In this market morning briefing, the host provides a concise overview of global equity and macro conditions on November 2, 2021, noting that most major asset classes are trading flat as investors await several high‑impact events (the Fed’s taper announcement, OPEC meeting, BoE rate decision, and U.S. non‑farm payrolls). The standout mover was Tesla, whose shares surged 8.5% after news that Chinese lithium supplier Ganfeng Lithium renewed a three‑year supply deal, while a conflicting report about the pending Hertz 100,000‑car order created uncertainty. The host examines Tesla’s recent price history, the role of Elon Musk’s social‑media activity (including a cryptic Chinese poem likened to a Trump‑style market‑moving stunt), and cautions that the stock may be overbought and vulnerable to a pull‑back. Small‑cap performance is highlighted, with the Russell 2000 posting its biggest daily gain since August. The briefing then shifts to the Australian Reserve Bank’s abrupt abandonment of yield‑curve control, its impact on the AUD, and revised GDP outlooks. U.S. political developments are covered, focusing on President Biden’s stalled $1.75 trillion social‑spending and climate bill due to Senator Joe Manchin’s opposition. A brief Brexit update notes France’s decision to pause retaliatory fishing‑rights measures against the UK. Finally, the host outlines the day ahead: limited economic data, upcoming earnings (BP, Standard Chartered, Pfizer), central‑bank speeches, and oil inventory reports, advising traders to respect current technical ranges until the scheduled events unfold.
Chapters
Okay, very good morning. It is Tuesday the 2nd of November. Hope you're doing well. And we'll start with the heat map. We're also going to talk a little bit about Tesla, the RBA rate decision that happened overnight, a little update on Biden and his latest complication on Capitol Hill as he tries to push through that spending bill. We've also got Brexit, the the French stepping back on their threats on the fishing rights. And then we'll look at the day ahead. Overall, though, I would say just looking at the charts this morning, pretty quiet. Most major products across the different asset classes are trading relatively flat. You can see here in the center charts whether the DAX, the NASDAQ, or the S&P, we're kind of consolidating at and around the record high levels at the moment. In time. And that makes sense logically. You've got the Fed formal announcement of tapering expected tomorrow. You've also got the likes of the OPEC meeting on Thursday, the Bank of England— will they, won't they hike rates on Thursday— and non-farm payrolls on Friday. And so I think the market at the moment quite happy to just sit on its hands, more broadly speaking, and just wait for these major risk events to materialize. I can't really envisage many people in the market wanting to really commit to any new positions ahead of those aforementioned events that are coming up. So overall, I think the briefing today probably will be fairly concise in that respect because none of the major stories here are too much of a focal point, I think, that will shift that narrative of relative consolidation until we get to those things, barring anything unexpected. But let's start with the heat map. And, um, before I get into Tesla, one thing yesterday is we did finish positive across the board. The S&P up about 2/10, the Dow slightly higher, quarter, and NASDAQ up 6/10 of 1%. The standout stock no doubt was Tesla. You can see down here they were up 8.5%. One of the main things there that was underpinning the company's share price and which actually helped them breach $1,200 a share for the first time ever was the Chinese firm Ganfeng Lithium Company won a deal to supply Tesla with lithium products for 3 years. And my understanding is that was a renewal from a deal that they struck 3 years ago. But nonetheless, with Tesla, obviously, with— as Musk has said himself, it's not really so much a demand issue but a supply issue. Securing that deal just helps them in their ambition to really scale up their manufacturing and production of their vehicles. It is worth noting though, on the Tesla front, I did see this morning CNBC were reporting that the CEO Elon Musk did say last night that the electric vehicle company has yet to sign a contract with the rental car company Hertz, which is, which is a little bit confusing because obviously that was the news story that really juiced their shares by a good 20% or so last week on the back of that 100,000 Tesla car order from Hertz, which would have a kind of nominal value of around $4.2 billion. And Musk saying last night that actually we've not signed a contract yet. I mean, at the time I was— I think I mentioned in the briefing, I actually went to the Hertz website to actually look at their official press release And it looked fairly robust in terms of the details of what they were saying. They certainly had a pretty in-depth marketing plan associated with this deal, but I was kind of looking for this, which was to me $4.2 billion just seems like an incredibly large order, and I just wondered how Hertz is financing that. And also the kind of questions around whether Tesla can actually fulfill that type of order size over a relatively short period of time. I think it was 14 months to hit that 100K vehicle delivery target. So be interested to see what happens here because Tesla shares