December 3rd Market Overview

Happy Tuesday everyone.

After yesterday's session, the market is taking a flat breather. Wall Street is processing the latest economic data.

Yesterday's manufacturing numbers looked good and they didn't raise inflation. 

This is exactly what the soft landing narrative needs. Traders are watching South Korea and digesting news of China's new export controls - they are complicating year-end market dynamics.

Let's dig in...

Executive Summary

• Job openings exceeded expectations at 7.74M in October, signaling persistent labor market resilience
  

• Manufacturing sector shows surprising strength with ISM at 48.1, while prices ease to 50.3
  

• Markets pricing in 73% probability of December Fed rate cut
  

• Bank of America and JPMorgan issue bullish 2025 forecasts, with SPX targets of 6,666 and 6,500 respectively

Market Overview

All major indices posting solid gains today.

Key Market Drivers

1. Economic Data Boost: ISM Manufacturing beat expectations at 48.1 vs 47.0 forecast, while manufacturing prices cooled to 50.3 vs 55.2 expected
   

2. Labor Market Strength: Job Openings and Labor Turnover Survey shows 7.74M job openings in October, surpassing 7.5M consensus
   

3. Fed Watch: After Fed Governor Waller’s comments, markets expect a December rate cut.
   

4. Geopolitical Tension: Worries grow over South Korea’s martial law and China’s export controls.

Stock Spotlight

• $BLK ▲ 2% will expand into private credit. It will buy HPS Investment Partners for $12B, adding $148B in client assets
  

• $T ▲ 4% unveils ambitious growth strategy targeting $16B+ free cash flow by 2025, plans $40B shareholder returns through 2027
  

• $CRDO ▲ 33% surges on strong earnings, receives a double upgrade from BofA with PT raised to $80
  

• $X ▼ 8.6% drops after Trump pledges to block Nippon Steel acquisition bid
  

• $HON revises 2024 outlook downward amid $17B Bombardier collaboration, adjusting EPS forecast to $9.68-$9.78

Big Name Updates

• $AAPL faces dual headlines: UK class action over App Store fees while showing 15% YoY revenue growth in first 64 days of Q1
  

• $MSFT confronts $1.27B UK lawsuit over cloud service pricing practices
  

• $TSLA deals with Delaware court rejection of Musk’s $56B compensation package; reports 15.5% MoM increase in China deliveries
  

• $PLTR secures crucial FedRAMP High authorization for Federal Cloud Service

Other Notable Company News

• $JOBY receives key FAA approval for Flight Academy
  

• $AXON upgraded by Morgan Stanley, PT raised to $700 on durable growth
  

• $MCHP cuts Q4 outlook, announces Tempe plant closure
  

• $ASML maintains 2024/2025 outlook despite US chip control measures

Sector Watch

Bond Market

Treasury yields show mixed movement with the 10-year at 4.228% and 2-year at 4.182%. Markets digest labor data while positioning for potential December Fed action.

Bond traders note October’s job openings have settled into a range around 7.5M, supporting the soft landing narrative.

Policy Watch

• Fed Governor Waller leans toward December rate cut support, though maintains data dependency
  

• Trump announces plans for 100% tariffs on BRICS nations if they pursue dollar alternatives.
  
  *BRICS is an intergovernmental organization comprising nine countries – Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates.
  

• China schedules central economic conference for December 11-12
  

• France schedules government confidence vote for Wednesday

What to Watch

1. November Jobs Report (Friday): Critical for Fed rate decision pathway
   

   • Market expects 214,000 payrolls

   • Unemployment rate forecast at 4.2%

   • Key influence on December Fed meeting
     

2. Fed Chair Powell Speech (Wednesday):

   • May provide clarity on rate cut timing

   • Could address recent economic data

   • Market reaction could influence near-term trading
     

3. China’s Economic Conference (Dec 11-12):

   • Policy response to property sector challenges

   • Potential new stimulus measures

   • Impact on global growth outlook

   
   
   Thanks for reading 🙂
   
   PS - Share this article with your friends if they are worried about a crash
   (I’m always worried about a crash)
   
   - John