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China’s limits on graphite exports, a key ingredient in electric car batteries, go into effect this week
Meetings between presidents come and go, but China’s efforts to capture the high ground in technologies for the future economy–and to defend that ground once captured–just go on. On December 1 China will begin requiring export permits for some graphite products, another attempt to control critical mineral supply in response to challenges to its global manufacturing dominance. Beijing’s move to restrict graphite exports will have a disproportionate impact on foreign makers of electric vehicle battery components who have not yet shifted to using as much synthetic material as Chinese counterparts, industry insiders and experts told Reuters.
Economists project that the rate at which inflation is falling will slow–does the Fed care?
The pace of improvement in the U.S. inflation rate is set to slow in the coming year. According to the economists surveyed by Bloomberg in its latest monthly outing, the core personal consumption expenditures (PCE) price index-—-the Federal Reserve’s preferred measure of inflation–will still be running at a 2.5% pace at the end of 2024. That’s up slightly from the 2.4% prediction in last month’s Bloomberg poll. Importantly it’s still significantly higher than the Fed’s 2% target inflation rate.
This looks like some profit taking among tech stock winners
Hedge funds are unwinding some of their overweight positions in technology stocks after their concentration in the sector reached record levels, according to Goldman Sachs. Net selling in tech, media and telecom stocks last week was the most since July, Goldman Sachs wrote in a note today. Information Technology (XLK) and Communication Services (XLC) were the most net sold sectors, Goldman said. And, among subsectors, sales of software stocks, chips and chip equipment and interactive media and services “were by far the most net sold.” The outweighed buying in IT services and media.”
Oil falls again on doubts that OPEC will cut production
Oil declined for a third day with U.S.benchmark West Texas Intermediate falling another 0.73% to $74.99 a barrel. International benchmark Brent crude fell 0.65% to $80.06 a barrel. OPEC meets on November 30 and there’s good reason to doubt that the cartel will agree to cut production even in the face of falling oil prices.
Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
I expect a week heavy with Fed-speak with the Federal Reserve’s pre-meeting quiet period due to start on Saturday, December 2, this week is the central bank’s last chance to shape market sentiment before the December 13 meeting of the Open Market Committee. That’s the Fed body that sets interest rates, just in case you’ve forgotten. The December 13 meeting date also includes the release of the quarterly update of the Fed’s Dot Plot projections on interest rates, inflation, GDP growth, and unemployment for 2024.
The tough end of the credit cycle shows up in drop in U.S. venture capital funding
The US-based venture capital funding deals fell 40.6% in January-October 2023 from that same period in 2022, according to GlobalData’s Financial Deals Database. In dollar terms venture deals fell by 43.56% year-over-year.The US accounted for 35% of the total number of venture capital funding announced globally during January-October 2023. Meanwhile, its share of the total disclosed funding value stood at 48.8%.
It looks like the job market is slowing–although data is inconclusive
Initial claims for unemployment fell by 24,000 to 209,000 in the week ending November 18, the Labor Department said n Wednesday. That was the biggest drop since June. Continuing claims, the number of people continuously receiving unemployment benefits, slipped to 1.84 million in the week ended Nov. 11. That was the first drop in two months.
Have a wonderful Thanksgiving filled with friends and family
No turkeys here in Italy so we’re making a pork roast with rosemary. At a farmhouse in Umbria with friends for the holidays. Someone saw a wild boar today on her walk in the vineyards. Back in Venice on Saturday. Back posting tomorrow. I wish everyone a great holiday.
Beijing readies big plan to bail out property developers but it might not be enough
China’s financial regulators are drafting a list of 50 developers eligible for a range of financing. In addition China’s biggest banks, brokerages and distressed asset managers have been told were to meet all “reasonable” funding needs from property firms. Plus the People’s Bank is trying to move up lending plans for the year and to provide at least 1 trillion yuan ($137 billion) of low-cost financing to the nation’s urban village renovation and affordable housing programs. Seems like a lot of money. And it is. But it may not be enough.
Nvidia, last of Magnificent 7 reports: These stocks are driving the market
On Monday Nvidia (NVDA) hit an all-time high. For 2023 through November 17, Nvidia and the other 6 stocks in the Magnificent Seven–Apple (AAPL), Alphabet (GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), and Tesla (TSLA)–have gained more than 70%. The other 493 stocks in the Standard & Poor’ 500 are up 6% for that same period.
Nvidia beats on earnings and revenue but falls short of highest expectations
Nvidia (NVDA) beat Wall Street expectations again. After the market close today, November 21, the company reported adjusted earnings per share of $4.02 on revenue of $18.12 billion. Analysts had projected adjusted earnings per share of $3.36 and revenue of $16.1 billion.
Nothing new in Fed’s November 1 minutes: Careful on rates
Federal Reserve officials at their November 1 meeting were agreed on a strategy to “proceed carefully” on future interest-rate moves and base any further tightening on progress toward their inflation goal. “All participants agreed that the committee was in a position to proceed carefully and that policy decisions at every meeting would continue to be based on the totality of incoming information,” according to minutes of the November 1 Federal Open Market Committee meeting released today, Tuesday, November 21. At the meeting the Fed held its benchmark lending rate in a range of 5.25% to 5.5% for the second straight meeting.
Rally or bear trap: Concentration in megacap tech stocks reaches a record high
I’m trying to decide if we’re watching a legitimate rally or a classic bear trap. If this rally is real, and likely to run for a while, investors should be putting cash to work even at market highs. If it’s a bear trap-you know one of those upward moves designed to pull in cash from the sidelines just before green turns to red in the market, then you ought to be using this moment as a selling opportunity, taking profits, and building cash for better barging down the road. A new survey by Goldman Sachs shows concentration in big tech stocks is at a record high. What does that mean?
Saturday Night Quarterback says, For the week ahead expect…
Nvidia’ earnings report after the close on Tuesday, November 21, will be the big event of the short Thanksgiving week.
And now it’s May–market moves up date of first Fed interest rate cut
Until this week, the consensus was that the Federal Reserve would begin to cut interest rates in July (or maybe June.) As of Friday, November 17, however, the CME FedWatch Tool, which calculates the odds of a Fed move from prices in the FedFunds Futures market, put chances of a interest rate cut at the central bank’s May 1 meeting at better than 50%.
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