Stock Market

🗓 Coming Up Next Week

Monday 30.09
⏺China Composite PMI
⏺UK GDP
⏺Germany CPI
⏺FED Powell Speech

Tuesday 01.10
⏺China - Markets Closed
⏺US, Japan, Germany, UK, Eurozone PMIs
⏺Eurozone CPI

Wednesday 02.10
⏺China - Markets Closed
⏺US ADP Nonfarm Employment

Thursday 03.10
⏺China - Markets Closed
⏺Japan, Australia, Germany, UK, Eurozone PMIs
⏺US Services PMI

Friday 04.10
⏺China - Markets Closed
⏺US Nonfarm Payrolls

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☄️Japanese Stocks May Fall On Monday

⏺Japanese stocks are likely to fall on Monday after Shigeru Ishiba's surprise victory in the ruling party leadership race fueled expectations of higher interest rates.

⏺Nikkei 225 Stock Average futures fell 6% in Osaka after Ishiba's election. The Nikkei 225 jumped 2.3% ahead of the final result as traders bet on a win by Sanae Takaichi, who opposes higher bets. Analysts say the stock market is likely to see big swings in the near future until there is more clarity on Ishiba's policies.

⏺The yen rose sharply after Ishiba's victory. A stronger currency is likely to drag down exporters, while banks are likely to be supported by optimism that their profits will increase amid higher rates.

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☄️Quant Hedge Funds Trapped in Short Squeeze After China Glitch

⏺Some firms suffered heavy losses because they shorted index futures for their so-called Direct Market Access strategies, said the people. Some saw their losses exacerbated by a Shanghai Stock Exchange glitch that left them unable to sell holdings to meet margin requirements.

⏺The losses come as many quants are still recovering from record drawdowns suffered during China’s stock market meltdown in February, when their favored small-cap stocks crashed, prompting regulators to push for the DMA products to be phased out. Now they have been caught wrongfooted again after China’s latest economic stimulus measures sparked the biggest weekly equity rally since 2008.

⏺Still, Friday’s drawdowns in the DMA products were smaller than the losses seen in February, and any forced liquidations should be rare, said the people. Some brokerages have agreed to extend deadlines for the quant clients to add margins for bets on index futures

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📱Apple Is Scrapping Its Big Plans To Release Movies In Theaters

⏺Apple is rethinking its movie strategy following disappointing box office performances for several big-budget films. Apple has canceled plans to release Lone Wolves, the action-comedy starring George Clooney and Brad Pitt, in thousands of theaters around the world. Instead, the film debuted in a limited number of theaters before becoming available on the Apple TV+ streaming service on September 27.

⏺Apple plans to take a similar approach with its next few films, including the World War II drama Blitz. The change in film strategy is part of a larger reboot at Apple's Hollywood studio, led by Zach Van Amburg and Jamie Erlicht. Having spent over $100 million, and in some cases over $200 million, on several of the aforementioned films, Apple will now focus on producing just over 10 films per year, most of which will be produced for less than $100 million

⏺The tech giant intended to spend $1 billion annually on films for theaters. This means that Apple's commitment to spend this amount will not change, but the composition of the company's film slate and release strategy will change
Apple will still aim to make one or two major motion pictures a year with films that are exclusively greenlit for higher budgets, such as Formula 1. However, films like Lone Wolves, for which Clooney and Pitt collectively earned tens of millions of dollars, will be shown on the Apple TV+ streaming service.

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🎲 Casino Stocks Were The Big Winners This Week

⏺Shares of casino stocks with exposure to Macao had a great week this week after China announced economic stimulus plans. According to data provided by S&P Global Market Intelligence, shares of Melco Resorts & Entertainment jumped as much as 31.5%, Las Vegas Sands was up 22.2%, and Wynn Resorts rose 21.9% this week.

⏺The Chinese government said this week it would implement "necessary fiscal spending" to get the country's economy on track to meet a 5% GDP growth goal. The plan is to reduce reserves banks must hold, cut interest rates, and provide loans for investors to buy stocks. In total, the package could be over $300 billion, but economists don't think it will move the needle much for the Chinese economy.

