⚡️Brent Crude Rose Almost 10% Amid Escalation In The Middle East

⏺Brent, the global oil benchmark, traded just below $79 a barrel on Friday, up nearly 10% from the previous Friday on a strong four-day rally. The rise in prices comes as conflict in the Middle East escalates, raising concerns about the stability of supplies from a region that produces a third of the world's oil.

⏺Concerns about disruptions in oil supplies from Iran and through the Strait of Hormuz contributed to Brent's biggest weekly rise since October 2022. Analysts and traders fear that Israel could strike oil infrastructure, and Iran and its allies would retaliate with attacks on energy facilities in the region.

⏺OPEC+ holds more than 5 million barrels per day outside the market, which could be used in case of disruptions. The most significant supply disruption could occur if Iran decides to block tanker traffic through the Strait of Hormuz, through which about a fifth of the world's oil supplies pass.

⏺A complete blockage of the strait could lead to "unmanageable oil prices" of $150 a barrel or higher. This could have a significant impact on the global economy, analysts warn

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☄️Analysts At JPMorgan And BofA Have Changed Their Forecasts For The Fed Rate

⏺Economists at the American banks JPMorgan and Bank of America changed their forecasts for easing the monetary policy of the US Federal Reserve after the published data on the labor market in the country for September.

⏺Analysts at both banks believe that the Fed will cut interest rates by 0.25 percentage points at its next meeting in November, not 0.5 percentage points as they previously expected. Michael Feroli, chief U.S. economist at JPMorgan, and Bank of America economist Aditya Bhave pointed to Friday's jobs report as a boost to temper expectations about the path to rate cuts.

⏺At the end of September, the number of jobs in the non-farm sector increased by 254,000. At the same time, the consensus forecast was at 140,000. Experts believe that these data indicate the stability of the US economy, and a reduction of half a point looks inappropriate.

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☄️EU Will Impose Duties Of Up To 45% On Electric Cars From China

⏺EU member states agreed on Friday to impose tariffs on imports of electric vehicles from China. The decision was the biggest trade dispute between economic superpowers in a decade.

⏺Despite active opposition from Germany and Hungary, the European Commission's proposal to establish anti-subsidy duties of up to 35.3% was supported by the majority of countries. Ten member states voted in favor of the tariffs, five voted against and 12 abstained, two of the sources said.

⏺EU tariffs will be in place for five years and will range from 7.8% for Tesla to 35.3% for SAIC, which owns the MG brand. Chinese automakers have proposed curbing sales and raising prices to avoid tariffs, but the proposal has been rejected by the EU. Brussels said it would continue talks aimed at a negotiated settlement to curb rising imports of Chinese electric vehicles.

⏺China has already retaliated by threatening to impose tariffs on EU brandy imports and has also launched investigations into pork and dairy products.

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⚡️After The US dockers Strike, It Will Take Up To A Week For The Supply Chain To Normalize

⏺Union dockworkers suspended their strike at East Coast and Gulf Coast ports Thursday night, Oct. 3, until mid-January. But it will take some time for the affected ports to return to normal operations due to the problems that have accumulated during the strike.

⏺The International Longshoremen's Association (ILA) and about 45,000 longshore workers went on strike for about three days before reaching a tentative agreement with the United States Maritime Alliance (USMX), which represents the interests of port employers. The deal, which must be ratified by both sides by January 15, includes a 62% wage increase for dockers.

⏺While negotiations are ongoing, port operators and dockworkers will begin the process of clearing the impact of the strike at East Coast and Gulf Coast ports as they work through delayed cargo, which will likely take several weeks before the supply chain returns to normal.

