Key Takeaways
- The 2024 presidential election is on Tuesday.
- The Federal Reserve will announce its interest rate decision on Thursday, followed by Fed Chair Jerome Powell’s press conference.
- A Harris victory could trigger a nearly 50% drop in Bitcoin’s price due to her cautious stance on crypto regulation, warn analysts.
- Palantir, Microchip Technology, and Arm Holdings are among the technology firms reporting this week, while pharmaceutical companies Novo Nordisk, Gilead Sciences, and Vertex also will issue financial reports.
Bitcoin Drops for 5 Consecutive Days; Harris Win Could Lead to 50% Bitcoin Crash?
On November 4, Bitcoin rose 0.22% to $68,631.2 after five consecutive days of losses. According to Coinglass, 145,400 crypto traders were liquidated in the past 24 hours, totaling $363 million, with $260 million in long positions and $67.48 million in short positions.
Polls show Harris currently leads Trump by 49% to 48%. Analysts predict that a Trump win might continue loose monetary policies, while Harris supports a regulatory framework for crypto, showing a more cautious stance. Bernstein analysts warn that a Harris victory could cause Bitcoin to drop nearly 50% to around $30,000.
US Payrolls Rise by Just 12,000 in October as Hurricanes and Strikes Weigh on Jobs Data
US job growth slowed to 12,000 in October, the weakest since 2020, with the unemployment rate holding at 4.1%. Severe hurricanes and major strikes impacted the figures, leading to low survey response rates and potential revisions. Key sectors, including health care and government, added jobs, while others like manufacturing and retail saw declines. The subdued report is expected to support a gradual approach to Fed rate cuts, with a 25-basis-point reduction anticipated in November. Wage growth remains steady, but labor market signs indicate cooling amid economic resilience.
Brookfield Moves Head Office to New York to Boost US Index Eligibility
Brookfield Asset Management has relocated its head office from Toronto to New York, aiming to increase its appeal to US stock indexes and attract a broader investor base. The move also involves a swap of Brookfield Corp.’s 73% unlisted stake in Brookfield Asset for publicly traded shares, simplifying the company’s structure.
China’s Stimulus Shows Early Signs of Success with Manufacturing, Housing Gains
China’s recent economic stimulus efforts appear to be having a positive effect, with manufacturing activity exceeding expectations and residential property sales rising for the first time this year. October’s factory activity, as measured by the Caixin PMI, rose to 50.3, marking an end to months of contraction. Residential property sales also jumped 73% from the prior month. The full impact of fiscal measures is yet to unfold, and additional support from top Chinese legislators is anticipated. However, global trade uncertainties, including potential US tariff hikes, pose risks to China’s export-driven recovery.
Iran Plans to Attack Israel via Proxies, Oil Prices Surge
Oil prices spiked following reports that Iran is preparing to strike Israel from Iraqi territory through militias it supports, potentially using drones and ballistic missiles. Brent crude rose as much as 2.9%, while West Texas Intermediate surpassed $71 a barrel. Although recent developments hinted at easing Middle Eastern tensions, analysts caution that the market may have relaxed too quickly. U.S. employment data showing slower-than-expected job growth added further pressure on the dollar, which supported oil price increases.
Traders Eye Gold as Safe Haven Amid Tight US Election
Gold prices are soaring, poised for their best year since 1979, as investors seek security amid a nail-biting US election. The uncertainty surrounding the election outcome is driving demand, with some predicting a prolonged rally in gold no matter the victor, as both candidates’ spending plans could strain US finances and spur inflation.
Economic Freedom Is on the Ballot for Black Americans
As the US election approaches, economic freedom is central for Black Americans, who face higher economic vulnerability. While Trump’s policies lean toward corporate tax cuts and tariffs that economists say may worsen inflation, Harris advocates initiatives aimed at affordable housing, student loan forgiveness, and Black entrepreneurship.
Canada’s Busiest Port Braces for Potential Strike Starting Monday
Dock foremen in British Columbia have issued a 72-hour strike notice, planning a full shutdown starting Monday, November 4, at 8 a.m. Pacific Time. The strike will impact major West Coast ports, including Vancouver, risking $574 million in daily trade. The Greater Vancouver Board of Trade has called on the federal government to intervene to avoid further disruptions. This comes amid a year of labor disputes affecting North American transport and logistics, with recent strikes on the US East Coast and at Montreal’s port.
CIBC Hires Mizuho’s Rob Cicchetti to Expand US Capital Markets Business
Canadian Imperial Bank of Commerce (CIBC) has hired Rob Cicchetti, a veteran from Mizuho Securities, to bolster its US asset-backed securities (ABS) business. Cicchetti will serve as Managing Director and Head of US ABS Origination. Additionally, CIBC has brought on Keisha Belinfanti from Citigroup and Jack Sullivan from Societe Generale to further drive growth in the US structured credit sector, as part of CIBC’s ongoing expansion in global markets.
