MARKET RECAP at 4 pm ET

Wall Street ended lower and Treasury

yields rose as investors fretted that
Coming Up
strong services data could point to the
Federal Reserve hiking interest rates
for longer. The dollar gained against
the yen, the euro and the pound, while
gold prices dropped. Oil prices fell over
3%.

STOCKS Close Chng % Chng Yr-high Yr-low

DJIA 33946.64 -483.24 -1.40 36952.65 28660.94

Nasdaq 11239.94 -221.56 -1.93 15852.14 10088.83

S&P 500 3998.86 -72.84 -1.79 4818.62 3491.58
Toronto 20244.19 -241.47 -1.18 22213.07 17873.18
FTSE 7567.54 11.31 0.15 7687.27 6707.62
Eurofirst 1743.77 -8.22 -0.47 1921.56 1506.25
Nikkei 27820.40 42.50 0.15 29388.16 24681.74
Hang Seng 19518.29 842.94 4.51 25050.59 14597.31
The Department of Commerce building is seen before an expected report of new home sales
TREASURIES Yield Price numbers in Washington, January 26. REUTERS/Joshua Roberts
10-year 3.5956 -26 /32
2-year 4.4061 -8 /32
Data from the Commerce Department investment data is set for release.
5-year 3.7985 -19 /32
is expected to show the U.S. trade
30-year 3.6063 -29 /32
deficit widened to $80.0 billion in LIVECHAT-REUTERS GLOBAL
FOREX Last % Chng October from $73.3 billion in the MARKET FORUM
Euro/Dollar 1.0485 -0.50 previous month. Ben McMillan, founder and CIO of IDX
Dollar/Yen 136.81 1.87 Digital Assets, discusses the post-FTX
Sterling/Dollar 1.2180 -0.87 Chile's central bank is expected to outlook for crypto markets and how
Dollar/CAD 1.3596 0.95 announce its interest rate decision, institutional investors are responding.
USD/CNH (Offshore) 6.9741 -0.62 which is likely to remain unchanged in (1200 ET/1700 GMT) To join the
COMMODITIES ($) Price Chng % Chng
December. Also, Mexico's gross fixed discussion, click here
Front Month Crude /barrel 77.34 -2.64 -3.30
Spot gold (NY/oz) 1767.27 -30.55 -1.70 KEY ECONOMIC EVENTS
Copper U.S. (front month/lb) 0.0378 -0.0007 -1.88
CRB Index Total Return 292.44 -6.74 -2.25 Events ET Poll Prior
S&P 500 Price $ Chng % Chng International trade for Oct 0830 -$80.0 bln -$73.3 bln
GAINERS -$99.00
Goods trade balance (R) for Oct 0830 --
United Airlines Holdings Inc 45.03 1.14 2.60 bln
CME Group Inc 180.38 3.75 2.12
MGM Resorts International 37.80 0.72 1.93 KEY RESULTS
Solaredge Technologies Inc 314.06 5.29 1.71
Marketaxess Holdings Inc 284.78 3.62 1.29
Company Name* Quarter ET Smart Estimates EPS Estimates** Year Ago Rev Estimates (mln)
LOSERS
VF Corp 29.52 -3.71 -11.15 Autozone Q1 BMO $25.55 $25.29 $25.69 $3,866.80
Ceridian HCM Holding Inc 64.53 -5.19 -7.44
Signature Bank 125.88 -10.12 -7.44
*Includes companies on S&P 500 index. **Estimates may be updated or revised; release times based on
Salesforce Inc 133.86 -10.70 -7.40 company guidance or past practice.
Zions Bancorporation NA 48.42 -3.83 -7.33 I/B/E/S EPS and revenue estimates, and StarMine Smart Estimates, provided by Refinitiv.
Market Monitor
Markets ended lower, as investors
spooked by better-than-expected data
from the services sector re-evaluated
their thinking on the Federal Reserve's
interest rate policy, while shares of
Tesla slid on reports of a production cut
in China. The data comes on the heels
of a survey last week that showed
stronger-than-expected job and wage
growth in November, challenging
hopes that the Fed might slow the pace
and intensity of its rate hikes amid
recent signs of ebbing inflation. "The
labor market looks fine and so it's
almost just this kind of bizarre world
where good news is bad news," said
Jonathan Waite, fund manager at Frost
Investment Advisors. Tesla shares
ended 6.37% lower. The Dow Jones
Industrial Average fell 1.40% to
33,946.64, the S&P 500 lost 1.79% to
3,998.86 and the Nasdaq Composite A trader works on the floor of the New York Stock Exchange in New York City, December 5.
dropped 1.93% to 11,239.94. REUTERS/Brendan McDermid