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🗓 Coming Up Next Week

Monday 07.10
⏺China Markets Closed
⏺Eurozone Retail Sales

Tuesday 08.10
⏺US Trade Balance
⏺Germany Industrial Production

Wednesday 09.10
⏺FOMC Minutes

Thursday 10.10
⏺Japan PPI
⏺US CPI
⏺US Initial Jobless Claims
⏺Earnings report - Delta Airlines

Friday 11.10
⏺Germany CPI
⏺US PPI
⏺Earnings report: JPMorgan, Wells Fargo, BlackRock

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⚡️Brent Oil Exceeded $80

⏺Oil prices rose above last week's high on Monday as concerns about conflict in the Middle East mounted. Brent, the global oil benchmark, rose 2.8% to $80.33 a barrel amid Hamas rocket attacks on Israel and Israeli retaliatory strikes on targets in Gaza and Lebanon. Investors fear possible attacks on the region's energy infrastructure, which could disrupt oil supplies, or disruptions in the Strait of Hormuz.

⏺There are signs that hedge funds are starting to rethink their positions, trimming large short bets against Brent and increasing long positions early last week, according to ICE data. However, computer-managed funds that tried to track market trends were still likely betting against oil as of Thursday, according to a model portfolio compiled by Société Générale.

⏺Goldman Sachs analyst Dan Stravin predicts that a six-month supply disruption of about 1 million barrels per day could push Brent prices to $85 if OPEC makes up the shortfall. Without compensation, prices may exceed $90. Investors are concerned about a possible escalation of the conflict between Israel and Iran.

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☄️Saudi Arabia Is Ready To Invest Billions In Hydrogen Production

⏺The country's sovereign wealth fund, led by Crown Prince Mohammed bin Salman, has created Energy Solutions Co. to finance the production of so-called “green” hydrogen. Investment in the new project is expected to be at least $10 billion, and this amount could rise significantly depending on demand for hydrogen. Part of the investment will be carried out jointly with state oil producer Saudi Aramco.

⏺Saudi Arabia is aiming to become one of the world's largest hydrogen producers, wanting to reduce its dependence on oil sales while remaining a global energy supplier. Green hydrogen is made from water and renewable energy and is an attractive solution for countries looking to reduce emissions from energy-intensive industries.

⏺However, green hydrogen remains expensive to produce and the infrastructure to transport it is costly. Saudi Arabia is building one of the world's few large-scale green hydrogen projects, costing $8 billion. Aramco is also interested in producing blue hydrogen using fossil fuels and capturing emissions.

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⚡️Japan Records Highest Number Of Bankruptcies In A Decade

⏺Japan recorded its highest number of bankruptcies since 2013 in February-September this year as the country's companies increasingly struggled due to rising costs.

⏺According to a Teikoku Databank report, about 4,990 firms went bankrupt during the period under review, an increase of 18.6% compared to the same period last year. It is noted that the number of bankrupt firms in Japan has continued to grow since the second half of the fiscal year ending in March 2022.

⏺The sharp rise in bankruptcies partly reflects the impact of high prices, especially for smaller companies. A record 472 of 4,990 firms cited inflation as the main reason for their failure, the report said. What's more, the weak yen has driven up the cost of importing everything from food to energy.

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☄️Chinese Market Plunges 10% After Rally In Absence Of New Stimulus

⏺Chinese stock market crashed in trading on October 8 after a massive rally over the past few weeks. Hang Seng Index (HSI) fell 9.56% to its low of 20,891.98 points. Hang Seng China Enterprises, which includes Chinese shares traded in Hong Kong, fell 10.9% to 7,421.3 points. CSI 300 index began the first day of trading after the holidays with an upward gap of almost 11%, but immediately began to lose ground.

⏺Shares in Chinese stock market suffered a sharp decline today after a recent rally, due to the lack of additional economic stimulus measures from the Chinese government. Over nine trading sessions, up to and including September 30, the CSI 300 index grew by 27.8% and reached 4038.7 points at its peak. Previously, the indicator lost more than 45% from its 2021 maximum to mid-September.

⏺Today's decline Chinese stock market is associated with growing doubts among investors about the government's readiness to further stimulate the economy. This followed a press conference by the National Development and Reform Commission (NDRC) held on October 8. At the press conference, officials confirmed their intentions to increase spending and support low-wage groups of the population, but specific steps to stimulate the economy were not named. This created an atmosphere of uncertainty among investors, who expected more decisive action from the government.

