Simulating a Junior Equities Trader @Standard Bank Global (Careers in Finance)

Recently, I completed the 4-hour Standard Bank - Global Markets Trading Job Simulation on Forage. Using 2023 data in the simulation, I will now examine what I learned with current data to solidify the lessons. This write-up doesn’t serve as financial advice but is merely a way for me to cement knowledge and encourage others who have taken the training to continue practicing with fresh data.

On the Global Markets Trading desk, equities traders meet at the start of each week to recap key events from the previous week and highlight upcoming ones. These events range from economic to geopolitical, often sparking thought-provoking discussions that equip traders with the knowledge to hold well-informed conversations with clients.

Today, on November 3rd, 2024, my first task is to find and summarize articles on events from the past week relevant to Standard Bank.

• US YoY inflation hit 2.1%, nearing the Fed’s target. PCE matched analyst expectations at 0.3%. Inflation was driven by services prices increasing 0.3%, while goods prices fell 0.1%—the fourth outright deflation in five months for this category. Housing prices rose by 0.3%, and energy goods and services dropped 2%.
• Treasury yields initially fell after October's U.S. jobs data showed minimal job growth, heavily impacted by industrial action and hurricanes. Benchmark 10-year yields were last up 7.7 basis points at 4.361%, the highest since July 5, following a 48 basis point rise in October—the largest monthly increase since April. Some strategists expect the U.S. fiscal outlook to worsen under either a Trump or Harris presidency.
• Eurozone inflation exceeded expectations, rising to 2.0% annually in October from 1.7% in September, above the anticipated 1.9% rise.
• UBS is awaiting the adoption of "too big to fail" proposals outlined by the Swiss government in April, aiming to prevent banking collapses like that of Credit Suisse last year.

Next, I’ll review the Economic and Earnings Calendars provided in the Sources section below, identifying events most relevant to Standard Bank’s equity portfolio. I’ll prepare a voice note for my manager, Tim, summarizing these upcoming events and their potential impact on the bank’s portfolio.(l have intentions of doing a youtube video on this, so my voice note will be there

• Nothing notable from the European Central Bank this week.
• The Bank of England's Monetary Policy Report is due on Thursday.
• In the U.S., the presidential election is on Tuesday, followed by the FOMC meeting on Thursday.
• Accenture reports earnings on December 19 (pre-market).
• Micron reports earnings on December 18.
• I won’t cover Ocado, as Standard Bank likely no longer holds this position given its poor performance. Ocado shares have dropped nearly 50% year-to-date, while the FTSE 250 index is up 4.96%. Financials have been weak, with negative free cash flow and net profit for four years, and the company has made a pre-tax profit in just 3 of the last 23 years.

Let’s break down the key economic events and their implications for the investment landscape:

U.S. Inflation

The YoY inflation rate in the U.S. reached 2.1%, aligning closer to the Federal Reserve’s target and indicating a potential slowdown in inflationary pressures. This stability, particularly in core measures driven by service prices, suggests the Fed may take a cautious approach to cutting rates. Real estate and service sectors, showing modest growth, remain stable investments, while falling energy prices could benefit sectors reliant on lower input costs.

U.S. Treasury Yields and Employment Data

Treasury yields surged, with the 10-year yield reaching 4.361%. This increase follows soft October employment numbers, likely exacerbated by industrial actions and hurricanes. Higher yields may boost returns on fixed-income assets, making bonds more appealing, especially for risk-averse investors. However, rising yields could pressure equity valuations, particularly in growth sectors sensitive to interest rates, like tech.

U.S. Fiscal Policy

Concerns over the U.S. fiscal trajectory, especially with the upcoming election, suggest potential volatility. A strained fiscal outlook could dampen market sentiment if debt concerns increase, potentially leading to a flight to safer assets like inflation-linked bonds and real estate.

Eurozone Inflation

Eurozone inflation accelerated to 2.0% in October, indicating much needed inflationary pressures that might prompt less stricter ECB measures on hiking rates. This environment could favor inflation-protected assets like real estate, though investors may remain cautious due to ECB policy uncertainty.

Global Banking Regulations

UBS awaits regulatory changes following the Credit Suisse collapse. These “too big to fail” regulations aim to stabilize the financial system but could lead to tighter restrictions on European banking operations, potentially impacting returns and limiting growth prospects. Investors in European financials should monitor regulatory developments closely.

Upcoming Events

Key events include the U.S. presidential election, FOMC meeting, and the Bank of England’s Monetary Policy Report. Potential shifts in monetary or fiscal policy due to these events could heighten volatility across asset classes, especially in technology and consumer discretionary sectors.

Notable Earnings

Micron and Accenture are set to report earnings in December. Tech earnings can offer insights into sector health, while Accenture’s results might reflect broader corporate spending trends, essential for assessing the resilience of the business services sector.

Finally, I’ll create a slide deck featuring one buy and one sell recommendation, supported by justifications. The two U.S. stocks in focus are Coca-Cola and Tesla. I’m excited to work with current data and will write a detailed report for my senior portfolio manager. Stay tuned for my next write-up addressing this task.

Sources

• Youtube: The Video link of this write up coming soon
• CNBC: PCE Inflation September 2024
• Reuters: Global Markets Wrap-up
• Investing.com: European Stocks Weaken Ahead of Key Eurozone CPI Release
• Reuters: UBS Capital Requirements
• Reuters: HSBC, Barclays, StanChart Jostle for US Banking Riches
• Forex Factory: Economic Calendar
• Tesla Investor Relations: Quarterly Disclosure
• Coca-Cola Company: Investor Relations
• Nasdaq: TSLA Analyst Research
• Nasdaq: KO Analyst Research
• Finbox: KO Earnings Growth
• Finbox: TSLA Earnings Growth