Guardian Weekly Market Report – Issue 139

Reports of Note Due This Week

This week kicks off with the bond market being closed Monday due to the Columbus Day holiday.  On tap this week we have retail sales , housing starts, building permits and homebuilder confidence.

• Monday, Oct 14 – none scheduled.
• Tuesday Oct 15 – At 8:30 A.M.  Empire State manufacturing survey.
• Wednesday Oct 16 – At 8:30 A.M. we see the release of the import price index.
• Thursday Oct 17 – We start the day at 8:30 A.M. with the Weekly Initial Jobless Claims. They are expected to be 245,000 versus last weeks 258,000. Also out is U.S. retail sales. Then out at 9:15 A.M., it’s Philadelphia Fed manufacturing index, industrial production and capacity utilization. 10:00 A.M. brings business inventories and home builder confidence index.
• Friday Oct 18 – At 8:30 A.M. Housing starts and building permits

Geopolitics

Hurricane Milton, after making landfall as a Category 3 storm near Siesta Key, Florida, weakened to a post-tropical cyclone and dissipated late last week.. It’s responsible for at least 17 deaths in Florida, including tornado-related fatalities in St. Lucie County. The storm produced exceptional rainfall in the Tampa Bay area, described as a 1-in-1,000-year event. Nearly 2 million residents remain without power as the state recovers, experts estimating $50 billion in damages. Efforts to aid those affected are ongoing, and national and local organizations are accepting donations for the impacted regions.

China conducted military drills around Taiwan as a warning against perceived separatist activities following statements by Taiwan’s President Lai Ching-te. The drills, named “Joint Sword-2024B,” involved the Chinese army, navy, air force, and rocket force, but did not include live-fire exercises. Taiwan’s government responded by denouncing the drills as irrational and provocative. The exercises are part of a series of responses by China to Taiwan’s stance on independence and sovereignty, with tensions managed by continued communication between the U.S., China, and Taiwan.

The S&P 500 and Dow Jones Industrial Average reached new highs, propelled by strong bank earnings initiating the third-quarter earnings season positively. The broad market rally reflected a more diverse market recovery. Major banks like JPMorgan Chase and Wells Fargo exceeded profit expectations, boosting investor sentiment despite some areas of concern like reduced net interest income. Economic data suggesting easing inflation encouraged hopes of a “soft landing” for the economy, influencing Federal Reserve rate expectations. However, Tesla’s shares fell sharply following a disappointing event.

China’s National Development and Reform Commission, led by Zheng Shanjie, announced actions to boost economic growth but introduced no new major stimulus plans, causing disappointment in the markets. The plans include speeding up bond issuance and a 100 billion yuan investment for next year. While measures to support the property market and domestic spending were pledged, specifics were lacking, leading to a tempered market reaction. Despite this, China remains confident about meeting its growth targets, with additional fiscal support anticipated.