MARKET WRAPS

Watch For:

Durable Goods for October; 2nd estimate GDP for 3Q; Weekly Jobless Claims; University of Michigan Final Consumer Survey for November; New Home Sales for October; Personal Income & Outlays for October; EIA Weekly Petroleum Status Report

Opening Call:

Stock futures paused as investors awaited a busy day of economic data releases ahead of the Thanksgiving holiday, plus minutes from the Federal Reserve's latest meeting.

Stock markets' gains have been tempered in recent weeks by concerns over fresh coronavirus lockdowns in parts of the world, and inflation that is proving longer lasting than many had anticipated. The robust earnings season, which had been a major boost to markets, is drawing to a close and investors are looking for fresh drivers.

"We have had fantastic earnings, the bond market is behaving itself, inflation is up but rates are very low. As I sit here with five to six weeks left to the year I have a hard time not being optimistic," said Tim Holland, chief investment officer at Orion Advisor Solutions. "As long as rates are low and earnings are growing I think it's very difficult not to lean into stocks."

Deere-whose workers approved new contracts in November, ending a strike that lasted over a month-is set to release earnings Wednesday ahead of the opening bell. Nordstrom slumped over 27% in out-of-hours trading, while Gap fell more than 18%. Both retailers reported disappointing earnings due to supply-chain issues late Tuesday, which bode ill for the sector ahead of the festive season.

A slate of economic data is due Wednesday, including some releases brought forward because of Thanksgiving. Durable goods orders, jobless claims and a second reading of third-quarter gross domestic product are due at 8:30 a.m. Data on consumer confidence, and new home sales, will be out at 10 a.m.

Data on personal spending is also due at 10 a.m. The release includes the Fed's preferred measure of inflation-the core personal-consumption expenditures price index-which is forecast to show its biggest annual rise since the early 1990s.

Overseas, European shares struggled on lockdown concerns, while in Asia, stock markets were mixed.

Stocks to Watch:

Abercrombie & Fitch plans to spend half of its capital budget on improving its digital technology, a larger share than in prior years, Chief Financial Officer Scott Lipesky said. The company said Tuesday it expects to spend $100 million on capex in the 2021 fiscal year.

Abercrombie previously spent most of its capital budget on its brick-and-mortar stores, according to Mr. Lipesky. The company's digital investments include improving mobile capabilities such as allowing customers to shop online and pick up in stores, Mr. Lipesky said.

Mr. Lipesky also said Abercrombie is examining whether to increase prices next year in response to ongoing increases in raw materials costs, particularly cotton. The company has offered fewer markdowns to customers in recent months, which in turn has increased the average price of its goods and boosted sales.

Net sales during the quarter ended Oct. 31 rose 10% from a year earlier, to $905.2 million. But ongoing increases in the price of cotton and other input costs could push the company to raise the ticket price on its apparel, according to Mr. Lipesky. "We'll think about it for 2022," he said.

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Porsche said that BlackRock is investing in charging-network provider Ionity, a joint venture that includes a number of auto makers.

Porsche said it would invest $787.4 million by 2025 together with other Ionity shareholders but didn't disclose individual shares or the size of BlackRock's stake in the network. Ionity plans to increase the number of 350kW charging points for electric vehicles in Europe to 7,000 by 2025 from the current 1,500.

Apart from Porsche and BlackRock, whose investment is subject to authorities' approval, BMW, Mercedes-Benz, Ford, KIA and Audi are part of the joint venture.

Forex:

The dollar was slightly firmer in Europe and CBA said another set of strong inflation figures may spur higher market pricing for FOMC interest-rate increases and help the USD Index reach a fresh 2021 high. CBA said both the headline and core PCE deflator for October could post a strong reading as signaled by the recent sharp rise in the CPI.

UBS Global Wealth Management said the Fed won't be compelled to overtighten financial conditions and will continue to balance developments in the labor market with its price stability objective.

