Oil & Gas: Still Mostly Bearish Prospects

FxPro

Commodity

Energy

Economic

Summary:

Among the longer-term factors, the upward trend in US oil inventories has continued.

Crude Oil

The price of a barrel of crude oil has fallen 1.6% since the start of Monday, bringing the decline over the last two trading sessions to 4%. Pressures on the oil price include signals from the ceasefire talks between Israel and Lebanon (reducing supply risks) and disappointment over the size of China’s stimulus package (revising expected demand).

Oil & Gas: Still Mostly Bearish Prospects_1

Among the longer-term factors, the upward trend in US oil inventories has continued. The strategic reserve has increased by 1.4 million barrels, maintaining the pace in recent weeks and accelerating from the average rate of 750k barrels per week since the beginning of the year. The acceleration appears to be driven by lower prices, which also help to provide soft support.

Commercial inventories have been on an upward trend since the end of September, with oil producers adding at a record pace of 13.5 mb/d over the past four weeks. However, the current level of commercial inventories (427.7 mb/d) is at the lower end of the range of the past 5 years, and this factor is unlikely to seriously worry the markets as long as inventories remain below 500 mb/d.

The markets expect the Republican party’s political dominance to favour oil producers. However, we doubt this will lead to an increase in production. Instead, the focus will be on optimising profits (with equal emphasis on price and volume) and reducing subsidies for alternative energy sources.

Oil & Gas: Still Mostly Bearish Prospects_2

A Republican administration may step up purchases of oil reserves after January, but that’s still more than two months away.

Technically, oil continues to be dominated by the bears, with a sharp reversal below the 50-week moving average in early October and trading near the lower end of its range over the past three years. The price also closed below its 50-day moving average last week and is now actively declining after falling below $69/bbl WTI. We will be watching the price dynamics and OPEC+ comments with interest in the event of a pullback to $65-66, as this would take Brent back to $70-71, which looks like an informal floor for the major cartel members.

Natural Gas

On Monday, the US Natural Gas price rose more than 5% since the start of the day due to the temporary shutdown of 16% of gas production capacity in the Gulf of Mexico.

Oil & Gas: Still Mostly Bearish Prospects_3

This doesn’t seem to be a problem for the US now, with the latest data showing the highest gas inventories in 4 years and close to historical highs for the index.

The price has returned to the $3.0 area – highs in just under two weeks. The $3.0-$3.20 area has acted as pivot resistance more than once this year, and it will be interesting to see if this pattern continues. Given the inventory levels and dynamics of oil, a new downtrend is more likely for now. In the case of gas, however, a break of resistance could trigger a dramatic rise.

Oil & Gas: Still Mostly Bearish Prospects_4

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Risk Warnings and Disclaimers

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Glendon

Economic

The global economy is constantly evolving, shaped by trade, innovation, natural resources, and policy. The world’s top economies are leaders in global GDP, reflecting their productivity, industrial strength, and influence in global markets. Here’s a comprehensive look at the top 25 economies as of the latest data, highlighting their economic output, main industries, and contributions to global economic dynamics.

1. United States

GDP: ~$26 trillion

The U.S. remains the world’s largest economy, leading in sectors such as technology, finance, and healthcare. Silicon Valley drives tech innovation, and Wall Street remains a global financial center.

2. China

GDP: ~$18 trillion

China’s rapid growth has propelled it to the world’s second-largest economy, with strengths in manufacturing, technology, and e-commerce. China’s "Belt and Road Initiative" exemplifies its expanding global influence.

3. Japan

GDP: ~$5 trillion

Known for its automobile and electronics industries, Japan has a highly developed economy and is a leader in robotics and precision technology. Companies like Toyota and Sony are globally renowned.

4. Germany

GDP: ~$4.5 trillion

As Europe’s largest economy, Germany excels in manufacturing and engineering, especially in the automotive and machinery sectors, with brands like BMW and Siemens.

