MARKET WRAPS
Watch For:
Employment Trends Index; Consumer Credit; Fed's Thomas Barkin speaks at Demystifying Inflation event; earnings from Activision Blizzard, BioNTech, Lyft, NRG Energy, Mosaic
Opening Call:
Today's Headlines:
-Apple Warns iPhone Production Disrupted by China Covid-19 Restrictions
-Meta Plans to Begin Large-Scale Layoffs This Week
-Walgreens Unit Close to Roughly $9 Billion Deal With Summit Health
-Hong Kong Stocks Continue Rebound
-Raising Money on Wall Street Hasn't Been This Hard in a Decade
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Stock futures rose on Monday, even as short-term Treasury yields hovered near their highest since 2007, with this week's important inflation data the focus of attention.
Before that investors may consider the midterm elections.
"History suggests the midterms are a big influence on markets as they always seem to rally once mid-terms [or Presidential elections] are out the way," said Deutsche Bank.
It added that although his base case was that 2023 would be "a bad year for the global economy and risk, in every 12-month period post mid-terms over the last century, the equity market has always gone up with the inflexion point being immediately after mid-terms".
Meanwhile, a positive turn for Asian markets has provided some support, analysts noted. The Hang Seng climbed nearly 3% on Monday.
"The persistent rumours that China's Covid restrictions will be relaxed played a part in Friday's risk on rally. Updates from the health authorities over the weekend confirmed that the policy of 'dynamic clearing' will be continued, but a strong start to the week in Asia suggests that investors are still anticipating changes," said Peel Hunt.
Forex:
The dollar was higher following Friday's steep selloff and MUFG said it was "too soon for a more sustained weakening" of the greenback, although it may start to weaken next year.
Bonds:
2-year Treasury yields flirted with 15-year highs as traders eyed this week's consumer prices data and the mid-term elections.
The Federal Reserve has laid the foundations for slower interest rate rises but Mizuho said it was too early to discard a 75bp rate rise in December.
"But with the Fed also increasingly accounting for the cumulative effect of their tightening, we expect the market to become less reactionary to incoming data [barring large surprises, of course]."
Energy:
Oil prices edged lower after China pushed back on suggestions it will ease its strict zero-Covid policies.
Chinese officials have restressed their commitment to their strict approach to fighting Covid-19 cases, undermining hopes--founded on unverified social media rumors--that Beijing was considering easing its lockdowns sooner than expected.
Metals:
Base metals and gold all moved lower, with Marex saying prices were largely reacting to signals during the weekend that China will stick to Covid-19 controls.
"However, the devil is always in the details, in which language was used to criticize the various provincial governments on their 'one-size fits all' approach on the widespread lockdowns."
Marex added that onshore buyers of commodities were more positive later in the Asian session, with buying volumes high.
TODAY'S TOP HEADLINES
Apple Warns iPhone Production Disrupted by China Covid-19 Restrictions
Apple Inc. warned shipments of its high-end iPhone models would be hindered amid Covid-19 restrictions at one of its major suppliers in China, an inopportune disruption as the company enters its all-important holiday shopping season.
The Cupertino, Calif., tech giant on Sunday said the assembly factory in Zhengzhou is currently operating but at reduced capacity.
Facebook Parent Meta Is Preparing to Notify Employees of Large-Scale Layoffs This Week
Meta Platforms Inc. is planning to begin large-scale layoffs this week, according to people familiar with the matter, in what could be the largest round in a recent spate of tech job cuts after the industry's rapid growth during the pandemic.
The layoffs are expected to affect many thousands of employees and an announcement is planned to come as soon as Wednesday, according to the people. Meta reported more than 87,000 employees at the end of September. Company officials already told employees to cancel nonessential travel beginning this week, the people said.
Walgreens Unit Close to Roughly $9 Billion Deal With Summit Health
A unit of Walgreens Boots Alliance Inc. is nearing a deal to combine with a big owner of medical practices and urgent-care centers in a transaction worth roughly $9 billion including debt, according to people familiar with the matter, the latest in a string of acquisitions by big consumer-focused companies aiming to delve deeper into medical care.
The drugstore giant's primary-care-center subsidiary, Village Practice Management, would combine with Summit Health, the parent company of CityMD urgent-care centers, in an agreement that could be reached as early as Monday, the people said.