⏺Economists may not think the stimulus is enough to drive change, but that didn't stop investors this week who were looking for any way to get exposure to China's potential growth. Macao clearly offers that. Macao has seen steady growth over the past two years and stocks have been relatively undervalued. So far this year, gambling revenue in Macao is up 33.4% and has grown double digits every single month

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⚡️Global Stocks Hit Record Levels Boosted By Chinese Stimulus And Lower US Inflation

📊STOXX 600 index in Europe rose 0.5%, while DAX, CAC 40 and FTSE 100 indices rose 0.3-1.2%. S&P 500 is also up after hitting a record on Thursday. PCE index showed a further decline in inflation pressures in August, which increased expectations of a second US Federal Reserve rate cut by 50 basis points in November.

💵USD fell 1.5% to 142.60 yen after Shigeru Ishiba won the election as Japan's prime minister. Ishiba supports the normalization of the Bank of Japan's policies.

💸Shares in China rose on stimulus, posting their best week since 2008, with the MSCI world index up 0.4%, Chinese blue chips up 4.5% and the Hang Seng index up 3.6%. China's central bank has cut interest rates and injected liquidity into the banking system, with more fiscal measures expected to be announced before China's week-long holiday starting Oct. 1.

🛢Oil prices fell 0.1% to $71.50 a barrel following news of Saudi Arabia's plans to increase production.

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⚡️Threat Of Dock Workers' Strike Could Paralyze US Ports

⏺About 45,000 dockworkers at all major ports in the eastern United States and the Gulf Coast are threatening to go on strike early next week. Negotiations that have been going on since June have reached a dead end. Cargo owners are in a hurry to avoid the consequences.

⏺The International Longshoremen's Association is threatening a strike if an agreement is not reached with the United States Shipping Alliance on wages and automation by October 1. This is already affecting the operation of ports: working hours are increasing and surcharges are being introduced for interruptions. ILA leader Harold Daggett confirmed that dockers would continue to work on some military cargo and cruise ship sites.

⏺Retailers brought their goods in advance, which may soften the economic impact of the strike. However, delays may negatively impact some cargo, such as perishable foods and pharmaceuticals. The ports that could be affected handle more than 90% of the pharmaceutical products imported into the United States. Analysts warn the fallout will spread around the world as port congestion reduces shipping capacity and increases freight rates.

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🥈 Silver Rose To Its Highest Level Since 2012

⏺Exchange prices for silver soared to their highest level since 2012. On Thursday, September 26, silver futures for December delivery on the Comex exchange rose 3.1% to $33.02. The precious metal was last traded at this level in December 2012. Since the beginning of the year, silver prices have risen almost 37%.

⏺Silver hit a multi-year high amid an overall increase in investor demand for precious metals. On September 26, gold prices also rose to a new historical high, exceeding $2,700 per ounce for the first time in history. The growing interest in precious metals was fueled by expectations of further interest rate cuts by the Federal Reserve, as well as increased demand.

⏺The US Federal Reserve immediately cut the rate by 50 bp. based on the results of the September meeting. The regulator has kept it at 5.25–5.5% per annum since July 2023. The US rate was at its highest in more than 20 years for more than a year. According to the CME FedWatch tool, traders are now pricing in a Fed rate cut of a total of 75 bps. until the end of 2024.

⏺Silver has been one of the best performers among major commodities this year, as the Fed's pivot to looser monetary policy last week and the prospect of more rate cuts bode well for non-interest bearing precious metals

⏺The rise in silver prices was also supported by the possibility of increased industrial use as China takes steps to boost its economy. In addition, the inflow of funds into silver-backed exchange-traded funds increased, the publication reported.

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☄️Boeing Is Losing $100 Million To $150 Million A Day Due To Union Strike

⏺Boeing is caught between a rock and a hard place as the strike between it and the International Association of Machinists (IAM) union continues into its second week.

⏺On Monday, September 23, Boeing increased its offer to the union, which represents 33,000 workers. However, the company did not approach the union leadership, but instead sent its “best and final” proposal directly to the workers, which did not please the IAM.

⏺Boeing's latest offer raised wages to 30% from 25% in the previous offer, doubled the signing bonus to $6,000 and increased 401k contributions, among other things. However, as was the case with the first offer, participants remained uninterested in the company's latest offer, which was sent out through the media.

