Grinding Higher...
- Marc Bentin
- Oct 19
- 7 min read
BentinPartner Weekly
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Please find below our latest Weekly Trend Report.
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Marc Bentin,
Bentinpartner GmbH
US stocks closed the week with additional gains despite kind of freaking out on Thursday after Zions and Western Alliance Bancorp plunged, falling victims of fraud on loans to funds invested in distressed commercial mortgages. Earlier on Tuesday, J. Dimon (CEO of JP Morgan) had warned about “cockroaches” in the credit market during a conference call where he referred to auto lender Tricolor and car-parts supplier First Brands. Making matters worse on Tuesday, China Commerce Ministry said it was “ready to fight till the end” in a trade war with the US after President Trump he was ready to add 100% tariffs on goods from China…
After the VIX briefly hit 29% early on Friday, the highest since April 24th, things suddenly calmed down (with all finance Ministers and Central Bank Governors convened in Washington contemplating the damage) and risk aversion ebbed back, closing the week at 21% on …no particular reason that I could see, other than the triple witching ending the day much better than initially feared with everybody having interest to put a hell of a fight in taking the credit cycle away from the critical juncture in which it seemed to be engulfing.
The US administration also seemed ready to strike (in a hurry) a more conciliatory tone after blasting China earlier in the week for being unreliable with Treasury Secretary S. Bessent calling China’s negotiator “unhinged”.
In the meantime, the US government shutdown continued with D. Trump accused of opportunistically picking winners and losers among those public services and servants who would continued to be paid in the third week that the government shutdown (the longest in history). Trump himself said programs favored by democrats are being targeted and “there are never going to come back, in many cases”.
At the same time, the Trump Administration said it was looking to provide an additional USD20bn aid to Argentina, coming on top of USD20bn in credit swap lines already pledged. The extension in financial support would come with the strings attached that the ruling party of President Milei would succeed in this month’s midterm legislative elections. “If he (President Milei) wins, we are staying with him. And he does not win, we’re gone”, D. Trump said.
Elsewhere, President Trump authorized the CIA to conduct covert action in Venezuela (including against President N. Maduro, while also floating the idea of land strikes in a broadening campaign against alleged drug trafficking, in a blatant effort to seek regime change and grab more (easily) the country’s natural resources. In the process, the military commander overseeing the Pentagon’s escalating attacks against boats in the Caribbean Sea said he was…stepping down.
On the Ukraine front front, Russian President V. Putin in a phone call last week with President D. Trump, demanded that Kyiv surrender full control of Donetsk, a strategically vital region in eastern Ukraine, as a condition for ending the war. This was prior to Ukraine’s V. Zelenskiy going into a White House meeting with US President D. Trump on Friday, hoping for a big arms deal, trading Ukraine’s advanced drone technology for US Tomahawk cruise missiles, and a tightening of the sanctions noose around Russia’s neck. He came out of the meeting empty handed, Bloomberg reported, with D. Trump failing to commit to deliver the Tomahawks and asking V. Zelinski what he thought of building a pipeline linking the US with the Russia in the strait of Bering…
After meeting with Zelenskiy, Trump said on social media that their talks were 'very interesting, and cordial, but I told him, as I likewise strongly suggested to President Putin, that it is time to stop the killing, and make a DEAL!'
Adding to the surprise was the choice of Hungary as the venue for a second meeting scheduled for the next two weeks. “It is also symbolic as it is a clear slap in the face for Brussels, which will not be involved in the meeting at all, despite the fact that Hungary is both an EU and Nato member, Bloomberg wrote, leaving Brussels now “scrambling for a seat” at the upcoming Putin–Trump summit, desperate to counter what EU officials call “Putin’s influence over Trump.”
German Chancellor Friedrich Merz said following Zelenskiy's meeting in the US that his trip turned out “tougher than expected” and “failed to deliver the results he counted on.”
“The visit didn’t go as Zelensky hoped,” Merz said, adding that only a strong Ukrainian army can bring peace, and surrender is not an option — because if Ukraine falls, Russia will strike another European country next.o 2.5%) as growth worries loomed.