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⚡️S&P Puts Boeing's Rating Under Review

⏺Global ratings agency S&P yesterday placed Boeing on CreditWatch with a negative rating due to a strike by 33,000 of the planemaker's US workers, which is halting production of its best-selling planes. The union, whose members have been on strike for 26 days, is seeking a 40% pay rise over four years and the restoration of a defined benefit pension that was eliminated in the contract a decade ago.

⏺The rating agency estimates Boeing will face cash outflows of about $10 billion in 2024 and will likely require additional financing. S&P's inclusion on CreditWatch reflects the increased likelihood of a rating downgrade if the strike continues, which would increase costs and delay the company's return to aircraft production and cash flow generation.

⏺Last month, all three major ratings , including S&P, warned that a prolonged strike at Boeing's West Coast plants could lead to ratings downgrades, a headache for the heavily indebted planemaker. At the same time, the company itself announced that it was stopping negotiations with the union of striking workers. She also withdrew her salary offer.

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⚡️Fed Suffers Split Over The Level Of Rate Cuts

⏺Federal Reserve Chairman Jerome Powell received some pushback over a half-point rate cut in September, with some officials favoring a smaller quarter-point cut at the meeting. Such information is provided in the Fed minutes.

⏺“Several participants indicated that they would prefer a 25 basis point reduction in the target range at this meeting, and several others indicated that they might support such a decision,” notes the minutes of the Sept. 17-18 meeting. All participants said it would make sense to reduce borrowing costs.

⏺US Federal Reserve cut its benchmark rate by 0.5 percentage points last month, a decisive move to protect economic growth as inflation weakens and risks to the labor market rise. Despite the debate, the minutes noted that a “substantial majority” supported a massive rate cut.

⏺One problem for some officials was that such a large change was inconsistent with their intention to gradually lower interest rates. Although Fed board member Michelle Bowman was the lone dissenting voice against the move, the minutes revealed a deeper rift among officials than the near-unanimous decision suggested. This suggests that Powell has led the committee to take a larger step.

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⚡️Huawei Has Overtaken Apple In China Sales For The First Time In 46 Months

⏺Chinese company, under US sanctions, continues to build on the success of last year's 5G smartphone. That's consistent with findings from government think tank China Academy of Information and Communications Technology, which reported a 12.7% year-on-year decline in smartphone shipments abroad, including Apple's iPhone, in the same month. Those shipments fell to 1.87 million units in August from 2.14 million a year earlier as domestic smartphone shipments rose 26.7% to 24.05 million over the same period.

⏺The competition between Huawei and Apple in the world's biggest smartphone market has taken on new significance as the Shenzhen-based telecom equipment giant experiences a revival in its mobile phone business amid the US tech giant's recent troubles on the mainland.

⏺Strong demand for Huawei's high-end phone models such as the Mate and Pura series, as well as foldable smartphones such as the recently introduced Mate XT, helped push the company's average selling price and wholesale revenue to record highs in the second quarter, according to TechInsights. It said China remains Huawei's main market, accounting for 89% of global smartphone shipments.

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⚡️Canadian Bank TD Bank Will Pay Colossal Fines Worth $3 Billion To US Authorities

⏺Canadian bank TD Bank has pleaded guilty to money laundering and will pay $3 billion in fines. According to the court decision, the US Department of Justice and federal financial regulators will receive money. The bank failed to control money laundering by drug traffickers and other criminals, a judge ruled.

⏺As part of the deal, TD Bank, whose U.S. unit is the 10th largest U.S. bank by assets, is accepting limits on its growth, the Office of the Comptroller of the Currency said Thursday. The combined assets of TD Bank's two U.S. subsidiaries will not exceed $434 billion.

⏺Attorney General Merrick Garland said will monitor the bank's compliance with anti-money laundering practices for three years as part of a settlement with the Justice Department that will receive $1.8 billion due to the bank's guilty plea in federal court

⏺Garland said that over a six-year period ending last October, TD Bank failed to track a staggering $18.3 trillion in customer activity, allowing three money laundering networks to move more than $670 million through bank accounts.