⏺Boeing's insistence on reaching out directly to union members speaks to the challenges the company faces. Boeing is already forced to conduct a significant reassessment of its financial performance. Every day Boeing goes on strike, they lose between $100 million and $150 million.

⏺Without union members working at Boeing's assembly plant in Renton, Washington, the company will be unable to deliver its cash cow, the 737 Max jet. Boeing can still supply its 787 Dreamliners from its nonunion South Carolina plant, but the number of the planes is limited. Boeing delivered 70 737 Max planes in the second quarter, but only nine of its larger Dreamliners.

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⚡️AI Market Could Reach Almost $1 Trillion In Three Years

⏺Generative AI is a major driver of the current wave of change, and experts estimate that the market for AI products and services could reach between $780 billion and $990 billion by 2027.

⏺The overall AI-related hardware and software market is expected to grow 40% to 55% annually for at least the next three years. Fluctuations in supply and demand will create volatility along the way, but the long-term, sustainable trajectory looks set to continue.

⏺The rapid development of AI will continue to transform the technology sector. That being said, larger models will continue to push boundaries, while smaller models will create new, more focused capabilities in specific verticals and domains.

⏺Experts believe AI workload demands will also drive innovation in storage, compute, memory and data centers. And as the market becomes more competitive and complex, companies will need to adapt quickly to capture their share of the potential trillion-dollar market.

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📈Chinese Market Rose To A 4-Month High On Economic Support Measures

🔴Chinese market rose sharply after the head of the People's Bank of China (PBOC) Pan Gongsheng announced new stimulus measures aimed at improving the economic situation as well as the investment climate in the country.

⏺During a press conference following PBOC meeting on September 24, he announced, in particular, a reduction in the reserve requirement ratio (RRR) for banks by 50 bps. This will allow liquidity to flow into the market in the amount of 1 trillion yuan ($142.15 billion). The head of the Chinese Central Bank made it clear that the base rate (LPR) could also be lowered by 0.2–0.25 percentage points.

⏺This is a clear attempt to cope with the slowdown in economic growth, especially given the weak performance in areas such as manufacturing and consumer spending. Given low inflation pressures and fiscal constraints, more gradual steps of this nature can be expected in an attempt to stabilize the situation without over-committing.

⏺While market participants said the policy measures were better than expected, many still question whether they will help revive consumer demand enough to halt the country's longest deflationary period since 1999. It will likely take more than just monetary policy to help the economy get back on its feet and effectively address the housing downturn.

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🏘 US Home Price Growth Slowed In July Amid High Mortgage Rates

⏺US home price growth slowed in July as high mortgage rates kept potential buyers away and supply increased. The national home price index rose 5% from a year earlier, down from June's 5.5% rise, according to S&P CoreLogic Case-Shiller data. After seasonal adjustment, prices in July rose 0.2% from the previous month, reaching a record for the 14th time in a row.

⏺The July index covers the three-month period beginning in May, when 30-year mortgage rates peaked at 7.22%. Borrowing costs have fallen since then, but housing affordability remains an issue. At the same time, the supply of homes on the market has increased, with active listings up 14% in July compared to last year.

⏺The US Federal Reserve cut interest rates for the first time this month, hinting at further cuts that could lower mortgage rates and revive the housing market. The likelihood of further rate cuts is high, and this could lead to an acceleration in home prices towards the end of the year or the beginning of next year, when purchasing power improves.

⏺In July, the price index for the 20 largest U.S. cities rose 5.9% from a year earlier, down from June's 6.5% rise. New York again saw the largest increase at 8.8%, followed by Las Vegas and Los Angeles with increases of 8.2% and 7.2%, respectively.

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🕯 Most Volatile Stocks / 23.09.2024

⏺Tesla stock is on the rise as investors await the company’s long-anticipated robotaxi debut and its third quarter sales figures. Shares of the Elon Musk-helmed electric vehicle company jumped over 4% on Monday. Tesla is set to finally unveil its driverless cabs on Oct. 10 after months of delays. Also in early October, the company will announce its deliveries for the third quarter. Wall Street analysts forecast sales to rise 6% from last year to about 460,000 EVs.

