The post-election rally resumed this week as a confluence of factors appeared to reinforce investor sentiment. Key November earnings reports illustrated both the US consumer and the generational AI transformation continue to perform as largely expected. Breadth, in particular, was encouraging with advancers leading decliners broadly. Importantly, US interest rates held within recent ranges. The benchmark 10-year yield remained capped by what is largely viewed as important, post-election resistance at 4.5%. Separately, President-elect Trump was forced to abandon his controversial AG nomination, suggesting Congressional Republicans can offer some modicum of restraint when he retakes control next year. Also, Trump’s speculated Treasury Secretary picks seemed to engender further confidence from investors. Finally, even a brief bout of risk aversion related to a worrisome, ratcheting up of Ukraine tensions between the US and Russia was easily digested. For now, a missile salvo that included the first ever combat use of a hypersonic, intermediate range ballistic missile by the Russians, and stepped up rhetoric by President Putin were mostly viewed through the prism of the likely final throes of the conflict, before new US administration pushes all parties to the bargaining table and hopefully yields some kind of détente.
On the data front, US PMI readings were solid and mostly in-line with expectations, led by strength in services with favorable underlying growth and signs of continued cooling inflation. Juxtaposed to that was European PMI data that plunged, with services contracting and manufacturing sinking deeper into recessionary territory. The US dollar index rose to a fresh 2-year high on Friday with the Euro testing below 1.04. Futures markets see only slightly better odds that the Fed cuts by 25 bps next month while EU markets have begun to handicap a 50 bps cut from the ECB. Bitcoin continued its run towards 100K as reports suggested Trump will look to reward crypto advocates through White House staffing decisions. For the week, the S&P and Nasdaq each gained 1.7%, while the DJIA climbed 2%.
Corporate news featured most of the final big earnings reports of the pre-holiday quarter. Nvidia maintained its lofty status as the leading edge of the AI revolution, beating quarterly expectations, though its guidance wasn’t as stellar as traders have come to expect. Management eased concerns about growth deceleration by denying recent reports about overheating issues with its Blackwell GPUs and describing demand for the new product is “staggering” with deliveries ahead of plan. The Gap hit the mark with consumers, beating estimates and raising guidance as online sales saw good growth and management reported holiday selling is off to a “strong start”. Walmart reported a strong quarter and raised guidance, but also became the latest big retailer to warn that potential new tariffs next year could force them to raise prices. In contrast, Target had terrible quarterly results, saying it had encountered some “unique” challenges and cost pressures as gross margins and operating margins fell. Baidu fell to a 52-week low after reporting quarterly results, and despite touting progress on its AI products the stock has given up all of the 40% gains it saw two months ago as China unleashed its latest stimulus barrage.
MON 11-18
(RU) US Pres Biden reportedly for the first time authorized Ukraine to use long-range missiles ATACMS to hit targets inside Russia (for now only in Kursk region) is a significant reversal in US policy – WaPo
(US) Tier1 analysts citing call with co-owner of housing advisor firm Parrott Ryan Advisor: Immigration is a key risk to US homebuilders; NAHB estimates immigrants make up 31% of construction tradesmen; Major GSE reform still seems unlikely
(US) Treasury Dept Issues Final Regulations to Sharpen and Enhance CFIUS Procedures and Enforcement Authorities to Protect National Security
ADM Reports Final Q3 $1.09 v $1.09 prelim, Rev $19.9B v $20.6Be; Affirms guidance; Foresees softer market conditions into next year
BECN Building products distributor QXO said to be in discussions to make bid - WSJ
BKKT DJT in advanced talks to buy crypto trading venue Bakkt - FT
CSCO Signs Multi-Year Agreement with MGM Resorts International; Gives MGM Resorts access to much of Cisco's software portfolio and Customer Experience (CX) services
CTVA Announces Breakthrough in Wheat Technology; Breakthrough has the potential to increase yield by 10%