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⚡️BlackRock Hits Record $11.5 Trillion In Assets Amid Market Rally And ETF Surge

⏺BlackRock's assets under management hit a record high for the third quarter in a row, helped by rising inflows into the company's exchange-traded funds and soaring stock gains that have boosted the value of its clients' investments.

⏺Stock markets reversed the August sell-off and extended gains in the third quarter, driven by renewed hopes for a soft landing for the U.S. economy following encouraging inflation data. Broad market equities ended the third quarter higher, with the S&P 500 index up 5.4% and the MSCI Worldwide Stock Index rising 6.2%.

⏺Assets managed by BlackRock rose to $11.48 trillion in the third quarter, up from $9.10 trillion a year earlier and $10.65 trillion in the second quarter. The world's largest asset manager recorded $160 billion in long-term net flows in the third quarter. Total net flows hit a quarterly record of $221.18 billion, up from $2.57 billion a year earlier. Most of the inflows came from ETFs, at $97.41 billion. Meanwhile, clients poured $62.74 billion into BlackRock's fixed income products

⏺With Fed finally beginning its long-awaited easing cycle, asset managers are poised to benefit as huge cash reserves move into riskier assets such as fixed income products.

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⚡️Tesla lost 8% After Disappointing Robotaxi Presentation

⏺Shares of electric car maker Tesla fell after investors were underwhelmed by its long-awaited robotaxi unveiling. Musk unveiled the Tesla Cybercab concept car - a low, silver two-seater without a steering wheel or pedals - on Thursday evening. It is planned that the car will be able to be driven autonomously.

⏺Tesla's boss said the company hopes to produce the Cybercab until 2027, but did not provide details on where the vehicles would be built. Consumers will be able to buy a Tesla Cybercab for less than $30,000, he said. He also expects Tesla to launch "unsupervised" driver assistance (FSD) in Texas and California in its Model 3 and Model Y electric vehicles next year. So far, the technology requires the presence of a human driver behind the wheel, ready to steer or brake at any time.

⏺Following the event, analysts said the announcements failed to highlight any near-term opportunities for Tesla, instead prioritizing Musk's vision for a fully autonomous driving future. It is expected that it will be several more years before self-driving cars become an accepted reality on public roads, as regulators are concerned about the safety features built into such vehicles. Among the few companies that have successfully launched self-driving cars on public roads is Google's Waymo, which has offered its robotaxi service to the general public since June.

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⚡️China Announced New Economic Stimulus, But Has Not Yet Detailed Its Plan

⏺China has announced new stimulus plans, promising to soon introduce a package of additional fiscal policy measures to support economic development. It is reported that the package includes a significant increase in public debt, measures to support consumers, local authorities, subsidies for the poor, recapitalization of banks, measures to stabilize real estate markets.

⏺However, during Saturday's press conference, specific details of the plan and, most importantly, numbers were not yet announced, which is likely to prolong nervousness in the markets in anticipation of a clearer policy roadmap of the Chinese authorities. China's legislature is expected to meet in the coming weeks to approve additional debt issuance.

⏺A wide range of economic data in recent months has fallen short of forecasts, raising fears among economists and investors that the government's goal of growing the economy by about 5% this year is in jeopardy and that a longer-term structural decline could occur. Data for September, due out next week, is expected to show a further decline, but officials said they were "fully confident" the 2024 target would be met.

⏺New fiscal stimulus was the subject of intense speculation in global financial markets after a September meeting of the Communist Party's Central Committee Politburo signaled a heightened sense of economic urgency.

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⚡️AMD Introduced A New Chip That Will Compete With Nvidia's Blackwell

⏺A new development is graphics processing units for data centers, known as GPUs. Production of the Instinct MI325X, as the chip is called, will begin before the end of 2024. If developers and cloud giants view AMD's AI chips as close replacements for Nvidia's products, it could put pricing pressure on the latter, whose GPUs were in high demand last year.