This follows the market's movement to price in a modestly faster pace of monetary tightening with lower inflation due to Jerome Powell's nomination for a second term as Fed chairman. As disruptions from the Covid-19 pandemic fade, UBS expects the annual rate of inflation to fall from 6.5% at the end of 2021 to 1.8% by the end of 2022.

"If this is the case, it will make it easier for the Fed to justify remaining on hold until 2023," Mark Haefele, chief investment officer said.

Bonds:

Long-dated Treasury yields eased slightly in Europe, as investors continued to price in more monetary tightening by the Fed. Volumes were typically lower, analysts said, noting that the days before Thanksgiving tends to be comparatively thinly traded.

Investors will look for further insight into the Fed's plans for interest rates and tapering when the central bank publishes minutes from its November meeting at 2 p.m. ET.

DZ Bank said the market's pricing of almost three interest rate increases by the Fed, each 25 basis points, by the end of 2022 is excessive.

Analyst Birgit Henseler said that at the beginning of October, markets were still only pricing in one Fed interest-rate rise by December 2022 but raised their rate expectations after Jerome Powell's nomination.

Commodities:

Oil prices gained in Europe, but their post-SPR rally slowed, with investors' attention turning to OPEC+ when it meets next month.

Crude prices have shown limited response to the U.S.'s plan to release 50 million barrels of oil from its strategic stockpiles. The move had been well telegraphed by the White House and some market participants had been girding for a larger release.

DNB Markets' Helge Andre Martinsen said investors had expected more than 100 million barrels to be tapped overall from the major oil consumers, considerably more than the 67 million barrels released. The move had been a "classic 'sell the rumor buy the fact' dynamic."

Gold edged higher ahead of a bumper day of economic data releases, while the FOMC meeting minutes should offer bullion investors insight into the central bank's inflation views and outlook for interest rates.

TODAY'S TOP HEADLINES

Bain Capital Targets $1.5 Billion for Second Tech Opportunities Fund

Bain Capital is pitching investors on its second technology-focused fund with a goal of raising $1.5 billion barely a year after wrapping up the strategy's debut fund with $1.25 billion.

The New Mexico State Investment Council committed up to $60 million to the vehicle, Bain Capital Tech Opportunities Fund II LP, according to David Lee, the director of private equity for the council, which manages $34 billion of assets for four permanent funds. Bain Capital is committing $150 million to the fund, Mr. Lee said.

Target's Chief Legal and Risk Officer Helps Retailer Manage Bumpy Supply Chains

Target Corp. started to prepare for possible supply-chain challenges this year right after the 2020 holiday season concluded, with the help of technology tools to predict consumer purchasing patterns and mapping out potential bumps along the way that could hamper deliveries from manufacturers to its shelves.

With the start of the holiday shopping season, the retailer reported it had 17.6% more in inventory in its fiscal third quarter ended Oct. 30 compared with a year earlier, well exceeding a 13.2% growth in sales.

TD Bank's New CIO Pushes for More Women in Tech

The new chief information officer of TD Bank NA, the U.S. subsidiary of Canada's Toronto-Dominion Bank, said her priorities include encouraging women to pursue tech careers and making her staff of engineers feel supported.

Judy Dinn, who started in the role Nov. 1, succeeded Janice Withers, who has retired. Ms. Dinn said her goals take on even more importance given nationwide talent shortages that make hiring and retaining tech employees increasingly difficult.

HP Sees Office Reopenings Lifting PC Demand Ahead of Promising Holiday Season

HP Inc. reported strong earnings and gave an upbeat outlook, aided by office reopenings and an expectation for healthy consumer demand through the holiday shopping season despite supply shortages.

The PC and printer maker on Tuesday said it generated quarterly sales of $16.7 billion, up 9.3% from the year-ago period, and $3.1 billion in net income, including a one-time $1.78 billion legal settlement. The results beat Wall Street expectations for both sales and earnings.

