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S&P, Nasdaq Fail At Key Technical Support As Nomura Fears Fed Accelerating Shift From "Slowdown" To "Contraction"

S&P, Nasdaq Fail At Key Technical Support As Nomura Fears Fed Accelerating Shift From 'Slowdown' To 'Contraction' This morning's melt-up from the cash open was extremely technical, lifting the US majors above various key technical levels. However, that surge of buying did not last long and now that Omicron has struck in a second place in the US, the S&P (back below its 50DMA), Nasdaq (back below its 50DMA), and Dow (back at 200DMA) are all fading fast... So what really changed?  Nomura's Charlie McElligott explains: It’s pretty obvious: the Fed has green-lighted an accelerated taper in order to pull-forward a dense-but-short “lift-off,” as Jerome Powell is clearly now much more concerned about inflation (which is no longer transitory) than about economic growth And Nomura's "Economic Quadrant" playbook highlights the fact that the current Equities risk-premium / thematic return profile very closely mirrors what they said it would do upon this the phase shift from “Expansion” into “Slowdown” being confirmed in the first week of October (and holding since)... Extending this idea of “accelerated tightening” from the Fed, Nomura warns that this could drive this artificial economic cycle to experience an accelerated move into the NEXT potential quadrant shift, from “Slowdown” into “Contraction”.  And what would that mean for Factor fwd returns on both a static- and “transition into-“ cut? McElligott's backtests show that during the initial phase-shift “transition” that the market actually begins to anticipate the hard economic “stop”…and with that will come policy-makers turning their efforts to “easing” - so you see “economic growth / inflation -sensitives” being to perform like “10Yr Yield Factor,” “WTI Crude Factor,” “Growth Nowcast Factor” and “Cyclical Value Factor” lead 3m out as traders sniff policy rate “cuts” Top Performing Factors, 3m Fwd Return Based on if Current Quadrant just Transitioned into: Contraction However, the Nomura MD warns that upon immersion with the “Contraction” phase, it is clear that there is a very rational “risk-off” phase, with leadership from “Low Risk” and “Quality”…but also one that rhymes with the “now” dynamic, as “Value” (Cyclical and Defensive) outperforms “Growth”: Top Performing Factors, 3m Fwd Return Based on if Current Quadrant in: Contraction Which is exactly what the yield curve appears to be screaming...a Fed policy error sparking a recessionary environment (and The Fed still cornered from acting by multi-decade-high inflation)... Additionally, the Nomura strategist note that the environment remains shockingly dysfunctional, with my colleague John Pierce noting that with VVIX (‘vol of vol’) closing at 155 yday, it was the second-highest closing level YTD--which notably was only previously exceeded in 2021 by the massive pain felt during the Meme stock / HF Short Book blow-up in January. Finally, and VERY notably, McElligott warns that the CTA Trend model is nearing a “flip” trigger level in the legacy “+100% Long” signal in S&P futures to “Short” - we would need to CLOSE below today’s trigger of 4496, but it already feels like discretionary traders are trying to press it there now - selling under 4496 would see the “long” sold and flip “-42% Short” across the aggregate signal (I would again note that it has already “held” upon earlier test this morning as a tradeable bounce level) Tyler Durden Thu, 12/02/2021 - 10:42.....»»

Category: smallbizSource: nytDec 2nd, 2021Related News

Fidelity"s spot bitcoin ETF is set to start trading in Canada, while its US fund is still waiting for the SEC"s green light

Fidelity Investments is bringing a spot bitcoin exchange traded fund (ETF) to Canada, where it's expected to start trading imminently. Blue bitcoinYuichiro Chino Fidelity has launched a spot bitcoin ETF in Canada that will start trading on Thursday. Fidelity is "the biggest asset manager to date with a bitcoin ETF", Eric Balchunas, senior ETF analyst at Bloomberg said.  Spot bitcoin ETFs trade in Europe and Canada, but only futures-based ETFs have been approved in the US. Sign up here for our daily newsletter, 10 Things Before the Opening Bell. Fidelity Investments is about to launch an exchange traded fund (ETF) backed by bitcoin, rather than bitcoin futures, but it's listing the fund in Canada, as US regulators have still not given these particular crypto products the go-ahead. An affiliate of the Boston-based asset manager, Fidelity Investments Canada told Insider it would launch the Fidelity Advantage Bitcoin ETF and ETF Fund "on or around  December 2" under the ticker FBTC, according to its website. The ETF's bitcoin sub-custodian, Fidelity Clearing Canada. will acquire and hold bitcoin and investors will be able to buy and sell it on the Toronto Stock Exchange.ETFs backed by physically settled bitcoin are available in Europe, as well as Canada, where regulators approved those funds in February this year. In August, French regulators let asset manager Melanion Capital list a spot bitcoin ETF of its own. "We believe that cryptocurrency is a valid asset class that we would like to provide as an investment option for retail investors in Canada by including this in our product offering," a spokesperson from Fidelity Investments Canada told Insider. US investors only have access to bitcoin-futures ETFs for now. Fidelity filed to list a spot bitcoin ETF in the US back in March, but has not got approval to do so at this point.  So far, US regulators have approved bitcoin futures ETFs run by ProShares, Valkyrie and VanEck. Fidelity opted to offer a bitcoin spot ETF over a futures one because bitcoin futures are generally in "contango" which means the futures price is higher than the spot price of the underlying asset, which means investors can lose money when they roll their positions. The company also said bitcoin futures ETFs may suffer from capacity constraints due to limits on the number of futures contracts an ETF is permitted to hold at any given time.Fidelity's history with digital assets traces back to 2014, when it began research and development efforts into blockchain technology through the Fidelity Centre of Applied Technology.Some analysts believed Fidelity listing a bitcoin ETF in Canada was a blow to regulators in America. "This should be embarrassing for the SEC that one of America's biggest, most storied names in investing is forced to go up North to serve its clients," Bloomberg Senior ETF Analyst Eric Balchunas said on Twitter.Crypto giant Grayscale, which filed for a spot bitcoin ETF in October, sent a letter to the SEC on Monday saying it had no basis to approve bitcoin futures ETFs and not spot ones and by doing so violated the Administrative Protections Act (APA). Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 2nd, 2021Related News

US stocks edge higher as investors struggle against Omicron volatility

Adding to Thursday's volatility was a report that Apple may be experiencing a drop in demand for its iPhones this holiday season. Trader Leon Montana works on the floor of the New York Stock Exchange stocks NYSE worryAP Photo/Richard DrewUS stocks edged slightly higher on Thursday as investors continue to grapple with the Omicron variant.Adding to market concerns is Fed Chair Jerome Powell suggestion of tapering its bond purchases at a faster pace. A report on a drop in demand for Apple's iPhones this holiday season added to the volatility.US stocks traded slightly higher on Thursday as concerns surrounding the Omicron virus and hawkish comments from Fed Chairman Jerome Powell weighed on investors.On Wednesday, the CDC said it identified the first case of the COVID-19 Omicron variant in the US, which it found in California. With little known about how transmissible and deadly the new variant is, and whether current vaccines protect against it, investors are selling first and asking questions later.Adding to the volatility on Thursday was a report from Bloomberg that Apple is experiencing a decline in demand for its iPhones this holiday season. Shares of Apple traded down more than 3% in early Thursday trades.Here's where US indexes stood shortly after the 9:30 a.m. ET open on Thursday:S&P 500: 4,517.70, up 0.1%Dow Jones Industrial Average: 34,156.60 up 0.41% (144.69 points)Nasdaq Composite: 15,239.00, down 0.1%The metaverse investment theme is growing in popularity, with Ark Invest's Cathie Wood calling it a multi-trillion dollar opportunity that will infiltrate every sector.Sales of virtual land in the metaverse hit $106 million last week, with The Sandbox platform taking a big lead from other NFT platforms. Insider sales have soared to a record high this year, with Elon Musk selling more than $10 billion of Tesla last month. Jeff Bezos is also selling Amazon stock, and Microsoft CEO Satya Nadella recently sold half of his stake in the software giant.Fidelity is launching its own spot bitcoin ETF in Canada this week, even as the SEC continues to only favor futures-based bitcoin ETFs.West Texas Intermediate crude oil fell as much as 1.95% to $64.29 per barrel. Brent crude, oil's international benchmark, dropped as much as 1.89% to $67.57 per barrel.Gold fell as much as 0.29% to $1,779.10 per ounce.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 2nd, 2021Related News

NewsWatch: The omicron panic is overdone. Buy the dips in these stocks, says JPMorgan.

Stock futures are pointing to a rebound, after reports of the first U.S. omicron coronavirus case clobbered Wall Street in a wild day of trading......»»

