Happy Friday folks! First up on everyone’s mind were those job numbers this morning, which came in far higher than expectations at 263K jobs added vs the median 200k forecasted for the month of November - this holds the unemployment rate at 3.7% of the labour force. Read up on this below as well as stories on a startling military partnership forming between China and Russia as well as the blights facing the mortgage industry within this 165th Coachman’s Report!
Markets in Review
Despite the stellar job news, premarket futures sold off heavily with respective losses of 1.13, 1.39 and 2.04 bps for the Dow, S&P and Nasdaq. When coupled with Wednesday’s strong GDP performance for Q3 of 2.9% (which also beat expectations of 2.6%), today’s jobs report creates a compelling case for another month of high inflation spurred by demand-pull factors. Regardless, investors are fleeing to fixed income and have pushed the shorter end of the yield curve down a couple of basis points since the start of the week - conversely, the long end has drifted up, likely due to a lack of liquidity. Moreover, for the third straight week, investor sentiment has been reported as overwhelmingly bearish with a share of 40.4% of market participants sitting in this camp. Last, the next market catalyst is right around the corner with OPEC hosting their final meeting of the year on Sunday, where it is highly likely that the fate of international oil prices will be sealed for the near to medium term. Watch the meeting’s live stream at this link on Sunday.
Long: UiPath Inc. (PATH-NYSE) | Timeline: 2 days
UiPath Inc. (PATH), which provides an end-to-end automation platform that offers a range of robotic process automation (RPA) solutions around the world, reported earnings yesterday after the market closed. The company was able to beat earnings and revenue estimates by 210.44% and 5.21%, respectively, as the company “closed several notable third-quarter deals using this value-selling approach and are widely engaged with both new and existing customers heading into the last quarter of the fiscal year 2023" (Rob Enslin, Co-CEO). (Full Story) Referring to the chart, PATH has suffered amid macroeconomic headwinds throughout 2022, falling from highs of $40 in January, however, the stock has remained quite reactive on a positive earnings transcript. That said, as the stock edges closer to the end of this falling wedge, it’s played a head and shoulders - and with positive news, this should most likely result in a breakout.
Zooming out...
Air Exchanges Over the past 48 hours, multiple reports have begun to emerge of what many believe was one of the United States’ worst fears. Russian and Chinese air forces have been conducting joint patrols over the Sea of Japan and the East China Sea, while also landing military planes at each other's airbases. This signals to the world that the partnership between the two nations is at its strongest level in years, even with the ever-present backdrop of the war in Ukraine. On these patrols, Russian and Chinese squads managed to encroach on the territory of not one, but two nations in their immediate radii, Japan and South Korea. The South Koreans were forced to scramble jets after two Chinese bombers, and six Russian jets from the patrols crossed over its air defence zone. While Japan’s Chief Cabinet Secretary said that Tokyo has “severe concerns” about the patrols coming so close to Japanese territory. This incursion is likely to spur further nationalist sentiment within Japan, and will likely have a large impact on the planned military procurement figure set to be released in mid-December. Additionally, Japan is rumoured to be announcing the development of a new advanced fighter jet with the UK and Italy within the next week. Mortgage Industry Layoffs Continue
As shown in the chart above, October home sales slumped far below the 5 year average for the month, compounding an unfortunate downward trend that has persisted since August of this year. In truth, these weak numbers present the tenth month of a dismal year for both home buyers and sellers in the US housing market. Resultantly firms have continued to announce layoffs in the mortgage industry. Yesterday it was announced that Wells Fargo would be cutting hundreds of additional mortgage employees nationwide. This was after the bank had already cut roughly 400 employees from the division throughout the year. Redfin has also announced a new set of sweeping cuts that laid off an additional 13% of its workforce, bringing the year’s total to a 29% reduction. In short, the US housing market has been simultaneously choked by a lack of demand from interest rate hikes and a lack of desire to sell for a lower price due to the general downturn. It seems that the gridlock will not break until a catalyst sends either interest rates, or home prices far lower.
Making headlines...
Unemployment rate drops slightly to 5.1% in November
Statistics Canada says employment was little changed in November as the economy added a modest 10,000 jobs. (Full Story)
Musk says Twitter has suspended rapper Ye
Twitter has suspended rapper Ye after he tweeted a picture of a swastika merged with the Star of David. (Full Story)
OPEC+ Oil Export Cut Blunted by Surge in Russian Shipments
The Organization of Petroleum Exporting Countries slashed output by about 1 million barrels a day, according to a Bloomberg survey, roughly fulfilling their half of a cutback co-ordinated with the wider OPEC+ coalition. (Full Story)
McLaren Sells Historic Cars to Raise Cash for New Supercar
Cash-strapped McLaren Holdings Ltd. has recently sold some of its prized heritage car collection to Bahrain’s sovereign wealth fund Mumtalakat Holding Co. to raise capital. (Full Story)
Chart of the Day: Down goes personal savings rate
"Nature is an unforgiving mother."
- Will Spencer
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