💲TSLA💲
Current price - $250.00
YTD Perf - up 0.61%
Wall Street Target Price - 218.00
Buy/Hold/Sell - 24/22/12

⏺Boeing shares jumped 2% on Monday after The Seattle Times reported the plane manufacturer raised its contract offer to the machinists union in order to put an end to the strike. According to the publication, the new offer, delivered this morning, would increase wages by 30% over four years, up from a prior proposal of 25%. Boeing also offered to restore an annual bonus an item that had been removed from the prior contract offering. Boeing shares had been hovering around 52-week lows recently after the International Association of Machinists and Aerospace Workers (IAM) went on strike demanding higher salary increases.

💲BA💲
Current price - $156.30
YTD Perf - down 40.04%
Wall Street Target Price - 209.33
Buy/Hold/Sell - 17/8/4

⏺Trump Media & Technology Group stock dropped another 6% on Monday to touch another low after the company’s six-month lock-up period expired last week. Shares are down roughly 15% since last Thursday when former President Donald Trump and other stakeholders were legally allowed to sell their stock for the first time since the company went public earlier this year. Despite recent reassurances from Trump that he wouldn't sell any of his stake, shares of the social media company have declined to their lowest level since their March debut. The stock has been volatile, often moving in tandem with any development related to the Republican presidential candidate.

💲DJT💲
Current price - $12.15
YTD Perf - down 30.57%
Wall Street Target Price - n/a

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⚡️Eurozone PMI Fall Could Accelerate ECB Rate Cuts

⏺An unexpected fall in the eurozone private sector PMI gave ECB a reason to accelerate interest rate cuts. On Monday, the current situation pushed markets to forecast a rate cut of 43 basis points by the end of the year, instead of the previously expected 38 basis points. At the same time, the probability of another rate cut in October is estimated at 40%.

⏺Following the release of business activity data from S&P Global, a key segment of the German yield curve normalized and the euro weakened. Today's PMI data adds to concerns about growth and increases the likelihood of another contraction in October. Eurozone economic performance continues to deteriorate, especially in Germany. Germany's business activity index fell to 48.9 in September, which is below the predicted 50.5.

⏺Some ECB policymakers have warned that rates that are too high could harm the economy. Eurozone inflation data for September and Ifo's monthly survey on the German economy will be important for decision-making at the next ECB meeting. Speculation about faster easing has also intensified due to the US Federal Reserve's move to cut rates despite the US economy continuing to expand.

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🗓 Coming Up Next Week

Monday 23.09
⏺Japan - Markets Closed
⏺US, Germany, Eurozone, UK Composite PMI

Tuesday 24.09
⏺Japan PMI
⏺US Consumer Confidence

Wednesday 25.09
⏺US New Home Sales

Thursday 26.09
⏺US Initial Jobless Claims
⏺US Durable Goods Orders
⏺Jerome Powell Speech

Friday 27.09
⏺Eurozone Consumer Confidence
⏺Eurozone Inflation
⏺US PCE Index
⏺US Consumer Confidence

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☄️Shares of European Automakers Collapse After News From Mercedes

🔽Mercedes shares fell more than 8% on Friday after the company became the latest automaker to cut its forecasts for this year as sluggish demand in China and trade disputes weigh on the sector.

©The company said it now expects group earnings before interest and tax (EBIT) to be "significantly below" the previous year's level and adjusted margin on sales to be between 7% and 8%, down from its previous forecast of 10-11 %.

➡️The revision to Mercedes' figures was driven by further deterioration in the macroeconomic environment, primarily due to lower consumption levels in China and a prolonged downturn in the country's real estate sector, the company said in a statement.

💸This impacted overall sales in China, including sales in the Top-End segment. Overall, sales mix in the second half of 2024 is expected to remain unchanged from the first half, and therefore be weaker than originally expected.

📉Fellow German automaker BMW also posted significant losses last week after cutting its 2024 profit forecast due to slumping sales in China and problems with a braking system supplied by Continental.

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⚡️Boeing Sends Thousands Of Employees On Unpaid Leave

⚠️Thousands of Boeing employees are taking leave as the strike continues. Thus, production of the American company's best-selling aircraft, the 737 MAX, has been suspended. Striking workers at the International Association of Machinists and Aerospace Industries were paid their final pay this week as negotiations between Boeing and its largest union stalled.

📣With no indication that Boeing and union negotiators would soon return to the negotiating table, both sides took preliminary steps to prepare for a long strike. About 33,000 workers in the northwest region of the United States rejected a preliminary agreement to increase wages by 25% over four years, demanding 40%.

