The final stretch 

Thoughts of the Day

As we approach year-end, asset managers who did well are likely to secure profits and reduce exposure, while those facing challenges aim to minimize risk and take a break. This period offers a window for individuals not tied to reporting to take advantage of price dislocations resulting from position reductions. Expect such opportunities as the year-end holidays approach!

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Week Ahead

Monday:
Tuesday:
Wednesday: The Australian Monthly CPI Indicator is expected to show that prices rose +5.2% in October, down from +5.6% in September.

The RBNZ is expected to keep interest rates at 5.5% in its Interest Rate Decision.

The US GDP Growth Rate is expected to reflect a +5% Quarter-on-Quarter growth in Q3 compared to +2.1% in Q2.

Thursday: The OPEC+ will hold its meeting to discuss any changes to output levels in oil production.

The US PCE Price Index is expected to show that prices rose +3.1% Year-on-Year in October compared to +3.4% in September. The core index is expected to show an increase of +3.5%, a tad lower than +3.7% in September.

Friday: The Canadian Unemployment Rate is expected to increase slightly to 5.8% in November compared to 5.7% in October. The Employment Change is expected to show +14k jobs being added compared to +17.5 previously.

Federal Reserve Chairman Powell is due to participate in a fireside chat titled “Navigating Pathways to Economic Mobility” at Spelman College, in Atlanta.

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What Happened Yesterday

Market Movements as of New York Close 24 Nov 23 (26 Nov for Crypto)
  • The US Treasury Yield curve inversion narrowed slightly to 0.45% as the US 2-year bond yield rose +0.03% to 4.92% while the US 10-year bond yield rose +0.05% to 4.47%.
  • The US stock futures traded sideways on Friday due to the lack of volume amidst the Thanksgiving holiday and Black Friday.
  • The US stock market opened almost unchanged from Wednesday. It then continued to trade within a small range in the New York session which ended earlier at 1pm Eastern Time due to Black Friday. Consequently, the S&P 500 closed +0.06% higherer (high: +0.08%, low: -0.08%), the Dow Jones rose +0.33% (high: +0.36%, low: +0.08%) while the Nasdaq inched -0.12% lower (high: +0.04%, low: -0.38%).
  • The crypto market experienced weakness over the weekend with Bitcoin down -0.72% and Ether down -1.01%.
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Headlines & Market Impact

Black Friday shoppers spent a record $9.8 billion in U.S. online sales, up 7.5% from last year

Notable Snippet: Black Friday e-commerce spending popped 7.5% from a year earlier, reaching a record $9.8 billion in the U.S., according to an Adobe Analytics report, a further indication that price-conscious consumers want to spend on the best deals and are hunting for those deals online.

“We’ve seen a very strategic consumer emerge over the past year where they’re really trying to take advantage of these marquee days, so that they can maximise on discounts,” said Vivek Pandya, a lead analyst at Adobe Digital Insights.

Black Friday’s spending spike reflects a consumer who is more willing to spend than in 2022, when gas and food prices were painfully high.

Pandya noted that impulse purchases may have played a role in the Black Friday growth since $5.3 billion of the online sales came from mobile shopping. He noted that influencers and social media advertising have made it easier for consumers to get comfortable spending on their mobile devices.

Still, shoppers are price-sensitive, managing tighter budgets due to last year’s record inflation and interest rates. According to the Adobe survey, $79 million of the sales came from consumers who opted for the ‘Buy Now, Pay Later’ flexible payment method to stretch their wallets, up 47% from last year.

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Nvidia shares close down on report it delays China AI chip designed to comply with U.S. export rules

Notable Snippet: Nvidia is delaying a new artificial intelligence chip for China that has been designed to comply with U.S. export restrictions, according to Reuters.

Reuters, citing two sources familiar with the matter, reported that Nvidia told Chinese customers that it is delaying the launch of an AI chip that is designed to comply with U.S. export rules until the first quarter of next year.

The new chip, called the H20, was being delayed due to issues server manufacturers were having while integrating the semiconductor into their products, Reuters reported.

The delay to the H20 could be a setback for Nvidia which makes around a fifth of its revenue from China and is facing competition from local players such as Huawei.

Even as Nvidia reported this week that it tripled its revenue in the September quarter, the company warned sales in regions affected by export restrictions will “decline significantly” in the current quarter.

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China turns to households in fight to slash carbon emissions

Notable Snippet: At a gleaming new metro station on the edge of Shenzhen, the local government is promoting “carbon coins” to commuters to earn and trade for shopping vouchers and travel cards in a push to get households to join China’s fight against climate change.

The southeastern city’s “Carbon Road for Everyone” scheme, which rewards people for logging their use of public transport, is one of dozens around China encouraging citizens to ditch cars, plant trees and cut energy use.

The so-called “carbon inclusion” programmes are part of the ruling Communist Party’s campaign to mobilise the whole of society, not just industry, to transform the world’s biggest greenhouse gas emitter into a carbon-neutral country by 2060.

China’s efforts to tackle climate change will come under intense scrutiny as negotiators from around the world gather for the COP28 meetings in Dubai next week.

While the country’s emissions reduction task is massive, potential cuts by individuals could be huge. A 2021 study by the China Academy of Sciences said households contribute more than half of China’s total emissions of over 10 billion metric tons per year.

“Carbon inclusion is a huge platform and an effective way to mobilise the public to practise low-carbon, zero-carbon and negative-carbon activities,” said Xie Zhenhua, China’s top climate envoy, during the launch of a government carbon inclusion committee in August.

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Best,
Phan Vee Leung
CIO & Founder, TrackRecord