The eagerly awaited US consumer price index (CPI) was released this morning, and it showed that inflation decided to make a comeback in October. The CPI rose to a 2.6% year-over-year growth rate, up from September's 2.4%, aligning perfectly with Bloomberg's economist consensus. The Core CPI, which excludes volatile food and energy prices, increased by 3.3% from a year ago, matching forecasts and last year's rise. Housing costs continue to drive this inflationary trend. The Federal Reserve will be closely monitoring these numbers as it contemplates its next move.

This slight uptick in inflation shouldn't cause alarm if the trend soon returns to a cooling towards the Fed's 2% target. As Trump spins his policy web, financial markets are adjusting. The initial knee-jerk reactions that favored leveraged assets are giving way to more fundamental shifts, particularly in key rate projections and trade dynamics.

Europe, meanwhile, is feeling the strain. The performance gap between US and global stock markets widened yesterday. European markets, like France's CAC40, took a hit, dropping 2.69%. This was its steepest decline since a 3.13% fall on July 6, 2023. Since the US election results were confirmed, the Stoxx Europe 600 index has underperformed the S&P 500 by about 6%. Asia Pacific markets haven't fared much better, underperforming by 5%.

Wall Street is faring much better, although it took a breather yesterday, with the S&P 500 dipping just 0.29%. Trump's return to the political stage is driving this divergence. His comeback, coupled with the Republican sweep in Congress, is reshaping expectations. The Senate has already flipped, and the House of Representatives is on the brink, with Republicans holding 216 seats to the Democrats' 207, needing 218 for a majority. This trifecta gives the GOP control over both the executive and legislative branches. In his role as "president-elect," Trump is already assembling his future administration, filling positions with divisive figures ready to enforce his radical policies, including additional tariffs—a potential blow to global trade.

Investors are shifting their focus back to the US, explaining Wall Street's resilience amid global market woes. Trump's appointments suggest he won't shy away from tariffs, especially against China. Bank of America's latest survey of asset managers, conducted between November 1 and 7, provides insight. Though not perfectly timed, with the US election on November 5, 22% of respondents participated post-election. This group anticipates more growth, more inflation, and increased allocations to US and Japanese equities, technology, small caps, and high-yield bonds. Their biggest fears? Rising inflation and geopolitical tensions. The "Magnificent 7" stocks remain their top pick, outshining gold, which is losing favor to a bullish dollar. The Nasdaq is loved, but the Russell 2000 is gaining traction, especially among post-election respondents. The bet on Japanese equities hinges on a weakening yen and Japan's favorable geopolitical stance.

In the Asia-Pacific region, markets are struggling. Tokyo's Nikkei 225 fell 1.6%, and Seoul's KOSPI dropped 2.6%. India, Australia, and Taiwan saw losses between 0.5% and 1.2%. In China, Hong Kong continues its decline, down 0.1%, while mainland indices like the CSI300 rose 0.6%. European indices remain in a downward trend, with the Euro Stoxx 600 slipping 0.3%.

Today's economic highlights:

German industrial production and the US consumer price index are on the calendar today. https://www.marketscreener.com/stock-exchange/calendar/economic/

The dollar is down to EUR 0.9399 and GBP 0.7839. The ounce of gold is worth USD 2,612. Oil remains low, with North Sea Brent at USD 72.07 a barrel and US light crude WTI at USD 68.31. The yield on 10-year US debt stands at 4.38%. Bitcoin is just above USD 89,000.

In corporate news:

  • The Toronto Stock Exchange reached a record high, propelled by investor optimism post-U.S. elections and a significant 21% surge in Shopify's stock following robust third-quarter earnings and positive fourth-quarter projections.
  • Spotify's Q3 financial results exceeded expectations with strong subscriber growth, increased revenue, and a rise in shares, although Q4 revenue guidance fell below analyst consensus despite forecasting a profit above estimates due to cost cuts and robust holiday season performance.
  • Health care stocks declined Tuesday, with notable drops in the NYSE Health Care Index and the Health Care Select Sector SPDR Fund, amid news that the DOJ and state attorneys general are suing to block UnitedHealth Group's $3.3 billion acquisition of Amedisys, while Tyson Foods reported better-than-expected quarterly earnings.
  • CyberArk Software reported increased Q3 earnings and revenue, raised its 2024 outlook, announced a partnership with Wiz to boost cloud security, and appointed Erica Smith as the new CFO following Josh Siegel's departure.
  • Cava Group, a Mediterranean restaurant chain, raised its 2024 same-restaurant sales forecast, following strong Q3 earnings and revenue growth.
  • ZoomInfo Technologies reported a Q3 revenue of $303.6 million, below expectations.
  • Amazon has made several recent business moves, including an insider selling shares, partnering with IKEA to promote green fuels in shipping, securing a payment processing deal with Boku in Japan, and introducing stricter work-from-home policies for disabled employees.
  • Hut 8 Corp. reported a successful Q3 with a revenue of US$43.7 million, net income of $0.9 million, surpassing revenue expectations.
  • Griffon Corporation announced a quarterly dividend increase, reported Q4 earnings that topped expectations, and approved an additional $400 million for share repurchases while providing 2025 revenue guidance.
  • Topgolf Callaway Brands experienced a decline in Q3 earnings and revenue.