INVH Announces $200M JV with a leading global real estate investment partner; Expected to deploy ~$500M, including debt, to acquire newly constructed homes
NVDA NVIDIA Accelerates Google Quantum AI Processor Design With Simulation of Quantum Device Physics
TUES 11-19
(EU) EURO ZONE OCT FINAL CPI Y/Y: 2.0% V 2.0%E; CORE CPI Y/Y: 2.7% V 2.7%E
(IR) IAEA: Iran has agreed to stop producing near-bomb grade uranium, and to allow experienced inspectors to conduct verifications
(RU) Russia Pres Putin approves updated nuclear doctrine; Russian spokesperson say Russia may use nuclear weapons in response to aggression using conventional weapons supported by a nuclear power (as announced in Sept) - Russian press
(UR) UKRAINE REPORTEDLY MAKES FIRST US-MADE ATACMS LONG-RANGE MISSILE STRIKE INSIDE RUSSIA'S BORDER REGION - UKRAINE PRESS CITING UKRAINE MILITARY OFFICIAL [**Note: Ukraine has already used UK long-range missiles Storm Shadow (which have even longer range than ATACMS) in past years to strike Crimea]
(US) Fed's Schmid (non-voter for 2024; voter for 2025; hawk): Large fiscal deficits won't cause inflation because Fed will prevent it, though that would mean higher interest rates - speech text
(US) Pres-elect Trump said to interview both Kevin Warsh and Marc Rowan for US Treasury Secretary job on Wednesday - financial press
(US) Atlanta Fed GDPNow: Raises Q4 GDP forecast from 2.5% to 2.6%
CMCSA Reportedly confirms plans to spin off NBCUniversal cable channels; Said timeframe will take 1 year to complete - press
LEU Russian low enriched uranium trade partner TENEX has export license to US suspended, effective Dec. 31st; Centrus will be in communication with its customers whose pending orders may be affected and is assessing actions to mitigate adverse impacts (update)
LOW Reports Q3 $2.99 v $2.81e, Rev $20.2B v $20.0Be; Raises mid-point of sales outlook, but trims margin; Notes continued softness in DIY bigger-ticket discretionary demand, which was partly offset by storm-related sales and positive comparable sales in Pro and online
TKA.DE Reports FY23/24 Net -€1.4B v -€2.0B y/y, adj EBIT €567M v €526Me, Rev €35.0B v €34.9Be
J Reports Q4 $1.37 v $1.36e, Rev $2.96B v $2.99Be; Book-to-bill continues to grow
WMT *EXEC: HOLIDAY PERIOD IS OFF TO PRETTY GOOD START; TARIFFS COULD FORCE WALMART RAISE PRICES; CONSUMERS ARE WAITING TO MAKE GENERAL MERCHANDISE PURCHASES UNTIL THEY SEE A COMPELLING DEAL, ESPECIALLY AS THEY PAY MORE FOR FOOD - PRE-EARNINGS MEDIA CALL WITH CNBC
WMT Q3 US Grocery SSS +mid single digit y/y; Q3 US Grocery inflation bps 100bps (primarily to eggs) v 60bps in Q2 - earnings call
WMT Reports Q3 $0.58 v $0.53e, Rev $169.6B v $167.5Be; Raises outlook again
WEDS 11-20
(RU) REPORTEDLY RUSSIA PRES PUTIN IS OPEN TO DISCUSSING A UKRAINE CEASEFIRE DEAL AND SECURITY GUARANTEES FOR UKRAINE WITH US PRES-ELECT TRUMP AND ALSO OPEN TO WITHDRAWING FROM "RELATIVELY SMALL" PATCHES OF UKRAINE TERRITORY, BUT RULES OUT MAKING ANY MAJOR TERRITORIAL CONCESSIONS AND INSISTS UKRAINE ABANDON AMBITIONS TO JOIN NATO - PRESS CITING RUSSIAN SOURCES
(UK) OCT CPI M/M: 0.6% V 0.5%E; Y/Y: 2.3% V 2.2%E (highest annual pace since Apr)
(US) Cleveland Fed’s Inflation Nowcast forecasting Nov US CPI Y/Y to accelerate again to 2.7% from 2.6% for Oct US CPI Y/Y
(US) Follow Up: Some House Republicans may block Pres-elect Trump from using a recess appointment on attorney general nominee Gaetz, but Pres-elect Trump said to be convinced that Speaker Johnson is on board for recess appointments idea; Several House Republicans would vote against any motion to go into recess - Axios
(US) Pres-elect Trump reportedly to revive the Keystone XL oil pipeline - Politico
(US) Cleveland Fed’s Inflation Nowcast forecasting Nov US CPI Y/Y to accelerate again to 2.7% from 2.6% for Oct US CPI Y/Y
(US) Reportedly Pres-elect Trump is looking more seriously at Sen. Bill Hagerty (R-Tenn.) for Treasury secretary – Axios
*TTN Reminder: In late Sept, Iran was said to be brokering talks to send advanced Russian supersonic anti-ship missiles to Yemen's Houthis, which would be a “game changer” for regional security; That press report cited that Russia did not make final decision on it, but would potentially arm the Houthis in case "Western states decide to allow Ukraine to use their weapons to strike farther into Russian territory"
BARC.UK TTN Summary of 03:45ET J.P. Morgan UK Leaders Conference: Credit environment in the UK remains benign with Q3 loan loss rate at 3 basis points; US cards delinquencies higher than last year as expected but have stabilized.
