regardless of whether interest rates rise or not.

 

 

 

 

 

Conclusion:

In another context, the future outlook for stock performance remains optimistic,
with artificial intelligence remaining a key driver for global technology stocks,
prompting recommendations to invest in semiconductor and software sectors.
Companies and consumers anticipate a better spending environment due to expected interest rate cuts in the second half of the year.

In the current market performance context, the S&P 500 index experienced a slight increase,
while the yields of 10-year Treasury bonds fluctuated.
Stocks of Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms, and Tesla strengthened Wall Street’s recovery.
Conversely, the modified version of the S&P 500 index poses challenges to its dominant influence,
leading to a 17% discount from the benchmark valuation.

 

 

Stocks Maintain Gains Supported by Strong Economic Data

Worst Wall Street Investing Mistakes of 2023

Worst Wall Street Investing Mistakes of 2023: The expectations of American market experts confirmed that stocks would fall, bonds would rise,
and a recession would arrive. The S&P 500 index rose by 5% in January, contrary to the expectations of all experts, which confirmed that it would fall strongly.



Topics

Expectations of the largest American banks
Failure of expectations

Recession traps and high-interest rates

S&P 500 Index

Growing pessimism

Bond experts

China’s economy

Conclusion

 

Expectations of the largest American banks

At the end of the year 2022, the situation was very bad on Wall Street, as everyone was preparing for a recession, believing that it was coming without a doubt.

Mike Wilson, a strategist at Morgan Stanley, who preferred a decline in stocks, expected a decline,
while at Megan Swiber
Bank of America, was asking clients to prepare for a decline in Treasury yields,
while at
Goldman Sachs, Kamakshi Trivedi, one of the strategists, was encouraging increased investment in Chinese companies.
After the Chinese economy recovered from the consequences and impact of the Corona pandemic and closures.

Consequently, Wall Street issued a formula common to all forecasts, which encouraged selling US stocks and buying Treasury bonds and Chinese stocks.

 

 

 

Failure of expectations

The expectations failed and the consensus was completely wrong. What was expected to fall rose, and what was supposed to rise fell.
Contrary to the consensus and expectations, the
S&P 500 index rose by 20%, and the Nasdaq 100 index rose by more than 50%.
This is the largest rise. On an annual basis since the period of the “Dot-com bubble,”
which is the period in which the shares of technology and Internet companies in the United States witnessed a significant rise in value and then a sharp decline in value.

More importantly, it shows how the economic forces unleashed during the pandemic—essentially increasing consumer demand,
boosting economic growth and driving inflation—continue to fascinate the financial and political community in Washington and beyond.
It also puts the sellers, known to prominent Wall Street analysts, in an awkward position before investors around the world who pay for their opinions and advice.

“I’ve never seen a consensus forecast as wrong as in 2023,” said Andrew Pace,
director of investment strategist at Russell Investments, which manages about $290 billion in assets. “Look at the sell side, they’ve all failed.”

 

Recession traps and high-interest rates

Asset managers like Russell have defied the odds and delivered strong results, with stocks and bonds earning slightly better than their benchmarks.
To be clear, Pace’s predictions were not as successful as the biggest sell-side promoters.
The main reason behind his mistakes was the same reason that prompted them to do so; It was the urgent feeling that America was heading towards recession,
as was the case in the rest of the world.

This makes sense because the Fed is amid its most aggressive interest rate hikes in decades, and a decline in consumer and business spending seems certain.

However, there is little evidence of this yet. Indeed, growth has accelerated this year as inflation has declined.
Add some developments in artificial intelligence, the new hot topic in the world of technology, and you have the right mix for a bull market.

 

S&P 500 Index

The year started well, with the S&P 500 rising 5% in January alone and 16% by midyear.
At the time, slowing inflation sparked widespread speculation that the Federal Reserve would begin adjusting interest rates and a rate hike was imminent,
and the pace of rate hikes accelerated again in November, bringing the index close to its all-time high.

However, Wilson, chief US equity strategist at Morgan Stanley, stood his ground.

His forecast of a stock market decline in 2022, which few people believed would be true,
helped him earn the highest portfolio strategy rating in the Institutional Investor survey for two years in a row.
Wilson stuck to the pessimistic forecast and said that stocks will fall sharply in early 2023, and even if they rise in the second half of the year, there will be no significant change in the end.

 

Growing pessimism

Many people joined him. A massive wave of selling last year in response to rising interest rates sparked panic among strategists.
By early December, they expected stocks to decline again in the new year, according to the median forecast among Bloomberg survey respondents.
Consensus forecasts of a potential decline like this have not occurred for at least 23 years.
Even Marko Kolanovic, a strategist at JPMorgan Chase, implicitly endorsed this view, insisting through most of 2022 that stocks were on the cusp of a rally.
These pessimistic trends continued into the following year, as average expectations for the S&P 500 saw a slight rise.

Wilson has become the public face of the pessimist class, convinced that corporate profits will deteriorate as they did in 2008.
While traders are betting that lower inflation will benefit stocks, Wilson has warned against the opposite,
suggesting that a continued slowdown in the economy could squeeze corporate profit margins.