Nomura Faces Mounting Scandals, Executives Take Pay Cuts Amid Spoofing Case and Attempted Murder Arrest
Nomura Holdings is grappling with multiple scandals that threaten its reputation and turnaround efforts. Top executives, including CEO Kentaro Okuda, have taken pay cuts after an employee was found to have manipulated the bond market, prompting firms to halt trading with Japan’s largest brokerage. Meanwhile, a former Nomura employee was arrested for alleged robbery and attempted murder of elderly clients, intensifying scrutiny on the company. While Nomura’s recent quarterly profit exceeded estimates, these incidents may impact client trust and future growth.
Trump’s Immigration Policy Would Make Food Inflation Even Worse
Donald Trump’s proposed immigration policy of mass deportation could lead to higher food prices in the US by reducing the labor pool needed in the food industry. About 1.7 million undocumented workers support the nation’s food supply, from farms to restaurants. If they were forced out, labor shortages would intensify, leading to higher prices as smaller farms and food businesses struggle to survive. Experts argue that comprehensive immigration reform would be a more effective way to ensure food security and control costs.
*The viewpoints are attributed by Wallis Zeng.
Market Momentum Slows, But Long-Term Outlook Remains Positive: AimStar’s Take on Diversification Opportunities
Uptrend Still in Place, but Some Short-Term Caution Needed:
AimStar remain positive on the stock market over the next 12 months, supported by the Federal Reserve’s easing cycle. However, momentum is starting to slow down. We’re seeing signs such as fewer stocks making new highs and defensive sectors (like utilities and healthcare) showing strong performance, which usually signals potential market weakness. The current sentiment suggests that the market could experience a short-term pullback. Despite this, we recommend using any dips as a chance to accumulate stocks as the broader uptrend is still intact.
Rising Concerns on the Horizon:
There are a few growing concerns impacting the market. Recently, East Coast port closures and escalating tensions in the Middle East have spooked investors. These events could disrupt supply chains, particularly in the retail industry, which depends heavily on these ports. On the flip side, geopolitical risks have boosted defense stocks, as we’ve seen a breakout in the Aerospace & Defense sector.
Strong September Performance Defies Expectations, but Election Year Could Add Volatility:
September is usually a weak month for stocks, but this year, the S&P 500 posted a 2.02% gain, defying its usual negative trend. However, with the upcoming election, October might see some volatility or consolidation. Still, any market dips should be viewed as buying opportunities, as the long-term outlook for stocks remains strong.
Market Signals Remain Positive:
In the medium to long term, things are looking good for equities. Around 76% of stocks in the S&P 500 are trading above their 50-day and 200-day moving averages, which is a positive sign. Additionally, riskier sectors like consumer discretionary are outperforming defensive sectors, indicating that the market is positioning itself for more upside over the next 12-18 months.
Focus on Diversification:
For the past year and a half, concentrated bets on a few large stocks have worked well. However, the market is now broadening out, and we believe a diversified approach will be more effective. Historically, when markets become highly concentrated, it often sets the stage for more average stocks to catch up, which is good news for diversified portfolios.
*The viewpoints are attributed by Tony Yuan
Tesla Falls Further as Reported Robotaxi Delay Weighs on EV Maker
Reported on July 12 by AIMSTAR.CA – Tesla (TSLA) shares are slipping more than 1% in premarket trading after suffering the steepest losses of any S&P 500 constituent Thursday with an 8.4% plunge on a report the EV maker is postponing its robotaxi unveiling by two months. The company previously indicated it would hold an event to introduce the autonomous vehicles on Aug. 8, but Bloomberg reported the presentation has been pushed back to October. Tesla shares entered Thursday on an 11-session winning streak to move into the green for the year, fueled by its better-than-expected second quarter deliveries report, but returned into negative territory for 2024 on yesterday’s plunge.
U.S. Inflation Cools, Possible Fed Rate Cut in September
Reported on July 11 by AIMSTAR.CA – U.S. inflation slowed in June, mainly due to reduced housing costs, raising the possibility of a Federal Reserve rate cut in September. Core CPI, excluding food and energy, increased by just 0.1% from May and 3.3% year-over-year, marking the slowest rise in over three years. Overall CPI fell 0.1% from the previous month. The labor market showed mixed signals, with high jobless benefit applications but a drop in first-time filings. Traders anticipate a rate cut in September, and Fed Chair Jerome Powell emphasized that decisions will be data-driven.
For investors, this week is bound to be filled with anxiety. The U.S. is set to hold an unpredictable presidential election, which will have long-term impacts on fiscal policy and global trade. Meanwhile, the Federal Reserve will hold a policy meeting, with expectations of another rate cut, as investors closely watch the future direction of interest rates.