F Plans to cut 4K jobs in Europe by end-2027, including 2.9K jobs in Germany
NVDA Reports Q3 $0.81 v $0.75e, Rev $35.1B v $33.2Be; Affirms Blackwell production shipments are scheduled to begin in Q4
NVDA TTN Summary of 17:00ET Earnings Call: There are 'no issues' with overheating in the liquid-cooled Grace Blackwell servers; Blackwell is now in the hands of all our major partners; Expects to deliver more Blackwells in Q4 than previously estimated; Customers are gearing up to deploy Blackwell at scale and demand for Blackwell is 'staggering'
PANW Reports Q1 $1.56 v $1.48e, Rev $2.14B v $2.12Be; Announces 2:1 stock split; Raises guidance
TGT Reports Q3 $1.85 v $2.29e, Rev $25.2B v $25.9Be; Cuts outlook and guides Q4 weak; Encountered some unique challenges and cost pressures
TJX Reports Q3 $1.14 v $1.09e, Rev $14.1B v $14.0Be; Says Q4 is off to a strong start, but guides Q4 below est at midpoint; Planning to enter Spain with its TK Maxx banner in early 2026
THRS 11-21
(RU) Russia Pres Putin: After long range attacks from Ukraine, this regional conflict has gained elements of a global one - Statement
(UR) REPORTEDLY UKRAINE AIR FORCE SAYS RUSSIA FIRED ICBM AS PART OF OVERNIGHT ATTACK - PRESS (UNCONFIRMED) [**Note: first time a missile of this power and range has been used during Ukraine/Russia war]
(US) BOFA INSTITUTE: WEEK-TO-NOV 16TH TOTAL CARD SPENDING +0.6% Y/Y V +1.0% ON AVERAGE IN OCTOBER; Within the sectors we report, online electronics, airlines & lodging showed the biggest y/y rise since Nov 3rd
(US) Fed’s Barkin (voter for 2024; non-voter for 2025): Do not want to prejudge December decision; Fed should not preemptively adjust monetary policy ahead of possible changes in economic policy; US more vulnerable to inflation shocks - FT
(US) Fed's Schmid (non-voter for 2024; voter for 2025; hawk): Fed will wait to react to fiscal policy - Q&A session
(US) INITIAL JOBLESS CLAIMS: 213K V 220KE (lowest since Apr); CONTINUING CLAIMS:1.908M V 1.88ME (~1-yr high)
(US) NOV PHILADELPHIA FED BUSINESS OUTLOOK: -5.5 V +8.0E
(US) Reportedly Pres-elect Trump's search for a Treasury secretary remains in flux, with Trump telling allies and advisers in recent days that he’s yet to be completely sold on the candidates he’s interviewed so far - press
(US) US Pres Elect Trump names Pam Bondi as Attorney General - press
(US) TRUMP SAID TO CONSIDER HAVING KEVIN WARSH SERVE AS TREASURY SEC AND THEN FED CHAIR - WSJ Timiraos
(US) Redfin: The number of homebuyers and sellers contacting Redfin agents has jumped over the last week, with Redfin’s Homebuyer Demand Index posting its biggest Y/Y increase since early 2022
(US) WEEKLY EIA NATURAL GAS INVENTORIES: -3 BCF VS. +5 BCF TO +7 BCF INDICATED RANGE (first negative reading since early Sept)
(JP) JAPAN OCT NATIONAL CPI Y/Y: 2.3% V 2.3%E; CPI EX FRESH FOOD (CORE) Y/Y: 2.3% V 2.2%E
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) CUTS INTEREST RATES BY 25BPS TO 7.75%; AS EXPECTED
BIDU Reports Q3 (CNY) 16.60 v 20.40 y/y, Rev 33.6B v 34.4B y/y; Notes in Nov, its AI bot ERNIE handled approximately 1.5B API calls daily v 600M in August
