The U.S. Dollar was pushed to fresh lows as many global assets continued their rise, though stocks were stopped in their tracks— let’s recap another news-filled session. 👀
Today’s issue covers several halts, economic updates, and charts on investors’ radars. 📰
Check out today’s heat map:
5 of 11 sectors closed green. Communication services (+0.58%) led, and financials (-0.58%) lagged. 💚
Overseas, the European Union tentatively agreed to a $60 per barrel price cap on Russian crude oil ahead of a looming Friday deadline. 🤝
Elon Musk’s brain-chip startup Neuralink shared a video that shows a monkey telepathically ‘typing.’ Meanwhile, a Neuralink co-founder created a rival company that won’t require holes drilled in patients’ skulls. 🧠
There were several earnings movers, including Farfetch (-35.06%), Marvell Technology (-9.41%), Asana (-13.33%), Neonode (+44.63%), UiPath (11.97%), Salesforce (-8.27%), Okta (+26.46%), and Dollar General (-7.62%). 📝
In crypto news, Sam Bankman-Fried continues his media tour with an interview with Good Morning America. In it, he admits, “I wasn’t even trying to manage risk. Like, I wasn’t spending any time or effort trying to manage risk on FTX.” Instead, he says he focused on exchange volumes, which drove revenue and grew the business. And Coinbase says that Apple wants a 30% cut of NFT gas fees before allowing digital wallet updates. ₿
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For a day when the major indexes were flat, you wouldn’t expect halts to be in the news. But two halts had people talking, so let’s see what’s up. 🕵️
America’s favorite meme stocks were back on the move today, with AMC Entertainment halted once today for volatility. 🍿
After a sharp rally out of the open, the Nasdaq halted trading in $AMC shares after the stock rose more than 15% by 11:30 am eastern time. Shares dropped marginally after that, pushed to a fresh high, and ultimately traded lower late in the day to close up 13%.
There was no specific news related to the company today, but people tend to notice whenever a meme stock makes a big move. So this will definitely be on traders’ radars in the days and weeks ahead. 🗺️
The second halt was not a trading one but a halt on redemptions. And we’re not talking about a crypto exchange here! Instead, Blackstone’s shares were down roughly 7% today and weighed on the financial sector after one of its largest private real estate funds halted redemptions. 🛑
Its “Blackstone Real Estate Income Trust Inc.” is a nontraded real estate investment trust (REIT) that invests in income-generating real estate. According to the company’s site, the portfolio is concentrated in rental housing and industrial in the Southern and Western U.S. and in sectors and markets with strong economic and demographic tailwinds. 🏘️
These vehicles typically include higher fees and are generally appropriate for wealthy individuals or “accredited investors” due to their lack of liquidity and complexity.
However, this specific fund grew massively over the last few years because of its strong return profiles. But as worries about the real estate market’s overall health continue to spread, withdrawal requests have picked up significantly, exceeding the monthly and quarterly limits imposed by the fund. ⚠️
And unfortunately for some investors, they’re learning the hard way the downsides of investing in illiquid assets. By definition, they’re hard to liquidate (i.e., sell them in a timely manner without a significant cut to their price).
How this plays out remains to be seen. But, given the amount of liquidity the Federal Reserve and other central banks are taking out of the market, today’s news spooked investors a bit. One thing is for sure; investors will be looking closely at the illiquid assets in their portfolios after today. Especially those in real estate. 👀
Lastly, it’s worth noting that Blackstone also sold its 49.9% stake in MGM Grand Las Vegas and Mandalay Bay to Vinci Properties. The company will receive $1.3 billion in cash and roughly $1.5 billion in debt relief as part of the deal. 💰
The economic data continues to roll in, so let’s see what today brought with it. 📝
First is the Fed’s key inflation measure, the core personal consumption expenditures index (PCE). After rising from July through September, the measure fell 0.2% in October to 5% YoY. The volatility in the data makes it hard to identify a clear trend. As Jerome Powell said yesterday, there is still much work to do on the inflation front. 🥵
Additionally, personal income rose 0.7% in October, above estimates for a 0.4% increase. While personal spending rose 0.8%, as expected.
Weekly jobless claims gave back most of last’s week’s jump, falling from 16,000 to 225,000. 📉
Speaking of the Fed, economist Austan Goolsbee was named the next Chicago Fed President. He will take the place of Charles Evans, who is retiring early next year.