Peabody, Coronado Global Resources End Talks Over $6 Billion Deal
SYDNEY-Peabody Energy Corp. and Coronado Global Resources Inc. have ended talks over combining to create a new global coal giant valued at about $6 billion.
Peabody, the largest U.S. coal producer, and Coronado on Monday said they had agreed to end discussions over a combination that would have brought together assets from North America to Australia. Neither company gave a reason for the failure of the talks or disclosed the financial terms that had been proposed.
Twitter Rollout of Blue Check Mark Service Hits Snags
Twitter Inc.'s first major product change under new owner Elon Musk encountered a setback as a promised software update to let some subscribers buy blue check marks for their accounts led to widespread confusion after it failed to materialize for most users.
Twitter on Saturday said it began software updates to charge users $7.99 a month for an expanded subscription service that would include marking their accounts with a blue check, which previously had been given out free by the company to signal that a user was authentic.
Airbnb to Make Cleaning Fees Clearer on Searches After Customer Complaints
The cleaning fees that customers of Airbnb Inc. have long complained about will soon become more apparent early in searches for lodging, the company says.
Starting in December, on an undetermined date, the company will allow guests to filter their search results by the total cost of the stay before taxes, Chief Executive Brian Chesky said on Sunday. That means the often-maligned cleaning fees will be among the fees included in the prices customers see.
Amazon Sweetens Prime Offerings as Growth Stalls
Amazon.com Inc.'s move to vastly expand its music catalog to Prime members aims to give the popular subscription program a boost just as rivals such as Walmart Inc. have achieved speedier delivery times and added new features to subscriptions.
The tech giant revealed this past week that it is expanding the free tier of its music-streaming service, Amazon Music, to include tens of millions more songs, ad-free, for Prime subscribers.
Warren Buffett's Berkshire Hathaway Swings to Loss, Stung by Battered Market
Warren Buffett's Berkshire Hathaway Inc. swung to a loss in the third quarter as a volatile stock market and losses from insurance underwriting offset gains in its manufacturing, service and retail businesses.
The Omaha, Neb., company reported a net loss of $2.69 billion, or $1,832 a class A share equivalent, versus a year-earlier profit of $10.34 billion, or $6,882 a share.
Raising Money on Wall Street Hasn't Been This Hard in a Decade
It is quiet on Wall Street. Too quiet.
Autumn is usually one of the busiest times of the year in finance but new stock sales, debt raises and corporate mergers all slowed to a trickle in recent weeks. The supply of cash that fuels such deals is evaporating and the slowdown likely is here to stay, bankers, investors and corporate lawyers say.
U.S.-Stock Funds Showed Life in October
No one is saying that mutual-fund investors will celebrate 2022 when it's done. But October's out-of-the-blue rally was a respite from the pain.
The average U.S.-stock fund rose 8.7% in October, according to Refinitiv Lipper data, as the stock market soared. The Dow Jones Industrial Average rose 14% during the month, its best month since 1976 (the S&P 500 and tech-focused Nasdaq registered single-digit gains).
Hedging Against Currency Swings Separates Winners From Losers This Year
The dollar's recent rise has heightened the complexity of buying overseas stocks for investors used to focusing on metrics like company earnings and share-price valuations.
When U.S.-based investors hold international equities, their performance is driven by fluctuations in exchange rates as well as the performance of the underlying company shares. In periods like this year when the greenback is strengthening, that dynamic eats away at returns as the other currency is traded for fewer dollars.
China's Exports Drop Sharply as Global Economy Slows
SINGAPORE-China's exports to the rest of the world shrank unexpectedly in October, a big sign that global trade is in sharp retreat as consumers and businesses cut back spending in response to central banks' aggressive moves to tame inflation.
Exports from China declined 0.3% last month compared with a year earlier, China's General Administration of Customs said Monday, the weakest pace of growth since May 2020, when trade was hobbled by countries' early efforts to contain a worsening global pandemic. That was well below the expectations of economists polled by The Wall Street Journal, who had expected exports to increase 4% year over year.
Frackers Say Oil Production Slowing in the Shale Patch
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11-07-22 0542ET