5. India

GDP: ~$3.5 trillion

India’s economy is fast-growing, with a large workforce driving IT services, agriculture, and manufacturing. Initiatives like “Make in India” aim to bolster industrial growth further.

6. United Kingdom

GDP: ~$3.3 trillion

The U.K. is a financial powerhouse with a strong services sector, particularly in banking, insurance, and real estate. London remains one of the world’s leading financial hubs.

7. France

GDP: ~$3 trillion

France’s economy benefits from luxury goods, tourism, and high technology. Paris is a cultural and business center, with companies like LVMH and Airbus headquartered here.

8. Italy

GDP: ~$2.2 trillion

Italy is known for fashion, automotive, and luxury goods, with brands like Ferrari and Gucci. The tourism sector also plays a significant role in its economy.

9. Canada

GDP: ~$2.1 trillion

Canada’s economy is resource-rich, with exports in oil, minerals, and lumber. The country also has a growing tech and services sector, especially in cities like Toronto and Vancouver.

10. South Korea

GDP: ~$1.9 trillion

South Korea is a tech and manufacturing giant, with companies like Samsung and Hyundai. Its economy is also driven by shipbuilding, chemicals, and entertainment.

11. Russia

GDP: ~$1.8 trillion

Russia has significant natural resources, especially oil and gas. The energy sector dominates its economy, though recent diversification efforts target technology and agriculture.

12. Brazil

GDP: ~$1.7 trillion

Brazil is the largest economy in Latin America, with strong agricultural and natural resource sectors, and significant exports in coffee, soybeans, and iron ore.

13. Australia

GDP: ~$1.6 trillion

Australia’s economy benefits from abundant mineral resources and is a major exporter of iron ore, coal, and natural gas. The country also has a growing services sector.

14. Spain

GDP: ~$1.5 trillion

Spain’s economy relies on tourism, manufacturing, and agriculture. Its sunny climate and vibrant culture attract millions of tourists annually, contributing significantly to GDP.

15. Mexico

GDP: ~$1.3 trillion

Mexico’s economy is closely tied to the U.S. due to trade agreements. It has a robust manufacturing sector, particularly in automotive and electronics.

16. Indonesia

GDP: ~$1.2 trillion

Indonesia’s economy is driven by natural resources like oil, gas, and palm oil. The country is also experiencing rapid growth in digital industries.

17. Netherlands

GDP: ~$1.1 trillion

The Netherlands has a highly developed economy with a strong focus on trade, agriculture, and technology. It’s known for its innovative agricultural techniques.

18. Saudi Arabia

GDP: ~$1 trillion

Saudi Arabia’s economy is heavily reliant on oil exports. However, its "Vision 2030" plan aims to diversify the economy into tourism, technology, and renewable energy.

19. Turkey

GDP: ~$900 billion

Turkey’s economy is diverse, with contributions from agriculture, automotive, textiles, and construction. It also has a rapidly growing digital economy.

20. Switzerland

GDP: ~$800 billion

Switzerland is known for banking, pharmaceuticals, and precision manufacturing. Its high standard of living and stable economy make it a global financial hub.

21. Taiwan

GDP: ~$750 billion

Taiwan is a leader in semiconductor manufacturing, with companies like TSMC. Its economy is also supported by electronics and technology.

22. Poland

GDP: ~$700 billion

Poland has a growing economy, with strengths in manufacturing, IT services, and agriculture. EU membership has boosted trade and investment.

23. Thailand

GDP: ~$650 billion

Tourism and manufacturing, especially electronics and automotive parts, drive Thailand’s economy. It’s a popular destination for travelers worldwide.

24. Sweden

GDP: ~$600 billion

Sweden’s economy is highly developed, with key industries in manufacturing, technology, and green energy. Stockholm is a growing hub for tech startups.

25. Belgium

GDP: ~$550 billion

Belgium has a strong economy based on trade, pharmaceuticals, and logistics, with a strategic location in the heart of Europe.