Treasury yields rose as strong data

on the services and manufacturing
sectors, coming on the heels of a solid
non-farm payrolls report, reinforced
expectations the Federal Reserve will
continue to raise interest rates well into
2023. "I think the Fed has more wood
to chop here," said Gregory Faranello,
head of U.S. rates at AmeriVet
Securities in New York. "The Fed took
a sledgehammer to the market all year,
but (Fed Chair Jerome) Powell said
we're going to slow things down a little
bit which makes sense and see how
the economy evolves. But ISM services
were well north of 50 so there is
definitely conflicting data here," he
added, saying that, in contrast, inflation
has been on a downtrend of late. The
two-year notes were down 8/32,
yielding 4.4061. The benchmark 10-
year notes fell 26/32, to yield 3.5956%
and the 30- year bonds were down
28/32, yielding 3.6054%.
The dollar gained against the yen, the
euro and the pound after data showed
that U.S. services industry activity
unexpectedly picked up in November,
prompting speculation the Federal
Reserve may lift interest rates more
than recently projected. "The ISM
services PMI data highlighted a U.S.
economy that's still showing some
strength, despite tighter financial
conditions," said Priscilla
Thiagamoorthy, an economist at BMO
Capital Markets. "While that's good
news for the growth outlook, it's not so
great for the Fed trying to dampen
demand and ease inflation." The dollar
index was 0.73% higher at 105.31.
The euro slid 0.50% to $1.0485, while
the pound was 0.89% lower at
$1.2178. Against the Japanese yen,
the dollar was up 1.88% to 136.82
yen.
Oil prices fell over 3%, following U.S.
stock markets lower, after U.S. service
sector data raised worries that the
Federal Reserve could continue its
aggressive policy tightening path.
"Macro-economic jitters about the Fed
and what they're going to do on interest
rates are taking over the market," said
Phil Flynn, an analyst at Price Futures
group. Brent crude futures were down
3.02% at $82.99 a barrel. West Texas
Intermediate crude fell 3.31% to
$77.33 a barrel.
Gold prices beat a sharp retreat as the
dollar rebounded on bets that strong
U.S. economic readings may give the
Federal Reserve fodder to accelerate
rate hikes. The hotter-than-expected
ISM data prompted a rally in the dollar
index, in turn causing a selloff in gold
and silver on expectations that the Fed
is going to be more hawkish, said
Phillip Streible, chief market strategist
at Blue Line Futures in Chicago. The
dollar's subsequent bounce made gold
less attractive for bullion traders
holding other currencies. Spot gold
dipped 1.70% to $1,767.29 per ounce,
after touching its highest since July 5 at
$1,809.91 earlier in the day. U.S. gold
futures were down 1.61% to $1,780.50
an ounce.

