Is this the beginning of the End?

Thoughts of the Day

The US interest rates futures market suggests a 0% chance of a Federal Reserve hike in December and January, with a 30% chance of a rate cut in March. This probability is likely to grow as we get more data that shows that inflation is continuing to moderate, and the jobs market is slowing as wished for by the policy makers.

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Week Ahead

Tuesday: The Reserve Bank of Australia will release its meeting minutes for its November meeting, and likely reveal the details behind the interest rate hike.

The Canadian Consumer Price Index is expected to show that prices rose +3.2% Year-on-Year in October, down from +3.8% in September.

The meeting minutes for the Federal Reserve October Meeting will be release and the market will be looking for more hints that they are close to the end of the hiking cycle. 

Wednesday: The revised print for the University of Michigan Consumer Sentiment (60.5 exp, 63.8 prev) and inflation expectations for the year ahead (4.4% exp, 4.2% prev) will be released.

Thursday: Thanksgiving Holiday in the US, stock and bond markets will be closed.

Friday: The Japanese core Consumer Price Index is expected to show that prices rose +3.0% Year-on-Year in October, down from +2.8% in September.

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What Happened Yesterday

Market Movements as of New York Close 17 Nov 23 (19 Nov for Crypto)
  • Fedspeak:
    Collins (2025 voter, known centrist):
    “I would not rule out the possibility of further tightening.”
    Daly (2024 voter, slight hawk): “High risks and ‘murky’ economic conditions mean Fed should practise gradualism. The Fed is not certain if inflation is on track to 2%.”
    Barr (current voter, known centrist): “We are likely at or near the peak of where we need to be on interest rates.”
  • The US Treasury Yield curve inversion widened slightly to 0.44% as the US 2-year bond yield rose +0.05% to 4.88% while the US 10-year bond yield fell -0.01% to 4.44%.
  • The US stock futures drifted sideways through the Asian and London trading sessions with the S&P 500 futures making minimal changes.
  • The US stock market opened almost unchanged from Thursday. It then had a muted day due to the lack of market moving news. Consequently, the S&P 500 inched a tad higher by +0.13% (high: +0.26%, low: -0.19%), the Dow Jones inched +0.01% (high: +0.24%, low: -0.18%) while the Nasdaq crept +0.03% (high: +0.28%, low: -0.42%).
  • The crypto market climbed higher over the weekend following reports that Fidelity is seeking to create an exchange-traded fund that owns Ether.  Javier Milei’s win in the Argentine Presidential elections also helped sentiment because Milei is a Bitcoin hawk who ran on the promise of shutting down the country’s central bank. Bitcoin rose +1.91% while Ether gained +2.53%.
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Headlines & Market Impact

US jobs data may be miscounting millions of ‘gig’ workers, research suggests

Notable Snippet: Millions of “gig” workers may get missed every month in the U.S. government’s employment report, a discrepancy with implications for how Federal Reserve officials size up the job market and any associated inflation risks.

Research prepared for a Boston Federal Reserve labour market conference found that whether driving for Uber to make ends meet or taking piecework jobs in retirement, casual contract workers sometimes don’t consider themselves “employed” or even a part of the labour force.

As a result, they answer government survey questions in a way that may produce a significant undercount of those working, economists Anat Bracha, an associate professor at the Hebrew University Business School in Jerusalem, and senior Boston Fed economist Mary A. Burke concluded in a research paper to be presented at the conference on Friday.

Though that indicates the labour market at any time may be “tighter” than thought, the researchers said they felt it means the economy actually has more room to increase work and production without generating inflation – a case for the Fed to give the job market more room to run.

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China’s transition to EVs is so fast that Volkswagen is on track for its worst local sales in years

Notable Snippet: Chinese brands are taking the lead in the country’s rapid shift to new energy vehicles, putting Volkswagen on track for its smallest year of China sales since 2012, according to CNBC analysis of public data for the first three quarters of the year.

The German auto giant isn’t alone in its struggles, according to CNBC’s analysis of 10 global car brands.

Nissan is on track for its worst year in the market since 2009, while Hyundai is set for its lowest sales since at least that time, CNBC’s analysis showed.
The declines come as China has rapidly transitioned away from internal combustion engines to new energy vehicles. It’s a rapidly growing market of battery and hybrid-powered cars which Tesla and homegrown brands such as BYD have captured.

In China, the world’s largest auto market, new energy vehicles have accounted for more than one-third of new passenger cars sold in the country so far this year.

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OpenAI shakeup has rocked Silicon Valley, leaving some techies concerned about future of AI

Notable Snippet: Just as Apple had the late Steve Jobs acting as the company’s esteemed figurehead, articulating the appeal of the iPhone and personal computers to the masses, so too did OpenAI have its own charismatic leader in Sam Altman.

With Altman out as CEO — at least for now — after his sudden firing on Friday, the Apple comparisons are flowing freely. Jobs was fired as CEO of Apple in 1985, a move that lives in Silicon Valley lore, since it was after his return in 1997 that Apple found the path that eventually made it the most valuable company in the U.S.

Along with Altman, OpenAI’s board removed Greg Brockman from his role as chairman. Later Friday, Brockman said he was quitting the company.

“What happened at OpenAI today is a Board coup that we have not seen the likes of since 1985 when the then-Apple board pushed out Steve Jobs,” longtime startup investor Ron Conway said Friday evening in an X post. “It is shocking; it is irresponsible; and it does not do right by Sam & Greg or all the builders in OpenAI.”

Efforts are already underway by OpenAI investors to get Altman back, according to people familiar with the matter. Microsoft, Tiger Global, Sequoia Capital and Thrive Capital are among a number of OpenAI’s top backers that are trying to reinstate Altman, said the people, who asked not to be named because discussions are confidential. The Verge reported on Saturday that Altman is “ambivalent” about the possibility of returning.

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Phan Vee Leung
CIO & Founder, TrackRecord