Market recap: Week of 30 Oct - 03 Nov 2023

US Banks

Reuters and The Daily HODL: JPMorgan Chase CEO Jamie Dimon to sell shares for the first time in 18 years for financial diversification and tax planning.

Meanwhile, US commercial banks' deposits witnessed a $100 billion decline in three weeks, per Federal Reserve Economic Data (FRED).

UK economy

The Guardian: The Bank of England, keeping a close eye on labour market trends, now sees signs of cooling.

Economist George Buckley highlights concerning indicators: falling consumer confidence, retail sales slowdown, construction output decline (especially in housing), and manufacturing contraction.

The Monetary Policy Committee (MPC) is likely considering these factors. Buckley suggests an MPC decision to maintain the current policy seems imminent.

Europe’s monetary policy

Reuters: Recent data indicates that the European Central Bank (ECB) will not likely raise interest rates in December unless there are significant surprises, commented Simkus. 

ECB policymakers Gediminas Simkus and Peter Kazimir, both of whom advocate tighter policy, emphasize that the ECB is not expected to lower rates during the first half of the following year. 

Stock market 

Reuters: JP Morgan’s Marko Kolanovic is concerned about consensus earnings growth amid economic challenges. Meanwhile, Morgan Stanley’s Mike Wilson maintains a year-end target of 3,900 for the S&P 500, citing a unique market setup.

Yield curve control

CNBC: BOJ maintains a -0.1% short-term policy rate despite 18 months of core inflation exceeding the 2% target. The 10-year Japan Government Bond yield target remains 0%, with a 1% upper bound as a reference.

BOJ cites 'extremely high uncertainties' in domestic and global economies and financial markets, leading to increased flexibility in YCC policy. 

Gold demand

Gold.org: Q3 gold demand (excluding OTC) surpassed the five-year average by 8% but was 6% weaker YoY at 1,147t.

Net central bank buying at 337t marked the third strongest quarter in Gold Council data.  Global gold ETFs experienced a smaller outflow of 139t in Q3 compared to Q3'22 (-244t).

Yen intervention

Reuters: Japan's top currency diplomat, Masato Kanda, stated authorities are ready to address 'one-sided, sharp' yen movements. This comes as the currency drops below a crucial level, emphasizing the warning against speculators.

Federal policy

Federal Reserve: Fed Chair Powell announced the decision to maintain the federal funds rate target range at 5.25% to 5.5% and continue reducing securities holdings.

The significant rate hike and over $1 trillion reduction in holdings since last year are having a restrictive impact on economic activity and inflation. 

Apple earnings

CNBC and Skynews: Apple reported a net income of $23B on $89.5B in revenue for the quarter ending September 30. This marks the 4th quarter decline.

While revenues dropped 1% from the previous year, forex rate changes caused a 2% revenue dip. Net income was $22.96B ($1.46/share) compared to $20.72B ($1.29/share) last year. iPhone 15 outperformed iPhone 14, but Mac and iPad businesses declined in the quarter.

Bank of England

CNBC, The Guardian and The BOE: The Bank of England maintains its benchmark rate at 5.25%, aligning with the Fed and European Central Bank in keeping key rates stable.

BOE foresees no cuts until the third quarter of the following year, prioritizing a prolonged restrictive stance. UK GDP likely remained flat in 2023 Q3, below prior projections. Inflation, measured by twelve-month CPI, stood at 6.7% in both September and 2023 Q3.