2
Top News
Tesla cuts output plan for Shanghai
plant for December - sources
Tesla plans to cut December output of
the Model Y at its Shanghai plant by
more than 20% from the previous
month, two people with knowledge of
electric vehicle maker's production plan
said. The planned production cut
comes after Tesla reported record
sales in China for November. The
output reduction was first reported by
Bloomberg, which said the move was a
reflection of sluggish demand. Reuters
was not able to determine the reason
for the planned reduction in output at
the Shanghai factory, Tesla's largest
production hub. The U.S. automaker
has cut prices for Model 3 and Model Y
cars by up to 9% in China and offered
insurance incentives, which helped
boost November sales of its China-
made cars by 40% from October and
by 89.7% compared to a year earlier.
Bankman-Fried says he will testify
before U.S. House committee
FTX founder Sam Bankman-Fried
tweeted on Sunday that he would
testify before the House Financial
Services Committee after he finished
"learning and reviewing" the events
that led to the spectacular collapse of
his cryptocurrency exchange. The U.S.
House Financial Services Committee
plans to hold a hearing in December to
investigate the collapse of FTX and
expects to hear from the companies
and individuals involved, including
founder and CEO Bankman-Fried.
Committee Chair Maxine Waters last
week invited Bankman-Fried to
participate in the panel's hearing on
Dec. 13. "Once I have finished learning
and reviewing what happened, I would
feel like it was my duty to appear
before the committee and explain," the
founder and former FTX CEO wrote in
a reply to Waters.
Exxon Mobil raises CEO, top
executives base pay
Exxon Mobil is raising the annual base
salaries of its top boss and other
A file photo of the logo of Tesla seen in Taipei, Taiwan, August 11, 2017. REUTERS/Tyrone Siu
executives for next year, the largest
U.S. oil company said. Exxon Mobil's
compensation committee approved an
increase in the annual salary of Chief
Executive Officer Darren Woods to
$1.88 million from $1.70 million this
year, according to a filing. Kathryn
Mikells, who became the company's
chief financial officer in August last
year, will receive a base pay of $1.22
million in 2023. The company also
raised the salaries of its senior vice
presidents, effective Jan. 1, 2023. Base
salaries, however, represent less than
10% of total pay, with stock awards
and bonuses making up a bigger share
of what Exxon's executives pocket
every year.
U.S. railroad investor resolutions
urge paid sick leave for workers
Investors have proposed shareholder
resolutions at two U.S. railroads calling
for paid sick leave for workers, an issue
that nearly caused a national rail strike,
and they could go to an advisory vote
at shareholder meetings in the spring.
On Friday President Joe Biden signed
legislation to block a rail shutdown that
could have devastated the American
economy. But the deal he approved did
not include paid sick days for workers,
a key sticking point for unions in
3
contract talks with five major U.S.
railroads. Proposals seen by Reuters
filed by activist investors ask Norfolk
Southern and Union Pacific to offer "a
reasonable amount" of paid sick time,
determined by company directors. If
accepted each resolution would appear
as a ballot item at the railroads'
springtime shareholder meetings.
U.S. Supreme Court rejects
Centripetal appeal in Cisco patent
fight
The U.S. Supreme Court declined to
hear a bid by Centripetal Networks to
reinstate the largest award in the
history of U.S. patent law - $2.75 billion
- to be paid by Cisco Systems in a
cybersecurity patent dispute. The
justices turned away Reston, Virginia-
based cybersecurity company
Centripetal's appeal of a lower court's
decision to negate the award after the
judge who presided over the trial
disclosed that his wife owned Cisco
stock worth $4,688. Judicial conflicts of
interest have attracted heightened
attention since the Wall Street Journal
last year reported that dozens of
federal judges had violated federal law
by hearing lawsuits involving
companies in which they or their
families owned stock. Centripetal sued
Cisco in federal court in Virginia in
2018, accusing it of infringing patents
related to Centripetal's network-
security technology.
MercadoLibre files complaints
against Apple for 'anti-competitive
practices'
E-commerce giant MercadoLibre said it
has filed complaints against Apple with
antitrust regulators in Brazil and Mexico
for anti-competitive practices, accusing
the U.S.-based firm of abusing what it
called a monopoly in the distribution of
apps for its devices. In a statement, the
e-commerce giant said that Apple had
imposed a series of restrictions on the
distribution of digital goods and in-app
purchases, including banning apps
from distributing third-party digital
goods and services such as movies,
music, video games, books and written
content. In the complaint, the South
American company criticized the
California tech giant for requiring
developers who offer digital goods or
services within apps to use Apple's
own payment system and stopping
them from redirecting buyers to their
websites.
Vans sneaker maker VF Corp says
CEO to retire, names Dorer as
interim chief
VF Corp announced Chief Executive
Officer Steve Rendle's retirement and
named its lead independent director
Benno Dorer as interim CEO effective
immediately. Rendle, who was also
chairman of the board, served as CEO
for nearly six years and has been with
the apparel and footwear maker for
about 25 years. The Vans sneaker
maker said it has started looking for a
permanent CEO and named Richard
Carucci as interim chairman of the
board. In a separate news, Slack Chief
Executive Officer Stewart Butterfield
plans to leave the workplace
messaging platform in January, parent
company Salesforce said. To read
more, click here
ADM sees its sustainable aviation
fuel coming online by 2026
Global grain merchant Archer Daniels
Midland sees the commercialization of
its sustainable aviation fuel (SAF)
efforts coming online around 2026,
Chief Financial Officer Vikram Luthar
said. "SAF in terms of reality to come
online, at least for us, is going to be in
the 2026 type of time frame," said
Luthar, speaking at the BMO Capital
Markets 2022 Growth & ESG
Conference. He said investment in the
SAF sector will be needed to help
commercialize sustainable jet fuel but
such investment would not necessarily
come from ADM. "We believe there's
enough economic incentive for SAF to
be profitable and to be a viable blend
for jet fuel," he said, adding that in
some circumstances, "we believe there
is some profitability already in SAF."
Nike cuts ties with Brooklyn Nets'
Kyrie Irving
Nike said it has cut ties with Kyrie
Irving, a month after suspending its
relationship with the Brooklyn Nets star
in the aftermath of his promotion of an
anti-Semitic documentary. Irving faced
heavy criticism after he posted a link to
the 2018 documentary film on Twitter in
late October and later defended the
A file photo of a silhouette of a woman wearing a protective face shield and a protective face mask
is seen near to a Nike logo at a shopping mall on the first day after the government eased
restrictions amid the coronavirus disease (COVID-19) outbreak in Jakarta, Indonesia, June 15,
2020. REUTERS/Ajeng Dinar Ulfiana
4
post. The seven-time All Star has since
deleted the post and apologized. The
sportswear giant in November
canceled its next Irving-branded shoe
release. Several media outlets have
reported the sneaker deal to be worth
$11 million, but Reuters could not
confirm that.
Hertz to pay $168 million to settle
over 95% of wrongful theft report
claims
Hertz said it will pay about $168 million
by year-end to resolve over 95% of
pending claims from owners who
alleged the car rental giant filed
wrongful theft reports. Some customers
had sued Hertz alleging the police
detained or arrested individuals in error
after the company reported rental cars
were stolen. Hertz, which operates
Hertz, Dollar and Thrifty vehicle rental
brands, said it will recover a
"meaningful" portion of the settlement
amount from its insurers. The
settlement resolves 364 pending claims
from car owners. Hertz said it does not
expect the resolution of these claims to
have a material impact on its capital
return plans for this and next year.
A protester waves an LGBT rights 'pride flag' as activists gather outside the U.S. Supreme Court, where justices were set to hear arguments in a major
case pitting LGBT rights against a claim that the constitutional right to free speech exempts artists from anti-discrimination laws in a dispute involving
an evangelical Christian web designer who refuses to provide her services for same-sex marriages, Washington, December 5. REUTERS/Kevin
Lamarque

