Breakfast FM-Radio: Oct 29, 2024 News Roundup

Market Overview

The market is closely watching a series of significant economic data and financial reports to be released this week. U.S. stocks are up, with small-cap indices leading with a 1.7% increase, and the Nasdaq is approaching its highest level. Tesla's shares turned negative, falling by 2.5%, and the chip index also turned negative, with Nvidia's shares dropping by 1% at one point. North American uranium mining and nuclear energy stocks rose in tandem, with Oklo, backed by OpenAI CEO Altman, surging over 28% to a new high.

Chinese concept stocks are soaring, with the index rising by 4% throughout the day, outperforming the broader market, and NIO Inc.'s shares rising by more than 10%. Solar energy stocks, such as Daqo New Energy, increased by over 14%.

U.S. Treasury yields rebounded across the board, with the 10-year U.S. Treasury yield reaching a three-month high. The dollar turned positive. The Japanese yen fell by 1% at one point, hitting a three-month low.

Bitcoin futures rose by over 4%, surpassing the $70,000 mark, and the cryptocurrency exchange Coinbase's shares rose by over 5%.

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Concerns in the Middle East eased, suppressing gold and oil prices. Oil prices plummeted by over 6%, marking the largest drop in more than two years, while gold recovered the losses from the early U.S. trading session by the close. Palladium rose by over 2% to a ten-month high.

In the Asian trading session, the Shanghai Composite Index closed up by 0.68%, while the Beijing Stock Exchange 50 fell by nearly 1%. Micro-cap stocks experienced a surge in trading limits, and government bond spot prices fell across the board.

News Highlights

Apple's first batch of AI features has arrived, with the release of the iMac equipped with the most powerful M4 chip, starting at $1,299. The highlights of the initial AI features are writing tools, image cleaning, and content summarization. Apple's financial report is due this week, and Goldman Sachs optimistically expects earnings to significantly exceed consensus expectations.The U.S. Treasury Department has revised down its federal borrowing estimate for the fourth quarter, primarily due to having more cash reserves at the end of September than anticipated; U.S. debt faces a major test on Wednesday, with the market closely watching whether the "quarterly refinancing" guidance will be adjusted.

Volkswagen plans to close at least three German factories, lay off tens of thousands of workers, and cut salaries for all employees by 10%. This marks the first time in Volkswagen's eighty-seven-year history that it is closing factories in its home country of Germany.

Market Summary

U.S. Stocks: The Dow Jones Industrial Average rose by 0.65%, the S&P 500 Index increased by 0.27%, and the NASDAQ Composite gained 0.26%.

European Stocks: The Euro STOXX 600 Index closed up by 0.41%. The German DAX 30 Index closed up by 0.35%. The French CAC 40 Index closed up by 0.79%.

Chinese Stocks: The Shanghai Composite Index rose by 0.68%, the Shenzhen Component Index increased by 0.62%, and the ChiNext Index fell by 0.44%.

Bond Market: The 10-year U.S. Treasury yield increased by 3.21 basis points, reporting at 4.2721%. The 2-year U.S. Treasury yield increased by 3.09 basis points, reporting at 4.1355%.

Commodities: WTI December crude oil futures closed down by $4.48, a decrease of 6.13%, at $67.38 per barrel. Brent December crude oil futures closed down by $4.63, a decrease of 6.09%, at $71.42 per barrel. COMEX gold futures rose by 0.03%, reporting at $2,755.30 per ounce. COMEX silver futures rose by 0.21%, reporting at $33.850 per ounce. COMEX copper futures fell by 0.11%, reporting at $4.3655 per pound.Breaking News Details

Global Highlights

The U.S. Treasury Department has reduced its federal borrowing estimate for the fourth quarter, primarily due to more cash reserves at the end of September than anticipated; U.S. debt faces a major test on Wednesday, with the market watching whether the "quarterly refinancing" guidance will be adjusted.

The U.S. Treasury Department has revised down its federal borrowing estimate for this quarter, projecting a net borrowing of $546 billion from October to December, lower than the $565 billion estimated in July. Consistent with previous estimates, the U.S. Treasury continues to anticipate a cash balance of $700 billion by the end of the year, just before the federal debt ceiling is set to take effect again.

Analysis普遍认为，the U.S. Treasury will maintain guidance to "keep the size of bill and bond auctions unchanged for at least the next few quarters," and any sign of increased supply could disrupt the bond market.

Volkswagen plans to close at least three German factories, lay off tens of thousands of workers, and cut salaries for all employees by 10%. This will mark the first time in Volkswagen's eighty-seven-year history that it has closed factories in its home country of Germany. The chairman of Volkswagen's works council stated that executives have two days to change their minds, or a strike will be organized among the workers.