⚠️The company will place a significant number of US employees who are not participating in the strike on temporary layoff. They will be given one week of leave every four weeks on a rolling basis.
The massive layoffs suggest Ortberg is preparing the company for a long strike that could be difficult to end given the anger of rank-and-file workers demanding a 40% wage increase and the reinstatement of performance bonuses.

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☄️Qualcomm Shows Interest In Buying Intel

⏺Chip designer Qualcomm wants to buy electronics and computer components maker Intel. Negotiations on the deal, which took place in recent days, were confidential. However, Qualcomm has not yet made an official offer to Intel.

⏺The deal with Intel, whose market value is about $90 billion, is still far from certain. Even if Intel agrees to it, the deal may come under scrutiny from antitrust authorities. To close the deal, Qualcomm may plan to sell Intel assets or parts to other buyers.

⏺The acquisition could occur in what could be one of the largest and most significant technology deals ever. The deal will allow Qualcomm to complement its mobile phone chip business with chips from Intel, which are widely used in personal computers and servers.

⏺In the second quarter, Intel reported a loss of $1.6 billion and gave guidance for the third quarter below market expectations. The corporation also announced its intention to cut 15% of its staff and suspend dividend payments. The report was one of the worst in Intel's 56-year history as the company struggles to regain its footing in an industry it once dominated. Also in the second quarter, Intel completely divested itself of its stake in British chip designer Arm Holdings.

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🕯 Most Volatile Stocks / 20.09.2024

⏺FedEx shares had their worst day in about two years after earnings came in lower than Wall Street expected. Shares of the transportation stock tumbled more than 15% in Friday’s session. Friday’s slide came after FedEx reported first-quarter earnings of $3.60 per share, excluding items, on $21.58 billion in revenue. Analysts polled by LSEG forecasted $4.76 a share and $21.93 billion. Shares are now up just over 2% for 2024, notably underperforming the broader market.

💲FDX💲
Current price - $254.64
YTD Perf - up 0.66%
Wall Street Target Price - 323.31
Buy/Hold/Sell - 20/9/1

⏺Nike shares jumped 5.8% after company announced that its CEO, John Donahoe, is stepping down and company veteran Elliott Hill is coming out of retirement to take the helm of the sneaker giant. Donahoe, who has been Nike’s CEO since January 2020, will retire from his position on Oct. 13. Hill is slated to take over on the following day. Donahoe will stay on as an advisor through the end of January.

💲NKE💲
Current price - $86.52
YTD Perf - down 20.31%
Wall Street Target Price - 91.47
Buy/Hold/Sell - 19/18/2

⏺Constellation Energy added more than 22% after it published plans to restart the Three Mile Island nuclear plant and will sell the power to Microsoft, demonstrating the immense energy needs of the tech sector as they build out data centers to support artificial intelligence. Constellation expects the Unit 1 reactor at Three Mile Island near Middletown, Pennsylvania, to come back online in 2028, subject to approval by the Nuclear Regulatory Commission, the company announced Friday. Constellation also plans to apply to extend the plant’s operations to at least 2054.

💲CEG💲
Current price - $254.98
YTD Perf - up 118.14%
Wall Street Target Price - 221.85
Buy/Hold/Sell - 12/6/0

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🥇 Copper Prices Surge To Two-Month High

📈On Friday, September 20, copper prices jumped to a two-month high amid a reversal in US monetary policy.

⏺Base metal prices continued their rise that began earlier this week. Initially, market participants were looking forward to the meeting of the US Federal Reserve System, which ended on September 18. As a result, the American regulator for the first time in 4 years reduced the interest rate by 50 bp, to the range of 4.75-5%. This event strengthened investors' hopes for a "soft landing" in the US economy.

⏺In China, metals market conditions are also showing signs of improvement. This week, premiums on imported copper rose to their highest levels since early 2024, while copper inventories fell. However, risks regarding further growth in metal prices still remain due to uncertainty in the US presidential elections, which will be held in November this year.

⏺Copper rose almost 0.7% to $9,580 per tonne on the London Metal Exchange. By the end of the week, the metal may increase in price by almost 3%. The cost of aluminum, zinc and nickel is also rising.

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