Conclusion

These top 25 economies showcase a range of industries and global economic contributions. While each economy has its unique strengths, all contribute to a complex and interconnected global market. As emerging economies grow and developed nations innovate, the global economic landscape will continue to evolve, impacting trade, investment, and economic policies worldwide. Understanding these economic powerhouses provides insight into global trends, opportunities, and challenges that shape our world today.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Glendon

Economic

Recessions are inevitable components of the economic cycle, and while they can lead to declines in GDP, rising unemployment, and business challenges, they also have specific effects on investors. For those involved in the financial markets, understanding the impacts of recessions can be crucial for managing portfolio risks and finding potential opportunities. In this article, we explore how recessions affect various asset classes, investor behavior, and strategies to withstand economic downturns.

How Recessions Affect Investment Markets

Stock Market Volatility

Recessions often trigger sharp declines in the stock market, as companies face decreased consumer demand, lower earnings, and, in some cases, insolvency. For example, during the 2008 global financial crisis, the S&P 500 index lost over 50% of its value before rebounding in the subsequent years. Investors typically react by selling off stocks in fear of further losses, amplifying market volatility.

Bond Market and Interest Rates

Bonds are generally seen as safer investments during recessions. Central banks often cut interest rates to encourage borrowing and spending, which typically drives up bond prices. Government bonds, in particular, become attractive as investors seek stability. For instance, during the COVID-19 pandemic recession, the Federal Reserve reduced interest rates near zero, driving demand for U.S. Treasury bonds.

Real Estate Sector

The real estate market can also suffer during recessions, particularly if unemployment rises and consumer spending drops. Property prices may decline as fewer people can afford mortgages. However, the real estate market’s response can vary depending on the type of recession; during the 2008 recession, property values dropped significantly, while during the 2020 recession, low interest rates helped buoy the housing market in many regions.

Commodities

Commodity markets, including oil and precious metals, react differently to recessions. Prices of industrial commodities like oil often fall as economic activity slows. In contrast, precious metals like gold, seen as safe-haven assets, typically increase in value as investors look to protect wealth. During the 2008 and 2020 recessions, gold prices surged as other assets declined.

Investor Behavior in Recessions

Risk Aversion and Selling Pressures

Investors tend to become more risk-averse in recessions, leading to sell-offs in riskier assets like stocks and high-yield bonds. This behavior is often driven by fear and uncertainty about the length and depth of the economic downturn. Unfortunately, selling in a panic can lock in losses, as it means selling assets at a lower price.

Flight to Quality

As investors exit risky assets, there’s often a “flight to quality” where they seek safer investments, such as government bonds and high-grade corporate bonds. Cash holdings can also increase, as some prefer liquidity during uncertain times. For instance, in 2020, global money market funds saw significant inflows as investors moved to protect capital.

Dividend Stocks and Defensive Investments

Dividend-paying stocks and defensive sectors like utilities and consumer staples often become more appealing to investors during recessions. These companies provide essential goods and services, typically experiencing less disruption in revenues even when the economy slows down. Dividend yields provide a source of income, which can offset some losses from market declines.

Strategies to Manage Investments During a Recession

Diversification

Diversifying across asset classes, sectors, and geographies can help mitigate risks during recessions. By holding a mix of stocks, bonds, and alternative assets, investors can reduce the impact of any single asset class or market downturn on their portfolio.

Focus on Quality and Defensive Stocks

Investing in quality stocks—companies with strong balance sheets, low debt, and reliable cash flows—can provide more stability during recessions. Defensive stocks, like those in the healthcare, utility, and consumer staples sectors, are less susceptible to economic downturns, making them valuable additions to a recession-resistant portfolio.

Consider Bonds and Fixed Income Assets

Bonds, especially government bonds, can act as a stabilizer in a portfolio during a recession. They tend to hold their value or even appreciate when stock markets are volatile. In addition, bond yields can provide consistent returns that offset equity losses.

Avoid Emotional Decisions

One of the biggest mistakes investors make during recessions is letting emotions drive decisions. Panic-selling at the bottom of the market can lock in losses and miss out on recovery gains. Having a well-thought-out investment plan and sticking to it through market fluctuations can yield better results over the long term.