obviously, uh, are hugely elevated at the moment, um, just given the run-up that we've had. And in fact, you'll have to forgive me for the markups on this chart, they're fairly dated, but you'll get the sense at least of the share price movement of late. And this is having a look at Tesla's shares and Here we were back at the previous all-time high at the beginning of the year, and again we were closing in on $900 kind of dollars a share, and people were really saying this is overbought. And then we did have a quite sizable correction. You remember when Elon Musk was on Saturday Night Live and it was a bit, bit tragic. They then had lots of China issues with manufacturing. He made his U-turn on Bitcoin, receiving Bitcoin payments. The shares came off. And then we had that, that one day, if you remember back in May, when we had that day when crypto Bitcoin collapsed in prices, and that was when they kind of fleshed out a double bottom from the low in March. But, you know, just check out where we are, where we are at the moment. Remember October, Bitcoin had a really aggressive rally. A lot of that was building in the anticipation of those now launched ProShares and Valkyrie and other Bitcoin-related ETFs, and the market rallied quite aggressively there. And that, we tend to see a fairly sympathetic move translate over into Tesla shares. Then Tesla posted record revenues and profits in Q3 of 2021 during this earnings season. And now you've had Tesla, um, Hertz order, which is what this big jump up in prices here which is really this, this area. And then we've just continued to, to plow on. I mean, actually, since that Hertz order— let's just have a quick look up to here— we're actually up 33% since that order came in. So pretty incredible moves. And I know there's been a lot of options activity as well in this stock. And, you know, since we've gone over $1,000, it's just climbed rapidly. But yeah, quite interesting to see how that stock plays out by a factor of twofold. One, Musk's comments overnight about they've not actually signed the deal yet. And as I said, since that news, the stock is up in excess of 30%. And then layer in as well the other factor of the fact that the shares are just really overbought in quite a short term from a momentum perspective. Wouldn't be surprised to see a fairly aggressive pullback. Don't get me wrong, I'm not saying we're going to collapse back down 30%, But, you know, just don't be late joining the party trying to jump on buying the top in that respect. So that was, that was Tesla. The other thing, of course, Elon Musk, the just marketing genius that he is, has come out and he's tweeted overnight as well, humankind. And then he's, he's actually tweeted an ancient Chinese poem. What this poem is, I mean, you can look it up, read about it. It's something to do with two brothers arguing and beanstalks and things of that nature. But the— what people are suggesting that this is, is a nod to the Dogecoin-Shiba Inu cryptocurrency spat that's happening at the moment. To me, that's perhaps what it is in reference to, but to me it's just one of those things. The pattern I see in my mind, this is very discretionary observation. I don't have quantitative data to back this up, but, you know, my job having to be to sit here for many hours every day, year after year, is his activity is so similar to Donald Trump when Donald Trump was president. Whenever a certain subject, topic, or agenda gets right up to the kind of maximum point, and in this case reflected by a share price being quite extended to the upside. Um, Trump would do the same like this. He'd come out with a kuh-fee-fee moment, some random madness that everyone talks about, every newspaper prints it, and everyone just kind of pumps it, and it just helps juice the narrative a little further. And so yeah, I think it's quite interesting how he's done this as we're just printing and given the share price above $1,200 and the share price moves that I've just explained. So does not surprise me at all. And in fact, the more crazy the Tesla share price becomes, the more crazy his tweets will likely become to support and sustain in an attempt, I believe, to keep that going, because he knows as well for sure that it will, it will come off. And it wouldn't be surprising as well for me, I think, to hear Elon Musk in the coming days, given where we're trading in Tesla shares to say something along the lines of, I think the shares are a little, a little overextended. I think they're quite expensive. I think this move's a bit overdone. So almost talking down his own stock. But again, this is almost a self-preservation mechanism so that then when the stock comes off, he exerts the optics of control and it kind of limits the collateral damage of the downside. And then on and so forth. So yes, he's such an interesting individual, but certainly highly, as we know, intelligent. And I'm sure he knows what he's trying to attempt to do here, and who can, who can bet against him at this point in time. So yeah, that's, that's the latest there. Actually, the outperformer yesterday wasn't so much the big mega cap or anything like that. The actual winners yesterday were the small caps. The Russell 2000, in fact, was the standout and rose 2.7% yesterday. That was the biggest daily percentage gain since late August, in fact. But at the moment, we're still encountering a lot of complications on Capitol Hill about getting