Category: topSource: marketwatchDec 2nd, 2021Related News

Futures Rebound Fizzles On Slowing iPhone Demand, Omicron Fears

Futures Rebound Fizzles On Slowing iPhone Demand, Omicron Fears U.S. index futures regained some ground alongside Asian markets while European stocks slumped to session lows in a delayed response to yesterday's late Omicron-driven US selloff, as markets remained volatile following the biggest two-day plunge in more than a year, spurred by concern about the omicron coronavirus variant and Federal Reserve tightening. Investors await data for unemployment claims, as well as earnings from companies including Dollar General and Kroger. Tech is the weakest sector, dropping in sympathy after Apple warned its suppliers of slowing iPhone demand. Nasdaq futures pared earlier gains of up to 0.8% to trade down 0.1% while S&P futures are only 0.2% higher after rising as much as 0.9%. While the knee-jerk reaction of stock investors may “continue to be to take profits before the end of the year,” there is “plenty of liquidity available to drive stock prices higher as dip-buyers enter the market,” Ed Yardeni wrote in a note. The U.S. economy grew at a modest to moderate pace through mid-November, while price hikes were widespread amid supply-chain disruptions and labor shortages, the Federal Reserve said in its Beige Book survey Tuesday. Cruise-ship operator Carnival jumped 3.8% in premarket trading, while Pfizer and Moderna fell as the World Health Organization said that existing vaccines will likely protect against severe cases of the variant. Boeing contracts gained 3.4% after a report that the flagship 737 Max aircraft has regained airworthiness approval in China. With lots of uncertainty surrounding the pandemic and Fed policy, the size of potential market swings is still considerable.  Here are some other notable premarket movers today: Apple (AAPL US) shares fell 1.8% in premarket trading after the iPhone maker was said to tell suppliers that demand for its flagship product has slowed. Wall Street analysts, however, remained bullish. U.S. stocks tied to former President Donald Trump rise in premarket trading following a report his media group is in talks to raise new financing. Digital World Acquisition (DWAC US) +24%, Phunware (PHUN US) +38%. Katapult (KPLT US) shares sink 14% in premarket after the financial technology firm said its gross originations over a two-month period were lower than 2020 levels. Vir (VIR US) shares jump 8.1% in premarket trading after its Covid-19 antibody treatment, co-developed with Glaxo, looked to be effective against the new omicron variant in early testing. Snowflake (SNOW US) is up 17% premarket following quarterly results that impressed analysts, though some raise questions over the data software company’s valuation. CrowdStrike (CRWD US) shares jumped 5.1% in premarket after it boosted its revenue forecast for the full year. Square’s (SQ US) shares are 0.4% higher premarket. Corporate name change to Block Inc. indicates “a symbolic rebirth,” according to Barclays as it shows a broader set of possibilities than those of a pure payments company. Okta’s (OKTA US) shares advanced in postmarket trading. 3Q results show the cybersecurity company is well- positioned to deliver growth, even if some analysts say its guidance looks conservative and that its growth was not as strong as in prior quarters. The Omicron variant also hurt risk appetite, making the safe-haven bonds more attractive to investors, pushing yields down - although yields picked up again in early European trading. Volatility in equity markets as measured by the Vix hit its highest since February on Wednesday, before easing on Thursday, but remained well above this year’s average and almost twice as high as a month ago. Investors are braced for volatility to continue through December, stirred by tightening central-bank policies to fight inflation just as the omicron variant complicates the outlook for the pandemic recovery. The recent market turmoil may offer investors a chance to position for a trend reversal in reopening and commodity trades, according to JPMorgan Chase & Co. "Investors will need to maintain their calm during a period of uncertainty until the scientific data give a clearer picture of which scenario we face," said Mark Haefele, chief investment officer at UBS Global Wealth Management in Zurich. “This, in turn, will help shape the reaction of central bankers." Also weighing on stock markets, and flattening the U.S. yield curve, were remarks by Federal Reserve Chair Jerome Powell, who said that he would consider a faster end to the Fed's bond-buying programme, which could open the door to earlier interest rate hikes. In his second day of testimony in Congress on Wednesday, Powell reiterated that the U.S. central bank needs to be ready to respond to the possibility that inflation does not recede in the second half of next year. read more "In this past what we’ve seen is central banks using COVID as an excuse to remain dovish, and what we're seeing is central banks turn hawkish despite rising concerns around COVID, so it is a bit of a shift in communication," said Mohammed Kazmi, portfolio manager at UBP.  That said, the market is now so oversold, this is where we usually see aggressive dip-buying. In Europe, tech companies were the worst performers after Apple warned its component suppliers of slowing demand for its iPhone 13, the news dragged index heavyweight ASML Holding NV more than 4%. Meanwhile, travel shares were among the worst performers as the omicron variant continued to pop upin countries around the world, including the U.S., Norway, Ireland and South Korea. The Euro Stoxx 50 dropped as much as 1.7% while the Stoxx 600 Index fell 1.5%, extending declines to trade at a session low, with all sectors in the red and led lower by technology and travel stocks. The Stoxx 600 Technology Index slumped as much as 3.9%, the most in two months. Vifor Pharma surged by a record 18% following a report that Australia’s CSL is in advanced talks to acquire Swiss drugmaker. Here are some of the biggest European movers today: Vifor Pharma shares rise as much as 18% on a report that Australia’s CSL is in advanced talks to acquire the Swiss-based drug maker and developer while working with BofA on a A$4 billion funding package. Argenx jumps as much as 9.5% after Kepler Cheuvreux upgrades the stock to buy, saying the biotech company is on the brink of launching its first commercial product. Duerr gains as much as 7.2%, most since Aug. 10, after Deutsche Bank upgrades to buy and sets aa Street-high PT of EU60 for the German engineering company, citing the digitalization of the industry. Daily Mail & General Trust rises as much as 3.9% after Rothermere Continuation raised its bid for all DMGT’s Class A shares by 5.9% to 270p a share in cash. Klarabo surges as much as 54% as shares start trading on Nasdaq Stockholm after the Swedish property company raised SEK750m in an IPO. Eurofins Scientific declines for a fourth session, falling as much as 3.2%, as Goldman Sachs downgrades the company to neutral from buy “following strong outperformance YTD.” Deliveroo drops as much as 6.4% after an offering of 17.6m shares by CEO Will Shu and CFO Adam Miller at a price of 278p a share, representing a 4.2% discount to the last close. M&S falls as much as 3.4% after UBS cut its rating to neutral from buy, citing limited upside to its new price target as well as “little room for meaningful upgrades.” Earlier in the session, Asian stocks erased an earlier loss to trade slightly up, as traders continued to assess the potential impact of the omicron virus strain and the Federal Reserve’s efforts to keep inflation in check.  The MSCI Asia Pacific Index rose 0.2% after falling 0.4% in the morning. South Korea led regional gains, helped by large-cap chipmakers, while Japan was among the worst performers after the government dropped a plan for a blanket halt to all new incoming flight reservations. Asia’s equity benchmark is still down about 4% so far this year after rebounding in the past two sessions from a one-year low reached earlier this week. Despite the region’s underperformance against the U.S. and Europe, cheap valuations and foreign-investor positioning have prompted brokerages including Credit Suisse Group AG and Nomura Securities Co. Ltd. to turn bullish on Asia’s prospects next year. “Equity markets continue to play omicron tennis and traders looking for short-term direction should just wait for the next virus headline and then act accordingly,” said Jeffrey Halley, a senior market analyst at Oanda Corp. “Volatility, and not market direction, will be the winner this week.” Chinese technology shares including Alibaba Group Holding slid after Beijing was said to be planning to close a loophole used by the sector to go public abroad, fueling concern over existing overseas listings. Japanese equities declined, following U.S. peers lower after the first American case of the omicron coronavirus variant was confirmed. Electronics makers and telecoms were the biggest drags on the Topix, which fell 0.5%. SoftBank Group and TDK were the largest contributors to a 0.7% loss in the Nikkei 225.  The S&P 500 posted its worst two-day selloff since October 2020 after the first U.S. case of the new strain was reported. Federal Reserve Chair Jerome Powell reiterated that officials should consider a quicker reduction of monetary stimulus amid elevated inflation. “Truth is, there’s probably a lot of people who are wanting to buy stocks at some point,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management. “But, with omicron still an unknown, people are responding sensitively to news development, and that’s keeping them from buying.” India’s benchmark equity index climbed for a second day, led by software exporters, on an improving economic outlook and as investors grabbed some beaten-down stocks after recent declines. The S&P BSE Sensex Index rose 1.4% to close at 58,461.29 in Mumbai, the biggest advance since Nov. 1. Its two-day gains increased to 2.5%, the most since Aug. 31. The NSE Nifty 50 Index also surged by a similar magnitude. All of the 19 sector sub-indexes compiled by BSE Ltd. were up, led by a gauge of utilities companies. “India underperformed the global markets in recent weeks. Investors are now going for value buying in stocks at lower levels,” said A. K. Prabhakar, head of research at IDBI Capital Market Services. The Sensex gained in three of the past four sessions after plunging 2.9% on Friday, the biggest drop since April. The rally, however, is in contrast to most global peers which are witnessing volatility on worries over the spread of the omicron variant. High frequency indicators in India, such as tax collection and manufacturing activities, have shown robust growth in recent months, while the country’s economy expanded 8.4% in the quarter ended in September, according to an official data release on Tuesday. Mortgage lender HDFC contributed the most to the Sensex’s gain, increasing 3.9%. Out of 30 shares in the index, 27 rose and three fell. In rates, trading has been relatively quiet as bunds and gilts bull steepen a touch with risk offered, while cash TSYs bear flatten, cheapening ~5bps across the curve.Treasuries retraced part of yesterday’s rally that sent the benchmark 30-year rate to the lowest since early January. A large buyer of 5-year U.S. Treasury options targets the yield dropping around 17bps. 5s10s, 5s30s spreads flattened by ~1bp and ~2bp to multimonth lows; 10-year yields around 1.43%, cheaper by more than 3bp on the day while bunds and gilt yields are richer by ~1bp. Front-end and belly of the curve underperform vs long-end, while bunds and gilts outperform Treasuries. With little economic data slated, speeches by several Fed officials are main focal points. Peripheral spreads tighten with 10y Spain outperforming after well received auctions, albeit with a small size on offer. U.S. economic data slate includes November Challenger job cuts (7:30am) and initial jobless claims (8:30am) In FX, the Bloomberg Dollar Spot Index fell to a day low in the European session and the greenback traded mixed versus its Group-of-10 peers as most crosses consolidated in recent ranges. Two-week implied volatility in the major currencies trades in the green Thursday as it now captures the next policy decisions by the world’s major central banks. Euro- dollar on the tenor rises by as much as 138 basis points to touch 8.22%, highest in a year; the relative premium, however, remains below parity as realized has risen to levels unseen since August 2020. The pound rose along with some other risk- sensitive currencies following the British currency’s three-day slump against the dollar. Long-end gilts underperformed, leading to some steepening of the curve. The yen fell for the first day in three while the Swiss franc fell a second day. The Hungarian forint rose to almost a three-week high after the central bank in Budapest raised the one-week deposit rate by 20 basis points to 3.10%. Economists in a Bloomberg survey were evenly split in predicting a 10 or 20 basis point increase. The Turkish lira resumed its slump after President Recep Tayyip Erdogan abruptly replaced his finance minister amid deepening rifts in the administration over aggressive interest-rate cuts that have undermined the currency and fueled inflation. Poland’s central bank Governor Adam Glapinski sent the zloty to a three-week high against the euro on Thursday with his changed rhetoric on inflation, which he no longer sees as transitory after prices surged at the fastest pace in more than two decades. Currency market volatility also rose, with euro-dollar one-month volatility gauges below Monday's one-year peak but still at elevate levels . "Liquidity in some areas of the market is still quite poor as people grapple with this news and as we head towards year-end, a lot of it is really liquidity driven, which is leading to some volatility," said UBP's Kazmi. "Even in the most liquid market of the U.S. treasury market we've seen some fairly large moves on very little newsflow at times." In commodities, crude futures extend Asia’s gains. WTI adds 2.2% near $67, Brent near $70.50 ahead of today’s OPEC+ meeting. Spot gold finds support near Tuesday’s, recovering somewhat to trade near $1,774/oz. Base metals are mixed: LME aluminum drops as much as 1.1%, nickel, zinc and tin hold in the green Looking at the day ahead now, and central bank speakers include the Fed’s Quarles, Bostic, Daly and Barkin, as well as the ECB’s Panetta. Data releases include the Euro Area unemployment rate and PPI inflation for October, while there’s also the weekly initial jobless claims. Lastly, the OPEC+ group will be meeting. Market Snapshot S&P 500 futures up 0.7% to 4,540.25 STOXX Europe 600 down 1.0% to 466.37 MXAP up 0.2% to 192.07 MXAPJ up 0.7% to 629.36 Nikkei down 0.7% to 27,753.37 Topix down 0.5% to 1,926.37 Hang Seng Index up 0.5% to 23,788.93 Shanghai Composite little changed at 3,573.84 Sensex up 1.3% to 58,436.52 Australia S&P/ASX 200 down 0.1% to 7,225.18 Kospi up 1.6% to 2,945.27 Brent Futures up 2.4% to $70.53/bbl Gold spot down 0.6% to $1,771.73 U.S. Dollar Index little changed at 96.03 German 10Y yield little changed at -0.35% Euro little changed at $1.1320 Top Overnight News from Bloomberg Federal Reserve Bank of Cleveland President Loretta Mester said she’s “very open” to scaling back the Fed’s asset purchases at a faster pace so it can raise interest rates a couple of times next year if needed A United Nations gauge of global food prices rose 1.2% last month, threatening to make it more expensive for households to put a meal on the table. It’s more evidence of inflation soaring in the world’s largest economies and may make it even harder for the poorest nations to import food, worsening a hunger crisis Germany is poised to clamp down on people who aren’t vaccinated against Covid-19 and drastically curtail social contacts to ease pressure on increasingly stretched hospitals Some investors buffeted by concerns about tighter monetary policy are turning their sights to China’s battered junk bonds, given they offer some of the