Gap's Sales Suffer From Supply-Chain Problems Before Holidays

Gap Inc. joined a growing list of apparel chains still struggling to keep their shelves stocked even as large retailers such as Walmart Inc. say they have been able to snag enough inventory for the holidays.

Gap reported net sales of $3.9 billion for the quarter ended Oct. 30, flat from 2020 and 1% lower than 2019. The company said its brands were unable to meet strong demand from shoppers as continued fallout from Covid-19 outbreaks led to factory closures and clogged ports. Shares dropped 17% in after-hours trading.

U.S. Households Likely Increased Spending in October

U.S. consumers likely boosted spending in October, helping to power the broader economic recovery as businesses step up investment and the labor market tightens.

Economists surveyed by The Wall Street Journal estimated that consumer spending rose 1% in October from a month earlier and that personal incomes edged up 0.2% last month. The Commerce Department's report on October personal income and spending is scheduled to be published at 10 a.m. Eastern time on Wednesday. It includes a key reading on inflation, the personal consumption expenditures price index.

U.S. Jobless Claims Expected to Edge Down

Filings for unemployment benefits likely continued their gradual decline last week amid a hot labor market.

Economists surveyed by The Wall Street Journal estimate that weekly jobless claims, a proxy for layoffs, fell to 260,000 in the week ended Nov. 20 from 268,000 the prior week. That would bring the four-week moving average for initial claims, which smooths out weekly volatility, to the lowest level since the Covid-19 crisis began last year.

Turkey's Erdogan Looks to Regional Rival for Investment Amid Currency Crisis

ANKARA, Turkey-Turkey's President Recep Tayyip Erdogan is set to host on Wednesday the de facto leader of the United Arab Emirates in search of foreign investment that could help ease the country's economic crisis after the local currency extended a sharp slide.

Abu Dhabi Crown Prince Mohammed bin Zayed al Nahyan's visit to Ankara marks a recent thaw in ties after years of animosity between the two countries, which have competed fiercely for influence in the Middle East. It comes as Turkey seeks much-needed foreign investment and offers the oil-rich U.A.E. potential support in a broader struggle against Abu Dhabi's other main regional rival, Iran.

German Business Sentiment Declined Again in November

German business sentiment worsened again in November, as supply bottlenecks and the rise in coronavirus cases clouded the short-term outlook.

The Ifo business-climate index decreased to 96.5 points in November from 97.7 points in October, data from the Ifo Institute showed Wednesday. This is the fifth consecutive decrease of the indicator after it peaked at 101.8 in June.

Japan Confirms It Will Tap State Oil Reserves

The Japanese government confirmed on Wednesday that it will tap its state oil reserves, following a similar announcement from President Biden overnight aimed at bringing down gasoline prices.

Japan plans to release several days' worth of oil by selling it on the market. It will then buy oil at a later date to replenish the stockpile. The government currently holds about 145 days' worth of oil.

Mexico's Former Finance Minister Arturo Herrera No Longer to Head Central Bank

MEXICO CITY -- Mexican President Andrés Manuel López Obrador has decided to withdraw the nomination of former finance minister Arturo Herrera to lead the Bank of Mexico, Mr. Herrera said Tuesday.

Mr. López Obrador named Mr. Herrera in June as his choice to head the central bank on Jan. 1 and submitted the proposal for Senate ratification in July. Ricardo Monreal, Senate leader for the ruling Morena party, told reporters Tuesday that Mr. López Obrador had withdrawn the proposal in August.

U.N. Nuclear Chief Leaves Iran Without Deal on Access to Nuclear Plant, Diplomats Say

BERLIN-The head of the United Nations atomic watchdog agency left Iran late Tuesday after failing to reach a deal to allow inspectors access to a factory making equipment for Tehran's nuclear program, diplomats said Wednesday, casting a fresh shadow over international nuclear talks set for next week.

The Wall Street Journal reported last week that the factory, in Karaj, Iran, had resumed producing key parts for centrifuges, which are used to enrich uranium, without any monitoring by the International Atomic Energy Agency. The diplomats said talks between the IAEA and Iran were continuing.

