International Trade for August; EIA Weekly Petroleum Status
Report: Canada International Merchandise Trade for August; Canada
Building Permits for August
Stock futures fell on Wednesday as a more cautious tone
prevailed following a strong start to the fourth quarter.
Wall Street was on course for a relatively mild pullback, as
futures suffered some selling after a sturdy rally over the past
Johanna Chua, chief Asia economist at Citi, said that though U.S
growth remained in better shape than other countries and Fed
officials continued to sound hawkish, the market risked being
wrongfooted by any signs that interest rates could soon peak.
"Even as the overall fundamental setup has not
changed...trimming of bearish risk/bearish rates/bullish USD
positions has driven a sharp reversal," Chua said.
This view that oversold conditions and overly bearish sentiment
was a key contributor to the latest advance was endorsed by Tom
Lee, head of research at Fundstrat, though he accepted that bulls
may be chastened by the recent past.
"Given the generally poor win-ratio for rallies in 2022,
investors are naturally viewing the gains over the past two days as
just another 'bear market rally'," Lee said.
Still, a number of shifting factors suggest the positive run
could continue, according to Lee.
These included the dip in Fed fund futures; a 5% pullback in the
dollar index; and the Vix volatility index moving back below 30
with Vix futures back in contango.
In addition: "the Nasdaq 100 was '100% bid' Tuesday...since
1996, this has only happened 6 times, and 6 of 6 times the [Nasdaq
100] is higher 6M and 12M later with average gains of 27% and 34%,"
U.S. economic updates set for release on Wednesday include the
September ADP employment report at 8:15 a.m.; international trade
balance data for August at 8:30 a.m.; the September S&P
services PMI survey at 9:45 a.m.; and the September ISM services
report at 10 a.m.
The ADP report sets up the market for heightened nervousness
when the crucial nonfarm payrolls data is published at the end of
"All eyes are on the employment data on Friday, which has priced
in tremendous one day volatility in the options market," said
Stephen Innes, managing partner at SPI Asset Management.
Stocks to Watch:
Apple is asking its suppliers to shift the production of some
AirPods and Beats headphones to India for the first time, as it
seeks to diversify its supply chain away from China, Nikkei Asia
Apple is talking with a few suppliers to ramp up production in
India as soon as next year, the report said, citing three people
familiar with the matter.
Read more here .
Oxford Economics said the evidence of the past year shows that
inflation has been far from transitory. It believes supply factors
and relative demand shifts have been important inflationary forces
across advanced economies, and these pressure will subside.
"While we expect inflation to fall back, pressure has grown on
central banks to ensure that this happens relatively quickly,"
Oxford Economics said.
Persistently high inflation has increased the risk that
expectations become de-anchored, making central banks tip towards
erring on the side of too much policy tightening.
Inflation could fall back sharply without recessions, he says.
However, in most advanced economies recessions are more likely than
not, Oxford Economics said.
ActivTrades said the dollar's recent losses and shift in market
sentiment was limited, with strong employment numbers on Friday
likely supporting further aggressive Fed tightening, a scenario
where the dollar would almost certainly regain the front foot.
The euro touched parity against the dollar late on Tuesday, but
ING said there's not enough "bullish push" to keep EUR/USD above
parity on a sustainable basis, as it maintains its forecast of a
drop to the low 0.90 area into year-end.
"It's hard to point to any material change in the eurozone's
outlook that would warrant a significant return of market appetite
for the euro just yet," ING said.
Sterling looks vulnerable given the U.K.'s tarnished fiscal
reputation and after Treasury Chief, Kwasi Kwarteng, pushed back
against reports he would bring forward his debt-cutting plan, ING
"We suspect that the sterling rebound and the dollar correction
may have come far enough and could easily see cable [GBP/USD]
reversing to the 1.1200 area," ING said.
With higher yields across maturities, Pimco believes the case is
now stronger for investing in bonds and is of the view that
high-quality fixed-income markets can now be expected to deliver
returns that are much more consistent with long-term averages.
"We think the front end of yield curves in most markets already
price in sufficient monetary tightening."
JPMorgan said bonds are oversold, expecting peaking inflation
and inflation expectations, as well as activity weakness to likely
It expects activity momentum to stay weak near term, while
market pricing of a Federal Reserve terminal rate of 4.6% might not
"As activity softens towards contraction, the Fed is likely to
become more data dependent," JPMorgan said.
Oil prices were little changed in Europe, with investors pausing
ahead of an OPEC+ meeting which might see the cartel undertake its
biggest supply cut since the pandemic.