biggest yield buffers anywhere in global credit markets Pfizer Inc. says data on how well its Covid-19 vaccine protects against the omicron variant should be available within two to three weeks, an executive said GlaxoSmithKline Plc said its Covid-19 antibody treatment looks to be effective against the new omicron variant in early testing A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded tentatively following the declines on Wall St where all major indices extended on losses and selling was exacerbated on confirmation of the first Omicron case in the US, while the Asia-Pac region also contended with its own pandemic concerns. ASX 200 (-0.2%) was subdued amid heavy losses in the tech sector and with a surge of infections in Victoria state, although downside in the index was cushioned amid inline Retail Sales and Trade Balance, as well as M&A optimism after Woolworths made a non-binding indicative proposal for Australian Pharmaceutical Industries. Nikkei 225 (-0.7%) weakened after the government instructed airlines to halt inbound flight bookings for a month due to fears of the new variant and with auto names also pressured by declines in monthly sales amid the chip supply crunch. KOSPI (+1.6%) showed resilience amid expectations for lawmakers to pass a record budget today and recouped opening losses despite the record increase in daily infections and confirmation of its first Omicron cases, while the index also shrugged off the highest CPI reading in a decade which effectively supports the case for further rate increases by the BoK. Hang Seng (+0.6%) and Shanghai Comp. (-0.1%) were choppy following another liquidity drain by the PBoC and with tech pressured in Hong Kong as Alibaba shares extended on declines after recently slipping to a 4-year low in its US listing. Beijing regulatory tightening also provided a headwind as initial reports suggested China is to crack down on loopholes used by tech firms for foreign IPOs, although this was later refuted by China, and the CBIRC is planning stricter regulations on major shareholders of banks and insurance companies, as well as confirmed it will better regulate connected transactions of banks. Finally, 10yr JGBs were higher as prices tracked gains in global counterparts and amid the risk aversion in Japan, although prices are off intraday highs after hitting resistance during a brief incursion to the 152.00 level and despite the marginally improved metrics from 10yr JGB auction. Top Asian News Asia Stocks Swing as Investors Weigh Omicron Impact, Fed Views Apple Tells Suppliers IPhone Demand Slowing as Holidays Near Moody’s Cuts China Property Sales View on Financing Difficulties Faith in Singapore Leaders Hit by Record Covid Wave, Poll Shows Bourses across Europe have held onto losses seen at the cash open (Euro Stoxx 50 -1.4%; Stoxx -1.2%), as the region plays catchup to the downside seen on Wall Street – seemingly sparked by a concoction of hawkish Fed rhetoric and the discovery of the Omicron variant in the US. Nonetheless, US equity futures are firmer across the board but to varying degrees – with the cyclical RTY (+1.1%) and the NQ (+0.3%) the current laggard. European futures ahead of the cash open saw some mild fleeting impetus on reports GlaxoSmithKline's (-0.3%) COVID treatment Sotrovimab retains its activity against Omicron variant, and the UK MHRA simultaneously approved the use of Sotrovimab – but caveated that it is too early to know whether Omicron has any impact on effectiveness. Conversely, brief risk-off crept into the market following commentary from a South African Scientist who warned the country is seeing an exponential rise in new COVID cases with a predominance of Omicron variant across the country – with the variant causing the fastest ever community transmission - but expects fewer active cases and hospitalisations this wave. Back to Europe, Euro indices see broad-based losses whilst the downside in the FTSE 100 (-0.7%) is less severe amid support from its heavyweight Oil & Gas sector – the outperforming sector in the region. Delving deeper, sectors see no overarching theme nor bias – Food & Beverages, Autos and Banks are towards the top of the bunch, whilst Tech, Telecoms, and Travel &Leisure. Tech is predominantly weighed on by reports that Apple (-2% pre-market) reportedly told iPhone component suppliers that demand slowed down. As such ASML (-5.0%), STMicroelectronics (-4.4%) and Infineon (-3.6%) reside among the biggest losers in the Stoxx 600. Deliveroo (-5.3%) is softer following an offering of almost 18mln at a discount to yesterday's close. In terms of market commentary, Morgan Stanley believes that inflation will remain high over the next few months, in turn supporting commodities, financials and some cyclical sectors. The bank identifies beneficiaries including EDF (-1.5%), Engie (-1.2%), SSE (-0.2%), Legrand (-1.3%), Tesco (-0.5%), BT (-0.8%), Michelin (-1.6%) and Sika (-0.9%). Top European News Shell Kicks Off First Wave of Buybacks From Permian Sale Omicron Threatens to Prolong Pain in Bid to Vaccinate the World Apple, Suppliers Drop Premarket After Report Demand Slowed Valeo, Gestamp Gain After Barclays Raises to Overweight In FX, currency markets are still in a state of flux, or limbo bar a few exceptions, and the Greenback is gyrating against major peers awaiting the next major event that could provide clearer direction and a more decisive range break. Thursday’s agenda offers some scope on that front via US initial jobless claims and a host of Fed speakers, but in truth NFP tomorrow is probably more likely to be influential even though chair Powell has effectively given the green light to fast-track tapering from December. In the interim, the index continues to keep a relatively short leash around 96.000, and is holding within 96.138-95.895 confines so far today. JPY/CHF - Although risk considerations look supportive for the Yen, on paper, UST-JGB/Fed-BoJ differentials coupled with technical impulses are keeping Usd/Jpy buoyant on the 113.00 handle, with additional demand said to have come from Japanese exporters overnight. However, the headline pair may run into offers/resistance circa 113.50 and any breach could be capped by decent option expiry interest spanning 113.60-75 (1.5 bn). Similarly, the Franc has slipped back below 0.9200 on yield and Swiss/US Central Bank policy stances plus near term outlooks, and hardly helped by a slowdown in retail sales. GBP/CAD/NZD - All firmer vs their US counterpart, though again well within recent admittedly wide ranges, and the Pound perhaps more attuned to Eur/Gbp fluctuations as the cross retreats to retest 0.8500 and Cable rebounds to have another look at 1.3300 where a fairly big option expiry resides (850 mn). Indeed, Sterling has largely shrugged off the latest BoE Monthly Decision Maker Panel release that in truth did not deliver any clues on what is set to be another knife-edge MPC gathering in December. Elsewhere, the Loonie is straddling 1.2800 with eyes on WTI crude ahead of Canadian jobs data on Friday and the Kiwi is hovering above 0.6800 after weaker NZ Q3 terms of trade were offset to some extent by favourable Aud/Nzd headwinds. AUD/EUR - Both narrowly mixed against US Dollar, with the Aussie pivoting 0.7100 in wake of roughly in line trade and retail sales data overnight, but wary about the latest virus outbreak in the state of Victoria, while the Euro is sitting somewhat uncomfortably on the 1.1300 handle amidst softer EGB yields and heightened uncertainty about what the ECB might or might not do in December on the QE guidance front. In commodities, WTI and Brent front-month futures are firmer intraday as traders gear up for the JMMC and OPEC+ confabs at 12:00GMT and 13:00GMT, respectively. The jury is still split on what the final decision could be, but the case for OPEC+ to pause the planned monthly relaxation of output curbs by 400k BPD has been strengthening against the backdrop of Omicron coupled with the coordinated SPR releases (an updating Rolling Headline is available on the Newsquawk headline feed). As expected, OPEC sources have been testing the waters in the run-up, whilst yesterday's JTC/OPEC meetings largely surrounded the successor to the Secretary-General position. Oil market price action will likely be centred around OPEC+ today in the absence of any macro shocks. WTI Jan resides around USD 66.50/bbl (vs low USD 65.41/bbl) whilst Brent Feb briefly topped USD 70/bbl (vs low USD 68.73/bbl). Elsewhere, spot gold has eased further from the USD 1,800/oz after failing to sustain a break above the 50, 100 and 200 DMAs which have all converged to USD 1,791/oz today. LME copper is on the backfoot amid the cautious risk sentiment, with the red metal back under USD 9,500/t but off overnight lows. US Event Calendar 7:30am: Nov. Challenger Job Cuts -77.0% YoY, prior -71.7% 8:30am: Nov. Initial Jobless Claims, est. 240,000, prior 199,000; 8:30am: Nov. Continuing Claims, est. 2m, prior 2.05m 9:45am: Nov. Langer Consumer Comfort, prior 52.2 DB's Jim Reid concludes the overnight wrap With investors remaining on tenterhooks to find out some definitive information on the Omicron variant, yesterday saw markets continue to see-saw for a 4th day running. Following one of the biggest sell-offs of the year on Friday, we then had a partial bounceback on Monday, another bout of fears on Tuesday (not helped by the prospect of faster tapering), and yesterday saw another rally back before risk sentiment turned sharply later in the day as an initial case of the Omicron variant was discovered in the US. You can get some idea of this by the fact that Europe’s STOXX 600 (+1.71%) posted its best daily performance since May, whereas the S&P 500 moved from an intraday high where it had been up +1.88%, before shedding all those gains and more to close -1.18% lower. In fact, that decline means the S&P has now lost over -3% in the last two sessions, marking its worst 2-day performance in over a year, and this heightened volatility saw the VIX index close back above 30 for the first time since early February. In terms of developments about Omicron, we’re still in a waiting game for some concrete stats, but there was positive news early on from the World Health Organization’s chief scientist, who said that they think vaccines “will still protect against severe disease as they have against the other variants”. On the other hand, there was further negative news out of South Africa, as the country reported 8,561 infections over the previous day, with a positivity rate of 16.5%. That’s up from 4,373 cases the day before, and 2,273 the day before that, so all eyes will be on whether this trend continues, and also on what that means for hospitalisation and death rates over the days ahead. Against this backdrop, calls for fresh restrictions mounted across a range of countries, particularly on the travel side. In the US, it’s been reported already by the Washington Post that President Biden could today announce stricter testing requirements for arriving travellers. Meanwhile, France is moving to require non-EU arrivals to show a negative test before arrival, irrespective of their vaccination status. The EU Commission further said that member states should conduct daily reviews of essential travel restrictions, and Commission President von der Leyen also said that the EU should discuss the topic of mandatory vaccinations. There was also a Bloomberg report that German Chancellor Merkel would recommend mandatory vaccinations from February 2022, according to a Chancellery paper that they’d obtained. That came as Slovakia sought to incentivise vaccination uptake among older citizens, with the cabinet backing a €500 hospitality voucher for residents over 60 who’ve been vaccinated. As on Tuesday, the other main headlines yesterday were provided by Fed Chair Powell, who re-emphasised his more hawkish rhetoric around inflation before the House Financial Services Committee. Notably he said that “We’ve seen inflation be more persistent. We’ve seen the factors that are causing higher inflation to be more persistent”, though yields on 2yr Treasuries (-1.4bps) already had the shift in stance priced in. New York Fed President Williams echoed that view in an interview, noting it would be germane to discuss and decide whether it was appropriate to accelerate the pace of tapering at the December FOMC. 10yr yields (-4.1bps) continued their decline, predominantly driven by the turn in sentiment following the negative Omicron headlines. That latest round of curve flattening left the 2s10s slope at its flattest level since early January around the time of the Georgia Senate race that ushered in the prospect of much larger fiscal stimulus. In terms of markets elsewhere, strong data releases helped to support risk appetite earlier in yesterday’s session, with investors also looking forward to tomorrow’s US jobs report for November that will be an important one ahead of the Fed’s decision in less than a couple of weeks’ time. The ISM manufacturing release for November saw the headline number come in roughly as expected at 61.1 (vs. 61.2 expected), and also included a rise in both the new orders (61.5) and the employment (53.3) components relative to last month. Separately, the ADP’s report of private payrolls for November likewise came in around expectations, with a +534k gain (vs. +526k expected). Staying on the US, one thing to keep an eye out over the next 24 hours will be any news on a government shutdown, with funding currently set to run out by the weekend as it stands. The headlines yesterday weren’t promising for those hoping for an uneventful, tidy resolution, as Politico indicated that some Congressional Republicans would not agree to an expedited process to fund the government should certain vaccine mandates remain in place. An expedited process is necessary to avoid a government shutdown at the end of the week, so one to watch. After the incredibly divergent equity performances in the US and Europe, we’ve seen a much more mixed performance in Asia overnight, with the KOSPI (+1.09%), Hang Seng (+0.23%), and CSI (+0.23%) all advancing, whereas the Shanghai Composite (-0.05%) and the Nikkei (-0.60%) are trading lower. In terms of the latest on Omicron, authorities in South Korea confirmed five cases, which came as the country also reported that CPI in November rose to its fastest since December 2011, at +3.7% (vs +3.1% expected). Separately in China, 53 local Covid-19 cases were reported in Inner Mongolia, whilst Harbin province reported 3 local cases. Looking forward, futures are indicating a positive start in the US with those on the S&P 500 (+0.64%) pointing higher. Back in Europe, sovereign bonds lost ground yesterday, and yields on 10yr bunds (+0.5bps), OATs (+1.1bps) and BTPs (+4.2bps) continued to move higher. Interestingly, there was a continued widening in peripheral spreads, with the gap between both Italian and Spanish 10yr yields over bunds reaching their biggest level in over a year, at 135bps and 77bps, respectively. Another factor to keep an eye on in Europe is another round of increases in natural gas prices, with futures up +3.42% to their highest level since mid-October yesterday. Lastly on the data front, the main other story was the release of the manufacturing PMIs from around the world. We’d already had the flash readings from a number of the key economies, so they weren’t too surprising, but the Euro Area came in at 58.4 (vs. flash 58.6), Germany came in at 57.4 (vs. flash 57.6), and the UK came in at 58.1 (vs. flash 58.2). One country that saw a decent upward revision was France, with the final number at 55.9 (vs. flash 54.6), which marks an end to 5 successive monthly declines in the French manufacturing PMI. One other release were German retail sales for October, which unexpectedly fell -0.3% (vs. +0.9% expected). To the day ahead now, and central bank speakers include the Fed’s Quarles, Bostic, Daly and Barkin, as well as the ECB’s Panetta. Data releases include the Euro Area unemployment rate and PPI inflation for October, while there’s also the weekly initial jobless claims. Lastly, the OPEC+ group will be meeting. Tyler Durden Thu, 12/02/2021 - 07:57.....»»