⏺Advanced generative AI such as OpenAI's ChatGPT requires huge data centers equipped with GPUs to perform the necessary processing, which has led to increased demand for AI chips from more companies.

⏺Nvidia has dominated most of the data center GPU markets over the past few years, but AMD has historically been in second place. Now AMD is aiming to ta inke share from its Silicon Valley rival, or at least grab a larger slice of a market it says will be worth $500 billion by 2028.

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⚡️Hedge Funds Are Taking Off Bets Against Brent At The Fastest Pace In 8 Years

⏺Hedge funds were removing bearish bets against Brent crude prices at the fastest pace in nearly eight years as risks of war in the Middle East increased. Money managers cut short bets against Brent by 47,977 lots to 91,222, according to ICE Futures Europe. which was the largest reduction since December 2016.

⏺Israel has not yet decided how to respond to Iran's missile attack last week, according to an official familiar with the situation. Although US President Joe Biden has spoken out against an attack on energy facilities in Iran, the possibility has investors nervous and wary of betting against futures prices.

⏺Overall, speculators increased their bullish bets on Brent and WTI crude oil by 117,227 combined net long positions to 263,135, weekly ICE and CFTC futures and options data showed. This is the most optimistic indicator in 10 weeks. Meanwhile, money managers also increased their Nymex gasoline bets by 13,702 net long positions to 39,464 lots, the most bullish in 20 weeks, CFTC futures and options data showed.

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⚡️China's Deflation Problems Are Getting Worse

⏺China's deflationary problems worsened further in September, with consumer prices remaining weak and factory prices continuing to fall. The consumer price index rose 0.4% from a year earlier, although it was only above zero because of a jump in the price of fresh vegetables. Core consumer price index rose 0.1% in September, the weakest since February 2021, while producer prices fell for the 24th straight month.

⏺The figures highlight weakness in domestic demand before policymakers rolled out a slew of stimulus measures in late September to revive the economy. China is facing its longest period of deflation since the 1990s, with economy-wide price headlines falling for five straight quarters through June - a period that is likely to continue until September.

⏺Beijing has cut interest rates and increased support for real estate and equity markets since late September. The Treasury Department on Saturday promised more aid for the troubled real estate sector and debt-ridden local governments. It is expected that through the effective implementation of existing and the launch of new support measures, the confidence and expectations of consumers and manufacturers will increase, and market demand will gradually recover

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⚡️LVMH Investors Are Worried About Weak Demand From Chinese Buyers For Luxury Bags

⏺Investors are eagerly awaiting signs that China's new fiscal stimulus may finally lift wealthy and middle-class Chinese shoppers out of their funk, inspiring them to buy $4,300 designer leather handbags ahead of Singles' Day, China's biggest shopping holiday.

⏺Consulting firm Bain previously said global sales of luxury personal goods, including clothing, accessories and beauty products, would grow 4% this year compared with the same period last year, on a flat basis. The global downturn is most pronounced in China as economic uncertainty weighs on middle-class buyers and makes those who can still afford luxury wary of ostentation.

⏺Mistrust among Chinese buyers persists following the downturn in the country's property market. If confidence returns, even slightly, spending on luxury goods in China could become quite significant again. Let us remind you that the world leader in luxury LVMH has in its portfolio brands such as Louis Vuitton, Dior, Tiffany & Co and Sephora.

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🗓 KEY EARNINGS THIS WEEK

Since the beginning of this season, companies from the SP500 have so far reported earnings growth of an average of 4.1% for 3Q 2024, which is still higher than analysts' forecasts

Tuesday 15.10
⏺Bank of America, Citigroup, UnitedHealth, Goldman Sachs, Johnson&Johnson, Charles Schwab, Interactive Brokers

Wednesday 16.10
⏺Alcoa, Morgan Stanley, CSX

Thursday 17.10
⏺Netflix, Infosys, Interactive Surgical

Friday 18.10
⏺American Express, Proctor&Gamble

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