Preparing for the Recovery

Recessions, while challenging, are typically followed by periods of economic growth. Savvy investors prepare for recovery by looking for undervalued opportunities that arise during downturns. For example, sectors heavily impacted by the recession, like travel or entertainment, may experience significant growth once the economy begins to recover. Historically, the stock market has rebounded after each recession, offering potential for long-term gains.

Investors who remain disciplined and continue investing during a recession often see the benefits during the recovery phase. By dollar-cost averaging—investing a fixed amount regularly regardless of market conditions—they can lower the average cost of their investments and benefit from gains when markets recover.

Conclusion

Recessions impact all investors differently, but understanding how various assets perform during downturns can help investors make informed decisions. With a diversified portfolio, focus on quality assets, and disciplined approach, investors can better weather economic slowdowns and position themselves for eventual recovery. While recessions are an inevitable part of the economic cycle, they also present opportunities for those prepared to invest thoughtfully and with a long-term perspective.

To stay updated on all economic events of today, please check out our Economic calendar

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Glendon

Economic

Invizyne Technologies (IZTC) is gearing up for a significant move in the financial markets with its upcoming Initial Public Offering (IPO). The company, which focuses on delivering cutting-edge genetic engineering and biotechnology solutions, has caught the attention of investors seeking opportunities in the rapidly expanding biotech sector. Let’s dive into the details surrounding the IZTC IPO and analyze why it could be an exciting addition to your investment portfolio.

What is Invizyne Technologies?

Invizyne Technologies is a biotechnology firm that specializes in the development and commercial use of advanced gene-editing tools. Their proprietary technologies are designed to improve agricultural yields, accelerate drug development, and enhance industrial applications. With growing concerns over global food security, environmental sustainability, and health issues, Invizyne’s technologies have the potential to make substantial impacts across multiple industries.

The company has been in development for several years, positioning itself as a leader in the gene-editing space. Invizyne’s expertise lies in using synthetic biology and genome engineering to tackle complex problems. Their team of scientists and engineers have developed a robust portfolio of tools that aim to revolutionize genetic research and application.

The IZTC IPO: Key Details

Invizyne Technologies is seeking to raise funds through its IPO to fuel its growth and further expand its research and development (R&D) efforts. The IPO is set to be one of the most anticipated biotech offerings this year, with many investors excited about the potential market value of the company once it hits the public exchanges.

Key Offerings and Timeline

Ticker Symbol:IZTC

Exchange:The IPO will debut on the Nasdaq Stock Market.

Share Price:Invizyne has set an expected price range for its shares between $15 and $18 per share.

Shares Offered:The company plans to offer 7 million shares, which will provide a substantial influx of capital.

Use of Proceeds:The majority of the proceeds will go toward expanding R&D capabilities, increasing production capacity, and fueling the company’s global expansion plans.

Expected Launch Date: The IPO is projected to take place in late 2024 or early 2025. Investors will need to keep an eye on the market for updates as the company finalizes its offering price and confirms its listing date.

Why Investors Are Paying Attention

Several factors make the IZTC IPO an attractive investment opportunity:

Biotech Market Growth: The biotechnology industry is experiencing rapid growth, especially in the fields of gene-editing and synthetic biology. As the world continues to battle issues like climate change and food shortages, Invizyne’s solutions could play a pivotal role in solving these challenges. Investors are eager to tap into this fast-growing sector.

Proven Technology: Invizyne has developed a solid technological foundation with its gene-editing tools. The company’s tools have shown promise in both agricultural applications (increasing crop yields and creating disease-resistant plants) and health-related innovations (accelerating drug discovery and personalized medicine).

Experienced Leadership Team: Invizyne boasts a team of seasoned professionals with deep expertise in both biotechnology and business development. Their leadership gives investors confidence in the company’s ability to execute its vision and generate returns.

