The BlackSummit Team | November 18, 2023

Global Market News

Global equities make gains

Global equities made gains this week. The Dow Jones and S&P 500 gained 1.94% and 2.24%, respectively, while the Nasdaq rose 2.37%. The US 10-year Treasury fell several basis points to end the week at 4.44%. The price of a barrel of West Texas Intermediate crude continued its decline to $75.80. Volatility, as measured by the CBOE Volatility Index, decreased to 13.80.

Inflation falls more than expected

Markets rallied this week and the US 10-year Treasury yield fell following good news from the latest inflation report. Inflation came in at 3.2% year-over-year, down from October’s 3.7% reading. The decline was more than expected, increasing expectations of a soft landing for the US economy and prompting many investors to believe the Federal Reserve will begin cutting rates in the first half of 2024.

Updated Market Figures

International Developments

UN Security Council calls for humanitarian pauses in Gaza amid hospital occupation

Israeli forces have taken control of Gaza’s Al-Shifa hospital in a bid to eliminate what Israel describes as a secret Hamas base located there. To bolster its case, Israel has shown video and photographic evidence of weapons stashes in the hospital. Reports suggest that as many as 650 patients are still located in the hospital, with hospital staff barred from leaving. Meanwhile, the UN Security Council has successfully voted in favor of a resolution calling for humanitarian pauses 12 – 0, with the US, UK, and Russia abstaining. This marks a shift in US policy, which has to date blocked any resolution that does not condemn Hamas.

US hosts APEC Summit

The weeklong APEC Summit in San Francisco has come to a close. The summit included 21 Pacific Rim countries and included a CEO summit for major tech and business leaders, as well as a much-vaunted summit between US President Joe Biden and Chinese President Xi Jinping. The overall theme for the conference focused on “creating a resilient and sustainable future for all,” and topics ranged from Artificial Intelligence to opening communications between the US and China.

US Social & Political Developments

Biden meets with Xi

US President Joe Biden and Chinese President Xi Jinping ended their summit in San Francisco with progress being made in the US-Chinese relationship. Of particular note was the resumption of high-level military-to-military contacts, which is considered vital in avoiding military miscalculations between the two great powers, especially as competition heats up in the South China Sea and Taiwan Strait. Additionally, the two leaders agreed to have experts from both sides meet to discuss risk and safety issues inherent in artificial intelligence. 

Congress averts government shutdown

The US Senate has passed a stopgap funding bill to fund the government, with agencies’ funding bifurcated and set to run out either on January 19th or February 2nd, 2024. The Continuing Resolution maintains funding at current levels and includes no policy requirements. The bill passed the House of Representatives with near-unanimous support from Democrats and about half of Republicans, with the Senate approving it 87-11. While initially requested, the bill does not include funding for Ukraine, Israel, or Taiwan, as those bills are set to come separately. 

Corporate/Sector News

Retailers report mixed earnings

Target’s stock (TGT) leaped double digits in percentage Wednesday after a mixed earnings report, which beat expectations even as sales fell 4.6% in the third fiscal quarter. Walmart (WMT), on the other hand, fell 7% Thursday morning after releasing its earnings report that failed to meet expectations. Home Depot (HD) beat forecasts even with slower earnings on weaker sales and rose over 5% on Tuesday. All three retailers, however, had a cautious tone towards the holidays, which may signal that consumers are beginning to pull back on their spending.

UAW workers ratify deal with GM, Ford, and Stellantis

United Auto Workers was able to ratify a deal with its associated unions that it had negotiated with the three large automakers, GM, Ford, and Stellantis. The vote was more contentious than expected, with only 54.7% of the GM union workers supporting the deal, while the Ford and Stellantis unions had 67% supporting. The deal had record economic gains for unionized workers, including 25% pay increases, paths to future union jobs in battery plants, and more.

OpenAI ousts CEO Sam Altman

Friday afternoon, OpenAI – maker of ChatGPT – announced that its high-profile chief executive, Sam Altman, was fired. In a statement from the company’s board of directors, Altman was “not consistently candid in his communications with the board” and the board “no longer has confidence in his ability to continue leading OpenAI.” The announcement came as a surprise to many given the young company’s amazing growth and prominent status in the emergence of AI technologies.