Friday's Markets Update (September 15, 2023)
On Friday, New York production activity is reported stable but Nasdaw fell sharply with megacap names leading the declines. Adobe declined 4.2% after earnings miss. Traders await the FOMC decision due next week. Also, investors were selling amid a massive options expiration on the third triple witching day of 2023. BTC rally halted after hitting the resistance on 27K. Other news: Japan softened the rules for startups raising in crypto.
FYI: The third triple witching day of 2023 is on Friday, September 15, 2023. It is the simultaneous expiration of stock options, stock index futures, and stock index options contracts all on the same trading day. This happens four times a year: on the third Friday of March, June, September, and December.
Surprisingly, NY manufacturing activity little changed in Sept, after sharp drop in Aug. New orders, shipments up, inventories down. Labor market indicators are weak.
Some regions, like New York, might still experience a temporary rise in manufacturing activity during an upcoming recession.
New York is a major financial and business center, and it is home to many Fortune 500 companies. These companies may be less likely to cut back on production during a recession, as they may still have strong demand for their products or services.
New York is home to a number of counter-cyclical industries, such as the pharmaceutical. These industries are less likely to be affected by a recession than industries that are more cyclical, such as manufacturing and construction.
The NY state government has implemented a number of policies to support manufacturing, such as the Excelsior Jobs Program, which provides tax breaks to businesses that create new jobs. These policies have helped to keep manufacturing activity in New York relatively stable.
Japan to let startups raise funds with digital assets
The Japanese government’s decision to allow startups to raise funds with digital assets is a sign that they are taking a forward-thinking approach to the technology. This is in contrast to many other governments, which have been slow to embrace cryptocurrencies and other digital assets.
The Japanese government’s decision not to raise interest rates is also a sign that they are taking a cautious approach to the economy. The Federal Reserve, on the other hand, has been raising interest rates in an attempt to combat inflation. However, this has raised concerns that it could lead to a recession.
Japanese government’s willingness to experiment and try new things is a sharp contrast with outdated Boomer’s financial and economic policies, practiced elsewhere in the world.
China’s industrial production grew at a faster-than-expected pace in August, rising 4.5% year-on-year, the strongest expansion since April.
China is the world’s second-largest economy, and its growth is important for the global economy. The country is a major exporter of goods and services, and its demand for commodities such as oil, copper, and soybeans helps to keep prices high. This can lead to inflation in other countries, as businesses pass on higher costs to consumers.
For example, China’s industrial production growth in August was driven by a recovery in manufacturing activity, which rose 5.4%. Mining output also grew, rising 2.3%.
The rebound in industrial production is a positive sign for the Chinese economy, which has been struggling to recover from a recent slowdown. However, it also led to an increase in prices for major commodities. For example, the price of copper rose by 2.5% in August, while the price of oil rose by 1.5%. This could lead to higher inflation in other countries, as businesses pass on higher costs to consumers.
According to the IMF, China’s economic growth is expected to slow to 4.8% in 2023, from 8.1% in 2022. Despite the slowdown, China’s growth is still expected to be higher than the global average of 3.6%. This means that China will continue to be an important driver of global growth. However, the country’s growth will also continue to have a significant impact on commodity prices and inflation.
FYI: China is the world’s largest consumer of commodities, accounting for about 15% of global demand and also the world’s largest exporter of goods, accounting for about 13% of global exports.
In Week 38, all eyes will be on the Fed Press Conference (Wednesday, September 20) announcing the Fed Rate Decision (projection: no change at 5.5%). Therefore, long-term investors will stay on the sidelines and indexes will be volatile within narrow ranges.