Category: dealsSource: nytDec 2nd, 2021Related News

: The omicron panic is overdone. Buy the dips in these stocks, says JPMorgan.

Stock futures are pointing to a rebound, after reports of the first U.S. omicron coronavirus case clobbered Wall Street in a wild day of trading......»»

Category: topSource: marketwatchDec 2nd, 2021Related News

Market Snapshot: Dow futures swing higher as markets grapple with omicron and interest-rate uncertainty

U.S. stock futures pointed to a stronger start Thursday, in what's emerging as an increasingly volatile market......»»

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US stock futures recover from shock Omicron case in California; oil rises ahead of key OPEC+ meeting

The first US Omicron case initially hit stocks hard, but some stability was returning on Thursday. Meanwhile, oil rose off three-month lows. Stock market volatility is at its highest since the start of the year, as investors weigh up the impact of the Omicron variant.Anton Petrus/Getty Images US stock futures rose, shaking off the initial shock of the first US case of Omicron, while oil gained. OPEC+ is meeting Thursday to discuss crude-supply policy against a backdrop of uncertainty over the variant. Federal Reserve boss Jerome Powell's hawkish comments on monetary policy continued to reverberate across markets. US stock futures rose Thursday, shaking off the previous day's slide after the US detected its first case of the Omicron variant, while oil prices lifted off three-month lows ahead of a key meeting of the Organization of the Petroleum Exporting Countries.The Centers for Disease Control and Prevention said Wednesday that a fully vaccinated adult in San Francisco had tested positive for COVID-19 with the variant, with mild symptoms, after returning from South Africa on November 22.The World Health Organization has already said at least 23 countries have reported cases of Omicron, and it expected "that number to grow." The news sent a shiver through financial markets Wednesday. On Thursday, it dented shares across Europe as markets played catch-up, but left US and Asian equity market sentiment unscathed. US stock index futures were up across the board, with S&P 500 futures gaining 0.6%, Dow Jones futures rising 0.7%, and Nasdaq 100 futures 0.4% higher. The three benchmarks closed more than 1% down the day before, when the US case of Omicron surfaced."Yesterday's market reaction gives a flavour of how fickle and fragile sentiment currently is, despite the various reassurances from the likes of the WHO, as well as many of the vaccine companies, including BioNTech and Oxford University who came up with the AstraZeneca jab," CMC Markets strategist Michael Hewson said.In Europe, the Stoxx 600 was down 1.2% in early trade, along with most regional benchmarks. In Asia, the MSCI Asia ex-Japan index rose 0.4%.Meanwhile, crude oil rallied ahead of Thursday's meeting of OPEC and its partners to discuss supply policy. Given the recent drop in the crude price to three-month lows and the as-yet unknown impact to demand from the spread of the Omicron variant, there is greater uncertainty than usual over what the group of major oil producers will decide regarding output."The potential for a significant shift in demand if Omicron sparks new lockdowns does alter the state of play significantly, but the most likely outcome does still remain another 400k bpd increase in production," strategists at broker IG said in a daily note.Brent crude futures were up 1.3% at $69.75 a barrel. WTI, futures, which tend to be less sensitive to OPEC output, were up 1.5% at $66.50 a barrel. Both contracts lost around 17% in November, for their biggest one-month drop since April last year. US gasoline futures were up 1.8%, having gained nearly 42% so far this year, which has added to politicians' and central bankers' concerns about more entrenched inflation. Federal Reserve Chair Jerome Powell has long maintained that the high rate of increase in consumer prices would be transitory. But with a labor shortage pushing up wages, and the cost of goods from food to second-hand cars rising, Powell has changed his tone.On Tuesday, he said the Fed's policy-makers would discuss accelerating the winding-down of its bond purchases — a step investors perceive as immediately preceding a rate hike. Markets are currently pricing in at least two rate rises in 2022, starting around June."This raises an interesting, broader, point. Given that the Fed wants to quicken the policy normalization process, how will other G10 central banks react?" Michael Brown, a strategist at Caxton FX, said. "Either they will act as sheep and follow suit, bringing the 'easy money' era to a sooner end than had previously been expected, posing a headwind to risky assets; or, they will stick to the status quo, putting rocket boosters under the dollar in the process," he added.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 2nd, 2021Related News

Oil futures finish lower as U.S. identifies its first case of the omicron variant of coronavirus

Oil futures ended lower on Wednesday, giving up earlier gains following news that the U.S. has identified its first case of the omicron variant of coronavirus. The turn lower for prices late in the session was linked to growing concerns over COVID-19, and the potential for the new variant to disrupt economic activity and oil demand, said Tariq Zahir, managing member at Tyche Capital Advisors. Traders await Thursday's decision by the Organization of the Petroleum Exporting Countries and their allies on production levels. Some analysts said the group, known as OPEC+, may decide to pause their current deal to boost monthly output by 400,000 barrels per day, given the recent plunge in oil prices following the discovery of the new variant of coronavirus. January West Texas Intermediate crude fell 61 cents, or 0.9%, to settle at $65.57 a barrel on the New York Mercantile Exchange, after touching an intraday high of $69.49. Prices lost 5.4% on Tuesday. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

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What Happens When Omicron Meets Powell

What Happens When Omicron Meets Powell By Steve Englander, head of global FX research and North America macro strategy at Standard Chartered Bank, NY Branch 30 November FX moves most likely reflect position and G10 commodity currency unwinds Weakest currencies of the past two months were best performers as Fed and Omicron fears ramped up G10 currencies other than safe havens were weak, especially oil exporters FX price action on 30 November reflected concerns related to Omicron, the new COVID variant, and a hawkish shift in Fed Chair Powell’s monetary policy stance in an appearance before the US Senate. Investors have treated Omicron largely as a downside risk for G10 commodity currencies, although it is uncertain how serious a health risk it is. Indications of a high degree of infectiousness and the likelihood that the variant is present in many countries outside of Africa are prompting concerns over intensified public health measures and slower-than-expected growth (yet again). Some market participants likely were caught flatfooted by Powell’s Senate appearance. We and many others saw his prepared comments released 29 November as in line with expectations. The emergence of Omicron risk had led some to believe that renewed downside economic risk had fattened the monetary policy tail on the dovish side. The combination of Omicron and Fed surprises may lead to widespread cutting of FX positions and paradoxical strength in currencies that are rarely strong in risk-off episodes (Figure 1). The rally of high-beta currencies on a day of sharply falling equity and commodity prices feels more like position unwinding than the establishment of new positions, particularly as the strongest currencies had been the weakest in the prior two months. Economic and policy fears are likely to weigh on G10 commodity currencies until some daylight appears. However, the AUD and NZD are back to November 2020 levels and the CAD is flirting with its lows of the year, so it is hard to argue that investors are ignoring recent developments (Figure 2). Our index of COVID fears (driven by the ratio of COVID-sensitive stocks to techs, Figure 3) is similarly back to November 2020 levels. The CAD at 1.30 and AUD at 0.70 would undo almost all the progress made since the vaccine announcement in November 2020. If Omicron fears fade, there is room for a significant retracement upwards even if long positions look risky now. Except for the period of chaos in March 2020, risk reversals for commodity currencies are heavily bid for USD strength and commodity currency weakness relative to the past five years. The Powell shift was the more surprising because it followed a relatively bland opening statement. It is possible that he saw himself increasingly in the minority with respect to FOMC voters and as chair did not want to be far out of the FOMC consensus. It seems unlikely that he would be so concrete had he not anticipated a strong FOMC consensus to accelerate tapering. He reiterated his concerns on the inflation trajectory and on the likely discussion of accelerated tapering a couple of times, an indication that he did not want his initial comments to be seen as a slip of the tongue. His references to bringing the tapering schedule forward a few months sounded as if he sees the FOMC thinking March or April rather than May or June. The flattening of G10 curves suggests either that positions remain stretched on the fixed income side or that medium-term growth concerns are emerging even as (and possibly because) the Fed is shifting in a more hawkish direction (see MSV - Ride). In the aftermath of Powell’s comments, fed funds futures rates rose, but the maximum increase was in the February 2023 contracts, up 6bps. A similar pattern was seen in Eurodollar futures, where the expected yield increase peaked in late 2022 and early 2023 and then faded – this does not feel like a taper tantrum. For the USD, the knee-jerk reaction to a more hawkish Fed is likely to be strength (USD – Q4 upside risk on wage/price fears), but we are sceptical that this will persist if growth fears emerge, and it would not take too much of a 2022 easing in inflation fears – not back to 2% but noticeably lower than at present – for investors to unwind USD optimism. Tyler Durden Wed, 12/01/2021 - 15:00.....»»

Category: dealsSource: nytDec 1st, 2021Related News

Metals Stocks: Gold futures end higher amid ‘uncertainty and anxiety’ in the marketplace

Gold futures end higher on Wednesday, marking a partial rebound from losses in the previous session, buoyed by uncertainty around the impact of the omicron variant of coronavirus, as the dollar weakens, and yields for government bonds move lower......»»

