Market News

The NZDUSD moved lower after weaker New Zealand jobs data early in the new trading day, but sellers could not push the price below a familiar floor near 0.5579 (see green circles on the chart below). That level has attracted buyers on a number of occasions going back to late September and through October. Today, buyers leaned against it again and were rewarded with a rebound as the market reacted to the US election results.

The hold matters technically. Buyers had a level to define and limit risk, and they defended it. However, holding support is only the first step. To increase the bullish bias, they now need to take back resistance above.

The 200-hour moving average stalled the rebound

The rally today off the solid floor, broke above its…

• October US ISM services 54.5 vs 54.8 expected
• US final October S&P Global services PMI 56.1 vs 57.9 prelim
• US September international trade balance -105.0B vs -108.0B expected
• Canada Trade Balance ($C) for September +5.35B vs +4.1B estimate
• The biggest loser of the US elections was data centers
• EIA weekly US crude oil inventories -865K vs +877K expected
• US October ADP employment +86K vs +65K expected
• House Democratic leader Jeffries says will pass bill to stop tariffs and to end the Iran War
• Trump says election loss was largely a result of the Iran war
• The market is telling the hyperscalers it's happy about a slower data center buildout

Markets:

• WTI crude oil down $7.58 to $88.51
• S&P 500 up 1.7%
• Gold up $135 to $4063
• US 10-year yield down 6 bps to…

Perhaps the clearest takeaway from Tuesday's US midterms is that data centers are unpopular. After a short-lived construction boom, they provide little ongoing employment and drive up local energy costs. There were 41 local votes on data center curbs and 40 of them are on track to win, with margins in the 75/25% range.

Microsoft and Amazon are heavily into the data center business, including huge plans to build more so they should be losers today, right? Wrong. Shares of those two are up around 7% and the market cheers a slower, smaller data center buildout. The market has been hating the massive spending on highly-inflated chips and data center supply chains.

In effect, the market is saying that the government is doing for you what you…

Gold is trading up more than $130, or 3.3%, at $4061.80. The price reached a high of $4070.53 after trading as low as $3919.93.

Lower Treasury yields and a weaker US dollar are helping fuel the gains. The US 10-year yield is down 6.6 basis points at 4.883%, near its lowest level since September 10.

Why do lower yields and a weaker USD support gold?

A weaker USD makes gold less expensive for overseas buyers. Gold is priced internationally in dollars. When the dollar falls against currencies like the euro or yen, buyers using those currencies can purchase the same ounce for less, assuming the dollar gold price is unchanged. That can encourage demand.

Lower yields reduce the opportunity cost of holding gold. Gold pays no interest. When Treasury…

If endless Middle East wars were on the ballot, it's safe to say how it would have gone. 

Republicans are openly blaming the war for the midterm rout and the market is taking that at face value. The indication is that Trump will be forced out of Iran, and possibly soon. That will mean a reopened Hormuz and oil will be flowing again.

The market is aggressively pricing it in with WTI down $7.69 to $88.39 today in one of the largest plunges of the war. The close was the lowest since August 31. Given the oil hit $105 late last week, that's a huge turn. It's a big drag for inflation too and you can see that in the Treasury market with yields down 3-6 basis points, though there are certainly puts and takes there with Democrats now looking like…

• It's largely true election loss was the result of the Iran war
• It was worth it
• You can't let Iran have a nuclear weapon
• I'll get along probably with Democrats
• If I were on the ballot we would have won
• We weren't able to transfer the love to candidates
• It would destroy Democratic Part if they impeach me

Notably, JD Vance wrote at length about the election loss and also blamed the Iran war. It's worth reading but it doesn't mean that Trump and Republicans will finally put an end to the war. At the same time, WTI crude oil is down $7.83 today to $88.25, which is a sign the market says that it will either be Trump or Congress that puts an end to an extremely unpopular war.

Vance:

One of the things the data analysts on our side obsessed over was…

Crude oil futures are selling off sharply as traders react to comments from Senate Democratic Leader Chuck Schumer about ending the war with Iran.

Schumer says Democrats will move to end the war and that some Republicans have joined them. He adds that Americans do not want the conflict, do not understand why it was launched, and want it to end. The prospect of congressional action is weighing on oil as traders reassess the premium tied to the war and potential supply disruptions.

Meanwhile, Defense Secretary Pete Hegseth is facing increased scrutiny. CBS News reports that President Trump has asked advisers whether Hegseth should remain in his position following Republican losses in Tuesday’s elections. However, the White House says Trump…

House Democratic Leader Hakeem Jeffries says Democrats will pursue legislation to stop President Trump’s tariffs and bring an end to the war with Iran. He also wants to reverse Medicaid cuts and restore the enhanced Affordable Care Act tax credits, placing healthcare costs at the center of his affordability agenda.

The proposals target four areas:

• Tariffs: Reassert congressional authority over trade policy and seek to roll back Trump’s tariffs. Jeffries argues that those duties have increased the cost of everyday goods.

• Iran: Pursue legislation to end U.S. involvement in the war. He has said Democrats should examine available legislative options, including Congress’s control over funding, without committing to a specific funding…

US stocks are sharply higher, with the Dow up 2.06%, the S&P 500 up 1.75%, the Nasdaq Composite up 2.40% and the Nasdaq 100 up 2.03%. The run to the upside - especially in the tech heavy Nasdaq indices are interesting in that a Democrat sweep - along with the referendum votes on data centers - could limit expansion.  That too may slow the spending as well which may put a governor on the cost side for corporatations.  

The price action and the technicals become important in times of change and volatility.  Be aware that things can turn around, so having a technical roadmap is important. 

In the video above, I outline the key levels that will determine whether buyers can keep the momentum going or start to lose some of the control

A quick…

• Prior was -1892K
• Gasoline -222K vs +153K expected
• Distillates -3565K vs -100K expected

API data from late yesterday:

• Crude -5267K
• Gasoline +1427K 
• Distillates -270K

It's all about Trump and the Iran war today. There's a line of thinking that he will blame his advisors or others for the Iran war and look to wrap it up. In the post-mortems from the election, all sides are blaming an unpopular war and rising gasoline prices for the defeat. In contrast, Trump could go for broke on defeating Iran by escalating further in an effort to create a legacy.

WTI crude oil was last down $2.08 to $93.99 per barrel.

One of the clearest messages from Tuesday's US midterm elections had nothing to do with Republicans or Democrats. It was a resounding rejection of data centers.

Communities across the country voted on dozens of ballot measures involving data-center construction, zoning, moratoriums and development restrictions. Almost everywhere, voters came down on the same side: against new development.

The margins were extraordinary in many places.

• Granville, Ohio: 82.5% voted to prohibit data centers.

• Sunbury, Ohio: 78.6% supported a ban on large data centers, potentially affecting a proposed $2 billion Amazon project.

• Trenton, Ohio: 79.6% backed restrictions on large-scale data centers.

• Edgewater, Florida: 77.6% supported a ban on new data centers and…

• Prelim was 57.9
• Prior was 58.8
• Composite PMI 55.9 vs 57.6 prelim
• Coimposite prior was 58.4
• Sentiment regarding future activity fell to its lowest since May
• Demand was reported to be high
• Sentiment was overall at its lowest since May

This adds negative risk to the ISM services report at the top of the hour. 

I'm fearful that the Fed is behind the curve on inflation and that it's broadening. Of course, Trump could help to reverse that if he can get out of the Iran war ASAP.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence: “The October PMI surveys mark a strong start to the fourth quarter for the US economy, indicative of GDP rising at an annualised rate of over 4%. The star of the upturn remains the tech sector, but…