Over the past week, the S&P500 gained 1,7% (13,4% YTD) while the Nasdaq100 rallied 2,4% (18,1% YTD). The US small cap index rallied 2,4% (10,2% YTD). AAPL rallied 2,9% (0,7%).
The Equally Weighed SP500 gained 1,6% (7,3% YTD), underperforming the S&P500 by-0,2%.
Cboe Volatility Index sold off by -4,1% (19,8% YTD) to 20,78.
The Eurostoxx50 gained 1,5% (17,3%), underperforming the S&P500 by-0,3%.
Diversified EM equities (VWO) rallied 3,5% (23,5%), outperforming the S&P500 by 1,8%.
The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies dropped -0,5% (-5,7%) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) gained 0,3% (6,5%).
10Y US Treasuries rallied -2bps (-55bps) to 4,01%. 10Y Bunds dropped -6bps (21bps) to 2,58%. 10Y Italian BTPs rallied -8bps (-14bps) to 3,38%, outperforming Bunds by -2bps.
10Y French OAT’s rallied -12bps (17bps) to 3,36%, outperforming Bunds by -6bps.
US High Yield (HY) Average Spread over Treasuries dropped -11bps (6bps) to 2,93%. US Investment Grade Average OAS dropped -2bps (-3bps) to 0,84%.
In European credit markets, EUR 5Y Senior Financial Spread climbed 0bps (-1bps) to 0,62%.
Gold rallied 3,4% (61,9%) while Silver dropped -0,8% (79,7%). Major Gold Mines (GDX) rallied 3,9% (132,2%).
Goldman Sachs Commodity Index gained 0,2% (3,5%). WTI Crude sold off by -3,6% (-20,0%).
Overnight in Asia…
S&P future +12 points; Hong Kong +2.5%; Nikkei+2.9%; China +1.1%
Asian stocks rose on Monday following two consecutive weeks of declines as easing trade tensions as Chinese GDP came in stronger than expected (+4.8% vs. 4.7% yoy in September). Industrial production also came stronger than expected (+6.5% vs. +5% expected yoy in September). However, residential home prices continued their decline (-0.4% from -0.3% last month)
Chinese political leaders will begin gathering in Beijing for a four-day meeting, known as its Fourth Plenum, with traders watching for fresh measures to extend China’s strongest equity rally in eight years.
Attention in Asia is also on Japan ahead of a vote on Tuesday that will determine the country’s next prime minister and provide clarity for investors
Israel launched strikes against Hamas in Gaza and reportedly suspended all aid shipments on Sunday after blaming Hamas for a lethal Palestinian ambush that left two troops dead.
In an unscheduled move, S&P Global Ratings downgraded France to A+ from AA-, saying that the country’s budget uncertainty “remains elevated” despite the submission of a 2025 draft budget. The downgrade means France lost its double-A rating at two of the three major credit assessors in little more than a month, potentially forcing some funds with ultra-strict investment criteria to sell the country’s bonds. The rating is now on par with Spain and Portugal, six notches above junk. Current PM Sebastien Lecornu, only managed to remain in office by ceding to demands from opposition lawmakers for more deficit spending and the suspension of President E. Macron’s pension reform that aimed to bolster public finances.…France is experiencing its most severe political instability since the founding of the Fifth Republic in 1958,” S&P said. Acknowledging the downgrade, Finance Minister Roland Lescure reaffirmed the government’s determination to meet this year’s deficit target of 5.4% and said France remains committed to bringing the gap below 3% of GDP by 2029. S&P said it could further lower its ratings on France “if its budgetary position deteriorates beyond our forecast or economic growth prospects worsen significantly.”, Bloomberg reported.
On China’s recent moves to restrict the export of rare earths and US threats of retaliation, ECB President Lagarde said she would “discount a little bit of the positioning at the moment, because this is typical of negotiating tactics on both sides.” But she stressed that China has a “very, very strong trading position on that front and they’re going to use it.”
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