Germany's Olaf Scholz on Track to Succeed Angela Merkel as Chancellor

BERLIN-Germany's Olaf Scholz is on course to succeed Angela Merkel as chancellor after the victors of the September election reached a policy agreement to form the country's first three-party coalition, people involved in the negotiations said.

The policy program, which Mr. Scholz's center-left Social Democrats, the environmentalist Greens and the pro-business Free Democratic Party are set to unveil on Wednesday afternoon, aims to overhaul the German economy with a focus on combating climate change and updating the country's patchy digital infrastructure.

Biden to Nominate Shalanda Young as Budget Director

The White House intends to nominate Shalanda Young as director of the Office of Management and Budget on Wednesday, a person familiar with the plans said.

Ms. Young currently serves as acting director of the agency, which hasn't had a permanent leader in many months. If she is confirmed as budget director by the Senate, she would be the first Black woman to run the office. Ms. Young was confirmed as deputy director earlier this year in a bipartisan 63-37 vote.

Feud Between Billionaires Ken Griffin and J.B. Pritzker Likely to Shape Illinois Governor's Race

Two billionaires-one Democratic, one Republican-are facing off over the response to rising violence in Chicago and their broader running feud is raising the prospect of a new national spending record in a governor's race.

Illinois Gov. J.B. Pritzker, whose self-financing for his first campaign in 2018 helped set the current U.S. record, has found himself at odds with his state's richest man.

Covid-19 Antibody Tests in Demand as People Worry About Immunity

Some people are taking Covid-19 antibody tests to determine whether they might be protected against the virus. Many health officials and doctors wish they wouldn't.

Antibody tests are one tool some people are deploying to help them decide which precautions to take to protect themselves and curb the spread of Covid-19. Some vaccinated people say they want to know whether their protection has weakened to the point that they should get a booster, while some previously infected people say they want to measure the strength of the response the virus generated in their immune systems.

NRA Acknowledges New Findings of Excessive Benefits Paid to CEO Wayne LaPierre

The National Rifle Association said it had found additional examples of excessive benefits paid by the nonprofit gun rights organization in recent years to CEO Wayne LaPierre, including $44,000 in private jet flights, according to a new tax filing.

The NRA made similar admissions in its 2019 filing, when it disclosed that current and former top executives received at least $1.4 million in improper or excessive benefits from the organization in violation of nonprofit rules, the first time the group had publicly admitted such lapses.

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

Calian 4Q

Economic Indicators:

None scheduled

Stocks to Watch:

Canada Goose Names Paul Cadman Pres of Its Asia-Pacific Division

Surface Transportation Accepts CP-KCS Merger Application as Complete, Sets Procedural Schedule; Kansas City Southern: Bd Also Set a Procedural Schedule for the Regulatory Review That Calls for Final Briefs on July 1, 2022; CP and KCS Anticipate STB Review of CP's Proposed Control of KCS Will Be Completed in the 4Q 2022

Other News:

Canada's Housing Imbalance Poses 'Greatest' Risk to Financial System, Watchdog Says

The current imbalance in Canada between solid demand for housing and the limited supply available is driving up prices and represents the "greatest" risk in the country's financial system, Canada's banking regulator says.

Peter Routledge, head of the Office of the Superintendent of Financial Institutions, said Tuesday that demand for housing remains strong across the country, leading to "very significant" price increases.

Recent data from the Canadian Real Estate Association indicated benchmark house prices in October rose more than 23% compared with the same period a year ago. In part, this increase is related to a lack of inventory available for buyers.

CREA estimates that as of October, there were nearly two months of housing inventory--or the amount of time it would take, given the current pace of transactions, for every active residential real-estate listing on the market to sell. CREA said the historical inventory average is roughly five months.

"The greatest prudential risk in Canada's financial system is the supply-demand imbalance in housing," Mr. Routledge said in a virtual speech to financial analysts in Vancouver, British Columbia. "The imbalance tends to drive price increases to ever higher levels relative to income; this in turn induces more Canadians to resort to more leverage when buying a home."

