SURPRISING STRENGTH

The U.S. economy saw solid growth in the third quarter, driven by strong consumer spending that surpassed expectations for a slowdown. The gross domestic product (GDP) increased by 2.8% on an annualized basis, slightly lower than the anticipated 3.1%. This growth follows a 3% pace in the second quarter and highlights the economy’s resilience despite concerns about high interest rates and sustainability of stimulus measures. Consumer spending, accounting for two-thirds of economic activity, remained robust, with personal consumption expenditures rising by 3.7%. Government spending also played a significant role in driving growth, particularly in defense outlays. Moreover, it is worth noting that, as inflation has remained below the target rate, consumers seem to be relying on savings and credit to support their spending habits.

STILL OPTIMISTIC

In October, consumer confidence in the U.S. economy also saw a significant boost, with The Conference Board’s Consumer Confidence Index jumping over 11% to 138, the largest increase since March 2021. This rise was matched by an almost 8% increase in the expectations index, which reached 89.1, indicating positive outlooks for future economic conditions. Despite this positive sentiment from consumers, the Bureau of Labor Statistics reported a decrease in job openings, falling to 7.44 million in September, the lowest level since the start of the year. This drop in job opportunities brought the ratio of job vacancies to available workers below 1.1 to 1, a substantial decline from earlier in the year. However, despite the decrease in job openings, the number of hires increased by 123,000 in the same month, while separations remained relatively stable and quits saw a modest decrease of 107,000.

RECORD-BREAKING QUARTER

Alphabet surpassed expectations in its recent third-quarter earnings report, with strong growth in both earnings and revenue. The company’s cloud unit demonstrated significant progress, leading to a 6% increase in shares during after-hours trading. Key figures included earnings per share of $2.12, exceeding the expected $1.85, and revenue reaching $88.27 billion, higher than the anticipated $86.30 billion. Notable numbers showed YouTube advertising revenue at $8.92 billion, Google Cloud revenue at $11.35 billion, and traffic acquisition costs at $13.72 billion. Alphabet experienced a 15% revenue growth, with the cloud revenue specifically surging by almost 35% from the previous year. Additionally, net income rose to $26.3 billion. Moreover, the positive results from Alphabet set a strong start to a week of tech giant earnings reports, with companies like Meta, Microsoft, Apple, and Amazon also scheduled to release their financial results this week.

ONGOING VOLATILITY

In a flurry of yesterday’s trading activity, Bitcoin nearly reached a new all-time high, soaring above $73,000. This spike in Bitcoin’s value captivated traders and observers, with the cryptocurrency’s rise starting on Monday when it surpassed the $70,000 milestone. Notably, institutional interest in Bitcoin has been on the rise, with a significant influx of approximately $1 billion into Bitcoin-related funds within a week, signaling strong confidence in the digital asset’s future. However, it is important to remark that despite the excitement, the response within the crypto community remained relatively subdued, indicative of a more mature market accustomed to Bitcoin’s fluctuations. Thus, following the recent peak, Bitcoin settled close to the $72,000 mark as of 8:00 AM CST, and this demonstrates that the digital currency is currently experiencing notable volatility.

INTERNATIONAL NEWS

The euro zone economy exhibited stronger-than-expected growth in the third quarter, expanding by 0.4% despite forecasts of just 0.2%. Notable performers included Spain, with a 0.8% increase, and Ireland, which saw growth of 2%. Germany, the largest economy in the euro zone, experienced a surprising 0.2% growth, avoiding a projected recession despite challenges in its manufacturing sector. The European Central Bank responded to the weak economic activity by cutting rates for the third time in a year in October, and market expectations suggest that there could be another rate cut in December’s meeting. Many are considering the possibility of a larger rate reduction, with experts stating that there could be a 50 basis point decrease. However, experts are also forecasting a slowdown in GDP growth for the fourth quarter, particularly in Germany and Italy. Yet, despite these concerns, current data still suggests that the euro zone is not currently in a recession.