Conflicting jobs data, rising bond yields, and Fed member hawkish speeches have not stopped the market and the talking heads from predicting the Fed’s actions pushed stocks higher last week with high hopes they will be right this time.  China and European economies continue to raise uncertainties as does the changing habits of U.S. consumers as energy, food, & housing prices continue to rise. We have a light week of earnings and economic reports this week so expect anything in price action with a sensitivity to the news cycle.

Asian markets mostly declined overnight as Australia held interest rates with health care and real estate dragged markets down.  European markets trade mixed this morning as the eurozone PMI figures were revised lower changing investor early sentiment.  U.S. futures chop around the flatline facing a light week of data as worldwide economic uncertainty mutes last week’s relief rally follow-through.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include AVAV, CRMT, BRC, GTLB, & ZS.

News & Technicals’

Baidu, the Chinese tech giant and the leader in artificial intelligence (AI), has announced some of its latest achievements and products based on generative AI at an event on Tuesday. Generative AI is a type of AI that can create new content or data from existing ones, such as images, text, audio, or video. One of the products that Baidu showcased was an AI-powered tool that is integrated with its cloud service, which is similar to Google Drive. This tool can help users generate various types of documents, such as resumes, contracts, reports, and summaries, based on their needs and preferences. Baidu said that more than 6 million users have used this tool so far. Another product that Baidu demonstrated was a generative AI-based system that can assist with different scenarios, such as traffic management, financial research, and coal mine logistics. For example, the system can generate optimal traffic plans, financial reports, and coal transportation schedules based on the input data and the objectives. Baidu also mentioned that ChatGPT, a generative AI-powered chatbot developed by OpenAI, a research organization backed by Microsoft, is not officially available in China, where Google and Facebook are banned. ChatGPT is a chatbot that can produce humanlike responses to any input and has gained popularity and controversy around the world.

Mercedes and BMW, two of the most renowned German automakers, have unveiled their new electric vehicle (EV) concepts at the IAA auto show in Munich. The Mercedes-Benz Concept CLA Class and the BMW Vision Neue Klasse are the latest models that showcase the future of EV design and technology from the two brands. These cars are built on entirely new platforms that will support both their EV offerings for the coming years. This is a sign of the most aggressive push into the EV market from Mercedes and BMW, as they aim to compete with Tesla, the current leader in the EV industry. The Mercedes-Benz Concept CLA Class is a sleek and sporty four-door coupe that features a minimalist interior, a large touchscreen, and a high-performance battery. The BMW Vision Neue Klasse is a compact and elegant sedan that combines a spacious cabin, a digital dashboard, and an efficient drivetrain. Both cars are expected to go into production by 2025.

North Korea and Russia are strengthening their military and political ties, as Moscow seeks to acquire more weapons amid the ongoing war in Ukraine. According to the data I found, North Korea and Russia have recently held several meetings and joint exercises, signaling their closer cooperation and mutual support. For example, in August 2023, North Korea’s leader Kim Jong-un met with Russia’s President Vladimir Putin in Vladivostok, where they discussed regional security issues and economic cooperation. In September 2023, North Korea and Russia conducted a joint naval drill in the Sea of Japan, where they practiced anti-submarine warfare and missile defense. These moves indicate that North Korea and Russia are trying to counter the influence and pressure of the United States and its allies in the region, as well as to boost their defense capabilities. North Korea is also hoping to get more economic and humanitarian aid from Russia, as it faces severe sanctions and food shortages. Russia, on the other hand, is looking to expand its arms market and access to North Korea’s natural resources. The growing alliance between North Korea and Russia poses a challenge and a threat to the stability and security of Northeast Asia and beyond.

Stock markets ended slightly higher on Friday, continuing the positive mood of the week that was driven by optimism about the economy and the Fed’s actions. Interest rates also went up, with the 10-year Treasury yield near 4.2%. However, the bond market this week saw a decline in rates from last week’s 2023 highs, as the market expected fewer rate hikes from the Fed. Oil and gold prices rose, while sectors, such as energy, materials, financials, and industrials, led gains. To kick off a short trading week light day of earnings and economic reports with bond yields rising as economic uncertainty weighs on investors. Expect price volatility to continue as traders and investors continue trying to guess the Fed’s next actions despite their year-long poor track record in doing so.

Trade Wisely,

Doug