DE Reports Q4 $4.55 v $3.90e, Net Sales $9.28B v $9.15Be; Guides initial FY25 below est
DE Guides initial FY25 R&D expenses down slightly; Oct US/Canada Retail Sales of 2WD Tractors and Combines drop was bigger for Deere comparing with industry average - earnings slides
ESTC Reports Q2 $0.59 v $0.38e, Rev $365M v $354Me; Raises guidance, CFO to leave December 31, 2024
GAP Reports Q3 $0.72 v $0.56e, Rev $3.83B v $3.80Be
GOOGL Exec: To file our own proposals in Dec and to make our broader case in 2025
INTU Reports Q1 $2.50 v $2.36e, Rev $3.28B v $3.14Be; Guides Q2 light, affirms FY25 outlook
OPENAI.IPO Reportedly considering launching a browser product to challenge Google – TheInformation
PDD Reports Q3 (CNY) 18.59 v 19.67e, Rev 99.4B v 102.8Be (v 68.8B y/y); Notes intensified competition and ongoing external challenges
FRI 11-22
(EU) EURO ZONE NOV PRELIMINARY MANUFACTURING PMI: 45.2 V 46.0E (29th month of contraction); Services PMI in 1st contraction in 10 months; Business sentiment dropped sharply and was the lowest since September 2023; Notes if the euro keeps weakening, purchase prices might even rise in the coming months, especially if the EU Commission imposes counter-tariffs in response to potential US tariff hikes
(FR) FRANCE NOV PRELIMINARY MANUFACTURING PMI: 43.2 V 44.5E (lowest since Jan and 22nd month of contraction); Notably, French companies anticipate the contraction trend in activity to carry on into 2025 as, for the first time since May 2020; Notes no sign of relief given the deadlock over the country's 2025 budget
EUR/USD *Hits two-year low following weak PMIs, particularly in services, as ECB futures now pricing 50% chance for 50bps cut in Dec v <20% chance before PMIs
USD/JPY Charles Schwab's chief global investment strategist: Traders are piling up bets against the yen again, less than a month before the next BOJ meeting on Dec 19th when a hike like the last one in August could trigger a reversal
(US) Fed semi-annual financial stability report: Asset valuation pressures remained elevated; Auto and credit card loan delinquencies are above pre-pandemic levels; Hedge fund leverage near highest level since 2013
(UK) NOV PRELIMINARY MANUFACTURING PMI: 48.6 V 50.0E (2nd straight contraction and lowest print since Feb 2024); Notes prices charged inflation resumed its downward trajectory in November, despite a faster increase in overall input costs.
- Services PMI: 50.0 v 52.0e
(US) NOV PRELIMINARY S&P MANUFACTURING PMI: 48.8 V 48.9E
(US) NOV FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 71.8 V 73.9E; - 5-10 year inflation expectations 3.2% v 3.1% prelim
(CN) European Parliament Intl Trade Committee Chair Lange: Close to agreement with China to abolish EV import tariffs
Tier1 analysts citing call with Flexport expert: In recent weeks has seen some customers pull forward orders ahead of potential tariffs and US East Coast strikes; Ocean rates could move higher in the coming months, but base case would be ocean rates trending lower in 2025 on easing pull-forward demand and new supply