Analyst recommendations:

  • Bristol-Myers Squibb Company: Daiwa Securities upgrades to outperform from neutral with a price target raised from USD 50 to USD 65.
  • Camden Property Trust: Stifel downgrades to hold from buy and raises the target price from USD 120 to USD 121.
  • Caterpillar Inc.: Evercore ISI downgrades to underperform from in-line with a price target raised from USD 321 to USD 365.
  • Ccc Intelligent Solutions Holdings Inc.: Morgan Stanley upgrades to overweight from equalwt with a price target raised from USD 14 to USD 15.
  • Doximity, Inc.: Canaccord Genuity upgrades to hold from buy with a price target raised from USD 40 to USD 60.
  • Eaton Corporation Plc: Evercore ISI downgrades to in-line from outperform with a target price raised from USD 333 to USD 389.
  • Equity Residential: Stifel upgrades to buy from hold with a price target raised from USD 77.75 to USD 81.50.
  • Fortinet, Inc.: Punto Research upgrades to hold from buy with a price target raised from USD 91.50 to USD 105.27.
  • Globus Medical, Inc.: Zacks upgrades to outperform from neutral with a price target raised from USD 79 to USD 89.
  • Illinois Tool Works Inc.: Evercore ISI downgrades to underperform from in-line with a price target raised from USD 246 to USD 255.
  • International Paper Company: BNP Paribas Exane downgrades to underperform from neutral with a price target raised from USD 45.10 to USD 48.20.
  • On Holding Ag: BTIG upgrades to buy from neutral with a target price of USD 64.
  • Skyworks Solutions, Inc.: CTBC Securities Investment Service Co LTD downgrades to neutral from add with a price target reduced from USD 100 to USD 80.
  • Spotify Technology S.a.: Phillip Securities upgrades to accumulate from buy with a price target raised from USD 420 to USD 485.
  • Starbucks Corporation: Redburn Atlantic downgrades to sell from neutral with a price target reduced from USD 84 to USD 77.
  • Tesla, Inc.: Phillip Securities downgrades to sell from reduce with a target price of USD 230.
  • The Wendy's Company: Baptista Research upgrades to outperform from hold with a price target raised from USD 21.90 to USD 23.50.
  • Albemarle Corporation: Berenberg maintains its hold recommendation with a price target raised from 81 to USD 102.
  • Block, Inc.: Daiwa Securities maintains its buy recommendation and raises the target price from USD 80 to USD 100.
  • Cava Group, Inc.: Stifel maintains its buy recommendation and raises the target price from USD 118 to USD 175.
  • Charter Communications, Inc.: Redburn Atlantic maintains a neutral recommendation with a price target raised from 300 to USD 392.
  • Coinbase Global, Inc.: JMP Securities maintains its market outperform recommendation and raises the target price from USD 320 to USD 400.
  • Comerica Incorporated: Deutsche Bank maintains its hold recommendation with a price target raised from 53 to USD 64.
  • Crh Plc: DZ Bank AG Research maintains its buy recommendation and raises the target price from USD 95 to USD 120.
  • Saia, Inc.: Barclays maintains its overweight recommendation and raises the target price from USD 515 to USD 620.
  • The Home Depot, Inc.: Wolfe Research maintains its outperform rating and raises the target price from USD 392 to USD 471.
  • United Rentals, Inc.: Evercore ISI maintains its outperform recommendation and raises the target price from USD 795 to USD 1004.
  • Wells Fargo & Company: Deutsche Bank maintains its buy recommendation and raises the target price from 65 to USD 80.
  • Zoom Video Communications, Inc.: Morgan Stanley maintains its market weight recommendation and raises the target price from 68 to USD 86.
  • Zoominfo Technologies Inc.: Mizuho Securities maintains a neutral recommendation with a price target raised from 9 to USD 11.
  • Astrazeneca Plc: Intron Health upgrades to buy from hold with a target price of GBP 120.
  • Ds Smith Plc: BNP Paribas Exane downgrades to underperform from neutral with a target price raised from GBX 439 to GBX 480.
  • Rio Tinto Plc: AlphaValue/Baader Europe upgrades to buy from add with a price target reduced from GBP 64.84 to GBP 63.83.
  • Serco Group Plc: Shore Capital downgrades to hold from buy.
  • Spectris Plc: Davy downgrades to neutral from underperform with a target price reduced from GBX 2775 to GBX 2650.
  • Taylor Wimpey PL: Investec upgrades to buy from hold with a target price reduced from GBX 165 to GBX 153.
  • The Berkeley Group Holdings Plc: Investec upgrades to buy from hold with a target price reduced from GBX 5160 to GBX 4700.