Market 11/30: OPEC+ cuts oil production, PCE cools down

OPEC+ decides to cut production to avoid supply surplus

• OPEC+ decides to cut oil production by an additional -1 million barrels/day.

  • Of which, Russia will continue to limit exports -500,000 barrels/day.

• Meanwhile, Saudi Arabia alone maintains the plan to cut -1 million barrels/day since July, raising the total cut production to -2 million barrels/day from 2024.

→ OPEC+'s move aims to tighten supply to push oil prices up in the global market.

Crude oil price surges, fluctuating at 79.5 USD/barrel.

Updates on statements from some Fed officials

• Fed official Williams: "Fed may raise interest rates if inflation persists.".

• Fed official Daly: "It is still too early to know whether the Fed has finished raising interest rates.".

However, the PCE inflation index released tonight shows signs of cooling inflation, though still above the Fed's 2% target.

Fed's preferred inflation gauge falls to 30-month low

Core PCE and headline PCE recorded at +3.5% YoY and +3.00% YoY, lower than expected.

Growth in income and personal spending both cooled, both reaching +0.2% MoM as forecasted.

Compared to the same period last year, both indices also recorded the lowest in about 2 years:

• Income: +4.5% YoY.

• Spending: +5.3% YoY.

Savings rate based on % of disposable personal income (DPI - Disposable Personal Income) slightly increased to 3.8% in October.

Initial jobless claims rise to 2-year high

Continuing jobless claims rise to 1.93 million - highest since 2021

→ Sign of labor market cooling.

→ Consumer spending, inflation, and labor market all cooling in recent weeks indicate the economy is slowing down.

According to CME FedWatch Tool, 45% chance Fed will cut interest rates from March 2024.

Pending Home Sales drop to record low

After a slight recovery last month, pending home sales (Pending Home Sales) in October fell -1.5% MoM, -6.6% YoY (13 consecutive negative months).

Pending Home Sales index continues to fall to record lows since 2001, lower than during the financial crisis period, indicating a bleak housing market.

Salesforce ER: Stock surges due to earnings beating expectations

• Revenue reached 8.7 billion USD, up +11% YoY.

• Operating margin 17%, up +11 YoY.

• Non-GAAP EPS reached 2.11 USD (higher than expected by 0.05 USD).

Expected 2024 revenue to reach 34.8 billion USD, up +11% YoY.

Salesforce stock has risen to nearly 250 USD after the earnings report, up 80% since the beginning of the year thanks to job cut plans and cost optimization.

Some other news:

• Unrealized losses of banks at record high, -684 billion USD in Q3 due to surging mortgage rates reducing the value of mortgage-backed securities.

• Thousands of Twitter users canceled Disney+ subscriptions after Elon Musk accused some advertisers of blackmailing them using ad money.

• Eurozone CPI inflation index fell more than expected to 2.4%, signaling early rate cuts.

• Meta sues FTC over privacy agreement changes, accusing Meta of failing to comply with commitments. Meta claims the FTC's decision and use of an internal court system violate constitutional rights.