Market 10/22: Bond Yields Chasing Trump

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Today is a day with little news and economic data so Viet Hustler sends to readers a look at the health of the economy, market trends, and asset types through charts.

Xi Jinping meets Putin in Russia at BRICS meeting

Affirming strategic cooperation relations on military and economic fronts
Clearly showing the goal of de-dollarization

→ Fear of abandoning the dollar only seen in news but in reality, the only decline comes from the Euro.

Summary of money flow movements

Last week alone, money still flowed into the large cap block

By sector:
- Technology remains the strongest this year while energy is the weakest
- Real estate and consumer broke after FED cut interest rates

By Index:
- The growth small caps block rose the strongest but the weakest is the small caps value block (low growth)
- After that is the NASDAQ and S&P500 blocks

→ Investors are seeking more risk-on trades this year, focusing on small cap companies with potential and still surviving.

Money flow from large investment funds starting to flow back into small caps

Even big caps in S&P500 are being bought

Over the past 3 years IWM down -2.5% while S&P500 up 28.7%, is this the time for IWM to catch up?

By commodity types

By international stock markets:

By international bond markets:

Retail, services, and imports continue to grow

Johnson Redbook report shows retail data up +5.6% YoY

Philly FED reports services up +6 vs +4.1 forecast from -6.1 last month

LA-Long Beach ports break Q2/2021 volume record
- Q3/2024 is the quarter with the highest shipping volume in 116 years

Residential real estate stable

Only 0.43% of loans enter foreclosures in Q2/2024

Rent up only slightly in August, averaging 3% YoY nationwide
- West Coast, Seattle leads with +5.8% YoY increase

Interest rates rise with Trump's election odds

Bond yields rose last week as market prices in Trump win:

→ Protectionist policies, trade wars, and tax cuts will boost bond yields and dollar value

Not only the broader market but major investors are also shorting bonds:

Tax Brackets for 2025 from IRS:

GE: Strong growth

Earnings $1.15 beat $1.14 forecast
Revenue $9.84B beat $9.02B forecast
Orders up 28% in both consumer and commercial segments
Stock down due to weak commercial aircraft engine deliveries, largely from overall demand decline and Boeing strike.

Steve: “Since the spin-off then is Steve's all-time favorite turnaround stock, Steve exited at 170 and thinks around 160 at the bottom of the old consolidation range is reasonable to re-enter.”

Raytheon: War hasn't stopped

Earnings $1.45 beat $1.34 forecast
Revenue $20.09B beat $19.82B forecast
New orders $36B push backlog to $221B

→ For every $1.00 of orders completed, Raytheon adds $1.80 in new orders

Steve: “ and the defense sector overall is in a strong growth environment due to political conditions and likely with the current environment, wars or war threats will last longer. However, Steve thinks defense stocks have gone too far and should wait for opportunities like end of last year when some incident or bad news hits.”

3M: Successful turnaround

Earnings: $1.98 vs $1.9 forecast
Revenue $6.29B vs $6.06B forecast
Operating margin 23.0% up 1.4% from last year

Steve: “In the Q2 report, Steve recommended everyone to enter at $110 and predictions about the turnaround process of have occurred as predicted, nothing has changed from the old comment and Steve thinks that will continue to grow.”

Read the previous quarter's financial report again:

Market: Interest rate fears flood the market

Similar to yesterday, the market continues to face fears from bond yields. However instead of burden then today burden after the news of launching AI Agents next month.

Regarding structure, almost no change from yesterday, SPX above 5800 bullish up to 5900 but overall all levels are very close together.

Internals today are generally weak, market sideways and balanced, most likely this environment will persist until the end of the session with SPX closing around 5850.

Apex is having an 80% discount - How to make money without capital from Funded Account:

New rules from 10/21:

- No more payout period, trade enough 8 days to withdraw money

- In 8 days need 5+ days with profit over $100

- Must trade to $52,600 to withdraw, only allowed to withdraw max back to $52,100

- After 5 withdrawals then can withdraw the entire amount above $52,600

- On average trades must not lose more than 5 times the win

- Below $52,600 only allowed to trade half contract

- No more DCA rules, flipping with news trading, feel free

- Not allowed to lose more than 30% of total profit per trade, calculated from $750 (30% of $2,600)