Category: topSource: marketwatchDec 1st, 2021Related News

Oil futures pare some gains after EIA reports a smaller-than-expected weekly fall in U.S. crude supplies

The Energy Information Administration reported on Wednesday that U.S. crude inventories fell by 900,000 barrels for the week ended Nov. 26. On average, analysts had forecast a 2.7 million-barrel decline, according to a poll conducted by S&P Global Platts. The American Petroleum Institute on Tuesday reported a 747,000-barrel decrease, according to sources. The EIA also reported weekly inventory increases of 4 million barrels for gasoline and 2.2 million barrels for distillates. The S&P Global Platts survey expected supply climbs of 900,000 barrels gasoline and 1 million barrels for distillates. The EIA data showed crude stocks at the Cushing, Okla., Nymex delivery hub edged up by 1.1 million barrels for the week. January West Texas Intermediate crude was up $2.07, or 3.1%, at $68.25 a barrel on the New York Mercantile Exchange. It traded at $68.60 before the supply data.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Category: topSource: marketwatchDec 1st, 2021Related News

Gold futures end higher, buoyed by omicron-fueled uncertainty

Gold futures ended higher on Wednesday, recouping most of the 0.5% loss suffered in the previous session. Gold is really struggling for direction "having repeatedly failed to generate any momentum above $1,800," said Craig Erlam, senior market analyst at Oanda, in a market update. "The dollar easing in recent days and the huge amount of uncertainty in the markets should be giving it a lift, but then we have seen near-term [Treasury] yields rising as the Fed has accepted more action may be necessary." In testimony to the House Financial Services panel Wednesday, Fed Chairman Jerome Powell said the central bank's plan to slow and end its asset purchases shouldn't disrupt financial markets. February gold rose $7.80, or 0.4%, to settle at $1,784.30 an ounce. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Category: topSource: marketwatchDec 1st, 2021Related News

Market Rollercoaster Continues in Wake of Powell"s Comments

If you ever wondered what it was like to be a yo-yo, this market is giving you the opportunity. Market volatility is such that the stocks that you hated yesterday, you may find that you love today. U.S. stocks up strongly this morning, reversing the move of yesterday’s selloff. Both Dow and Nasdaq futures gained over 1% leading into the market open, and futures on the Russell 2000 Index, which has been particularly hard-hit of late, rose nearly 2%. Accordingly, parts of the market that were struggling in yesterday’s action are mostly rebounding this morning. This market volatility comes as the result of two main factors: concerns over the course of the Covid-19 omicron variant and a possible accelerated timeline for Fed tapering.  Energy stocks are mostly higher this morning, following the price of crude oil, which is now above $69 per barrel. Additionally, major “reopening” stocks, such as Expedia (NASDAQ: EXPE), Carnival (NYSE: CCL), and Hilton Worldwide (NYSE: HLT) are all up strongly. The yield on the 10-year Treasury note also has regained some ground, and is up near the 1.5% level, although this is still well below last week’s yields of 1.69%. Something to look for will be how interest-rate-sensitive financial stocks react to this move. ADP Non-Farm Employment numbers came in this morning above expectations (534k actual vs. 525k estimate), which may also help to give the market a boost. But the theme of the week so far is volatility, and that is reflected in the VIX. While the volatility index has now dropped below 24 on the move up in the market, this level is still elevated, and unlikely to drop to normal levels in the next couple of weeks: keep in mind, Quadruple Witching Day will occur in just over two weeks. One of the notable gainers this morning is Merck (NYSE: MRK), which received FDA advisory committee approval for its antiviral Covid-19 pill, which would be the first such pill to be taken at home.  Another gainer this morning is Mastercard (NYSE: MA), which both authorized an $8 billion share repurchase program and increased its ...Full story available on Benzinga.com.....»»

Category: earningsSource: benzingaDec 1st, 2021Related News

After Rebounding Sharply From Tuesday"s Rout, Stocks Face A Big Gamma Test

After Rebounding Sharply From Tuesday's Rout, Stocks Face A Big Gamma Test As expected, yesterday's bearish month-end rebalancing which saw over $8 billion in MOC for sale orders has given way to the traditional strong December equity inflows, sending futures sharply higher. Forced selling dump into the close today. Forced Dec 1 buying frontrunning after the close — zerohedge (@zerohedge) November 30, 2021 So now that reflexive fund flows have reversed and the narrative is quickly changing to one where both the bearish Omicron and Powell developments have been mitigated, at least according to today's price action, the question is what comes next. One answer comes from our friends at SpotGamma who look at the latest option exposure and continue to see major support down near 4550 noting that one of their largest combo strikes filled in at 4565 overnight. "This implies the “base” in options positions is building" and should the market revisit that area "price action would stall – and that would lead to a drop in implied volatility. In turn this incentives traders to close put options, which leads to dealers buying back futures." More importantly, and in keeping with what we said last week ("Is This A Real Crash? Keep An Eye On The VIX For The Answer"), SG points out that "implied volatility is down sharply this morning (black line today, blue y’day), as indicated in the graph below." This shows that the VIX complex (aka implied volatility) is decompressing, which is a tailwind for equities. So looking forward, the first hurdle for the S&P to clear is that of the Volatility Trigger/gamma flip line of 4640 - which is where futures are trading right now - and which markets could gain a bit of positive gamma support according to SpotGamma. Alternatively, if we dip back below that line elevated market volatility is likely to remain. But more critically for bulls is for the market to enter the “orbit” of the large 4700 gamma strike, which would initiate more positive gamma pull. That said, it will likely take some type of macro catalyst such as a reduction in fear around Covid, clarity on policy from Powell or a clear resolution on the debt ceiling that leads to a real release in this elevated implied volatility. Naturally, any continued drop in implied volatility should be seen as fuel for higher prices – this, as SG reminds us, is the vanna component that is critical to rallies. Finally, the most efficient way to view the composite picture is through the gamma profile below. Here SpotGamma notes that one can see the positive strike distribution that starts at ~4670 and builds up into 4717. From 4650 below there gamma remains quite neutral which is why markets are “fluid” - read volatile - in that price area.   Tyler Durden Wed, 12/01/2021 - 12:08.....»»

Category: dealsSource: nytDec 1st, 2021Related News

Metals Stocks: Gold futures rise amid ‘uncertainty and anxiety’ in the marketplace

Gold futures climb on Wednesday, staging a tenuous rebound from losses in the previous session, buoyed by uncertainty around the impact of the omicron variant of coronavirus, as the dollar weakens, but yields for government bonds rise......»»

Category: topSource: marketwatchDec 1st, 2021Related News

Best-Performing ETF Areas of November

Wall Street was on a volatile ride in the month of November. Most indexes were in the red last month on renewed COVID-19 fear. Wall Street was on a topsy-turvy ride in the month of November. While the start of the month was decent, renewed virus scare and lockdowns weighed on the broader market at the end. Overall, the S&P 500, the Dow Jones, the Nasdaq and the Russell 2000 lost about 1.4%, 4.4%, 0.7% and 6.9% past month, respectively.Nationwide COVID-19 lockdowns in Europe in late November once again stirred fears of the further spread of infections. While this raised chances of another wave of COVID-19 in other parts of the world, the finding of a new COVID-19 variant, namely Omicron, led to a massive crash in Wall Street in the month-end. Meanwhile, the Fed started QE tapering from November and corporate earnings came in upbeat. Holiday sales are forecast to come solid in 2021. Retail sales for the month of October was strong. Inflation data too was high due to supply chain issues. Oil prices staged a rally in November due to the prospect of higher demand but nosedived in the Thanksgiving week along with Wall Street on Omicron fears.Against this backdrop, we highlight below a few investing areas that stood tall in November.CarboniPath Series B Carbon ETN GRN, Kraneshares European Carbon Allowance ETF (KEUA) and Kfa Global Carbon ETF (KRBN) advanced 26.1%, 22.7% and 16.7%, respectively, past month. A sharp rise in gas prices boosted the demand for carbon futures.SemiconductorsThe semiconductor space has been on a tear as the pandemic has bolstered the demand for chips, leading to the worst global shortage in many years. Corporate earnings from the likes of Nvidia (NVDA), Qualcomm (QCOM) and Advanced Micro Devices (AMD) came in upbeat. The recent upsurge in the electric vehicle industry and increased awareness for clean energy also made the semiconductor industry an investors’ darling (read: 4 ETF Areas Near One-Year High With More Room for Growth).              Vaneck Semiconductor ETF SMH, PHLX Semiconductor iShares ETF (SOXX) and Nasdaq Semiconductor ETF First Trust (FTXL) and Dynamic Semiconductors Invesco ETF (PSI) gained 13.8%, 13.5%, 12.4% and 12%, respectively, past month.CoffeeCoffee prices have been super-hot as a supply crunch from Brazil to Vietnam pushed coffee prices to a seven-year high. Inclement weather, shipping disruptions and rising fertilizer costs are weighing on supplies. iPath Series B Bloomberg Coffee Subindex Total Return ETN JO gained 13.8% past month.The latest rally came after a decline in the certified stockpiles in Brazil. In addition, the early projections for Brazil’s 2022 crop indicate that yields will trail the nation’s last high-yielding cycle in 2020-21. This will prevent the rebuilding of stockpiles needed to weather the natural dip in the following harvest.Gaming & EsportsVideo gaming stocks have been in fine fettle. For 10 months, total consumer spending on gaming grew 12% year over year to $46.67 billion (per The NPD Group data). Market experts are optimistic about the strength that the video gaming industry is witnessing in the terms of sales growth despite tough year-over-year comparisons, highlighting the momentum in the space.Renewed virus fears from late November also brightened the stay-at-home investing areas like video gaming. Vaneck Video Gaming and Esports ETF ESPO advanced 7.6% (read: Bet on These Video Gaming ETFs to Ride the Surging Sales Trend).Homebuilding The broader housing sector appears in decent shape if we go by the recently released earnings reports. D.R. Horton Inc. DHI, Beazer Homes (BZH) and Meritage Homes Corporation (MTH) beat overall while NVR Inc. (NVR) came up with mixed earnings (read: What Supply Chain Woes? Buy Housing ETFs On Earnings Strength).Per the National Association of Realtors (NAR) report, there was a 0.8% sequential increase in existing homes sales to a seasonally adjusted annual rate of 6.34 million units in October. The figure surpassed economists’ expectations of sales declining to 6.20 million units, per a Reuters poll.  Increasing for the second successive month, the metric saw the highest level since January. US Home Construction iShares ETF ITB and S&P Homebuilders SPDR ETF XHB gained 7.1% and 6.2% past month, respectively. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report D.R. Horton, Inc. (DHI): Free Stock Analysis Report SPDR S&P Homebuilders ETF (XHB): ETF Research Reports iShares U.S. Home Construction ETF (ITB): ETF Research Reports VanEck Semiconductor ETF (SMH): ETF Research Reports iPath Series B Bloomberg Coffee Subindex Total Return ETN (JO): ETF Research Reports iPath Series B Carbon ETN (GRN): ETF Research Reports VanEck Video Gaming and eSports ETF (ESPO): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 1st, 2021Related News