Despite Wednesday's muted moves, oil has jumped this week as the
market has priced in a large cut in OPEC+ oil quotas. Analysts are
girding for a cut of between 500,000 and 1.5 million barrels a day
as the group seeks to halt a slide in crude prices.
"OPEC+ has to convincingly demonstrate its desire to restore
prices to market fundamentals in order to offer meaningful support
for oil benchmarks, amid the wave of demand-destroying policy
tightening by central banks around the world," Exinity Group
Gold and base metals were higher in European trading, with
prices supported by a weaker dollar on hopes the Fed will adopt a
looser monetary stance.
"Tighter monetary policy has been a strong headwind for base
metals, with concerns demand will falter amid higher borrowing
costs," ANZ Research said.
TODAY'S TOP HEADLINES
Elon Musk Proposes Closing Twitter Deal on Original Terms
Elon Musk has offered to close his acquisition of Twitter Inc.
on the terms he originally agreed to, a sudden and unexpected
comedown for the billionaire entrepreneur that could end a
monthslong battle he waged to get out of the $44 billion deal.
A lawyer for Mr. Musk communicated the proposal to Twitter's
lawyers Monday, according to a copy of a two-sentence letter that
was filed with the Securities and Exchange Commission Tuesday
Icahn, Others Clean Up on Musk's Twitter About-Face
Elon Musk's decision to end his war with Twitter Inc. isn't just
a big win for the social-media company, but also for some big-name
investors like Carl Icahn.
Mr. Icahn quietly amassed a Twitter stake of well over $500
million in the past few months and made a sizable profit Tuesday
after the shares shot up on news that Mr. Musk offered to close his
$44 billion purchase of the social-media giant on the original
terms, according to people familiar with the matter.
Juul Prepares to Seek Financing for Potential Bankruptcy
Juul Labs Inc. is expected as soon as this week to start
discussions with lenders for financing that would carry the company
through a potential chapter 11 bankruptcy filing, according to
people familiar with the matter.
The vaping company has received inquiries from lenders and will
soon formally request debtor-in-possession financing options, one
of the people said. Such financing allows companies to pay
day-to-day expenses and remain in possession of their business
while under bankruptcy protection.
Amazon Freezes Hiring in Retail Division
Amazon.com Inc. is halting hiring in its core retail division
through the end of the year, making it the latest big tech company
to pull back on hiring as it contends with economic headwinds.
The company is pausing hiring for corporate roles that include
tech positions in its retail business, a person familiar with the
matter said. The company has posted thousands of openings in the
segment in recent months. The New York Times earlier reported on
Commodity-Trading Hedge Funds Are Having a Strong Year
Some hedge funds that trade raw materials have generated
blockbuster returns this year, making them among the major
beneficiaries of exceptionally volatile commodity markets.
Prices for oil, natural gas, metals and grains ripped higher
earlier this year as economies reopened from lockdown and the
Ukraine war disrupted flows of energy and raw materials.
RBNZ Continues to Raise Rate Sharply to Counter Inflation
The Reserve Bank of New Zealand raised its official cash rate by
a further 50 basis points on Wednesday, citing continued inflation
pressures across the economy.
The hike takes the official rate to 3.50%, and marks the fifth
50-basis-point rise in the current tightening cycle. Most
economists expect the RBNZ will take the cash rate well above 4.0%
before it is satisfied that inflation has been tamed.
Student-Loan Forgiveness Plan's Cost Likely to Widen 2022
President Biden's student-debt forgiveness plan is likely to
widen the federal budget deficit for the just-ended fiscal year,
when compared with the White House's previous estimates.
Providing up to $20,000 in student-loan cancellations to
millions of Americans will cost $379 billion over roughly three
decades, the Education Department estimated. That entire cost will
be reflected as a one-time item in the budget results for fiscal
year 2022, which ended Sept. 30, a senior administration official
As Ukrainian Forces Advance, West Plays Down Threat From Russian
Ukrainian forces accelerated their advance into Russian-held
areas of the southern Kherson region as Western officials played
down the likelihood of Russia using nuclear weapons in retaliation
for its military defeats.
Ukrainian troops announced the liberation of several towns,
while Moscow sought to prevent an encirclement of its forces in the
east and south of the country. Soldiers posted footage of
themselves unfurling the Ukrainian flag over Davydiv Brid and
claimed the liberation of Starosillya, Arkhangelskoye and Velyka
North Korea Tests World's Resolve by Sending Missile Over
SEOUL-North Korea's latest missile launch over Japan represents
a major escalation that returns Pyongyang to a pattern of
provocation it hasn't used in years, testing how much international
resolve can be summoned to thwart it.