 In January, he said that even the pessimistic consensus on Wall Street’s outlook was too optimistic, and he predicted the S&P would fall more than 20% before eventually rising again.
A month later, he warned clients that the reward-to-risk ratio had fallen to its lowest levels during a bear market.
In May, when the index rose about 10%, he urged investors not to be fooled. “That’s what happens in a down market,” he said.
“It’s built on tricking you, confusing you, and forcing you to do something you don’t want to do.”


Bond experts

Similar opinions are widespread among leading bond experts. Treasury yields rose in 2022,
raising borrowing costs for consumers and businesses after the Federal Reserve ended its near-zero interest rate policy.
It all happened
So quickly that it was thought that certain sectors of the economy were doomed to collapse, pushing them into recession.
When that happens, bonds will rise as investors flock to safe-haven assets, and the Fed will come to the rescue by resuming monetary easing.

So Swiber and her colleagues on Bank of America’s interest rate strategy team, like the vast majority of analysts,
big gains for bond investors who have just suffered their worst annual losses in decades.
The bank is one of the few institutions calling for a reduction in the benchmark 10-year bond yield to 3.25% by the end of 2023.

For once, it looked as if it would happen soon. The collapse has already happened,
with Silicon Valley and several other banks filing for bankruptcy in March
after suffering huge losses in fixed-income investments as the Federal Reserve raised interest rates, and investors braced for the crisis to escalate.
Which will hinder economic growth. Stocks fell, bonds rose, and the 10-year bond yield fell below Bank of America’s target.
“The idea is that this will act as a tailwind to expectations of a deeper recession,” Swiper said.

 

China’s economy

 The Fed successfully contained the crisis, and yields resumed their steady rise throughout the summer and early fall as economic growth resumed its acceleration.
The late-year rally in US Treasuries has brought the 10-year yield down to 3.8%, where it was last year.

Swiper said the year was a lesson in humility, not only for her but for analysts as a whole.

Meanwhile, Wall Street received another lesson in humility in overseas markets
as Chinese stocks rose in the final two months of 2022 as the government ended pandemic restrictions.
As the economy opens up, strategists at banks, including Goldman Sachs and JP Morgan, expect China to lead the recovery in emerging market stocks.

Trivedi, global director of currencies, interest rates and emerging markets strategy at Goldman Sachs,
based in London, admitted that things were not going as expected. The world’s second-largest economy
is faltering as the housing crisis worsens and fears of deflation increase. Instead of flowing in,
investors exited, sending Chinese stocks lower and dragging gains in emerging market indexes lower.

“The support from reopening dissipated very quickly.
The net positive impact of reopening was small and we did not see the same growth rebound in other parts of the world,” Trivedi said.

 

Conclusion

Meanwhile, US stocks continued to overcome pessimism. By July, Wilson admitted that he had been pessimistic for too long,
saying: “We made a mistake in not expecting equity valuations to rise as inflation eases and companies cut costs.”
However, he remained pessimistic about corporate profits. Saying that the stock price is unlikely to rise in the fourth quarter.

Although the Fed did not change interest rates for the second time at its meeting in early November, it sparked a rally in stocks and bonds.
The pace of gains accelerated this month after monetary policymakers signaled they had finally ended the phase of raising interest rates,
leading traders to anticipate multiple rate cuts next year.
Markets have repeatedly gotten this fundamental shift wrong over the past couple of years, and they may now be making mistakes again.

Doubts are spreading among some Wall Street sellers. Gennady Goldberg,
head of U.S. interest rate strategy at TD Securities, said he and his colleagues are doing some soul-searching as the end of the year approaches.
TD is among the companies that expect big bond gains in 2023. “It’s important to learn from your mistakes,” Goldberg added.

What did Goldberg learn? The economy has been much stronger than he expected and better prepared for higher interest rates.
However, he remains convinced that a recession is coming and will happen in 2024, when bonds rise.

 

Worst Wall Street Investing Mistakes of 2023

U.S. stocks rise on merger deals corporate earnings

U.S. stocks rise on merger deals corporate earnings

U.S. stocks rose on Monday, closing near session highs, supported by a wave of merger deals,
after largely ignoring dovish messages from Federal Reserve officials.

 

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Discussion

Conclusion

 

 

 

 

 

 

Details:

Following a seven-week rally, the S&P 500 index rose 0.6%, after news of deals worth more than $40 billion on Monday, after months of disappointing volumes.

The Nasdaq 100 index rose 0.8%, after closing at a record high on Friday. The Dow Jones Industrial Average hit an all-time high, after breaking several records last week.

The VIX volatility index, a measure of fear on Wall Street, remained around 12 points, close to its lowest levels in several years.

Morgan Stanley’s head of trading and equities, Mike Wilson, said this week will show “whether the seasonal trend of rising stock markets in the second half of December will face potential headwinds, amid one of the strongest short-term rallies in recent years.”

Whether the S&P 500 can extend its eight-week winning streak will depend on data releases, including durable goods orders, personal consumption expenditures, the Fed’s preferred measure of inflation, and the latest estimate of third-quarter GDP.