Insight and Analysis

Blackstone REIT restriction a
possible warning sign for markets
While there has been little wider fallout
from this week's surge in redemption
requests at an unlisted Blackstone real
estate income trust (REIT), it is being
read by some as a warning sign.
Blackstone limited withdrawals from its
$69 billion unlisted REIT on Thursday
after redemption requests hit pre-set
limits amid investor concerns it was
slow to adjust valuations as interest
rates surged, a source close to the
fund said. The development is yet
another reminder of the risks facing not
just sectors that are sensitive to higher
interest rates but also broader financial
markets, which have rallied sharply on
hopes that interest rate hikes will slow.
EXPLAINER-Why U.S. airline pilot
wages are outpacing global rises
Delta Air Lines has offered a 34%
cumulative pay increase to its pilots
over three years in a new contract, in a
deal widely expected to become a
benchmark for negotiations at rivals
United Airlines and American Airlines.
But the proposed Delta contract is
unlikely to set a global precedent of
inflation-beating pay rises for pilots,
analysts say, because of factors unique
to the U.S. market. The U.S. domestic
aviation market has rebounded to pre-
pandemic levels far more quickly than
markets in other parts of the world,
according to data. U.S. domestic
demand was only 0.8% below than
2019 levels in October.
COLUMN-OPEC+ sits sensibly on its
hands as oil uncertainties abound:
Russell
When faced with a myriad of
uncertainties the most sensible path is
often to sit back and see how events
unfold. That is what OPEC+ has
chosen to do with the crude oil market.
The Organization of the Petroleum
Exporting Countries and allies including
Russia did what was expected at their
meeting on Sunday, sticking to their
previous crude output target. The
group's next scheduled meeting is a
monitoring committee gathering on
Feb. 1, which means that barring some
extraordinary developments the current
production target will remain steady for
some months.

