• News: UK unemployment data(Clairmont Count) at 2 AM EST
• Earnings: BAC,GS, Citi, PNC, STT and SCHW. UNH and JNJ

FX Markets:

• UK jobs number was a mixed bag where people claiming jobless benefits was 27.9K vs 20.2K but unemployment rate was 4% vs 4.1%. BOE was the one of the first central banks to cut interest rates post covid among all central banks back in August but they kept it unchanged for the next BOE meeting(9/19 at 5%). GBP/USD was howering around the recent lows at 1.30 after Governor Baileys comments that they will be more activist in cutting depending on Inflation and Jobs data. The jobs number pushed it back to it recent highs of 1.31. Next BOE meeting(11/7) similar to Fed. UK Core CPI data tomorrow at 2 AM EST.
• EUR/USD broke the 1.09 level around noon today and has been below 1.09 most of the time even till Asia Open post that. It has been in a tight range of 1.09 to 1.0935 but breaking the 1.09 level pushes it to the the lows post the Yen carry trade spillover(Aug 2nd).
• USD/JPY has found a tight range in 148.75 and 149.5 over the last week where breaking the 150 level has been difficult and has not been breached as of now.
• Overall the ranges for all the G10 currency pairs has been fairly tight even with the US CPI and PPI last week. The retail sales number on Thursday(10/17) alongside the US Equity earnings might give a directional trend before the US election in Novemeber, otherwise I expect the market to remain range bound till Nov 5^th(Election Day) and Nov 7^th(Fed Meeting)

US Equity Markets:

• All the Bank Earnings were a big surprise on the upside with the Interest Earnings and IB fees being the top performing group across banks. Post earnings, all the Banks stocks were up 2-3%.
• The oil prices fell after the media report suggested that Israel will not attack Iran Oil targets. The engegy stocks fell on that as well.
• The semi-conductos stocks fell today because of ASML cutting its revenue forecast because of weak non AI-chip demand. And also, Biden administrator was discussing about capping the sale of advanced AI chips to some countries.
• Around 10:00 when SPX was at the all time highs, there was a sharp drawdown which can be seen from the large trade imbalance at that time. Flow felt like that of investors taking profit in Financial companies post earnings and also entering in Utilities and Consumer stocks. This could be a key sign to the end of Bull Market and investors going into defensive stocks. Even on such great earnings, market found it difficult to sustain the highs so even a small earnings miss in the big tech stock could lead to a significant drawdown. Around the same time there was also the drawdown in the European Equity markets.

Macro View: I have a strong bearish view on the market primarily because I don’t think the companies have grown significantly this year. If we look at the Job numbers, they have been mostly been a miss all year and none of the big companies have made any significant investments in hiring new people which indicates that companies might not have invested in any new projects recently. All the companies have been very cautious in handling their balance sheet after 2023 not knowing the direction of inflation and fed cuts. The GDP growth numbers we are seeing which have been really good might be from the projects undertaken in last couple of years and not from the more recent undertakings. Even the US PPI number was mixed last week which also adds the scenario of higher inflation which could also lead to the drawdown.

Tomorrow: UK Core CPI at 2 AM, MS earnings before market open.

Sources: Marketwatch(https://www.marketwatch.com/), Reuters(https://www.reuters.com/), finviz(https://finviz.com/)