In Act Of Sheer Panic, Turkey Central Bank Intervenes To Prop Up Lira, Fails

In Act Of Sheer Panic, Turkey Central Bank Intervenes To Prop Up Lira, Fails With the lira having lost 40% of its value in just the past 3 weeks (and down almost 50% YTD), now that the market finally realizes just how insane Erdogan has been all along with his intention to keep cutting rates until the mid-2023 Turkish elections... ... and foreign investors pulling their capital from Turkey in a show of defiance to the Erdogan regime - they may return if and when a new, more sensible ruler emerges - overnight the Turkish central bank intervened in the foreign exchange market for the first time in seven years, and in an act of sheer desperation, fought to shore up the plunging lira. The Turkish Central Bank (TCMB) said in a statement that it took action due to “unhealthy price formations” in the lira, which has been in freefall since President Recep Tayyip Erdogan renewed his push for lower interest rates. Needless to say, the price formation is "unhealthy" only to the Erdogan regime, the entrenched Turkish state, and Erdogan's puppet central bank, and quite healthy to short sellers who have long been warning that Turkey is doomed to collapse under the Erdogan dictatorship, and only a currency collapse and hyperinflation has any hope of dislodging Turkey's batshit insane ruler. Indeed, in recent days we have seen sporadic protests against the currency collapse and soaring prices, and Erdogan is scrambling to intercept these before they spread to the rest of the population. Unfortunately for Erdogan, as Japan, the UK and so many other central banks have demonstrated with their failed intervention attempts, all the TCMB is achieving is blowing through its dollar reserves and ensuring that the currency collapse will come even faster and will be even more acute when it hits. Sure enough, while the lira initially surged against the dollar after the announcement, climbing as much as 8.5%, it later pared gains. A subsequent intervention by the central bank had a far smaller impact and was quickly faded by the market. Bottom line: after spending hundreds of millions or even billions, the lira is almost back where it was and every incremental attempt to punish lira shorts and send the lira higher will lead to an even faster collapse in the doomed currency which will not rebound as long as i) Erdogan is president or ii) until Erodgan capitulates and admits that his bizarre economy experiment has been a failure (which won't happen). Meanwhile, perhaps unaware of the endgame, Erdogan said that the central bank “can make the necessary intervention if that’s needed,” speaking to a group of reporters on Wednesday after addressing his party’s lawmakers in parliament. The intervention which took place in both spot and futures markets marks a new episode in Erdogan’s latest policy pivot according to Bloomberg. It follows after his latest pledge on Tuesday to keep lowering interest rates until elections in 2023. The Turkish leader also effectively doomed the currency saying that the country will no longer try to attract “hot money” by offering high interest rates and a strong lira. In Erdogan’s base scenario, cheaper money will boost manufacturing and create jobs while inflation eventually stabilizes. That said, the central bank's surprise - and desperate - decision to sell more from its dwindling foreign assets shows policymakers are turning less comfortable with the lira’s rising volatility than the Turkish president. It “reflects how serious the situation is,” said Piotr Matys, an analyst at InTouch Capital. “But it’s likely to prove insufficient. Turkey doesn’t have sufficient FX reserves to sell substantial amount of dollars on a regular basis.” As Bloomberg reminds us, the last intervention took place in January 2014, when the central bank sold $3.1 billion in spot markets. The move failed to stabilize the lira and less than a week later, Turkey was forced to more than double its benchmark interest rate to 10% in an emergency meeting. Expect a similar outcome, only this time Erdogan won't concede defeat and won't hike rates, which is why we repeat that our fair value for the USDTRY is 20, and potentially much more once local banks start defaulting on foreign-denominated debt. Bloomberg also admits that the country faces a very different set of circumstances now. Governor Sahap Kavcioglu is the fourth central bank chief since Erdogan was sworn in with expanded executive powers in 2018, which included being able to fire and replace bank governors. Kavcioglu has repeatedly changed his forward guidance in recent months to make room for rate cuts while inflation kept climbing. Since September, the central bank slashed the one-week repo rate by 4 percentage points to 15%. Looking ahead, the question traders should ask is how long can Turkey buy the currency some respite from the relentless selling. The answer, as BBG's Ven Ram notes, comes down to the size of the war chest and how willing the central bank is to run down those assets. While the Turkish central bank’s gross reserves add up to $128.5 billion, with $60.5 billion coming from the bank’s swap deals. with some $40 billion in gold (at least in theory; we have a strong suspicion Erdogan and his cronies have long ago sold or syphoned off Turkey's gold and all that number represents is an empty placeholder). However,  when swaps and other liabilities such as required reserves are stripped, Turkey’s net reserves stand at -$35 billion! Yes, negative. While the bank has predictably said on many occasions that its gross reserves - the total amount at its disposal at the time - are more important than net reserves, the FX swaps will promptly collapse once counterparties realize they are on the hook for billions in losses as the Turkish economy implodes and unwind the swaps. As such, expect attention to turn to the massive negative number of true net foreign assets. Separately, Ram also notes that the central bank’s intervention this morning is significant if only for the signaling it sends. During a previous episode of similar stress in the lira back in 2018, there was no reported intervention. In other words, the policy makers may be telling the markets that their strategy to ward off any speculation on the currency will take a different tack this time. And while, in 2018, the central bank took the benchmark rate to 24% from 8% in a short span to arrest the decline in the lira, this time rate hikes are off the table and instead the central bank will burn through its remaining reserves instead before the TRY truly collapses. Erdogan said on Tuesday that old policies based on “false” premises would result in higher inequalities, while leaving Turkey at the mercy of foreign money barons. “The high interest-rate policy imposed on us is not a new phenomenon,” he said. “It is a model that destroys domestic production and makes structural inflation permanent by increasing production costs. We are ending this spiral.” We very much doubt Erdogan is ending "this spiral" but we are absolutely certain that he is now starting Turkey's "hyperinflation spiral." Tyler Durden Wed, 12/01/2021 - 09:05.....»»

Category: blogSource: zerohedgeDec 1st, 2021Related News

Futures Surge After Powell-Driven Rout Proves To Be "Transitory"