5
CANADA
Market Monitor
Canada's main stock index dropped,
as elevated government bond yields
dented rate-sensitive technology
shares, while investor focus shifted to
the Bank of Canada's interest rate
meeting due later this week. The Bank
of Canada on Wednesday will be one
of the first major economies to
announce its rate-hike decision with the
U.S. Federal Reserve and the
European Central Bank set to follow
next week. "I am more of the belief now
that this might be the last of its hike,"
said Bryden Teich, portfolio manager at
Avenue Investment Management.
The Toronto Stock Exchange's S&P/
Top News
Canada's deep yield curve inversion
adds to BoC rate hike dilemma
As the Bank of Canada considers
ditching oversized interest rate hikes, it
is dealing with an economy likely more
overheated than previously thought but
also the bond market's clearest signal
yet that recession and lower inflation lie
ahead. Canada's central bank says
that the economy needs to slow from
overheated levels in order to ease
inflation. If its tightening campaign
overshoots to achieve that objective it
could trigger a deeper downturn than
expected. The bond market could be
flagging that risk. The yield on the
Canadian 10-year government bond
has fallen nearly 100 basis points
below the 2-year yield, marking the
biggest inversion of Canada's yield
curve in Refinitiv data going back to
1994 and deeper than the U.S.
Treasury yield curve inversion. Some
analysts see curve inversions as
predictors of recessions. Canada's
economy is likely to be particularly
sensitive to higher rates after
Canadians borrowed heavily during the
COVID-19 pandemic to participate in a
red-hot housing market.
TSX composite index ended down
1.17% at 20,246.56.
Technology stocks fell 2.85% to
142.61.
The U.S. dollar was 0.94% up against
its Canadian counterpart at
C$1.3595.
REUTERS/Mark Blinch
Ontario education workers accept
labour contract with province
Education workers in Ontario,
Canada's most populous province,
have voted to accept a labour deal with
the provincial government, union
representatives said. The vote comes
after about 55,000 education workers
represented by the Canadian Union of
Public Employees (CUPE) - a group
including education assistants and
library workers - called off a strike on
Nov. 7 after two days when Ontario's
government said it would rescind a law
imposing a contract and using a legal
clause to override workers' right to
strike. The government "thought we'd
roll over, we'd suck it up and we'd
accept less than we were worth,"
CUPE Ontario School Board Council of
Unions President Laura Walton told
reporters. More than 40,000 of the
union's members voted, she said, with
73% voting in favour of the agreement.
Ontario Education Minister Stephen
Lecce said in a tweet the deal was "a
great outcome that keeps kids learning
in class." "We are so pleased we've
been able to reach an agreement that
has been overwhelmingly ratified by
6
COMING UP
Canada's Ivey Purchasing Managers
Index data is due for release.
Separately, Statistics Canada is set to
show Canada's trade balance at $1.20
billion in October, up from $1.14 billion
in the month before. The country's
import and export prices data is also
scheduled for release.
TSE's S&P/TSX composite Price C$ Chng % Chng
GAINERS
AltaGas Ltd 23.86 1.04 4.56
Tilray Brands Inc 6.32 0.17 2.76
Filo Mining Corp 20.66 0.52 2.58
LOSERS
Energy Fuels Inc 8.40 -0.69 -7.59
Wesdome Gold Mines Ltd 8.32 -0.65 -7.25
OceanaGold Corp 2.48 -0.18 -6.77
the members that keeps kids in
classrooms and preserves the learning
experience."
GM's BrightDrop signs first
customer in Canada, unveils
country's first large EV factory
The first electric delivery trucks rolled
off production lines at BrightDrop's new
factory in Canada, when the upstart
unit of General Motors also announced
DHL Express Canada as its first
customer outside the United States.
GM spent seven months transforming
its 2 million-square-foot CAMI
Assembly plant in Ingersoll, Ontario,
into Canada's first large-scale electric
vehicle factory for BrightDrop Zevo
delivery trucks. Before the switch, the
site manufactured the gasoline-
powered Chevy Equinox. Opening the
retooled plant "is a major step to
providing EVs at scale," said
BrightDrop Chief Executive Travis
Katz, who expects the facility to turn
out 50,000 Zevo electric vans annually
by 2025. BrightDrop's relationship with
GM gives it manufacturing and financial
heft that several of its rival EV startups
lack, experts said.
WEALTH NEWS
ECONOMIC INDICATOR
U.S. services industry regains steam; factory
orders accelerate
U.S. services industry activity unexpectedly picked
up in November, with employment rebounding,
offering more evidence of underlying momentum in
the economy as it braces for an anticipated
recession next year. The survey from the Institute
for Supply Management (ISM) followed on the
heels of news last Friday that the economy
continued to create jobs at a solid clip in November,
with wage growth accelerating. Consumer spending
also rose strongly in October. The ISM said its non-
manufacturing PMI increased to 56.5 last month
from 54.4 in October. It was boosted by a surge in
business activity to an 11-month high. In
November, the ISM's measure of services industry
employment increased to 51.5 from 49.1 in
October.

