Global Markets & Economic Data
Markets remain fluid as gold has sold off like a meme stock after rocketing higher by 30% since the start of September. Equities generally have stabilized ahead of next week's large-cap tech earnings, FOMC, and a potential Trump Xi meeting. Some traders anticipate next week to provide the upside spark for a big year-end rally in the AI theme/QQQs.
- US: Delayed Sep. CPI data showed inflation up 3% y/y, and the highest reading since February, but below estimates, which bolsters the case for a Fed rate cut next week.
- UK/EU/Switzerland: UK retail sales are trending higher, but business and consumer confidence is low and car production has fallen 27% over the past year. Eurozone manufacturing PMIs are in contraction territory while services is modestly positive. Q2 final GDP was 0.1%. Switzerland 2025 GDP growth is forecast to be 1.3% and 2026 projections are for a slowdown.
- Asia: China Q3 GDP was 4.7% to 4.8%. Retail and industrial production data are both trending down. Japanese PMIs also are trending lower with cost pressures a headwind as inflation rose to 2.9% y/y in Sep.
- The surge in coffee prices exemplifies the real-world constraints to supplying the bulled up financial world with physical raw materials at reasonable prices.
- Arabica coffee futures extended their rally, nearing the record high reached in February. Prices have surged more than 50% since August amid growing concerns over global supply shortages
- The combination of weather-related supply issues policy disruption, and speculative momentum are set to maintain coffee prices at high levels over the medium-term.
- Commodity specialists hedge funds were shaken out of many strong fundamentally trending themes earlier in the year like owning softs commodities, but given the ongoing strong case to own softs like coffee, positive PNL could be coming back, which could signal better opportunities to come across energies and base metals, which also have long-term extreme bullish supply/ demand readings.
Market Spotlight: Biotech is leading the healthcare rebound
- As expected, H1's top-down, sentiment driven price action in the healthcare sector has normalized.
- However, it has been a checkered recovery. Biotech is ahead as delayed drug approvals continually rollout and small/mid cap companies get acquired by larger players. Meanwhile, other healthcare sub-sectors like med-tech and healthcare services remain dislocated, which is attracting generalist capital into various exciting ex-biotech healthcare stocks trading at attractive valuations.
HC buyers have comeback since May
Biotech is a beneficiary of most of the flows
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