Global Market News

Global Equities Make Gains

Global equities rose on the week, with the Dow Jones and S&P 500 rising 1.21% and 1.11%, respectively, while the Nasdaq gained 1.13%. The US 10-year Treasury note climbed several basis points to 4.09%. and the price of a barrel of West Texas Intermediate crude oil rose to $75.69 amid uncertainty over whether Israel plans to attack Iranian oil production. Volatility, as measured by the CBOE Volatility Index, was little changed on the week, closing Friday at 20.46

Core inflation rises more than expected

The core consumer price index advanced 0.3% in September and 3.3% from a year ago, rising more than expected. The inflation marker, which excludes food and energy and is thus a preferred indicator for underlying inflation, rose more than forecast. The higher-than-expected inflation data and last week’s robust jobs report have signaled to investors that the Federal Reserve may pursue a more moderate pace of interest rate reductions.

Updated Market Figures

International Developments

Israel Vows Strong Response to Iran as Conflict Escalates in Lebanon and Gaza

Israeli Defense Minister Yoav Gallant promised a “powerful, precise, and surprising” response to Iran’s missile attack, following a 30-minute phone call between US President Joe Biden and Israeli Prime Minister Benjamin Netanyahu, their first conversation in two months. Israel has expanded its ground operations into southern Lebanon, displacing over 1.2 million people, with more than 1,400 killed since the escalation began. Biden urged a “diplomatic arrangement” for displaced Israelis and Lebanese but stopped short of calling for a ceasefire, while Hezbollah has signaled support for a ceasefire in Lebanon. Meanwhile, Gaza saw more violence as Israeli forces were accused of targeting journalists, and the UN warned that its humanitarian operations in Gaza could collapse if Israel’s proposed laws banning the United Nations Relief and Works Agency (UNWRA) are passed.

Deadly Attack by Separatists on Balochistan Coal Mine Claims 20 Lives Amid Security Concerns

On Thursday, gunmen attacked a coal mine in Balochistan, Pakistan, killing 20 miners and injuring seven others, with most victims from Pashtun-speaking areas, and three of the dead being Afghan. The attackers also damaged machinery and fled, raising suspicions of the Baloch Liberation Army (BLA), a separatist group known for targeting civilians and security forces, which recently claimed multiple deadly attacks in August. Prime Minister Shehbaz Sharif and Balochistan’s Chief Minister Sarfraz Bugti condemned the killings, vowing to avenge the laborers and increase security ahead of the Shanghai Cooperation Organization (SCO) summit in Islamabad. The attack occurred shortly after Pakistan and Saudi Arabia signed $2 billion in investment deals, with a focus on mining in Balochistan, a region critical to the China-Pakistan Economic Corridor and China’s Belt and Road Initiative.

Japanese Organization Nihon Hidankyo Wins Nobel Peace Prize for Work to Eradicate Nuclear Weapons

The 2024 Nobel Peace Prize was awarded to Nihon Hidankyo, a Japanese organization of survivors of the Hiroshima and Nagasaki atomic bombings, for its efforts to eradicate nuclear weapons. The Norwegian Nobel Committee, chaired by Jørgen Watne Frydnes, highlighted the group’s role as nuclear weapon threats have risen, citing Russian President Vladimir Putin’s shift in nuclear doctrine. Nihon Hidankyo’s president, Toshiyuki Mimaki, expressed emotional gratitude upon hearing the news, while the award drew parallels to past Nobel winners such as ICAN in 2017 for similar anti-nuclear activism. The prize carries a financial award of 11 million Swedish kronor ($1 million).

US Social & Political Developments

Hurricane Milton Strikes Florida

Hurricane Milton made landfall in Florida earlier this week, causing widespread destruction, including deadly tornadoes and flooding, and leaving at least eight people dead. The storm knocked out power for over 3 million customers and damaged homes, with some areas receiving up to 18 inches of rain. Rescue teams saved hundreds of residents, while state officials, including Governor Ron DeSantis, expressed relief that the damage was not worse. Approximately 80,000 people stayed in shelters, and recovery efforts are ongoing, with damage estimates likely to rise.