Today’s purchasing managers index (PMI) data showed that U.S. manufacturing contracted in October for the first time since June 2020. 🏭
Meanwhile, the U.S. government fights to avoid any additional self-inflicted wounds. The Senate passed the bill to avert a national railroad strike but voted down the House’s addition of seven paid sick days for workers. This will send it to the President’s desk for signing ahead of Friday’s deadline.
The Supreme Court says it will continue blocking Biden’s student loan forgiveness program. It has scheduled arguments for February and will conclude by the June deadline when payments and interest are set to resume. ⚖️
There are three charts that the community has been talking about recently, so we want to highlight them below with some context.
The first is the market-cap weighted iShares Biotech ETF ($IBB).
Technical analysts have pointed to the base it formed throughout 2022, with prices staying below the 135-137 level. But as of this week, many suggest a breakout is ahead for the sector as prices test that resistance level once again.
So why does this matter?
Bulls say the Biotech sector is often a leading indicator for bull markets. The theory is this higher-beta area of the market shows investor risk appetite and willingness to bet on higher prices for the overall stock market. Bears question that theory and think this breakout attempt will fail like all the last as the overall market turns lower again.
Only time will tell who is right. But for now, Biotech remains on many community members’ radars 🤷
We last talked about the U.S. Dollar three weeks ago as it began to break its trend. And the theory investors’ had then seemed to have played out so far. As the “safe-haven” Dollar declines, risk assets continue to rally.
Why it’s back on people’s radars today is because prices broke below the widely-followed 200-day moving average, which technical analysts use to track the long-term trend. 👀
Some traders suggest a break of this key level will lead to further downside for prices and a continued tailwind for stocks and other risk assets. Meanwhile, others suggest that the selloff in the Dollar and rally in stocks is overdone and that a trend reversal in both is ahead.
Either way, the Dollar has been a key asset to track this year and will likely remain so. 💵
Lastly, we want to highlight Gold. After a rough eight-month stretch, the precious metal space recently caught a bid as the U.S. Dollar sold off. Breakouts in Gold, Silver, and even Platinum have caught our community’s attention as we head into year-end. 🪙
Bullets From The Day:
😮 Insured losses from disasters top $260 billion in 2022. The deadly category 4 Atlantic hurricane, Ian, caused the second-largest insured loss after Hurricane Katrina in 2005. Roughly $50 to $65 billion in damages were recorded from that storm alone, causing the insurance industry to consider changes to its underwriting approaches in the future. Insurance losses as a whole were well above the 10-year average of $207 billion, with catastrophic losses also above their 10-year average of $81 billion at $115 billion in 2022. CNBC has more.
✈️ Airbus reveals plans for hydrogen fuel cell aircraft. The company plans to mount the engine between the wings and the tail of a modified A380 superjumbo, with test flights estimated for 2026. This is part of the company’s ZEROe initiative to launch a zero-emission aircraft by 2035. Hydrogen fuel cell aircraft have become a more significant priority for major aircraft makers as the world looks to make travel more climate efficient. More from CNN Travel.
🗨️ TikTok CEO explains how U.S. data will be segregated from China. At the DealBook conference, CEO Shou Zi Chew explained that the solution to the U.S.’s concern that user data will be shared with the Chinese government lies in “Project Texas.” This involves TikTok moving its data from Virginia and Singapore to a new cloud infrastructure in the U.S., which Oracle runs. Once there, only a team made up of U.S. residents will have access to that data. He says the system is expensive and challenging but that the company is committed to addressing the security concerns of the U.S. The Verge has more.
💸 Another state pulls funds from BlackRock over ESG policy. Two months after Louisiana got the ball rolling, Florida followed suit, pulling roughly $2 billion from BlackRock over its environmental, social, and corporate governance (ESG) policies. While this is another small dent to BlackRock’s multi-trillion dollar assets under management, it highlights the growing trend of states and large organizations expressing their views using their dollars. More from Reuters.
📝 General Electric outlines details of its healthcare division spin-off. The company expects to spin off the division into GE HealthCare Technologies Inc., valued at roughly $31 billion, and hopes to go public in the new year. In the spin-off, current GE shareholders would receive one share of the new company for every three shares of GE they hold. After completing this spin-off, GE will continue to separate its aerospace business from its power and renewable-energy units, as expected by 2024. Yahoo Finance has more.