Market Report.
💼 Labour market data in the US continue to point towards greater ease of credit.
📉 ADP’s payroll data is among the private-sector sources that policymakers have referred to as an alternative to the official government statistics, which have been missing during the current U.S. government shutdown.
👷♂️ U.S. firms were shedding more than 11,000 jobs a week through late October, according to payroll processor ADP’s latest real-time estimate of job market trends. Though ADP reported the U.S. added 42,000 jobs in October overall, the new weekly estimates show hiring trends are weakening on a week-to-week basis.
🏦 This data could reinforce some Federal Reserve policymakers’ arguments that developing job market weakness warrants further reductions in the U.S. central bank’s benchmark interest rate, as evidenced by the rally in Treasuries and the increase in the probability of a rate cut implied by overnight-indexed swaps. The Fed has already reduced its policy rate by a quarter of a percentage point at each of its last two meetings, and investors expect another quarter-percentage-point cut at the December meeting.
🤝 Trump suggested the U.S. may soon lower tariffs on Indian goods, indicating both sides are moving closer to a trade deal. Tensions over trade and India’s Russian oil imports have weighed on the strategic ties between the two countries. Data shows India’s imports of Russian crude were largely unchanged in October, contradicting Trump’s claim that India has “substantially reduced” Russian oil imports.
🇮🇳 U.S. President Donald Trump faces a fresh test of his political diplomacy with India as longtime loyalist Sergio Gor takes up his post as ambassador in New Delhi. Steep tariffs, H1B visa issues, and Trump’s claims of brokering a ceasefire between India and Pakistan have led to the deterioration of strategic ties between the two countries.
📦 India’s exports to the U.S. account for 18% of its total exports, compared to only 1% for Russia, highlighting the importance of the U.S. market for India.
💻 China’s cybersecurity agency accused the U.S. government of orchestrating the theft of about $13 billion worth of Bitcoin (127,272 Bitcoin tokens) from the LuBian Bitcoin mining pool in December 2020. The Chinese National Computer Virus Emergency Response Center claims this was a “state-level hacker operation” led by the U.S., citing the quiet and delayed movement of the stolen Bitcoin as indicative of a government-level action.
🕵️♂️ The report links the stolen Bitcoin to tokens that were later confiscated by the U.S. government, which the U.S. said were associated with a Chinese businessman charged with wire fraud and money laundering. The U.S. has declined to say when or how it obtained the Bitcoin, and federal prosecutors have not commented on the details of how they obtained control of the funds.
🏦 According to Bloomberg, Chinese banks are engaging in a practice called “quick-lend-and-recover” to meet government-set lending targets that can’t be met by real demand. Banks are approaching valued business clients like Jerry Hu and even retail clients like Jane, asking them to borrow money, deposit it, and then quickly repay it – with the bank covering the interest.
📉 This is happening as China’s economy is slowing and banks are struggling to find real borrowers, with outstanding loans to the real economy growing at the slowest pace on record. Regulators have previously cracked down on banks inflating their loan data by having firms deposit funds before borrowing equivalent amounts, but the practice continues as banks face pressure to hit lending targets.
⚙️ According with WSJ, China is planning to establish a “validated end-user” (VEU) system for rare earth materials exports to exclude companies with ties to the U.S. military from receiving rare earth materials, while fast-tracking shipments to civilian firms.
🌏 The purpose is to follow through on Chinese President Xi Jinping’s pledge to U.S. President Donald Trump to facilitate the flow of rare earths to the U.S. economy, while preventing these critical materials from going to U.S. military suppliers.
🧪 China dominates over 90% of the global supply of refined rare earths, which are essential for various technologies, including military applications.
💰 In the corporate world, Softbank’s sale of its stake in Nvidia has put investors on edge, which remain paranoid, after Michael Burry, the prophet who announced the subprime mortgage crash of 2008, accused tech giants of inflating profit.
🤖 SoftBank has sold its entire stake in U.S. chipmaker Nvidia for $5.83 billion, as the Japanese firm looks to capitalize on its “all in” bet on ChatGPT maker OpenAI. SoftBank also sold part of its T-Mobile stake for $9.17 billion, as part of its “asset monetization” strategy to maintain financial strength.
🏗️ SoftBank said the Nvidia exit is not due to concerns about AI valuations, but rather part of its strategy to fund other projects like the acquisition of ABB’s robotics unit. The sale of the Nvidia and T-Mobile shares, as well as a margin loan on SoftBank’s Arm holdings, will provide $22.5 billion to fund SoftBank’s investment in OpenAI.
📈 Following the recapitalization, SoftBank’s ownership in OpenAI will increase from 4% to 11%, and the company may potentially increase its investment further depending on OpenAI’s performance.
Geopolitics.
⚡ A major wartime corruption scandal uncovered in Ukraine’s energy sector: The National Anti-Corruption Bureau (NABU) investigation revealed a high-level criminal organization involving a businessman, a former energy minister advisor, and officials from Ukraine’s state nuclear energy company Energoatom.
💸 The scheme allegedly involved $100 million in kickbacks from contractors hired to repair and protect Ukraine’s critical energy infrastructure from Russian attacks. Several individuals have been detained or charged, including Tymur Mindich, a former business partner of President Zelenskyy.
🇬🇧 Allies of UK Prime Minister Keir Starmer are trying to ward off a feared leadership challenge from Health Secretary Wes Streeting, a prominent minister in Starmer’s own centrist wing of the Labour Party. Starmer’s supporters have privately accused Streeting of plotting to replace the prime minister, citing concerns that any attempt to oust Starmer could risk a market shock and undermine the government’s finances.
⚖️ Starmer has been struggling to quell dissent within the Labour Party, and the cabinet split represents a potentially more serious threat than previous challenges from the party’s left wing. Labour members of parliament have grown increasingly anxious about the party’s fortunes as Starmer has struggled to stop the rise of the populist Reform UK party led by Nigel Farage.
Market View.
📈 As the reopening of the US government approaches, markets are regaining an optimistic tone. Mini S&P 500 futures are approaching 6,900 points, while Nasdaq futures have surpassed 25,800 points.
💵 The DXY dollar index remains above 99.50, and the EUR/USD pair climbed to 1.16 during yesterday’s session before retreating to 1.1585 at present.
🇪🇺 In Europe, DAX 40 futures are advancing for a second consecutive session, exceeding 24,300 points, while EuroStoxx 50 futures have broken new highs, rising above 5,750 and currently trading at 5,763 points.
🛢️ The crude oil market remains relatively steady, with Brent crude trading at $64.90 per barrel.
🥇 Gold futures held above $4,100 per ounce throughout yesterday’s session following Monday’s strong rally and are currently trading at $4,120.
🪙 Bitcoin, which began yesterday near $107,000, has retreated in recent hours and is now trading at $103,240.