Mr. Routledge cited recent data from the economics team at Bank of Nova Scotia, which calculated that Canada has the lowest number of housing units per 1,000 residents of any Group of Seven country.

Mr. Routledge added that the need to bring the level of housing construction aligned with demand "is an imperative for long-term financial stability."

Expected Major Events for Wednesday

00:01/UK: Nov REC JobsOutlook survey

00:30/JPN: Nov Japan Flash Manufacturing PMI

07:45/FRA: Nov Monthly business survey (goods-producing industries)

08:59/JPN: Sep Final Labour Survey - Earnings, Employment & Hours Worked

09:00/GER: Nov Ifo Business Climate Index

11:00/UK: Nov CBI Industrial Trends Survey

12:00/US: 11/19 MBA Weekly Mortgage Applications Survey

13:30/US: Oct Advance Economic Indicators Report

13:30/US: Oct Advance Report on Durable Goods

13:30/US: 3Q 2nd estimate GDP

13:30/US: 3Q Preliminary Corporate Profits

13:30/US: 11/20 Unemployment Insurance Weekly Claims Report - Initial Claims

14:45/US: Consumer Comfort Index

15:00/US: Nov University of Michigan Survey of Consumers - final

15:00/US: Oct New Residential Sales

15:00/US: Oct Personal Income & Outlays

15:30/US: 11/19 EIA Weekly Petroleum Status Report

17:00/US: 11/19 EIA Weekly Natural Gas Storage Report

23:50/JPN: Oct Services Producer Price Index

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Wednesday

Anavex Life Sciences Corp (AVXL) is expected to report $-0.15 for 4Q.

BQE Water Inc (BQE.V) is expected to report for 3Q.

CPI Aerostructures (CVU) is expected to report $0.06 for 1Q.

Calian Group Ltd (CGY.T) is expected to report $0.27 for 4Q.

Claros Mortgage Trust Inc (CMTG) is expected to report for 3Q.

Deere & Co (DE) is expected to report $3.91 for 4Q.

Platinum Group Metals Ltd (PLG,PTM.T) is expected to report for 4Q.

Riley Exploration Permian Inc (REPX) is expected to report for 4Q.

Rogers Sugar (RSGUF,RSI.T) is expected to report for 4Q.

SOPerior Fertilizer Corp (SOP.H.V) is expected to report for 3Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

AbbVie Raised to Buy From Hold by Societe Generale

Berkshire Grey Raised to Outperform From Neutral by Credit Suisse

Best Buy Shares Tumble 16% as 3rd-Quarter Results Raise Worries

Bumble Raised to Outperform From In-Line by Evercore ISI Group

Calumet Specialty Prods Raised to Outperform From Market Perform by Cowen & Co.

Calumet Specialty Prods Raised to Outperform From Peer Perform by Wolfe Research

CBRE Group Raised to Outperform From Market Perform by Keefe, Bruyette & Woods

EPAM Systems Raised to Buy From Hold by VTB Capital

Genesis Energy Cut to Equal-Weight From Overweight by Capital One

GXO Logistics Cut to Hold From Buy by Loop Capital

Micron Technology Raised to Buy From Neutral by Mizuho

Spire Inc Cut to Underperform From Neutral by B of A Securities

Spruce Biosciences Cut to Market Perform From Outperform by Cowen & Co.

TransUnion Raised to Overweight From Neutral by Atlantic Equities

Vonage Holdings Cut to Neutral From Outperform by Baird

Vonage Holdings Cut to Sector Weight From Overweight by Keybanc

Western Digital Raised to Buy From Neutral by Mizuho

Zimmer Biomet Holdings Cut to Hold From Buy by Argus Research

Zoom Video Communications Cut to Neutral From Buy by B of A Securities

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

November 24, 2021 05:56 ET (10:56 GMT)

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