RATE DECISION
Will the Fed 'raise and hold' rates? Traders bet they will not
Federal Reserve policymakers have all but promised to dial down the pace of their interest rate hikes next week, and over
coming months feel their way to a policy rate high enough to push down on inflation, but not so high as to crash the economy.

GRAPHIC
Global central banks extend rate hike push in November
The pace and scale of rate hikes delivered by central banks in November picked up speed again as policy makers around the
globe battle decade high inflation.

TRADE MEETING
Tax credits for EU electric vehicles to dominate U.S. trade talks
The European Union's top trade official called for urgent steps before the end of the year to modify a U.S. climate law that
would cut off the bloc's electric vehicles from U.S. tax credits, calling the measure discriminatory.

BIS REPORT
FX swap debt a $80 trillion 'blind spot' global regulator says
Pension funds and other 'non-bank' financial firms have more than $80 trillion of hidden, off-balance sheet dollar debt in FX
swaps, the Bank for International Settlements (BIS) said.

DEAL TERMINATION
Fintech Circle terminates $9 billion deal with Bob Diamond-backed SPAC
Cryptocurrency operator Circle Internet Financial said it has decided to end a $9 billion deal with blank-check firm Concord
Acquisition, nearly ten months after an earlier agreement was amended.

DEAL
EU charge sheet tells Illumina to swiftly unwind Grail deal
EU antitrust regulators on Monday proposed measures for U.S. life sciences company Illumina to unwind its acquisition of
biotech firm Grail, three months after blocking the deal on concerns that it would hurt competition.

7
ON THE RADAR
Events ET Poll Prior
Wed: Unit labor costs revised for Q3 0830 3.1% 3.5%
Productivity revised for Q3 0830 0.6% 0.3%
Consumer credit for Oct 1500 $28.30 bln $24.98 bln

Thu: Initial jobless claims 0830 230,000 225,000

Jobless claims 4-week average 0830 -- 228,750
Continued jobless claims 0830 1.600 mln 1.608 mln

Fri: PPI Machine Manufacturing for Nov 0830 -- 171.3

PPI Final demand yy for Nov 0830 7.2% 8.0%
PPI Final demand mm for Nov 0830 0.2% 0.2%
PPI ex-food/energy yy for Nov 0830 5.9% 6.7%
PPI ex-food/energy mm for Nov 0830 0.2% 0.0%
PPI ex-food/energy/transport yy for Nov 0830 -- 5.4%
PPI ex-food/energy/transport mm for Nov 0830 -- 0.2%
U Mich Sentiment Preliminary for Dec 1000 56.9 56.8
U Mich Conditions Preliminary for Dec 1000 58.0 58.8
U Mich Expectations Preliminary for Dec 1000 56.0 55.6
U Mich 1-year inflation preliminary for Dec 1000 -- 4.9%
U Mich 5-year inflation preliminary for Dec 1000 -- 3.0%
Wholesale inventories, R mm for Oct 1000 0.8% 0.8%
Wholesale sales mm for Oct 1000 -- 0.4%