Overseas Macro

After a two-week buying spree, hedge funds are shorting U.S. stocks again. Following two consecutive weeks of buying U.S. stocks, which led the market to historical highs, the smart money has started selling. According to Goldman Sachs' latest weekly report, over the past week, hedge funds have sold U.S. stocks, giving up 25% of the long positions they recently established, with the number of short positions being more than double the number of purchases.

Goldman Sachs' capital flow expert: We have entered the best Q4 trading period in nearly a century. Goldman Sachs expert Rubner stated that this Monday marks the beginning of the best fourth-quarter trading period for U.S. stocks since 1928, as well as the best trading period in an election year, with the buyback window for the largest buyers of U.S. stocks, public companies, also reopening on Monday; the median return of the S&P 500 index from October 27 to December 31 in election years since 1928 is 6.25%.

Middle East tensions ease, Israel does not bomb Iranian oil and nuclear facilities, U.S. oil plummets by over 6%, the worst in more than two years, Citigroup lowers oil price targets, but some warn Iran may strike back. Citigroup stated that the market is unlikely to believe that Israel's recent military actions will affect the escalation of oil supply issues. However, some industry insiders pointed out that it cannot be ruled out that Iran will retaliate against the attacks in the coming weeks, leading to a rise in the risk premium in the crude oil market again. On Monday, according to Xinhua News Agency, Iran stated it will not give up its right to respond to Israeli "aggression."Japan's "Black Swan" has indeed arrived, causing a significant surge in the Japanese stock market. The Nikkei index rose by 1.8%. Analysts believe that the ruling coalition's crushing defeat was not surprising, and the market was somewhat prepared, having already priced in 60-80% of this outcome. Since the market has not fully priced in the result, the yen and Japanese stocks may face pressure in the short term.

It is reported that Shigeru Ishiba has stated that he will not resign, which implies that the Liberal Democratic Party (LDP) needs to seek new coalition partners. With the rise in political uncertainty, the Bank of Japan's future interest rate decisions may become more cautious. In the long run, political turmoil could also have a negative impact on the stock market.

Overseas Companies

The financial reports of the five major U.S. technology companies are set to be released this week. Wall Street expects that the "Mag 7" will see a year-over-year profit growth of over 18% in the third quarter, a significant drop from the 37% growth in the second quarter, but it is still expected to outpace the overall earnings growth of the S&P 500. Despite challenges such as the prospect of interest rate cuts, strict regulation, and substantial capital expenditures, Wall Street remains generally optimistic about the prospects of large technology stocks, considering their strong profitability, AI growth potential, and robust capital returns.

Market Reassessment of "Mag 7": Tesla Out, Netflix In? Analysts believe that Tesla's fundamentals have been overhyped, compounded by recent poor performance, high valuations, and over-reliance on its core automotive business. Investments in AI and robotics will take several years to bear fruit, and whether it can remain among the U.S. stock market's "seven giants" is still a question mark. Among the potential replacements, Netflix, with its consistently strong free cash flow, is the most favored.

Meta Develops AI Search Engine to Reduce Dependence on Google and Microsoft.

Official Definition of Open Source AI, Meta Llama Model Fails to Pass. The Open Source Initiative (OSI), which has long been committed to defining and "managing" all open source affairs, released its Open Source AI Definition (OSAID) version 1.0 on Monday. According to OSAID, for an AI model to be considered open source, it must provide sufficient information so that anyone can "substantially" reconstruct the model. The model must also disclose any significant details related to its training data, including the source of the data, the processing methods, and the ways to obtain or license the data.

Indonesia Bans Sales of Apple iPhone 16, Citing Failure to Meet Investment Requirements. Apple's subsidiary in Indonesia has failed to meet the country's 40% local content requirement, with an investment of 1.5 trillion rupiah, lower than the promised 1.7 trillion rupiah. In contrast, competitors Samsung and Xiaomi have established factories in Indonesia to comply with local regulations. Currently, travelers can bring the iPhone 16 into Indonesia, but local sales are prohibited.

Boeing Launches $19 Billion Stock Issuance to Meet Liquidity Needs and Prevent Rating Downgrades. Boeing will issue 90 million common shares and depositary shares worth about $5 billion, valued at $19 billion at last Friday's closing, making it the largest stock sale since SoftBank reduced its stake in T-Mobile US in 2020.

After the Automobile Industry, European Home Appliance Giant in Trouble, Philips' Third-Quarter Sales Unexpectedly Decline, Full-Year Sales Guidance Downgraded. Philips' comparable sales in the third quarter declined by 0.5% year-over-year, significantly lower than the expected 3% increase. Due to worsening demand, the group has significantly downgraded its full-year 2024 comparable sales growth guidance from the previous 3%-5% to 0.5%-1.5%, and its stock price plummeted by nearly 16%.