Partnerships and Collaborations: Invizyne has already established several strategic partnerships with academic institutions, agricultural giants, and pharmaceutical companies. These collaborations are expected to help accelerate the commercialization of their technologies and further boost the company’s credibility.

Sustainability Focus: Investors are increasingly looking for sustainable, socially responsible investments. Invizyne’s solutions aim to solve global challenges, such as food security and medical advancement, making it an attractive choice for impact-focused investors.

What to Expect from the IZTC IPO

The IPO will offer investors an early opportunity to participate in a promising biotech company with strong growth potential. However, biotech stocks can be volatile, especially in the early stages of a company’s public offering. While the long-term prospects of Invizyne look promising, short-term fluctuations in stock price are to be expected, particularly as the company works toward scaling its operations and achieving profitability.

Future Outlook

Looking ahead, Invizyne Technologies is poised for significant expansion. The funds raised from the IPO will help the company invest in critical infrastructure, talent acquisition, and strategic partnerships. If Invizyne can execute its plans effectively, it could become a major player in the biotechnology sector.

The global biotechnology market, particularly in areas like genetic engineering, personalized medicine, and sustainable agriculture, is expected to grow substantially over the next decade. As a leader in these fields, Invizyne has the potential to benefit from this growth, making its IPO one of the more exciting investment opportunities in the market.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Donald Trump's sweep to victory in the U.S. presidential election has ignited the so-called "Trump trade", with the dollar, crypto and U.S. stocks all surging, as investors assess the global implications of his return to power.

Germany is grappling with a political crisis, Britain's finance minister delivers a key speech and policymakers head to Baku for a climate summit.

Here's a look at the week-ahead for markets from Kevin Buckland in Tokyo, Lewis Krauskopf in New York, Sinead Cruise, Dhara Ranasinghe and Karin Strohecker in London.

1/ WATCHING THE USA

Focus turns to U.S. inflation data on Nov. 13, as markets wait to see if President-elect Trump will push ahead with economic policies that could be inflationary.

Economists expect the consumer price index to have climbed 0.2% for October. September's 2.4% annual increase was the smallest in more than 3-1/2 years, reinforcing Federal Reserve rate-cut bets.

But the central bank may have been thrown a curveball with Trump's election, since the Republican's plans to raise tariffs could fuel price rises. Following the Fed's 25 bps rate cut on Thursday, Chair Jerome Powell gave little guidance on how fast and far rates will now fall.

Markets are also watching whether "Trump trades" - including a stronger dollar and buying shares of banks and small-cap companies - will continue as investors assess the impact of the election result.

A bar chart showing the monthly change in U.S. CPI inflation from Jan. to Sept. 2024 with a forecast for Oct. 2024.

2/ OVER IN BEIJING

A closely watched gathering of China's top legislative body wrapped up on Friday with the announcement of a 6 trillion yuan ($835 billion) spending package aimed at cleaning up off-the-book debt at local governments.

For investors who had been hoping for extra spending to counter the potential impact of a Trump-led trade war, that was a massive let-down. Hong Kong-traded mainland property shares tumbled as much as 4.6% on Monday. The yuan fell, and commodities from crude to copper sold off.

Some analysts had warned it would be too early for Beijing to formalise a strategy only days after Trump's election victory. Macquarie, for one, said the goal of the stimulus is achieving the around-5% growth target for 2024, and "not to reflate the economy in any meaningful way".

With Trump's threatened 60% tariffs dwarfing those from eight years ago, meeting that growth target may be the least of Beijing concerns.

China property sector slump

3/ POLITIK CHAOS

A collapse in Germany's ruling coalition puts a crisis in Europe's biggest economy in the spotlight just after Trump's win.

Chancellor Olaf Scholz's decision to fire his finance minister, from coalition partner the Free Democrats, points to a vote of no confidence in January and possible snap elections in March.

Scholz's Social Democrats now rule with remaining coalition ally the Greens in a minority government but face pressure to hold a no-confidence vote sooner. A contentious draft budget also needs to be finalised.