Here are the top 5 events in the financial markets to watch this week:
- U.S. Presidential Election Brings High Uncertainty
Election Day is set for Tuesday, though early voting is already underway. The race between Republican candidate Donald Trump and Democratic candidate Kamala Harris is exceptionally close. Recently, rising Treasury yields and a stronger dollar have been interpreted by some analysts as a signal that markets expect a Trump victory. However, polls indicate a tight race, meaning a potential victory for the Democratic candidate could lead to a series of trade reversals.
Traders may simply be hoping for a clear outcome, fearing that a contested result or prolonged uncertainty would bring significant risk to the markets. Although only seven states are considered truly competitive, a poll released on Saturday unexpectedly showed Harris leading in Iowa, a state Trump won comfortably in the last two elections. Another poll, however, showed her trailing in that state.
- Federal Reserve Meeting, Expected Rate Cut of 25 Basis Points
The Federal Reserve is expected to announce its latest policy meeting results on Thursday, with a projected rate cut of 25 basis points following a 50 basis point cut in September. Another rate cut is anticipated in December. Friday’s non-farm payroll report showed that October’s employment growth nearly stalled due to strikes and weather disruptions, reinforcing expectations for a modest rate cut. Additionally, job growth data from the previous two months was revised downward, indicating a gradual cooling of the labor market.
Investors will closely watch the Fed’s statement and Federal Reserve Chair Jerome Powell’s comments at the post-meeting press conference for insights into officials’ views on the economy and whether they may adjust the pace of rate cuts. However, Morgan Stanley analysts noted in a Friday report that they expect Powell “will not commit to a specific pace or magnitude of future rate cuts but will instead reiterate that the Fed remains data-dependent.”
- Earnings Season in Full Swing, Watch for Super Micro Computer and Others
While the market’s main focus is on the election and Federal Reserve actions, the third-quarter earnings season is still underway, with many companies set to release their latest reports following the tech giants.
On Monday, Palantir (NYSE: PLTR) and Constellation Energy (NASDAQ: CEG) will kick off the week with earnings reports. Then on Tuesday, Builders FirstSource (NYSE: BLDR), Ferrari (NYSE: RACE), and Super Micro Computer (NASDAQ: SMCI) will release their earnings. Notably, SMCI’s stock dropped nearly 45% last week after regulatory filings revealed that Ernst & Young had resigned as its auditor.
On Wednesday, Qualcomm (NASDAQ: QCOM), CVS (NYSE: CVS), and Arm Holdings (NASDAQ: ARM) will report earnings. The ongoing legal case between Arm and Qualcomm is also expected to draw attention.
Thursday will bring earnings reports from a range of companies, including Pinterest (NYSE: PINS), DraftKings (NASDAQ: DKNG), Cloudflare (NYSE: NET), and Affirm (NASDAQ: AFRM).
- Central Bank Moves: Bank of England Expected to Cut Rates
The Bank of England is set to hold its policy meeting on Thursday, with a widely expected 25 basis point rate cut. In August, the BOE made its first rate cut in over four years. This decision is also in the spotlight as the Labour government will release its new budget alongside it.
Given last Wednesday’s budget proposal, which revealed large-scale borrowing and spending plans, British borrowing costs have risen to their highest level in a year. Investors now anticipate that the BOE may reduce the frequency of rate cuts next year.
The Reserve Bank of Australia will also announce its rate decision on Tuesday, though it is expected to keep rates unchanged for the rest of the year. With robust economic activity and persistently high core inflation, the RBA is likely to maintain a cautious monetary stance.
- Oil Prices Face Uncertainty
Oil prices are likely to remain volatile, with geopolitical risk premiums balancing concerns about increased supply and weak demand.
On Friday, reports indicated that Iran is planning a retaliatory strike against Israel from within Iraq, potentially within the coming days. This news boosted oil prices, as the Middle East faces the threat of broader conflict. Sparked by clashes in Gaza, hostilities have intensified between Iran and Israel, leading to a series of reciprocal attacks.
Additionally, reports suggest that OPEC+ reached a preliminary agreement to postpone its planned “December production increase.” Previously, OPEC+ had aimed to raise oil output by 180,000 barrels per day in December, following an earlier delay in October. The postponement has offered some support to oil prices.
For the full week, Brent crude prices fell around 4%, impacted by U.S. oil production reaching a record high, while U.S. crude futures also dropped by about 3%.
The most anticipated earnings releases for the week of November 4, 2024 are Palantir Technologies #PLTR, Supermicro #SMCI, Celsius #CELH, Arm Holdings #ARM, Cleveland-Cliffs #CLF, AMC Entertainment #AMC, Qualcomm #QCOM, DraftKings #DKNG, Hims & Hers Health #HIMS, and e.l.f. Beauty #ELF.
Published by Vikki Zhao
November 04, 2024, 10:00 AM EST. 6 min read