To The Moon

The Week Ahead

Macro Factors - Is there a seasonal tailwind in November？

• U.S. Daylight Saving Time ended. The trading hours for U.S. markets (EST) will be moved an hour backward.

• Wall Street will try to keep the rally going in a week that’s set to be relatively light on economic data and earnings results, as seasonal tailwinds pick up entering the holiday season.

• Historically speaking, November is the best-performing month for the S&P 500, according to the Stock Traders’ Almanac, and many are hoping for a broader-based advance in equities following three straight months of declines.

• One notable event is the Treasury Department’s plans to auction $112 billion in debt, as it secures financing for government obligations, including ballooning costs to service the debt. The Treasury is seeking to refund $102.2 billion of notes set to mature Nov. 15 and raise more than $9 billion in additional funds.

• The Fed Chair Jerome Powell is set to speak twice in the week and is likely to reiterate statements made in a press conference after the November policy meeting that he will remain vigilant on inflation, and the central bank will continue to rely on immediate price data. On Thursday, he’s set to speak before the International Monetary Fund.

• Investors will absorb some notable data during the week. September consumer credit numbers are set for release Tuesday, and the Michigan Sentiment survey for any signs of weakness in consumer confidence on Friday.

Earnings

• Of the roughly 400 S&P 500 companies that have reported, about 80% of companies in the index have posted their third-quarter earnings, with four-fifths of them beating analyst expectations, FactSet data shows. Overall S&P 500 earnings are expected to have grown by 3.7%, according to FactSet’s John Butters.

• To be sure, Butters warned analysts are cutting their fourth-quarter earnings estimates at a pace not seen since mid-2020. He noted that earnings estimates for the October-November period decreased by 3.9% in the past month — versus an average forecast decline of 1.9%.

• More than 45 S&P 500 names are slated to report this week, including Disney, Biogen and D.R. Horton. MGM Resorts is also on deck.

Last Week's Recap

The US Market - The major averages notched five-day advances

• The major averages registered their best week in 2023 as bond yields fell sharply after data showed signs of slowing U.S. jobs growth and an uptick in unemployment, boosting hopes that the Federal Reserve is done with its interest rate hiking campaign.

• The rebound the week came as the S&P 500 closed out a dismal period of three months straight with losses. Three indexes notched their first five-day advances since June. The 10-year Treasury yield closed at 4.57%, down from the 5% high it hit last month.

• Powell noted that tighter financial conditions, stemming from the rise in the 10-year Treasury yield, lower stock prices and strong dollar, might avert the need for further interest-rate hikes.

• Jobs growth slowed to 150,000 in October, partly due to the now-ending UAW strike. The jobless rate rose to 3.9%, the highest since January 2022.

The US Sectors & Stocks - TLT rebounded

• All S&P 500 sectors went higher last week as the benchmark index was up for a fifth day. The real estate and financial sectors outperformed, up by 9% and 7% this week, respectively. Both sectors were down on the year after getting hit by higher interest rates.

• The iShares 20+ Year Treasury Bond ETF (TLT) saw heavy inflows and trading activity in October, as some investors bet on a rebound for the fund after yields rose above 5%.

• Apple (AAPL) beat fiscal fourth-quarter views, but revenue fell for the fourth consecutive quarter. Apple earnings climbed 13% while sales dipped 1% to $89.5 billion. Apple's iPhone revenue rose 3% to $43.8 billion. Mac and iPad sales dropped. China sales fell short of forecast. Apple guided to flat sales in the holiday Q1.

• Weight-loss giants Novo Nordisk (NVO) and Eli Lilly (LLY) easily beat third-quarter forecasts. Bullishly, sales of weight-loss drug Wegovy beat forecasts and surged by a triple-digit percentage.NVO and LLY stock rose for the week.

• Shopify (SHOP) reported Q3 earnings well above views. The ecommerce platform said Q3 gross merchandise volume from merchant transactions rose 22% to $56.2 billion, also topping. It recently sold its delivery and logistics business to Flexport, easing Wall Street worries over rising capital spending. SHOP stock skyrocketed.

• Palantir Technologies (PLTR) reported Q3 earnings and revenue as commercial market growth came in above expectations. Its revenue rose 17% to $558 million. PLTR soared.

• Roku (ROKU) added 2.3 million new users in the third quarter, ending with 75.8 million active accounts. Analysts had expected 1.8 million. Revenue sales rose 20% year over year to $912 million, topping views of $857 million. Shares spiked higher.

• DraftKings (DKNG) gapped higher after reporting a smaller-than-expected Q3 loss with revenue jumping 57% to $790 million, easily beating. The online sports betting giant also raised 2023 guidance and gave a bullish 2024 outlook.

• Berkshire Hathaway (BRK.A/BRK.B)reported a big jump in third-quarter operating earnings, while sitting on a record amount of cash as Warren Buffett saw few dealmaking opportunities.

Hong Kong Market - HSI advanced 1.53%

• Hong Kong stocks completed a second week of advance after a private report showed services sector in mainland China expanded last month, compensating for a slide in factory activity.

• The Hang Seng Index jumped 1.53% to 17,664.12, while the Tech Index soared 3.45%. The rally helped the benchmark index to rebound from an 11-month low.

• Policy support, in the form of property easing measures and interest-rate pause, boosted confidence among stock investors. Mainland funds bought HK$8.5 billion (US$1.1 billion) of Hong Kong-listed stocks via the Stock Connect this week.

• Hong Kong’s biggest commercial lenders extended gains, after they refrained from raising mortgage rates in lockstep with a pause in the city’s base rate and the Federal Reserve’s “dovish pivot.”

Singapore Market - STI was up 2.7%

• The Straits Times Index (STI) wrapped up the five-session trading week at 2.7% higher to close at 3,143.66 points, as the Federal Reserve’s move to hold the interest rates steady on Thursday (Singapore time) buoyed the real estate investment trusts (Reits), the sector which has borne the brunt of rising finance costs since the central bank started hiking rates last March to tame inflation.

• Singapore’s retail sales inched up 0.6% on year in September, significantly less than the revised 4.2% growth recorded in August, Department of Statistics (Singstat) data showed on Friday (Nov 3).

• The central bank has imposed a six-month pause on DBS’s non-essential information technology (IT) changes except for those related to security, regulatory compliance, and risk management.

Australian Market - ASX 200 rose 2.22%, the most since July

• The Aussie shares market finished on a positive note, tracking strong gains on Wall Street. The benchmark S&P/ASX 200 index sealed a weekly gain of 2.22%, the most since July. The interest rate sensitive real estate sector was the best performing, jumping 2%, as hopes the Fed may finally be done with raising interest rates gathered momentum.

• The figures released Wednesday showed Australian home prices advanced for an eighth straight month in October while rental vacancies hit a fresh record low.

• Markets responded by pricing in a near-70% chance that RBA will raise rates by a quarter point to 4.35% when it meets on Nov. 7, ending four months of keeping rates on hold.

• House prices and rents, gasoline and insurance were the top drivers of consumer prices last quarter. Together, they constitute roughly 19% of the CPI basket but accounted for an outsized 44% of price increases, according to calculations by Bloomberg Economics.