Hey folks we are getting ready to kick off 3rd Quarter Earnings this coming week for some key money center banks kicking things off. The remainder of this month will go a long way to determining where we go from here. Get me take below in this week’s Round-Up.
WEEKLY SOUND BITES:
- US Indexes (except the Russell) recorded gains, with the S&P 500 recovering a portion of the previous week’s losses. Worries over the debt ceiling were also alleviated late in the week as the Democrats pushed out to this December the debt ceiling debate. For the 3rd Quarter, markets came in essentially flat. Now we have Q3 earnings kicking off this coming week with over 6 major money center banks stepping into the Earnings confessional.
- The week brought the highly anticipated monthly payrolls report, which seemed to receive a mixed reaction in markets when it was released Friday morning. It appeared to be more of an inflation report rather than a labor report. The Labor Department reported that nonfarm payrolls grew by 194,000 in September, well below consensus expectations of around 500,000 while the unemployment number came in at 4.8%. The workforce participation rate also ticked lower. Average hourly earnings rose 0.6%—more than forecast—and average weekly hours worked hit their highest level (34.8) since May. Weekly jobless claims, reported Thursday, also fell more than expected.
- The jobs report did appear to foster a rise in longer-term bond yields later Friday morning, building on an increase earlier in the week. The yield on the benchmark 10-year U.S. Treasury notes briefly neared 1.62%, its highest level since early June. The Feds are forecasting (PCE) to come in at 4.2% for 2021 dropping down to 2.2% the next few years and down to 2.1% in 2024. Shipping costs have risen from $2,500 to $20,000 for a 40 ft container in the past 18 months, which food costs are up over 30% while energy costs have more than doubled in key global markets with Natural Gas hitting records across Europe and Asia and Oil at multi year highs. Also note that historically, rising energy prices have foretold or caused recessions.
- Wholesale natural gas prices surged to record levels in Europe amid global fuel shortages, threatening to increase costs significantly for households and to curb industrial production. European Central Bank (ECB) policymakers viewed the recent surge in inflation as temporary but acknowledged that the risks to the outlook “were widely regarded as being tilted to the upside. German industrial production in August fell the most in 17 months due to supply chain disruptions, particularly in the auto industry.
- Against the broader backdrop of worries about global inflation, oil prices, and the Chinese property market, Japan’s stock markets lost ground for the third week in a row. The Bank of Japan (BoJ) downgraded its economic assessments on five of the country’s nine regions, citing the lingering impact of the coronavirus pandemic and supply shortages that have hit manufacturers.
- Chinese Data released Friday showed the Caixin/Markit services Purchasing Managers’ Index rose to 53.4 from 46.7 in August, rebounding from the lowest level seen since the height of the 2020 pandemic. News from the property sector continued to dominate investor concerns after developers reported sharply lower sales for September, with more announcements of missed debt payments. In addition to Evergrande we now see that Fantasia Holdings and Sinic Holdings have also missed debt payments this past week.
Enjoy This Week’s Round-Up;
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