Futures Surge After Powell-Driven Rout Proves To Be "Transitory" Heading into yesterday's painful close to one of the ugliest months since March 2020, which saw a huge forced liquidation rebalance with more than $8 billion in Market on Close orders, we said that while we are seeing "forced selling dump into the close today" this would be followed by "forced Dec 1 buying frontrunning after the close." Forced selling dump into the close today. Forced Dec 1 buying frontrunning after the close — zerohedge (@zerohedge) November 30, 2021 And just as expected, despite yesterday's dramatic hawkish pivot by Powell, who said it was time to retire the word transitory in describing the inflation outlook (the same word the Fed used hundreds of times earlier in 2021 sparking relentless mockery from this website for being clueless as usual) while also saying the U.S. central bank would consider bringing forward plans for tapering its bond buying program at its next meeting in two weeks, the frontrunning of new monthly inflows is in full force with S&P futures rising over 1.2%, Nasdaq futures up 1.3%, and Dow futures up 0.9%, recovering almost all of Tuesday’s decline. The seemingly 'hawkish' comments served as a double whammy for markets, which were already nervous about the spread of the Omicron coronavirus variant and its potential to hinder a global economic recovery. "At this point, COVID does not appear to be the biggest long-term Street fear, although it could have the largest impact if the new (or next) variant turns out to be worse than expected," Howard Silverblatt, senior index analyst for S&P and Dow Jones indices, said in a note. "That honor goes to inflation, which continues to be fed by supply shortages, labor costs, worker shortages, as well as consumers, who have not pulled back." However, new month fund flows proved too powerful to sustain yesterday's month-end dump and with futures rising - and panic receding - safe havens were sold and the 10-year Treasury yield jumped almost 6bps, approaching 1.50%. The gap between yields on 5-year and 30-year Treasuries was around the narrowest since March last year. Crude oil and commodity-linked currencies rebounded. Gold remained just under $1,800 and bitcoin traded just over $57,000. There was more good news on the covid front with a WHO official saying some of the early indications are that most Omicron cases are mild with no severe cases. Separately Merck gained 3.8% in premarket trade after a panel of advisers to the U.S. Food and Drug Administration narrowly voted to recommend the agency authorize the drugmaker's antiviral pill to treat COVID-19. Travel and leisure stocks also rebounded, with cruiseliners Norwegian, Carnival, Royal Caribbean rising more than 2.5% each. Easing of covid fears also pushed airlines and travel stocks higher in premarket trading: Southwest +2.9%, Delta +2.5%, Spirit +2.3%, American +2.2%, United +1.9%, JetBlue +1.3%. Vaccine makers traded modestly lower in pre-market trading after soaring in recent days as Wall Street weighs the widening spread of the omicron variant. Merck & Co. bucked the trend after its Covid-19 pill narrowly gained a key recommendation from advisers to U.S. regulators. Moderna slips 2.1%, BioNTech dips 1.3% and Pfizer is down 0.2%. Elsewhere, Occidental Petroleum led gains among the energy stocks, up 3.2% as oil prices climbed over 4% ahead of OPEC's meeting. Shares of major Wall Street lenders also moved higher after steep falls on Tuesday. Here are some of the other biggest U.S. movers today: Salesforce (CRM US) drops 5.9% in premarket trading after results and guidance missed estimates, with analysts highlighting currency-related headwinds and plateauing growth at the MuleSoft integration software business. Hewlett Packard Enterprise (HPE US) falls 1.3% in premarket after the computer equipment maker’s quarterly results showed the impact of the global supply chain crunch. Analysts noted solid order trends. Merck (MRK US) shares rise 5.8% in premarket after the company’s Covid-19 pill narrowly wins backing from FDA advisers, which analysts say is a sign of progress despite lingering challenges. Chinese electric vehicle makers were higher in premarket, leading U.S. peers up, after Nio, Li and XPeng reported strong deliveries for November; Nio (NIO US) +4%, Li (LI US ) +6%, XPeng (XPEV US) +4.3%. Ardelyx (ARDX US) shares gain as much as 34% in premarket, extending the biotech’s bounce after announcing plans to launch its irritable bowel syndrome treatment Ibsrela in the second quarter. CTI BioPharma (CTIC US) shares sink 18% in premarket after the company said the FDA extended the review period for a new drug application for pacritinib. Allbirds (BIRD US) fell 7.5% postmarket after the low end of the shoe retailer’s 2021 revenue forecast missed the average analyst estimate. Zscaler (ZS US) posted “yet another impressive quarter,” according to BMO. Several analysts increased their price targets for the security software company. Shares rose 4.6% in postmarket. Ambarella (AMBA US) rose 14% in postmarket after forecasting revenue for the fourth quarter that beat the average analyst estimate. Emcore (EMKR US) fell 9% postmarket after the aerospace and communications supplier reported fiscal fourth-quarter Ebitda that missed the average analyst estimate. Box (BOX US) shares gained as much as 10% in postmarket trading after the cloud company raised its revenue forecast for the full year. Meanwhile, the omicron variant continues to spread around the globe, though symptoms so far appear to be relatively mild. The Biden administration plans to tighten rules on travel to the U.S., and Japan said it would bar foreign residents returning from 10 southern African nations. As Bloomberg notes, volatility is buffeting markets as investors scrutinize whether the pandemic recovery can weather diminishing monetary policy support and potential risks from the omicron virus variant. Global manufacturing activity stabilized last month, purchasing managers’ gauges showed Wednesday, and while central banks are scaling back ultra-loose settings, financial conditions remain favorable in key economies. “The reality is hotter inflation coupled with a strong economic backdrop could end the Fed’s bond buying program as early as the first quarter of next year,” Charlie Ripley, senior investment strategist at Allianz Investment Management, said in emailed comments. “With potential changes in policy on the horizon, market participants should expect additional market volatility in this uncharted territory.” Looking ahead, Powell is back on the Hill for day 2, and is due to testify before a House Financial Services Committee hybrid hearing at 10 a.m. ET. On the economic data front, November readings on U.S. private payrolls and manufacturing activity will be closely watched later in the day to gauge the health of the American economy. Investors are also awaiting the Fed's latest "Beige Book" due at 2:00 p.m. ET. On the economic data front, November readings on U.S. private payrolls and manufacturing activity will be closely watched later in the day to gauge the health of the American economy. European equities soared more than 1.2%, with travel stocks and carmakers leading broad-based gain in the Stoxx Europe 600 index, all but wiping out Tuesday’s decline that capped only the third monthly loss for the benchmark this year.  Travel, miners and autos are the strongest sectors. Here are some of the biggest European movers today: Proximus shares rise as much as 6.5% after the company said it’s started preliminary talks regarding a potential deal involving TeleSign, with a SPAC merger among options under consideration. Dr. Martens gains as much as 4.6% to the highest since Sept. 8 after being upgraded to overweight from equal- weight at Barclays, which says the stock’s de-rating is overdone. Husqvarna advances as much as 5.3% after the company upgraded financial targets ahead of its capital markets day, including raising the profit margin target to 13% from 10%. Wizz Air, Lufthansa and other travel shares were among the biggest gainers as the sector rebounded after Tuesday’s losses; at a conference Wizz Air’s CEO reiterated expansion plans. Wizz Air gains as much as 7.5%, Lufthansa as much as 6.8% Elis, Accor and other stocks in the French travel and hospitality sector also rise after the country’s government pledged to support an industry that’s starting to get hit by the latest Covid-19 wave. Pendragon climbs as much as 6.5% after the car dealer boosted its outlook after the company said a supply crunch in the new vehicle market wasn’t as bad as it had anticipated. UniCredit rises as much as 3.6%, outperforming the Stoxx 600 Banks Index, after Deutsche Bank added the stock to its “top picks” list alongside UBS, and Bank of Ireland, Erste, Lloyds and Societe Generale. Earlier in the session, Asian stocks also soared, snapping a three-day losing streak, led by energy and technology shares, as traders assessed the potential impact from the omicron coronavirus variant and U.S. Federal Reserve Chair Jerome Powell’s hawkish pivot. The MSCI Asia Pacific Index rose as much as 1.3% Wednesday. South Korea led regional gains after reporting strong export figures, which bolsters growth prospects despite record domestic Covid-19 cases. Hong Kong stocks also bounced back after falling Tuesday to their lowest level since September 2020. Asia’s stock benchmark rebounded from a one-year low, though sentiment remained clouded by lingering concerns on the omicron strain and Fed’s potentially faster tapering pace. Powell earlier hinted that the U.S. central bank will accelerate its asset purchases at its meeting later this month.  “A faster taper in the U.S. is still dependent on omicron not causing a big setback to the outlook in the next few weeks,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital, adding that he expects the Fed’s policy rate “will still be low through next year, which should still enable good global growth which will benefit Asia.” Chinese equities edged up after the latest economic data showed manufacturing activity remained at relatively weak levels in November, missing economists’ expectations. Earlier, Chinese Vice Premier Liu He said he’s fully confident in the nation’s economic growth in 2022 Japanese stocks rose, overcoming early volatility as traders parsed hawkish comments from Federal Reserve Chair Jerome Powell. Electronics and auto makers were the biggest boosts to the Topix, which closed 0.4% higher after swinging between a gain of 0.9% and loss of 0.7% in the morning session. Daikin and Fanuc were the largest contributors to a 0.4% rise in the Nikkei 225, which similarly fluctuated. The Topix had dropped 4.8% over the previous three sessions due to concerns over the omicron virus variant. The benchmark fell 3.6% in November, its worst month since July 2020. “The market’s tolerance to risk is quite low at the moment, with people responding in a big way to the smallest bit of negative news,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management in Tokyo. “But the decline in Japanese equities was far worse than those of other developed markets, so today’s market may find a bit of calm.” U.S. shares tumbled Tuesday after Powell said officials should weigh removing pandemic support at a faster pace and retired the word “transitory” to describe stubbornly high inflation In rates, bonds trade heavy, as yield curves bear-flatten. Treasuries extended declines with belly of the curve cheapening vs wings as traders continue to price in additional rate-hike premium over the next two years. Treasury yields were cheaper by up to 5bp across belly of the curve, cheapening 2s5s30s spread by ~5.5bp on the day; 10-year yields around 1.48%, cheaper by ~4bp, while gilts lag by additional 2bp in the sector. The short-end of the gilt curve markedly underperforms bunds and Treasuries with 2y yields rising ~11bps near 0.568%. Peripheral spreads widen with belly of the Italian curve lagging. The flattening Treasury yield curve “doesn’t suggest imminent doom for the equity market in and of itself,” Liz Ann Sonders, chief investment strategist at Charles Schwab & Co., said on Bloomberg Television. “Alarm bells go off in terms of recession” when the curve gets closer to inverting, she said. In FX, the Turkish lira had a wild session, offered in early London trade before fading. USD/TRY dropped sharply to lows of 12.4267 on reports of central bank FX intervention due to “unhealthy price formations” before, once again, fading TRY strength after comments from Erdogan. The rest of G-10 FX is choppy; commodity currencies retain Asia’s bid tone, havens are sold: the Bloomberg Dollar Spot Index inched lower, as the greenback traded mixed versus its Group-of-10 peers. The euro moved in a narrow range and Bund yields followed U.S. yields higher. The pound advanced as risk sentiment stabilized with focus still on news about the omicron variant. The U.K. 10-, 30-year curve flirted with inversion as gilts flattened, with money markets betting on 10bps of BOE tightening this month for the first time since Friday. The Australian and New Zealand dollars advanced as rising commodity prices fuel demand from exporters and leveraged funds. Better-than-expected growth data also aided the Aussie, with GDP expanding by 3.9% in the third quarter from a year earlier, beating the 3% estimated by economists. Austrian lawmakers extended a nationwide lockdown for a second 10-day period to suppress the latest wave of coronavirus infections before the Christmas holiday period.  The yen declined by the most among the Group-of-10 currencies as Powell’s comments renewed focus on yield differentials. 10-year yields rose ahead of Thursday’s debt auction In commodities, crude futures rally. WTI adds over 4% to trade on a $69-handle, Brent recovers near $72.40 after Goldman said overnight that oil had gotten extremely oversold. Spot gold fades a pop higher to trade near $1,785/oz. Base metals trade well with LME copper and nickel outperforming. Looking at the day ahead, once again we’ll have Fed Chair Powell and Treasury Secretary Yellen appearing, this time before the House Financial Services Committee. In addition to that, the Fed will be releasing their Beige Book, and BoE Governor Bailey is also speaking. On the data front, the main release will be the manufacturing PMIs from around the world, but there’s also the ADP’s report of private payrolls for November in the US, the ISM manufacturing reading in the US as well for November, and German retail sales for October. Market Snapshot S&P 500 futures up 1.2% to 4,620.75 STOXX Europe 600 up 1.0% to 467.58 MXAP up 0.9% to 191.52 MXAPJ up 1.1% to 626.09 Nikkei up 0.4% to 27,935.62 Topix up 0.4% to 1,936.74 Hang Seng Index up 0.8% to 23,658.92 Shanghai Composite up 0.4% to 3,576.89 Sensex up 1.0% to 57,656.51 Australia S&P/ASX 200 down 0.3% to 7,235.85 Kospi up 2.1% to 2,899.72 Brent Futures up 4.2% to $72.15/bbl Gold spot up 0.2% to $1,778.93 U.S. Dollar Index little changed at 95.98 German 10Y yield little changed at -0.31% Euro down 0.1% to $1.1326 Top Overnight News from Bloomberg U.S. Secretary of State Antony Blinken will meet Russian Foreign Minister Sergei Lavrov Thursday, the first direct contact between officials of the two countries in weeks as tensions grow amid western fears Russia may be planning to invade Ukraine Oil rebounded from a sharp drop on speculation that recent deep losses were excessive and OPEC+ may on Thursday decide to pause hikes in production, with the abrupt reversal fanning already- elevated volatility The EU is set to recommend that member states review essential travel restrictions on a daily basis in the wake of the omicron variant, according to a draft EU document seen by Bloomberg China is planning to ban companies from going public on foreign stock markets through variable interest entities, according to people familiar with the matter, closing a loophole long used by the country’s technology industry to raise capital from overseas investors Manufacturing activity in Asia outside China stabilized last month amid easing lockdown and border restrictions, setting the sector on course to face a possible new challenge from the omicron variant of the coronavirus Germany urgently needs stricter measures to check a surge in Covid-19 infections and protect hospitals from a “particularly dangerous situation,” according to the head of the country’s DIVI intensive-care medicine lobby. A more detailed breakdown of global markets courtesy of Newsquawk Asian equity markets traded mostly positive as regional bourses atoned for the prior day’s losses that were triggered by Omicron concerns, but with some of the momentum tempered by recent comments from Fed Chair Powell and mixed data releases including the miss on Chinese Caixin Manufacturing PMI. ASX 200 (-0.3%) was led lower by underperformance in consumer stocks and with utilities also pressured as reports noted that Shell and Telstra’s entrance in the domestic electricity market is set to ignite fierce competition and force existing players to overhaul their operations, although the losses in the index were cushioned following the latest GDP data which showed a narrower than feared quarterly contraction in Australia’s economy. Nikkei 225 (+0.4%) was on the mend after yesterday’s sell-off with the index helped by favourable currency flows and following a jump in company profits for Q3, while the KOSPI (+2.1%) was also boosted by strong trade data. Hang Seng (+0.8%) and Shanghai Comp. (+0.4%) were somewhat varied as a tech resurgence in Hong Kong overcompensated for the continued weakness in casinos stocks amid ongoing SunCity woes which closed all VIP gaming rooms in Macau after its Chairman's recent arrest, while the mood in the mainland was more reserved after a PBoC liquidity drain and disappointing Chinese