Global News
44 Billion USD Exits Bank of America, Morgan Stanley and BNY Mellon in Three Months As Deposit Flight Refuses to Relent.
The three US financial titans just witnessed the flight of deposits in excess of $44 billion in a single quarter.
According
to Bank of America’s most recent quarterly earnings press release, the
lender’s average deposits fell by $26.2 billion in three months.
Meanwhile, BNY Mellon and Morgan Stanley depositors pulled out
approximately $15 billion and $3 billion, respectively, in the last
quarter.
Amid the decrease in deposits, JPMorgan, Wells Fargo and
Citigroup are reportedly shelling out billions of dollars to keep
customers from moving their funds. The Wall Street Journal reports
JPMorgan and Wells Fargo paid approximately $21 billion and $9 billion
in interest expense in Q3, respectively.
Source:
https://dailyhodl.com/2023/10/22/44354000000-exits-bank-of-america-morgan-stanley-and-bny-mellon-in-three-months-as-deposit-flight-refuses-to-relent/
Israel rejects calls for ceasefire and says UN chief Guterres should resign.
World leaders gathered to debate whether to support a temporary
ceasefire to enable the release of Hamas’ remaining 200 hostages and
allow more humanitarian aid into Gaza.
Mr Guterres said:
“The Palestinian people have been subjected to 56 years of suffocating occupation,”
“But
the grievances of the Palestinian people cannot justify the appalling
attacks by Hamas. And those appalling attacks cannot justify the
collective punishment of the Palestinian people.’
Israeli
ambassador Mr Erdan said the UN chief’s comments showed that he was
“completely disconnected from the reality in our region”.
“The UN
Secretary General, who shows understanding for the campaign of mass
murder of children, women, and the elderly, is not fit to lead the UN,”
Mr Erdan said.
Israel has so far rejected calls for a ceasefire,
as it continues to insist it is preparing to ‘wipe out’ Hamas in a
ground invasion after a terrorist attack killed 1400 Israelis earlier
this month.
Source: https://www.lbc.co.uk/news/un-chief-called-resign-israel-rejects-ceasefire-palestine-gaza-hamas/
Economics
The HCOB Eurozone Manufacturing PMI fell to 43 in October 2023, the
lowest in three months and missing market expectations. New orders
received fell sharply, backlogs of orders were depleted and firms
reduced employment for a fifth consecutive month and at the sharpest
rate since August 2020. Input prices were down, although the rate of
decline eased for a third month in a row. Looking ahead, confidence
about output levels in the year-ahead deteriorated.
Services PMI
fell to 47.8, pointing to the third consecutive month of contracting
service sector activity and the biggest slump since February 2021. These
declines show a cooling of the post pandemic surge in spending on
travel and recreation.
Sources:
https://tradingeconomics.com/euro-area/manufacturing-pmi
https://tradingeconomics.com/euro-area/services-pmi
The European Central Bank kept interest rates unchanged at its
October meeting, reflecting a more cautious wait-and-see stance among
policymakers, influenced by the gradual easing of price pressures and
concerns about an impending recession.
This decision follows a
series of ten consecutive rate increases since July 2022, which elevated
the main refinancing operations rate to a 22-year high of 4.5% and the
deposit facility rate to an all-time record of 4%.
The central
bank also stated its determination to ensure that inflation returns to
its 2% target over the medium term, saying it will maintain interest
rates at these elevated levels for a sufficiently extended period until
it achieves that objective.
Source: https://tradingeconomics.com/euro-area/interest-rate
The US economy expanded at an annualized rate of 4.9% in the third
quarter of 2023, the most since the last quarter of 2021, and above
market forecasts. Consumer spending rose 4%, led by consumption of
housing and utilities, health care, financial services, insurance, food
services, accommodation and nondurable goods.
Source: https://tradingeconomics.com/united-states/gdp-growth
The number of Americans filing for unemployment benefits rose by
10000 to 210000 on the week ending October 21st, slightly above market
expectations.
Initial jobless claims remained relatively close to
the nine-month low from the previous week, sustaining the perception
that the US labor market is at historically tight levels.
Source: https://tradingeconomics.com/united-states/jobless-claims
The personal consumption expenditure price index, in the US, rose
0.4% month-over-month in September 2023, the same as in August and above
market forecasts of 0.3%. The annual PCE rate was 3.4%, in line with
forecasts.
Meanwhile, annual core PCE inflation which excludes food and energy, slowed to 3.7%, the lowest reading since May 2021.
PCE
inflation is the Fed’s preferred inflation metric, and September
figures showed that inflationary pressures continue to slowly moderate
although the rates remain above the central bank target of 2%.
Is the FED able to control inflation without crashing the economy? Let’s wait and see…
Source: https://tradingeconomics.com/united-states/pce-price-index-monthly-change
Financial Markets
Week-on-week, the main stock market
indices are down, with the S&P500 losing 2.5%, the NASDAQ 100 down
2.6%,
and the RUSSEL 2000 2.6% in the red. Gold is up by 1.3%, now above 2000$ per ounce, and silver lost 1.1%. The barrel of WTI is down 3.6% and is now around 85$ per barrel.
Bitcoin rised 14% and is now around ~34200$.
The relative
strength of the US dollar rised 0.4% and seems stable. US
bond yields moderated slightly, now sitting at 4.84% for the 10-year and 5.02% for the 30-year.
The US bond yield curve remains inverted and is now peaking at 5.55% in 6
months from now.
Opinion Section
Despite the relative strength of the US dollar and bond market yields being steady this week, the stock market remains bearish. The earnings season results are mixed. Financial conditions are not easing at the same rate as in previous months, and seem to be stabilizing. As financial conditions get tighter, the need for liquidity will put negative pressure on stock markets and may lead to further bond market selloffs. This will occur over the course of months, and short term bounces should not be confused with new bull markets in either stocks or bonds. Have a nice weekend.
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