The timing is unfortunate. Germany has just dodged recession after a series of setbacks, while higher tariffs may loom under Trump.

Uncertainty could hurt business investment and slow M&A. As an election-packed year globally winds down, Germany could be gearing up to hold a poll of its own.

This bar chart shows Germany's quarterly GDP (seasonally and calendar-adjusted) from 2019 Q1 to 2024 Q3 with some annotations about related global situations.

4/ COP-ING MECHANISMS

Policymakers and climate activists head to Azerbaijan's capital Baku from Nov. 11 for the 29th annual United Nations Climate Summit, known as COP29.

The summit has been dubbed the "climate finance COP" for its central goal: to agree on how much money should go each year to helping developing countries cope with climate-related costs.

Governments are also eager to resolve rules for trading carbon credits earned through the preservation of forests and other natural carbon sinks.

But coming just days after the U.S. elections and amid rising geopolitical tensions, the meeting is expected to be a subdued affair. Trump, a climate denier, wants to ramp up fossil fuel production and pull out of the Paris Climate Accords, a framework for reducing global greenhouse gas emissions.

Chart shows the progress of G20 nations in reaching their individual commitments to reducing carbon emissions under the Paris Agreement by 2030.

5/ PENSION POTS

UK finance minister Rachel Reeves will serve up her latest plans to reinvigorate Britain's sluggish capital markets in her first Mansion House speech on Thursday, with a slew of pension fund reforms topping industry wish-lists.

UK defined benefit retirement schemes, most of which are closed to new members, are collectively sitting on an estimated 300 billion pounds of cash that could be funnelled into housing, infrastructure, unlisted company investments and unloved stocks for the greater good of the UK economy, industry sources say.

But while change is broadly welcome, the idea of mandating pension fund investment in so-called UK productive finance has been criticised because of the risk that good intentions may not always lead to good outcomes for retirement savers, particularly as UK equities continue to perform poorly against global peers.

The line chart shows the public sector borrowing as a share of the GDP for UK and Oct. 2024 and March 2024 forecasts.

Source: Reuters

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Kevin Du

Economic

New Zealand's central bank will be under greater pressure to ease policy aggressively this month as its rate meeting calendar leaves an unusually long three-month gap until its next gathering, arguing for extra insurance against an economic slump.

That is partly why markets and analysts have fully priced in another large 50-basis-point rate cut from the Reserve Bank of New Zealand at its last meeting for the year on November 27.

Even a whopping 75 basis point cut is also considered a possibility.

"I think front loading the rate cut has some optional values for the RBNZ. It means they can go into the Christmas break with a policy stance that's closer to neutral," said Faraz Syed, a senior economist at Citi Australia, which has called for 75 bp move in November. "That's what the economy requires."

The RBNZ cut the number of its policy meetings to seven from eight in 2016, which has allowed policymakers to enjoy a nearly three-month year-end break. That is unusually long for a major central bank - most central banks break for a month or two.

Michael Reddell, a former RBNZ official, said the RBNZ made the scheduling decision at a time when the cash rate was hardly being moved at all, which reduced the significance of the decision.

"I wouldn't be surprised if they were doing things over again they went back to eight... If I was sitting on the monetary policy committee today, I'd be certainly advocating a shift to eight meetings a year."

RBNZ's unusually long summer break argues for extra insurance on rates_1

Just last week, the RBNZ sounded the alarm on further economic weakening even though rates have been chopped by 75 bps in just two meetings. Rising unemployment is likely to cause more borrowers to default on their mortgage payments over the next six months, it warned.

Between 2021 and August, the RBNZ had raised interest rates by 525 basis points to a 16-year high of 5.5% to stamp out surging inflation. Headline inflation, which peaked at 7.3%, slowed to 2.2% in the September quarter, back in the target band of 1-3%.

But that came with a hefty price. New Zealand's economy shrank from a year ago in the second quarter, with a gauge of living standards - gross domestic product per capita - falling for a seventh straight quarter.