A particularly strong reaction came from Japan, where in two
northern prefectures and islands that stretch south of Tokyo,
citizens started their Tuesday mornings with emergency alerts about
Pyongyang's intermediate-range missile flying over their country.
The incident will likely energize Japan's plans to increase
military spending-a policy shift aimed at deterring North Korea and
Judge Dismisses Charges Against Seven Former Officials in Flint
A Michigan judge dismissed indictments against several former
state officials related to their handling of the Flint water
The decision followed an earlier opinion from the state Supreme
Court that canceled a lower court's ruling due to concerns over how
the indictments were handled.
Alabama Argues Before High Court Against Second Black-Majority
WASHINGTON-The Supreme Court heard Alabama's plea to stop
creation of a second Black-majority congressional district, in
arguments Tuesday that could reshape federal protections for
Black voters and organizations challenged the state's House map
under the Voting Rights Act of 1965. In January a special
three-judge court in Birmingham, Ala., ordered the new Black
majority district to be drawn.
Write to email@example.com TODAY IN CANADA
Trilogy Metals 3Q
Economic Indicators (ET):
0815 Official International Reserves
0830 Aug International merchandise trade
0830 Aug Building permits
Stocks to Watch:
Boyd Group Services Reopens Nearly All Florida and South
Carolina Collision Repair Centers; Hurricane Will Modestly Impact
3Q and 4Q Results
Link Weighs A$1.27B Proposal From Dye & Durham for Some
Link Administration is considering an offer worth $830 million
from Dye & Durham for its Corporate Markets business and its
entire Banking and Credit Management unit.
Link said Dye & Durham had made three proposals recently to
acquire some of its businesses, but it had decided not to engage
with Dye & Durham on two of them.
Read more here.
Expected Major Events for Wednesday
00:30/JPN: Sep Japan Services PMI
06:00/RUS: Sep Russian Services PMI
06:00/GER: Aug Foreign Trade
06:45/FRA: Aug Industrial Production Index
07:45/ITA: Sep Italy Services PMI
07:50/FRA: Sep France Services PMI
07:55/GER: Sep Germany Services PMI
08:00/ITA: 2Q General Govt Quarterly Accounts
08:00/UK: Sep UK monthly car registrations figures
08:30/UK: Sep UK Official Reserves
08:30/UK: Sep S&P Global / CIPS UK Services PMI
08:30/UK: Sep Narrow money (Notes & Coin) and reserve
09:00/ITA: 2Q GDP revised
11:00/US: 09/30 MBA Weekly Mortgage Applications Survey
12:15/CAN: Sep Official International Reserves
12:15/US: Sep ADP National Employment Report
12:30/CAN: Aug Building permits
12:30/CAN: Aug International merchandise trade
12:30/US: Aug U.S. International Trade in Goods &
13:45/US: Sep US Services PMI
14:00/US: Sep ISM Report On Business Services PMI
14:30/US: 09/30 EIA Weekly Petroleum Status Report
15:00/US: Sep Global Services PMI
All times in GMT. Powered by Onclusive and Dow Jones.
Expected Earnings for Wednesday
Ares Capital Corp (ARCC) is expected to report $0.49 for 3Q.
Byrna Technologies Inc (BYRN,BYRN-L) is expected to report for
Costco Wholesale Corp (COST) is expected to report.
Hyzon Motors Inc (HYZN) is expected to report for 2Q.
Lamb Weston Holdings Inc (LW) is expected to report $0.53 for
Landec (LNDC) is expected to report $-0.18 for 1Q.
RPM International Inc (RPM) is expected to report $1.31 for
Resources Connection (RGP) is expected to report $0.39 for
Richardson Electronics (RELL) is expected to report $0.25 for
USCB Financial Holdings Inc (USCB) is expected to report for
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ANALYST RATINGS ACTIONS
Applied Genetic Tech Cut to Equal-Weight From Overweight by
Bank of New York Mellon Raised to Buy From Neutral by
Clene Cut to Perform From Outperform by Oppenheimer
CommScope Holding Raised to Outperform From Neutral by Credit
Domino's Pizza Raised to Buy From Neutral by UBS
F45 Training Cut to Neutral From Overweight by JP Morgan
Gilead Sciences Raised to Overweight From Neutral by JP
Illumina Raised to Outperform From Market Perform by SVB
M&T Bank Cut to Neutral From Buy by Citigroup
Paramount Global Cut to Equal-Weight From Overweight by Wells
Poshmark Cut to Neutral From Outperform by Wedbush
Vintage Wine Estates Cut to Neutral From Buy by DA Davidson
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
October 05, 2022 05:42 ET (09:42 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.