 

 

 

 

 

Discussion:

While stocks largely ignored Fed officials who are trying to temper expectations of early and deeper-than-expected interest rate cuts, the rise in Treasury yields took a breather on Monday.

Yields rose, with the two-year yield up about 4.5%, while the 10-year yield neared 4%. The dollar held steady, while the yen weakened.

Chicago Fed President Charles Evans and Cleveland Fed President Loretta Mester were the latest to join a growing group of central bank officials who have cooled market optimism, after New York Fed President John Williams said last week that bets on a March rate cut were premature.

On the other hand, European Central Bank board member Poschtan Vassilev struck a cautious tone after ECB President Christine Lagarde said last week that the bank had not discussed cuts at all.

 

 

 

Conclusion:

Traders will also be watching Japan, where the country’s central bank began a two-day policy meeting.

While speculation has grown that the Bank of Japan will soon end the world’s last negative interest rate system, economists believe April is the most likely timing for a change, with about 15% of them expecting BOJ Governor Haruhiko Kuroda to end negative rates in January, according to a Bloomberg survey of more than 50 economists.

Economists at Societe Generale led by Yao Yao wrote in a note that “the BOJ does not need to rush into policy changes.” They added that “markets will be watching for any signs of the board’s willingness to end negative rates, or to control the yield curve.”

 

 

U.S. stocks rise on merger deals corporate earnings

Tech Stocks Lead U.S. Stock Market Gains

Tech Stocks Lead U.S. Stock Market Gains Amid Expectations of Interest Rate Cuts

Expectations of interest rate cuts support U.S. stocks

U.S. stocks continued to rise strongly in November, with the S&P 500 index reaching its highest level since August, while the Nasdaq 500 index reached its highest level in 22 months.

 

This rise comes amid growing expectations of future cuts in U.S. interest rates,
as the Federal Reserve seeks to address the expected economic slowdown.

 

Content

Tech stocks lead the gains

Treasury bond auction supports stocks

Analysis

Conclusion

 

 

 

 

 

 

 

Tech stocks lead the gains

 

Tech stocks led the gains, with shares of Nvidia and Microsoft hitting new highs. Zoom shares also rose on better-than-expected sales.

 

Tech stocks are among the sectors most sensitive to interest rates, as they tend to rise when interest rates are low.

 

Treasury bond auction supports stocks

 

The results of the U.S. 20-year Treasury bond auction helped to support stocks, as the auction attracted buyers and yields fell.

 

Treasury yields are a measure of the cost of borrowing, and they rise when interest rates rise.

 

 

 

 

 

 

 

Analysis

 

The U.S. economy needs to continue to grow strongly and inflation needs to be under control for stocks to make significant gains.

 

If economic growth weakens, it could lead to lower earnings, and hence lower stock prices. Similarly, rising inflation could lead to higher costs for businesses, and hence lower earnings as well.

 

According to analysts’ expectations, the U.S. economy is likely to continue to grow in 2024, but inflation will remain a concern.

 

This means that stock gains may be limited in the near term, as investors need to see more evidence that the U.S. economy will continue to grow strongly and inflation will remain under control.

 

 

Conclusion

 

Overall, analysts expect the U.S. economy to continue to grow, but inflation will remain a concern, which will lead to higher interest rates for a longer period of time.

 

This means that stock gains may be limited in the near term, as investors need to see more evidence that the U.S. economy will continue to grow strongly and inflation will remain under control.

 

 

Tech Stocks Lead U.S. Stock Market Gains

 

The Warning Bells Ring on Wall Street

The Warning Bells Ring on Wall Street

In an ever-shifting financial landscape, it’s crucial to stay informed and vigilant.

 

topic

Corporate Profit Expectations in Peril

Treasury Bond Yields Soar to a Decade-High

 

 

 

 

 

 

 

Corporate Profit Expectations in Peril

The world of Wall Street is not immune to shifts and fluctuations.
Recently, the spotlight has turned toward a precarious situation, one that has set alarm bells ringing,
and it revolves around the dwindling profit expectations of corporations.

 

A Tale of Two Expectations

At the heart of this concern is a stark discrepancy between companies that
have slashed their earnings forecasts and those that have raised them.
This divergence has raised questions about the overall health of the corporate world
and its stability in the face of changing economic conditions.

 

Prolonged Interest Rate Hike Fears Grip the Market

The current month has seen an undercurrent of anxiety ripple through the markets.
This unease stems from the possibility of extended interest rate hikes.
Market watchers are closely monitoring the situation,
and it is crucial to delve into why these developments matter.

 

 

 

 

 

 

 

 

Treasury Bond Yields Soar to a Decade-High

Amidst these concerns, the yield on 10-year Treasury bonds has surged to levels not witnessed in a decade.
This sudden surge has significant implications for various stakeholders,
from individual investors to institutions and even governments.
It’s imperative to understand the ramifications of this soaring yield.

 

The discrepancies in corporate profit expectations and the looming threat of prolonged interest rate hikes have certainly caught the market’s attention. As we navigate these challenges,
it’s essential to remember that understanding these dynamics is the key to making informed financial decisions.

 

 

The Warning Bells Ring on Wall Street