To The Moon

Last Week's Recap

The US Market - The tech-heavy Nasdaq led to rebound

• The stock market remained a fight between bulls and bears as Treasury yields surged to fresh 16-year highs. The S&P 500 and the Dow undercut recent lows early in the week, but bounced back late in the week led by the tech-heavy Nasdaq.

• The U.S. economy added 336,000 jobs in September, about double expectations. Average hourly wages rose a tame 0.2% for a second straight month, lowering the 12-month increase to 4.2%. The jobless rate held at 3.8% for a second month.

• Stocks posted a stunning turnaround on Friday. The 10-year Treasury yield once skyrocketed as high as 4.89%. Traders were unclear of the reason for the intraday reversal. Some noted it could be the softer wage number in the jobs report that made investors rethink their earlier bearish stance. Others noted the pullback in yields from the day’s highs. Part of the rally may just be to do a market that had gotten extremely oversold with the S&P 500.

• Israeli forces clashed with gunmen from the Palestinian group Hamas on Sunday, 24 hours after the militants launched a surprise attack on Israel. Crude oil prices could see a spike on Monday but the overall impact of the attack will likely be limited, energy experts said.

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The US Sectors & Stocks - Bond-focused ETFs slided to new lows

• The technology and communication services sectors among the week’s best S&P performers. The communications services sector raised more than 3% and the technology sector posted a 2.35% gain, led to the upside by tech giants and chipmakers.

• Bond-focused ETFs slided to new lows. The iShares National Muni Bond ETF (MUB) hit its lowest level since March 2020. Meanwhile, the iShares TIPS Bond ETF (TIP) and the SPDR Portfolio TIPS ETF (SPIP) both fell to levels not seen since 2009.

• Tesla (TSLA) delivered 435,059 EVs in Q3, down 6% vs. Q2 and well below recently lowered analyst views. The EV giant blamed factory upgrades, but there was a lot of existing inventory. Bulls are betting on a fourth-quarter rebound in deliveries with the revamped Model 3 in China and the expected Cybertruck launch. Tesla also rolled out a new, lower-end Model Y variant in the U.S. that is $3,750 cheaper than the prior base version. It later cut prices on other Model Y variants and the Model 3. Shares surged past an aggressive entry, but trimmed gains late in the week.

• Warren Buffett’s Berkshire Hathaway continued its selling streak for HP, unloading shares of the printer and PC maker for 10 straight days and reducing its stake to 9.9%, a new regulatory filing showed.

• Tim Cook sold 511,000 AAPL shares worth about $41 million after taxes in his biggest sale in more than two years. Other Apple executives also disclosed stock sales.

• Rivian (RIVN) announced plans to offer $1.5 billion in convertible debt, while also reporting preliminary Q3 revenue in line with views. Shares plunged after announcement.

• China EV sales remained strong in September, defying headwinds. BYD (BYDDF) sold more than a quarter-million electric vehicles for the month to cross the 2-million mark for the year. Notably, BYD sold almost as many battery electric vehicles as Tesla during the third quarter. Startups Li Auto (LI) and XPeng (XPEV) also reported robust September and Q3 deliveries after launching new and cheaper electric vehicles. Nio (NIO) sales fell for a second straight month in September. Their sales gains come amid a price war in a slowing economy.

Hong Kong Market - HSI trimmed the week decline to 1.8%

• Hong Kong stocks climbed for a second day as China’s economic recovery gained momentum as manufacturing expanded, fanning optimism the government will enhance the rebound with more policy stimulus. The Hang Seng Index gained 1.6% to 17,485.98 on Friday, trimming the weekly decline to about 1.8%. The 30-member Tech Index narrowed the weekly loss to 2.5%.

• “We expect growth and inflation to bottom out in the near term on stabilising exports, less drag from inventory destocking and increased policy offset,” Goldman said in a report on Friday. “Looking ahead, we still expect additional policy support for the remainder of this year” and continued easing in the property market, it added.

• Property stocks grabbed attention as John Lee Ka-chiu, the city’s chief executive, prepares to deliver his annual policy address later this month. Financial Secretary Paul Chan Mo-po had earlier hinted that some control measures to damp property speculation in 2009 were no longer suitable to current market conditions.

• Distressed mainland Chinese developers also rose after Sunac China (1918.HK) won court consent on Thursday to implement its US$10.2 billion debt restructuring plan with offshore creditors. Sunac rose 11 per cent to HK$2.41, while Country Garden gained 3.5 per cent to HK$0.90.

Singapore Market - STI lost 1.34%

• Singapore stocks ended the first week of Q4 with the benchmark Straits Times Index (STI) lost of 1.34%. However, Singapore stocks closed the week in positive territory, tracking regional indices.

• Raffles Medical Group (SGX: BSL), or RMG, announced a move to expand its presence in Vietnam. The integrated healthcare player entered a strategic partnership with My My Trading Services Company to acquire a majority interest in American International Hospital (AIH) in Ho Chi Minh City (HCMC).

• Singapore’s digital economy has expanded to about $77 billion, or 17.3% of gross domestic product, and should continue to drive growth in coming years, according to a new government report.

Australian Market - The ASX 200 fell below 7000-point mark

• The Australian share market took a couple of tentative steps in the upwards direction after a tough week in which the ASX 200 fell decisively below the important 7000-point mark.

• The ASX 200 index down 1.34% for the week to close at 6,954.2 points, after three straight weekly falls. OSeven of the 11 market sectors down but the overweight financials and materials sectors both rose strongly.

• Australia’s monthly trade surplus exceeded estimates in August as iron ore shipments rose and non-monetary gold exports surged. The windfall was A$9.6 billion ($6.1 billion), compared with estimates for A$8.7 billion and a downwardly revised A$7.3 billion surplus in July, Australian Bureau of Statistics data showed Thursday.

The Week Ahead

Macro Factors - Middle East Violence, September CPI highlight the week

• September inflation data and Israel-Hamas conflict are the highlights for investors this week.

• The September consumer price index (CPI) that’s due out Thursday is expected to show easing inflation. Economists polled by Dow Jones anticipate inflation rose by 0.3% from the prior month, and by 3.6% on a yearly basis. That would be a cooler print from the previous month, when inflation gained 0.6% and 3.7%, respectively.

• Meanwhile, so-called core CPI, which excludes volatile food and energy prices, is expected to have risen 0.3% month over month, in line with the prior month, according to consensus estimates. Year over year, it’s set to have risen 4.1%, also slightly cooler.

• Federal Reserve watchers will closely parse the minutes from the central bank's mid-September policy meeting after their release on Wednesday. A consensus reading could mean the Fed will not have to raise rates again at its November meeting.

• Meanwhile, the Middle East Violence is under way, the latest news is that Israeli troops engaged in fierce fighting throughout Sunday to regain control of swaths of the country’s south after Hamas militants flooded in from Gaza, with the military struggling to reseal the border to further incursions.

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Earnings

• This week is the start of the third-quarter earnings season, kicked off by PepsiCo and major banks.

• Some traders anticipate stocks will soon start to bounce off oversold conditions leading by earnings. “A stronger economy and resilient labor force likely drives revenue and earnings growth. So, I suspect that the third-quarter earnings reporting season will be a positive catalyst, not a negative one, and we’ll likely see guidance for the fourth quarter tick up, not down,” said Art Hogan, chief market strategist at B. Riley Financial.

• Thursday will see a slew of companies release earnings, including Delta Air Lines, Walgreens and Domino’s. On Friday, numerous financial services companies will report, JPMorgan Chase, Wells Fargo and Citigroup.