Insights Before The Bell | Michael Wilson Warns of Overvalued Q4 Stock Rally in US; Chevron Australia LNG Staff Approve Pay Deal

United Sts Brent Oil Fd Lp Unit +0.47% Post
Proshares Trust Ii Ultra Bloomberg Crude Oil(Post Rev Splt) +0.88% Post
Chevron Corporation -0.02% Post
HSBC Holdings plc Sponsored ADR +1.30% Post
FARADAY FUTURE INTELLIGENT ELEC INC +8.84% Post

United Sts Brent Oil Fd Lp Unit

BNO

29.98

29.98

+0.47%

0.00% Post

Proshares Trust Ii Ultra Bloomberg Crude Oil(Post Rev Splt)

UCO

29.72

29.74

+0.88%

+0.07% Post

Chevron Corporation

CVX

155.41

155.40

-0.02%

-0.01% Post

HSBC Holdings plc Sponsored ADR

HSBC

37.70

37.71

+1.30%

+0.01% Post

FARADAY FUTURE INTELLIGENT ELEC INC

FFIE

0.08

0.08

+8.84%

-0.50% Post

Key Takeaways

1. Michael Wilson Warns of Overvalued Q4 Stock Rally;

2. Federal Reserve's Nov 1 Decision Under Market Spotlight;

3. Chevron Australia LNG Staff Approve Pay Deal;

4. Toyota's Global Production and Sales Reach Record High in First Half of Fiscal Year;

5. Progress in the US Automotive Strike;

6. SoFi Soars More Than 8% Premarket with Massive Revenue Beat

I. Market Report

U.S. stock futures rose on Monday as traders braced for a big of a big week filled with a Federal Reserve rate decision, jobs report and Apple’s earnings report.

As of 08:30 am, EST (15:30 AST in Saudi Arabia), S&P 500 futures added 0.57%, while Nasdaq-100 futures gained 0.69%. Dow Jones Industrial Average futures were up 180 points, or 0.55%.

Oil prices declined as Israel's actions in the Gaza Strip have not yet triggered significant military retaliation from Iran, easing concerns about disruptions in regional crude supplies. In the U.S., oil stockpiles at Cushing, Oklahoma are near their lowest since 2014, while an excess of gasoline has accumulated along the Gulf Coast. The WTI's prompt spread, a market metric, indicates less tight conditions at 74 cents a barrel in backwardation, despite still being in a bullish pattern. This is close to last week's lows and less than before the Middle East conflict escalated.

As of 08:19 EST (15:19 AST in Saudi Arabia), United Sts Brent Oil Fd Lp Unit(BNO.US) traded at $31.44. Proshares Trust Ii Ultra Bloomberg Crude Oil(Post Rev Splt)(UCO.US) dropped by 1.38% to $33.68.

II. Flash Headlines

Earnings Beat Consensus Amid Fed's Interest Hikes

This earnings season has seen strong performances from major companies like Microsoft and Coca Cola. According to EvercoreISI data, of the 235 S&P 500 companies that reported Q3 results, sales grew by 5.1% and earnings expanded by 14.5%, beating consensus by 0.6% and 8.9% respectively. However, underlying financial stress is growing due to the Federal Reserve's 11 interest rate hikes since March 2022, affecting various business aspects, adding pressure to cut costs.

Michael Wilson Warns of Overvalued Q4 Stock Rally

Morgan Stanley's Michael Wilson has lowered expectations for a Q4 stock rally, citing concerns like falling earnings revisions and declining consumer and business confidence. Wilson, recently named the best portfolio strategist by Institutional Investor, has been bearish on equities due to higher-for-longer interest rates. The S&P 500 entered a technical correction last Friday, closing 10% below a recent peak. Wilson warns that even in a well-performing economy, profit expectations for Q4 and 2024 are too high. He notes the market is increasingly concerned about growth as the impact of Federal Reserve tightening begins to be felt.

Federal Reserve's Nov 1 Decision Under Market Spotlight

Geopolitical issues and a rise in Treasury yields have led to a 10% decline in the S&P 500 from its July high. The ten-year note yield stood at 4.87% on Monday at 6:41 am ET. With the U.S. Treasury likely to increase the size of auctions in Q4, further yield increases may pressure stocks. Although inflation is easing, the Federal Reserve is expected to keep rates unchanged on Nov. 1, with certain economic sectors showing resilience, raising questions on the Fed's long-term rate plans. Market focus is now on upcoming U.S. economic data, including October's non-farm payrolls.

source from: FedWatch Tool

U.S. set to announce IPEF initiatives at the APEC meeting, Katherine Tai says

U.S. Trade Representative Katherine Tai announced that new initiatives under the Indo-Pacific Economic Framework (IPEF) will be unveiled in November. Speaking on the sidelines of the G7 trade ministers' meeting in Osaka, Tai emphasized the importance of cooperation on sustainability, resilience, and inclusivity amid economic challenges. She also stressed the urgency, stating that long trade negotiations could not be afforded. The IPEF, launched in May last year by President Joe Biden, serves as the U.S.'s primary economic strategy in Asia.

