Well folks, markets appreciated across the board yesterday with the S&P gaining about 80 bps by close - the gains extended to our trade on $DX, with it printing to the tune of 5% - if you’re still holding a position, remember to mind our recommended timeline and sell by today’s close. We have multiple stories on the UK’s new PM and an update on the possible flashpoint that is the South China Sea, as such read on for your daily dose of market inspiration in these volatile waters!
Markets in Review
The green tone set for the week does not seem to be extending to today with premarket futures on the Dow, S&P and Nasdaq trading down 44, 30 and 7 bps at time of writing - with that said, the after the S&P’s performance yesterday it is trading new a minor resistance level within the price channel at around 3800 points; depicted below, the market has used this as a minor support/resistance around six times since June and will need to break through it by the end of this earnings season in order to have any shot of reaching above 4000 points by the year’s end.
Panning to interest rates, the probability of another 75bp hike on November 2nd has only grown a further percentage point since last week - bringing the chance to 97.7%. Given the inability to control inflation thus far as well as the continuingly hot job market, our house view of anything other than a 75bp raise taking place is nil. Moreover, pictured below, treasuries are continuing to price this in with a 1-year T-bill breaking a 4.6% yield recently.
Short: Crown Holdings, Inc. (CCK-NYSE) | Timeline: 2 days
Crown Holdings, Inc. (CCK), which designs, manufactures, and sells packaging products and equipment across the globe, reported earnings yesterday after the market closed, and it’s looking like investors won’t react well. The company missed earnings and revenue estimates by 17.22% and 0.67%, respectively, while income from operations came in at $297 million compared to $348 million in Q3 of 2021 - reflecting increasing inflation, European energy prices, interest rates and unfavourable foreign currency translation. (Full Report) Referring to the chart, CCK took a turn for the worst earlier in the year as the company had begun feeling the effects of rising prices, and hasn’t been able to recover since. That said, as the stock continues a strong bearish cycle a pennant has recently formed - and with stochastic RSI in extremely overbought levels, traders should expect a breakthrough to the pattern’s lower level.
Zooming out...
What Rishi Means for the UK In a stunning turn of events, and after all the other competitors dropped out of the race Rishi Sunak has taken control of the conservative leadership within the UK. He’ll be the third PM to take the reins of the struggling nation this year, and by all accounts, many see him as the man that will get the books in order and set the country back on the right track. He’s a right-wing fiscal conservative, the youngest PM in 210 years, highly educated, and with a net worth of close to £700M as he married the daughter of the man who created Infosys. In terms of his plans for the nation, Sunak has already promised that “economic stability, and confidence” will be the main goal of his time in office. Sunak also plans to tackle the “profound economic crisis” that is currently gripping the UK. One drawback of Mr. Sunak’s leadership is previous statements of support for a CBDC or Central Bank Digital Currency. If everything remains normal, Sunak will hold power until January 2025, when the next general election takes place. South China Sea Spitting Contest Over the past quarter North Korea has been launching ballistic missiles and firing artillery barrages over and at their neighbours South Korea and Japan. On Monday the two nations fired shots back and forth as a sea border was disputed by a merchant ship, however, a light border skirmish seems like child’s play compared to recent announcements from South Korea and the United States. On Monday, South Korean PM Yoon Suk Yeol told parliament that he believes North Korea has made all preparations for a seventh nuclear test. Punishments from the global community have been promised if the test is performed, while the state department or at least the Deputy Secretary of State has warned of “nuclear, conventional, and missile defense” being employed to defend all US allies in the area from any potential aggression.
Making headlines...
Russia Ships Record Volumes of Gas and Steelmaking Coal to China
China imported record quantities of Russian liquefied natural gas and steelmaking coal in September, as total purchases of energy products topped $50 billion since the invasion of Ukraine pushed Moscow to expand sales to its strategic ally. (Full Story)
Toronto Mayor Wins Third Term Pledging to Fix Housing Crisis
John Tory cruised to a third term as mayor of Toronto, as voters in Canada’s financial capital opted for a status-quo candidate with a strong fiscal pedigree at a time of growing economic uncertainty. (Full Story)
Canopy Growth looks to grow U.S. business
Canopy Growth Corp. says it is looking to grow its U.S. business with the creation of a new U.S.-domiciled company that will hold its U.S. cannabis investments. (Full Story)
Adidas ends partnership with Ye over antisemitic remarks
Adidas has ended its partnership with the rapper formerly known as Kanye West over his offensive and antisemitic remarks, the latest company to cut ties with Ye and a decision that the German sportswear company said would hit its bottom line. (Full Story)
Fed Is Losing Billions, Wiping Out Profits That Funded Spending
Profits and losses aren’t usually thought of as a consideration for central banks, but rapidly mounting red ink at the Federal Reserve and many peers risk becoming more than just an accounting oddity. (Full Story)
Chart of the Day: Largest annual depreciation of the Chinese yuan in 27 years.
“If you can’t fly then run, if you can’t run then walk, if you can’t walk then crawl, but whatever you do you have to keep moving forward.”
- Martin Luther King Jr
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