Daily Economic Update: October 26, 2023

 

A decent move lower for equities especially the Nasdaq as Google/Alphabet shares stumbled and as yields moved solidly higher yesterday, with the 10Y moving back towards 5%.  Weakness in equities continues as META's beat did little to improve sentiment and this morning UPS missed while citing lower package volume.  USD-JPY is trading above 150 as we near next week's BoJ decision.  In somewhat positive news, the UAW appears to have reached a deal to end their strike on Ford and, as Bloomberg Opinion stated, the Republicans Pick Some Guy to be Speaker

This morning the 2Y is 5.12%  and the 10Y is 4.95% as the focus shifts to data and the ECB.  The ECB is expected to be on hold just as the BoC was yesterday.  In US Data we get a first look at 3Q GDP along with Durable Goods and Jobless Claims.  We'll also get the always interesting 7Y auction which follows a weak 5Y auction yesterday that tailed over 2bps.  AMZN earnings after the bell today.

XTOD: The biggest lie they tell you as a kid is that Santa Claus isn't real. 

It turns out that there IS one guy who air-delivers presents to every kid in the world, maintains an army of low-paid workers in freezing conditions, and knows everything you've done over the past year

XTOD: Regional bank update  Regional banks in many cases at 1/5/10-year lows with price/book ratios at 60% plus or minus and yields at 7% plus or minus. Current situation resembles the axiom of “catching a falling knife.” It hurts if done too early. I’m waiting a few more days but they are great long term holds. 

XTOD: 85% chance Newsom is the D nominee.

XTOD: Bloomberg on “Bond Market’s ‘Vicious Cycle’ Risk Puts Spotlight on Fed’s QT.”

Put another way, the bond market’s once reliable buyer, with seemingly limitless buying appetite/ability and no price sensitivity, has now been forced by inflation and other excesses into becoming the market’s reliable seller — this at a time when there is concern about other buyers, as well as about the magnitude of forthcoming debt issuance.

XTOD: Jeremy Grantham: "In the U.S., the three near perfect markets with crazy investor behavior and 2.5+ sigma overvaluation have always been followed by big market declines of 50%. The current superbubble features a dangerous mix of cross-asset overvaluation."

XTOD: It’s always a good sign when something like #volatilitylaundering is finally starting to be understood and the launderer’s response is “ok, fine, instead let’s sell it to retail!” https://www.bloomberg.com/news/articles/2023-10-25/private-equity-s-kkr-wants-part-of-retirement-savings-with-fidelity-schwab

XTOD: This generation is completely doomed. They can't even hold a 9-5 job without having a mental breakdown.

https://x.com/Noahpinion/status/1717237681426780188?s=20

https://x.com/real_bill_gross/status/1717205352926920818?s=20
https://x.com/dailydirtnap/status/1717211735503827305?s=20

https://x.com/elerianm/status/1717129620300935455?s=20

https://x.com/hussmanjp/status/1717209470760022179?s=20

https://x.com/CliffordAsness/status/1717153698906792021?s=20

https://x.com/stillgray/status/1717147923816046870?s=20