WTO chief warns global growth will be impacted if Israel-Hamas conflict spreads

The World Trade Organization's director-general, Ngozi Okonjo-Iweala, warned that the ongoing Israel-Hamas conflict could impact global growth if it expands into the broader Middle East. Speaking to CNBC's Martin Soong, she noted that the Middle East is a significant source of the world's natural gas and oil. An escalating conflict could exacerbate already grim trade growth, she added.

III. Stocks To Watch

Majority of Employees at Chevron's Australian LNG Plant Vote in Favor of Pay Agreement

Chevron Corporation(CVX.US) announced on Monday that the majority of employees at its Gorgon and Wheatstone liquefied natural gas export facilities in Australia have voted in favor of a compensation agreement. Earlier this month, the union had suspended plans for a strike at Chevron's LNG plant after agreeing to a settlement on wages and working conditions.

HSBC's Third Quarter Profits Soar, Announces $3 Billion Share Buyback

HSBC Holdings plc Sponsored ADR(HSBC.US) reported on Monday that it achieved a net profit of $6.26 billion in the third quarter of this year, a 235% increase compared to $2.66 billion in the same period last year. Pre-tax profits rose by $4.5 billion to $7.7 billion, primarily due to the higher interest rate environment. Additionally, HSBC announced a share buyback of $3 billion.

Shein Announces Acquisition of British Women's Fashion Brand Misguided

Chinese cross-border e-commerce giant Shein announced on Monday that it will acquire the internet women's fashion brand Misguided, based in Manchester, England, from the UK fashion retail giant Fraser Group. Shein stated that Misguided's products will be offered as an independent brand through Shein's website and Misguided's website, reaching Shein's 150 million global users.

Faraday Future Announces Monthly Delivery Plan, Starting from Late November, Ramping up to Two Vehicles per Week

According to an announcement from the official FARADAY FUTURE INTELLIGENT ELEC INC(FFIE.US) WeChat account on October 30th, Faraday Future revealed its plan to deliver five FF 91 2.0 Futurist Alliance vehicles in November as part of its ongoing "Delivery Co-creation Day" program. The company plans to increase the weekly delivery volume to two vehicles starting from the last week of November. Prior to this, Faraday Future had delivered FF 91 2.0 Futurist Alliance vehicles to well-known users, including Le Mans 24-hour race champion and renowned racing host, Justin Bell.

Progress in the US Automotive Strike: UAW Leaders Approve Ford Contract, General Motors Negotiations Still Deadlocked

Leaders of the United Automobile Workers (UAW) approved a new tentative contract agreement with Ford Motor Company(F.US) on Sunday, which includes $8.1 billion in new factory investments. However, negotiations with General Motors Company(GM.US) are still ongoing, with no agreement reached yet.

Toyota's Global Production and Sales Reach Record High in First Half of Fiscal Year

Toyota Motor Corp. Sponsored ADR(TM.US) announced on Monday that its global sales in the first half of the fiscal year, ending in September, increased by 8.3% compared to the same period last year, reaching a record high of 5,596,183 vehicles. However, in the Chinese market, Toyota's sales in the first half of the fiscal year grew by less than 1%, as local buyers shifted towards electric vehicles.

SoFi Soars More Than 8% Premarket with Massive Revenue Beat

SOFI TECHNOLOGIES INC(SOFI.US)'s shares jumped more than 8% premarket today after SoFi came out with a massive revenue beat for the third quarter and raised its outlook for the full year. The financial services provider posted $531 million in revenue, while analysts expected $512.1 million, according to estimates from LSEG. Revenue was boosted by higher-than-expected student loan originations for the quarter, according to the company’s earnings release.

IV. Upcoming Events

Economic Calendar

DateMarketEventsPrevious
Mon
Oct 30
USDallas Fed Mfg Business Index (Oct)-18.1
Tues
Oct 31
KSAGDP - Flash Estimate Q3/20231.20%
KSANational Accounts 2022-
KSAM3 Money Supply (YoY)9.60%
KSAPrivate Sector Loans (YoY) 9.50%
USCB Consumer Confidence (Oct)103
USAPI Weekly Crude Oil Stock-2.668M

Earnings Calendar

DateMarketCompany
Mon
Oct 30
USMcDonald's Corporation(MCD.US)
USBYD COMPANY LIMITED(BYDDF.US)
USArista Networks, Inc.(ANET.US)
Tues
Oct 31
KSANational Medical Care Co.(4005.SA) 
KSAAbdullah Saad Mohammed Abo Moati for Bookstores Co.(4191.SA) 
KSAMobile Telecommunication Company Saudi Arabia(7030.SA) 
KSAAbdulmohsen Alhokair Group for Tourism and Development(1820.SA) 
KSASaudi Pharmaceutical Industries and Medical Appliances Corp.(2070.SA) 
KSASouthern Province Cement Co.(3050.SA) 
KSASaudi Cement Co.(3030.SA) 

[This newsletter is written and edited by Bruce from Sahm News Team]

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