Caixin Manufacturing PMI data which fell short of estimates and slipped back into contraction territory. Finally, 10yr JGBs were lower amid the gains in Japanese stocks and after the pullback in global fixed income peers in the aftermath of Fed Chair Powell’s hawkish comments, while a lack of BoJ purchases further contributed to the subdued demand for JGBs. Top Asian News Asia Stocks Bounce Back from One-Year Low Despite Looming Risks Gold Swings on Omicron’s Widening Spread, Inflation Worries Shell Sees Hedge Funds Moving to LNG, Supporting Higher Prices Abe Warns China Invading Taiwan Would Be ‘Economic Suicide’ Bourses in Europe are firmer across the board (Euro Stoxx 50 +1.6%; Stoxx 600 +1.1%) as the positive APAC sentiment reverberated into European markets. US equity futures are also on the front foot with the cyclical RTY (+2.0%) outpacing its peers: ES (+1.2%), NQ (+1.5%), YM (+0.8%). COVID remains a central theme for the time being as the Omicron variant is observed for any effects of concern – which thus far have not been reported. Analysts at UBS expect market focus to shift away from the variant and more towards growth and earnings. The analysts expect Omicron to fuse into the ongoing Delta outbreak that economies have already been tackling. Under this scenario, the desk expects some of the more cyclical markets and sectors to outperform. The desk also flags two tails risks, including an evasive variant and central bank tightening – particularly after Fed chair Powell’s commentary yesterday. Meanwhile, BofA looks for an over-10% fall in European stocks next year. Sticking with macro updates, the OECD, in their latest economic outlook, cut US, China, Eurozone growth forecasts for 2021 and 2022, with Omicron cited as a factor. Back to trade, broad-based gains are seen across European cash markets. Sectors hold a clear cyclical bias which consists of Travel & Leisure, Basic Resources, Autos, Retail and Oil & Gas as the top performers – with the former bolstered by the seemingly low appetite for coordination on restrictions and measures at an EU level – Deutsche Lufthansa (+6%) and IAG (+5.1%) now reside at the top of the Stoxx 600. The other side of the spectrum sees the defensive sectors – with Healthcare, Household Goods, Food & Beverages as the straddlers. In terms of induvial movers, German-listed Adler Group (+22%) following a divestment, whilst Blue Prism (+1.7%) is firmer after SS&C raised its offer for the Co. Top European News Wizz Says Travelers Are Booking at Shorter and Shorter Notice Turkey Central Bank Intervenes in FX Markets to Stabilize Lira Gold Swings on Omicron’s Widening Spread, Inflation Worries Former ABG Sundal Collier Partner Starts Advisory Firm In FX, the Dollar remains mixed against majors, but well off highs prompted by Fed chair Powell ditching transitory from the list of adjectives used to describe inflation and flagging that a faster pace of tapering will be on the agenda at December’s FOMC. However, the index is keeping tabs on the 96.000 handle and has retrenched into a tighter 95.774-96.138 range, for the time being, as trade remains very choppy and volatility elevated awaiting clearer medical data and analysis on Omicron to gauge its impact compared to the Delta strain and earlier COVID-19 variants. In the interim, US macro fundamentals might have some bearing, but the bar is high before NFP on Friday unless ADP or ISM really deviate from consensus or outside the forecast range. Instead, Fed chair Powell part II may be more pivotal if he opts to manage hawkish market expectations, while the Beige Book prepared for next month’s policy meeting could also add some additional insight. NZD/AUD/CAD/GBP - Broad risk sentiment continues to swing from side to side, and currently back in favour of the high beta, commodity and cyclical types, so the Kiwi has bounced firmly from worst levels on Tuesday ahead of NZ terms of trade, the Aussie has pared a chunk of its declines with some assistance from a smaller than anticipated GDP contraction and the Loonie is licking wounds alongside WTI in advance of Canadian building permits and Markit’s manufacturing PMI. Similarly, Sterling has regained some poise irrespective of relatively dovish remarks from BoE’s Mann and a slender downward revision to the final UK manufacturing PMI. Nzd/Usd is firmly back above 0.6800, Aud/Usd close to 0.7150 again, Usd/Cad straddling 1.2750 and Cable hovering on the 1.3300 handle compared to circa 0.6772, 0.7063, 1.2837 and 1.3195 respectively at various fairly adjacent stages yesterday. JPY/EUR/CHF - All undermined by the aforementioned latest upturn in risk appetite or less angst about coronavirus contagion, albeit to varying degrees, as the Yen retreats to retest support sub-113.50, Euro treads water above 1.1300 and Franc straddles 0.9200 after firmer than forecast Swiss CPI data vs a dip in the manufacturing PMI. In commodities, WTI and Brent front month futures are recovering following yesterday’s COVID and Powell-induced declines in the run-up to the OPEC meetings later today. The complex has also been underpinned by the reduced prospects of coordinated EU-wide restrictions, as per the abandonment of the COVID video conference between EU leaders. However, OPEC+ will take centre stage over the next couple of days, with a deluge of source reports likely as OPEC tests the waters. The case for OPEC+ to pause the planned monthly relaxation of output curbs by 400k BPD has been strengthening. There have been major supply and demand developments since the prior meeting. The recent emergence of the Omicron COVID variant and coordinated release of oil reserves have shifted the balance of expectations relative to earlier in the month (full Newsquawk preview available in the Research Suite). In terms of the schedule, the OPEC meeting is slated for 13:00GMT/08:00EST followed by the JTC meeting at 15:00GMT/10:00EST, whilst tomorrow sees the JMMC meeting at 12:00GMT/07:00EST; OPEC+ meeting at 13:00GMT/08:00EST. WTI Jan has reclaimed a USD 69/bbl handle (vs USD 66.20/bbl low) while Brent Feb hovers around USD 72.50/bbl (vs low USD 69.38/bbl) at the time of writing. Elsewhere, spot gold and silver trade with modest gains and largely in tandem with the Buck. Spot gold failed to sustain gains above the cluster of DMAs under USD 1,800/oz (100 DMA at USD 1,792/oz, 200 DMA at USD 1,791/oz, and 50 DMA at USD 1,790/oz) – trader should be aware of the potential for a technical Golden Cross (50 DMA > 200 DMA). Turning to base metals, copper is supported by the overall risk appetite, with the LME contract back above USD 9,500/t. Overnight, Chinese coking coal and coke futures rose over 5% apiece, with traders citing disrupted supply from Mongolia amid the COVID outbreak in the region. US Event Calendar 7am: Nov. MBA Mortgage Applications, prior 1.8% 8:15am: Nov. ADP Employment Change, est. 525,000, prior 571,000 9:45am: Nov. Markit US Manufacturing PMI, est. 59.1, prior 59.1 10am: Oct. Construction Spending MoM, est. 0.4%, prior -0.5% 10am: Nov. ISM Manufacturing, est. 61.2, prior 60.8 2pm: U.S. Federal Reserve Releases Beige Book Nov. Wards Total Vehicle Sales, est. 13.4m, prior 13m Central Banks 10am: Powell, Yellen Testify Before House Panel on CARES Act Relief DB's Jim Reid concludes the overnight wrap If you’re under 10 and reading this there’s a spoiler alert today in this first para so please skip beyond and onto the second. Yes my heart broke a little last night as my little 6-year old Maisie said to me at bedtime that “Santa isn’t real is he Daddy?”. I lied (I think it’s a lie) and said yes he was. I made up an elaborate story about how when we renovated our 100 year old house we deliberately kept the chimney purely to let Santa come down it once a year. Otherwise why would we have kept it? She then asked what about her friend who lives in a flat? I tried to bluff my way through it but maybe my answer sounded a bit like my answers as to what will happen with Omicron. I’ll test both out on clients later to see which is more convincing. Before we get to the latest on the virus, given it’s the start of the month, we’ll shortly be publishing our November performance review looking at how different assets fared over the month just gone and YTD. It arrived late on but Omicron was obviously the dominant story and led to some of the biggest swings of the year so far. It meant that oil (which is still the top performer on a YTD basis) was the worst performer in our monthly sample, with WTI and Brent seeing their worst monthly performances since the initial wave of market turmoil over Covid back in March 2020. And at the other end, sovereign bonds outperformed in November as Omicron’s emergence saw investors push back the likelihood of imminent rate hikes from central banks. So what was shaping up to be a good month for risk and a bad one for bonds flipped around in injury time. Watch out for the report soon from Henry. Back to yesterday now, and frankly the main takeaway was that markets were desperate for any piece of news they could get their hands on about the Omicron variant, particularly given the lack of proper hard data at the moment. The morning started with a sharp selloff as we discussed at the top yesterday, as some of the more optimistic noises from Monday were outweighed by that FT interview, whereby Moderna’s chief executive had said that the existing vaccines wouldn’t be as effective against the new variant. Then we had some further negative news from Regeneron, who said that analysis and modelling of the Omicron mutations indicated that its antibody drug may not be as effective, but that they were doing further analysis to confirm this. However, we later got some comments from a University of Oxford spokesperson, who said that there wasn’t any evidence so far that vaccinations wouldn’t provide high levels of protection against severe disease, which coincided with a shift in sentiment early in the European afternoon as equities begun to pare back their losses. The CEO of BioNTech and the Israeli health minister expressed similar sentiments, noting that vaccines were still likely to protect against severe disease even among those infected by Omicron, joining other officials encouraging people to get vaccinated or get booster shots. Another reassuring sign came in an update from the EU’s ECDC yesterday, who said that all of the 44 confirmed cases where information was available on severity “were either asymptomatic or had mild symptoms.” After the close, the FDA endorsed Merck’s antiviral Covid pill. While it’s not clear how the pill interacts with Omicron, the proliferation of more Covid treatments is still good news as we head into another winter. The other big piece of news came from Fed Chair Powell’s testimony to the Senate Banking Committee, where the main headline was his tapering comment that “It is appropriate to consider wrapping up a few months sooner.” So that would indicate an acceleration in the pace, which would be consistent with the view from our US economists that we’ll see a doubling in the pace of reductions at the December meeting that’s only two weeks from today. The Fed Chair made a forceful case for a faster taper despite lingering Omicron uncertainties, noting inflation is likely to stay elevated, the labour market has improved without a commensurate increase in labour supply (those sidelined because of Covid are likely to stay there), spending has remained strong, and that tapering was a removal of accommodation (which the economy doesn’t need more of given the first three points). Powell took pains to stress the risk of higher inflation, going so far as to ‘retire’ the use of the term ‘transitory’ when describing the current inflation outlook. So team transitory have seemingly had the pitch taken away from them mid match. The Chair left an exit clause that this outlook would be informed by incoming inflation, employment, and Omicron data before the December FOMC meeting. A faster taper ostensibly opens the door to earlier rate hikes and Powell’s comment led to a sharp move higher in shorter-dated Treasury yields, with the 2yr yield up +8.1bps on the day, having actually been more than -4bps lower when Powell began speaking. They were as low as 0.44% then and got as high as 0.57% before closing at 0.56%. 2yr yields have taken another leg higher overnight, increasing +2.5bps to 0.592%. Long-end yields moved lower though and failed to back up the early day moves even after Powell, leading to a major flattening in the yield curve on the back of those remarks, with the 2s10s down -13.7bps to 87.3bps, which is its flattest level since early January. Overnight 10yr yields are back up +3bps but the curve is only a touch steeper. My 2 cents on the yield curve are that the 2s10s continues to be my favourite US recession indicator. It’s worked over more cycles through history than any other. No recession since the early 1950s has occurred without the 2s10s inverting. But it takes on average 12-18 months from inversion to recession. The shortest was the covid recession at around 7 months which clearly doesn’t count but I think we were very late cycle in early 2020 and the probability of recession in the not too distant future was quite high but we will never know.The shortest outside of that was around 9 months. So with the curve still at c.+90bps we are moving in a more worrying direction but I would still say 2023-24 is the very earliest a recession is likely to occur (outside of a unexpected shock) and we’ll need a rapid flattening in 22 to encourage that. History also suggests markets tend to ignore the YC until it’s too late. So I wouldn’t base my market views in 22 on the yield curve and recession signal yet. However its something to look at as the Fed seemingly embarks on a tightening cycle in the months ahead. Onto markets and those remarks from Powell (along with the additional earlier pessimism about Omicron) proved incredibly unhelpful for equities yesterday, with the S&P 500 (-1.90%) giving up the previous day’s gains to close at its lowest level in over a month. It’s hard to overstate how broad-based this decline was, as just 7 companies in the entire S&P moved higher yesterday, which is the lowest number of the entire year so far and the lowest since June 11th, 2020, when 1 company ended in the green. Over in Europe it was much the same story, although they were relatively less affected by Powell’s remarks, and the STOXX 600 (-0.92%) moved lower on the day as well. Overnight in Asia, stocks are trading higher though with the KOSPI (+2.02%), Hang Seng (+1.40%), the Nikkei (+0.37%), Shanghai Composite (+0.11%) and CSI (+0.09%) all in the green. Australia’s Q3 GDP contracted (-1.9% qoq) less than -2.7% consensus while India’s Q3 GDP grew at a firm +8.4% year-on-year beating the +8.3% consensus. In China the Caixin Manufacturing PMI for November came in at 49.9 against a 50.6 consensus. Futures markets are indicating a positive start to markets in US & Europe with the S&P 500 (+0.73%) and DAX (+0.44%) trading higher again. Back in Europe, there was a significant inflation story amidst the other headlines above, since Euro Area inflation rose to its highest level since the creation of the single currency, with the flash estimate for November up to +4.9% (vs. +4.5% expected). That exceeded every economist’s estimate on Bloomberg, and core inflation also surpassed expectations at +2.6% (vs. +2.3% expected), again surpassing the all-time high since the single currency began. That’s only going to add to the pressure on the ECB, and yesterday saw Germany’s incoming Chancellor Scholz say that “we have to do something” if inflation doesn’t ease. European sovereign bonds rallied in spite of the inflation reading, with those on 10yr bunds (-3.1bps), OATs (-3.5bps) and BTPs (-0.9bps) all moving lower. Peripheral spreads widened once again though, and the gap between Italian and German 10yr yields closed at its highest level in just over a year. Meanwhile governments continued to move towards further action as the Omicron variant spreads, and Greece said that vaccinations would be mandatory for everyone over 60 soon, with those refusing having to pay a monthly €100 fine. Separately in Germany, incoming Chancellor Scholz said that there would be a parliamentary vote on the question of compulsory vaccinations, saying to the Bild newspaper in an interview that “My recommendation is that we don’t do this as a government, because it’s an issue of conscience”. In terms of other data yesterday, German unemployment fell by -34k in November (vs. -25k expected). Separately, the November CPI readings from France at +3.4% (vs. +3.2% expected) and Italy at +4.0% (vs. +3.3% expected) surprised to the upside as well. In the US, however, the Conference Board’s consumer confidence measure in November fell to its lowest since February at 109.5 (vs. 110.9 expected), and the MNI Chicago PMI for November fell to 61.8 9vs. 67.0 expected). To the day ahead now, and once again we’ll have Fed Chair Powell and Treasury Secretary Yellen appearing, this time before the House Financial Services Committee. In addition to that, the Fed will be releasing their Beige Book, and BoE Governor Bailey is also speaking. On the data front, the main release will be the manufacturing PMIs from around the world, but there’s also the ADP’s report of private payrolls for November in the US, the ISM manufacturing reading in the US as well for November, and German retail sales for October. Tyler Durden Wed, 12/01/2021 - 07:47.....»»

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Metals Stocks: Gold futures edge higher, but dollar and yield moves hem in precious metal’s price

Gold futures head higher Wednesday morning, staging a tenuous rebound on the session as the dollar trades flat but yields for government bonds climb......»»

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