The central bank won't meet again until February 19, a month after the inauguration of Donald Trump as U.S. president, when the economic landscape could be drastically different.

Even as the outlook for further U.S. rates has become more clouded, expectations that Trump's proposed policies including global tariffs will stoke inflation have seen borrowing costs surge globally. In New Zealand, a key short-term swap rate jumped 19 basis points last week, almost equal to a quarter-point hike in official rates.

That tightening comes at exactly the wrong time for the economy and again argues for drastic easing by the RBNZ.

"I think it does make it tricky that they have this long summer gap. It's basically 12 weeks between decisions and usually it's sort of six to seven," said Zoe Wallis, an investment strategist at Forsyth Barr.

50S AT LEAST

The prolonged downturn in the economy saw the jobless rate hit a near four-year high of 4.8% in the September quarter as employment dropped by most in four years.

Worryingly, there were clear signs young people were quitting the workforce, discouraged by a dearth of vacancies.

Goldman Sachs said a 75 bp move can be justified given how far rates are above the neutral rate of 3%, the long lags of policy and the near three-month meeting gap, but it is sticking with a 50 bp move to be followed up by another 50 in February.

That's partly due to comments from Governor Adrian Orr in late October that he was still a tad concerned about lingering inflation pressures. Rates on the way down probably will be more incremental than on the way up, Orr told an event in Washington.

Jarrod Kerr, chief economist at Kiwibank, agrees.

"Going 75 probably signals they're a bit worried about things and that certainly wasn't the sense we got from Adrian Orr... I think they will deliver 50 and then another one in February."

Source: Reuters

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JPMorgan

Economic

Stocks

It's old news by now, but Donald Trump was announced as President-elect Wednesday morning. It was a catalyst-heavy week for markets, from U.S. elections to the Federal Reserve. Below, we get you up to speed on the market moves driven by the events that were.

Equities

U.S. large cap equities rallied to all-time highs. Last Wednesday's +2.5% gain was the best one-day performance of 2024.

Industrials had their biggest one-day gain in two years, as markets anticipated what an “America first” agenda means for U.S. production.

Small caps were one of the beneficiaries on the last week (Solactive 2000 +7.6%). Better growth and fewer regulations could aid the group.

Deregulation should remove hurdles for mergers and acquisitions (M&A) and help thaw frozen activity. That's a big boost for financials. The large cap sector gained +5%, while the regionals gained +10.2%. The market is not just anticipating M&A, but also loan growth and less stringent capital buffers.

Fixed income

A GOP sweep (which most investors now expect) drove interest rates higher.

Yields on the 2-year (4.21%) and 10-year (4.36%) both jumped Wednesday (eight and 16 basis points, respectively) following election results, but have since partially retracted. Higher inflation and fiscal deficits may necessitate more compensation to invest in longer-maturity fixed income.

Currencies

Following its biggest one-day appreciation in two years (+1.6%), the U.S. dollar paired back some gains.

What does the Fed's latest move mean for investors?_2

A focus on onshoring and securing U.S. supply chains, combined with tariff threats (tariffs would reduce U.S. demand for imports, and thus, foreign currency to pay for those imports, increasing the value of the dollar, all else equal) resulted in a bullish backdrop for the dollar relative to foreign currencies.

Commodities

Oil recaptured some gains after falling -9% in the month of September. OPEC+ delayed output hikes and the U.S. purchased oil to refill the strategic petroleum reserve. In the medium term, we think prices will be challenged given the likelihood of incentives for more production. We are likewise unexcited about energy equities.

Gold (-1.6%), which has reached several all-time highs throughout the year, took a step back. The move seemed to be driven by U.S. dollar outperformance, given the precious metal fared better when priced in foreign currencies.

Crypto

Bitcoin jumped to all-time highs, and now sits at $75,960 per coin. Markets were excited about potential deregulation and the increased institutional adoption that could come, leading to the +10% pop.