various different bills passed. So we'll see how sustainable that is in the end. But generally, COVID, things like that, looking in a much better condition now than what we were several months ago, allowing the economy to continue to pick up. And again, although the Q3 advance GDP reading we had last week was weak. The idea being is that things will gradually start to pick up in time. All right, the other thing then overnight was the RBA, the Australian central bank, abandoned yield control to combat surging prices amid an improving domestic outlook underpinned by high vaccination rates. They kept their interest rate at the same rate at 0.1%. And the one thing I would say here that was quite interesting is that it was only like a month ago or so, maybe slightly longer, when they were talking about we're not going to hike rates until, you know, 2024. And now they've gone all full swing to a period of just fairly abruptly, but given some of the yield move that we've seen, taking, taking away one of their main stimulus tools, which was yield curve control. So interesting to see how quickly things can shift. The currency overall, the Aussie dollar, actually dropped and declined overnight. Let me just bring it up so I can show you what that type of price activity looks, looks like. I mean, it's not the biggest move in the world, but it's certainly directionally fairly clear to see. So you had some initial bout of volatility. I'll put this on the 60-minute. So you had a little bit of volatility and then just general downside. And you can see here we're kind of broken out a little bit of that range that we've been trading, uh, really going back to around the 26th, the end of October. It's a bit downside scene, uh, with the lower by about 40 pips at the moment in the Aussie dollar. And the rationale being there is that the Governor Lowe said it would still likely to take some time for inflation to sustainably return to its target. So short-end sovereign bonds also raised losses as the RBA dampened bets for any aggressive tightening, uh, from here. And so we've had a little bit of a weakness just come in. The other thing as well, on their forecasts, they cut their GDP growth outlook for 2021, but they did upgrade it for later on up to 5.5%. So short-term more pressure, but something similar we've been seeing in other major Western economies, which is more pressure in the short term given the high inflationary conditions and the impact that would have on, uh, economically. And then once that then pressure starts to fade, the economy starts to catch up pace back into next year in 2022. All right, into US politics. Biden's domestic agenda getting another setback on Monday, uh, again the thorn in his side. I'm sure Biden wakes up in a cold sweat dreaming of Joe Manchin at the moment as A sight that might be because Manchin said he would not commit to supporting a $1.75 trillion framework on social spending and climate change that was unveiled last week. And so again, as a reminder, the Senate is an absolute even 50-50 split. It's the Vice President Kamala Harris that holds that then vote in a tied situation to then tip the balance in favor of the Democrats. So if Joe Manchin is not playing ball, there's no passage of any deal at this point. And so particularly problematic that any one Democrat, whether Manchin or not, can effectively veto power away from what the president's agenda is. And that's kind of what's happening at the moment. So it drags out a little bit further. And then looking at Brexit, I talked about this yesterday, it's just a quick update. Macron has said the fishing rights dispute talks between the US and France will resume. As we know, today, but he's already gone in and said that retaliatory measures against the UK over the fishing dispute will not be implemented at midnight, as talks are ongoing. And the actual movement in the pound is hard to see because there really isn't any. So it's just more of a political update than it is one meaningful for the sterling currency. And then quick look at the day ahead. Yeah, really quiet day. And this kind of then goes full circle all the way back to what I said at the beginning. A lot of people waiting for these main events to happen really commencing tomorrow night with the FOMC. And so today, again, barring anything unexpected, could be relatively quiet. Um, so I'd definitely be looking at the charts from a technical perspective, looking at the general range trades that we've been sitting in for the time being and may well be respected for now, because today there's not really a great deal coming out, really nothing major at all as far as economic data is concerned. You've got the API crude oil inventory later on tonight. So then from a speaker perspective, central banks, no one really too meaningful. ECB's Elderson is not speaking on anything economic or policy related. Fixed income supply out the UK, 25 and 2071 gilt auctions. And then from an earnings perspective, just kind of slowly coming out now, but so you're aware, for anyone trading the FTSE at the open in an hour's time, because I'm just coming up to 7 AM this morning here in London. You've got BP and Standard Chartered, and then later on in the US you've got Pfizer, one of the major names reporting today. All right, gonna leave it there, let you guys get on with the day. Hopefully that was useful, and yeah, enjoy the rest of the session. Take care.
