Macro Matters

Powell Says Fed in No 'Hurry' to Lower US Interest Rates

Federal Reserve Chair Jay Powell advocated for a gradual approach to lowering interest rates, emphasizing that the Federal Reserve is not in a rush due to the strong economy and the uneven path of inflation reduction. He praised the US economy's performance and noted significant progress in controlling inflation, though more effort is needed to reach the 2% target.

Powell's remarks led to a rise in the two-year Treasury yield and adjusted market expectations for a December rate cut. The Federal Reserve recently reduced its benchmark rate to a range of 4.25% to 4.75%, and officials are expected to proceed cautiously to balance inflation control with maintaining economic strength.

Despite recent increases in inflation metrics, Powell stated that the overall downward trend remains intact, but acknowledged potential bumps along the way. He indicated that the Fed might consider slowing the pace of rate cuts if data supports such a move, aligning with earlier remarks by Fed Governor Adriana Kugler.

China Stimulus Boosts Domestic Consumption as Trump Tariffs Loom

In the fourth quarter, China's economy showed more balance as consumption growth nearly matched factory output, driven by stimulus measures. Retail sales in October grew at the fastest rate in eight months, surpassing economists' forecasts, while industrial production remained strong, supporting the government's 2024 growth target. The rise in consumption is notable given the previous recovery imbalance, where household spending lagged behind production. This internal demand boost becomes crucial as Donald Trump, re-elected as US president, threatens a 60% tariff on most Chinese imports, posing a significant risk to China's export sector.

Smart Money Flow

The current equity risk premium suggests that investors are not being adequately compensated for the risks associated with stocks. As a result, US Treasury bonds may appear more attractive than US equities.

While strong earnings growth projections for 2025 provide a positive backdrop for potential market performance, investors should remain vigilant due to high valuations and market concentration.

Goldman Sachs forecasts the 10-year U.S. Treasury yield to hit 3.85% by end-2024, diverging from current futures market expectations.

Bitcoin Rises Above $90,000 on Trump Euphoria

Bitcoin broke through the $90,000 level on Wednesday, to an all-time high in a rally showing no signs of easing on expectations that Donald Trump as U.S. president will be a boon for cryptocurrencies.

Top Corporate News

Alibaba Q2 Results Top Estimates

On November 15, Alibaba Group released its Q2 financial report for the fiscal year 2025, showing quarterly revenue of 236.503 billion yuan, a 5% year-on-year increase, in line with market expectations. By focusing on a "user-first, AI-driven" strategy, Alibaba's core business continues to achieve high-quality growth.

Disney's Earnings Surge Amid Box Office and Streaming Successes

Walt Disney's shares increased by over 6% following a 39% rise in earnings, attributed to the box office success of Marvel's "Deadpool & Wolverine" and Pixar's "Inside Out 2," along with strong profits from Disney+ and Hulu streaming services. These gains offset declines in Disney's traditional TV sector. The streaming segment, including ESPN+, achieved a total operating income of $321 million, reversing a prior loss. Disney anticipates a strong holiday box office with upcoming releases like "Moana 2" and "Mufasa: The Lion King." Despite challenges in its "experiences" division, including theme parks and cruise ships, Disney saw record revenues and plans to invest $60 billion in this area over the next decade. The company reported a fiscal fourth-quarter net income of $460 million, with adjusted earnings surpassing Wall Street expectations. CEO Bob Iger's cost-cutting and restructuring efforts have improved share performance, and Disney plans a $3 billion share repurchase in 2025.

Alibaba Is Said to Consider Offering $5 Billion of Bonds

Alibaba Group Holding Ltd. is considering issuing bonds totaling approximately $5 billion as early as this month, according to people familiar with the matter. The potential bond offering could include both dollar and yuan-denominated portions. This comes after Alibaba's record private placement of $5 billion in convertible bonds in May. The last time Alibaba sold standard dollar notes in public markets was in 2021, with a $5 billion multi-part deal. It is not clear whether the current plan is for a private placement or a public offering.

Currently, it is an opportune time for borrowers to access credit markets in Asia. Yield premiums on dollar securities in the region have recently fallen to all-time lows, following a series of monetary and fiscal stimulus measures by Chinese policymakers, which have increased the appeal of the region's debt.

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