Well folks, yesterday was quite a start to the week for markets - it started with expectations of one of the world’s largest banks, Credit Suisse, becoming insolvent and it ended with North Korea firing a nuke over Japan…which ultimately ended up missing the island and landing in the pacific. Regardless, the S&P ended the day up 2.64% and in the premarket is posturing for more green with futures up 1.67% currently along with the Dow and Nasdaq at +1.29% and 1.89% at the time of writing.
Markets in Review
As expected, the market vied to defend the 3600 point level and succeeded yesterday in putting some healthy distance between itself and this key price level. With futures posturing positively again today, it will be nice to see the market not trade too much further into the red as investors hold their breath on the outcome of this Q3 reporting period. Given the overly bearish nature of sentiment right now, with 60.8% of participants feeling bearish, any flicker of hope resulting from positive earnings could be what's needed to keep the market sideways.
Trade of the Day - Short: Biogen Inc. (BIIB-NASDAQ) | Timeline: 2 days
Biogen Inc. (BIIB) - a company that discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases had a ton of success over the last week with their Alzheimer's drug, however, yesterday the US Supreme Court turned away the company’s effort to reinstate Tecfidera patent, clearing the way for other companies like Viatris Inc to manufacture and market the drug. This puts Biogen in a sticky situation, as one of their products that differentiates them from others is now on the open market, leaving investors skeptical on whether or not sticking with this stock is the best idea. Turning to the chart, Biogen stock has trended sideways for the majority of 2022, with the exception of its most recent pop in late September, following the good news mentioned above. That said, should traders follow Newton’s third law of motion (what goes up, must come down!), shorts are likely to enter the market over the next couple of days with the Supreme Court’s ruling as a perfect catalyst.
Zooming out...
The UN Wades Into Rates The UN’s Conference on Trade and Development has called for central banks, namely the Federal Reserve, to slow, or halt rate hikes as they risk sending the global economy into a deep recession. Chiefly, the organization is concerned with the financial course of developing nations over the coming years. They report that every percentage increase in Fed rates equates to lowered economic activity in rich countries by 0.5% over the following three years, while it lowers economic activity in developing nations by 0.8% over the same time span. The Conference also estimated that Fed hikes so far this year have reduced the economic output of poorer countries by $360B over three years. Cargo Price Collapse
The Shanghai Containerized Freight Index
This year, the shipping industry has been rife with cancellations in what typically acts as their busiest season. After two years of complete pandemonium, one must ask themselves, “what's happened to the shipping industry?’. Well, these recent cancellations have occurred in what used to be one of the most popular shipping routes, the Trans-Pacific. Total trade volume in this route has fallen roughly 75% on a YoY basis, while prices for containers moved fell globally. Moreover, it doesn’t seem as if there’s a near-term solution for this fall in demand as many US manufacturers are in the midst of the bullwhip effect, and are sitting on large stockpiles of inventory - prime examples of these retailers being Walmart and Target. This current shortage has led many vessel operators to cancel voyages as they’d simply be lugging empty containers.
Making headlines...
White House unveils artificial intelligence 'Bill of Rights
The Biden administration unveiled a set of far-reaching goals Tuesday to align artificial intelligence-powered tools with what it called the values of Democracy and equity, including guidelines for how to protect people’s personal data and limit surveillance. (Full Story)
Cathie Wood Scoops Up Tesla as Stock Tumbles
Cathie Wood bought Tesla Inc. shares as they plunged the most in four months after the electric carmaker’s third-quarter deliveries missed expectations. (Full Story)
LNG Canada, country's $40-billion 'second chance' at becoming a global LNG leader
On a drizzly stretch of B.C. coastline at the head of the Douglas Channel, Canada’s first natural gas export terminal is taking shape. (Full Story)
As Pound’s Recovery Rages, Strategists Expect Selling to Resume
The pound has rallied more than 10% from last week’s lows against the dollar but most strategists are sticking to bets that the UK currency will resume losses, with some predicting a new record low by year-end. (Full Story)
North Korea fires ballistic missile over Japan
North Korea has fired a ballistic missile over Japan, in what appears to be a deliberate escalation to get the attention of Tokyo and Washington. (Full Story)
Chart of the Day: Air Cargo Market Trends for the past 5 weeks
“It is never too late to be what you might have been.” – George Eliot
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