On the Federal Reserve

While overshadowed by the election in the media landscape, we believe that the Federal Reserve and corporate earnings are more important for financial asset returns than politics. Chair Jerome Powell seemed to agree, saying that “the election will have no effect” on policy decisions in the near-term. Here's what happened in their latest meeting.

As widely anticipated, the Federal Reserve lowered their target interest rate range by 25 basis points to between 4.5 and 4.75%. The 25-basis point decision was unanimous among voting members after September's 50-basis point cut.

What does the Fed's latest move mean for investors?_3

According to Chair Powell, the risk to the Federal Reserve's mandate (maximum employment and stable prices) is “roughly in balance”, meaning that the recalibration of the policy rate should allow the economy to maintain the strength of the labor market and make more progress on inflation. Over time, Powell said the path of policy will be moving lower towards “neutral,” with the speed and ultimate level still to be determined.

Powell is “feeling good about economic activity” and even with the interest rate reduction, policy is still restrictive. The labor market has cooled considerably from its overheated position. Inflation has moved down a great deal from two years ago and is on a sustainable path lower. The decision to move rates is just another step in securing the soft landing.

We see the Federal Reserve continuing to ease monetary policy towards the neutral rate. Futures markets believe that by the middle of next year, the committee will have cut the policy rate three times, with a 60% chance of a fourth cut.

What does that mean for investors?

Cash is already earning you less than it was a week ago and will likely be even lower in the coming months. We advocate for investors to position portfolios at their strategic neutral duration position. Core bonds can still provide diversification and defensive characteristics in a long-term allocation.

Additionally, a soft landing (our base case) is an environment where equities have historically performed well. We think that can continue to be the case this cycle. We prefer U.S. equities relative to the rest of the world, and see opportunities in industrials, utilities, tech and financials.

Lastly, for investors concerned about inflation, we see structural opportunities in infrastructure. Infrastructure, which has inflation-hedging characteristics, can support returns in a modestly higher inflation environment. Combined with the greater need to supply power for the artificial intelligence buildout (an estimated 2% additional power annually for the next decade), there are opportunities across power generation and power distribution, as well as digital infrastructure.

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Oil & Gas: Still Mostly Bearish Prospects

Crude Oil

Natural Gas

The Top 25 Economies in the World: A Snapshot of Global Economic Powerhouses

1. United States

2. China

3. Japan

4. Germany

5. India

6. United Kingdom

7. France

8. Italy

9. Canada

10. South Korea

11. Russia

12. Brazil

13. Australia

14. Spain

15. Mexico

16. Indonesia

17. Netherlands

18. Saudi Arabia

19. Turkey

20. Switzerland

21. Taiwan

22. Poland

23. Thailand

24. Sweden

25. Belgium

Conclusion

How Recessions Shape Investment Decisions: Risks, Rewards, and Strategies for Investors

How Recessions Affect Investment Markets

Stock Market Volatility

Bond Market and Interest Rates

Real Estate Sector

Commodities

Investor Behavior in Recessions

Risk Aversion and Selling Pressures

Flight to Quality

Dividend Stocks and Defensive Investments

Strategies to Manage Investments During a Recession

Diversification

Focus on Quality and Defensive Stocks

Consider Bonds and Fixed Income Assets

Avoid Emotional Decisions

Preparing for the Recovery

Conclusion

IZTC IPO: What Investors Need to Know About Invizyne Technologies' Upcoming Public Offering

What is Invizyne Technologies?

The IZTC IPO: Key Details

Key Offerings and Timeline

Why Investors Are Paying Attention

What to Expect from the IZTC IPO

Future Outlook

Take Five: Bracing for 'Trump 2.0'

1/ WATCHING THE USA

A bar chart showing the monthly change in U.S. CPI inflation from Jan. to Sept. 2024 with a forecast for Oct. 2024.

2/ OVER IN BEIJING

China property sector slump

3/ POLITIK CHAOS

This bar chart shows Germany's quarterly GDP (seasonally and calendar-adjusted) from 2019 Q1 to 2024 Q3 with some annotations about related global situations.

4/ COP-ING MECHANISMS