Budget Watchdog Finds that Policies Proposed by Harris and Trump Plans Would Increase the National Debt by Trillions

A study by the Committee for a Responsible Federal Budget found that proposals from both Kamala Harris and Donald Trump would significantly increase the national debt over the next decade. Harris’ plan could raise the debt by $3.5 trillion, while Trump’s proposals would add $7.5 trillion. Both campaigns disagreed with the study, with Harris pointing to potential deficit reductions and Trump emphasizing economic growth as a way to offset costs. Major components of their platforms include tax cuts, healthcare reforms, and military spending, but neither candidate has outlined full strategies to finance these proposals or address ballooning debt. US national debt currently exceeds $35 trillion which is more than 100% of GDP.

Corporate/Sector News

Tesla’s Shares Drop 8% after Underwhelming Robotaxi Unveiling

Tesla’s shares dropped by 8%, wiping out $60 billion in value, after the underwhelming unveiling of the self-driving “Cybercab” on October 11th. CEO Elon Musk showcased a driverless van capable of transporting 20 people and claimed it would be in production by 2026 at a price under $30,000, aiming to reshape urban landscapes. However, analysts like Tom Narayan from RBC and Garrett Nelson from CFRA criticized the event for its lack of concrete details, timelines, and financial projections. Investors were also disappointed by the absence of updates on Tesla’s more affordable vehicles and the long-awaited Roadster.

Return of X in Brazil Following the Company’s Compliance with Court Orders

Elon Musk’s X platform was reinstated in Brazil on October 8th after complying with Brazilian Supreme Court Justice Alexandre de Moraes’ demands. The platform had been blocked on August 30th due to a dispute over far-right accounts and misinformation, with Musk publicly criticizing de Moraes. X met requirements such as blocking specific accounts, paying fines, and naming a legal representative, Rachel de Oliveira Villa Nova Conceição. Despite Musk’s initial resistance, X complied to avoid the economic consequences of losing access to its third-largest market, home to an estimated 20-40 million users.

Foxconn to Construct World’s Largest Nvidia Superchip Facility in Mexico Amid AI Boom

Foxconn is building the world’s largest facility for bundling Nvidia’s GB200 superchips in Guadalajara, Mexico, as part of Nvidia’s next-generation Blackwell family computing platform. Foxconn executives, including Senior VP Benjamin Ting, emphasized the strong demand for Nvidia’s Blackwell platform and the company’s readiness for the AI revolution. Nvidia began shipping Blackwell samples in August 2024, expecting billions in revenue from these chips in the fourth quarter. Foxconn, already heavily invested in Mexico with over $500 million in Chihuahua, is also focusing on diversifying into electric vehicle manufacturing alongside its AI server production.

Company Profile: Lazard Inc.

Lazard Faces Rising Competition in Sovereign Debt Restructuring Amidst Global Financial Challenges

Lazard Inc., a 175-year-old financial advisory firm based in New York with deep French roots, has historically dominated sovereign debt restructurings, exemplified by its recent negotiations to restructure Zambia’s $13.4 billion debt, which faced delays due to the influence of China and Wall Street bondholders. The company, led by CEO Peter Orszag since late 2023, aims to double its revenue by 2030 after reporting a $2.52 billion decline in 2023; it is expected to post a $263 million profit for 2024, boosted by a strong first quarter. However, Lazard is encountering intensified competition, notably from former executives who have established rival sovereign advisory teams at firms like Centerview Partners and Houlihan Lokey, which are aggressively pursuing deals in emerging markets. With developing nations currently owing about $28 trillion and facing increased borrowing costs, Lazard’s ability to adapt to this evolving landscape will be crucial for maintaining its leading position in the sector.

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Source: Bloomberg