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On Monday, the gold market once again made waves as the spot gold price rebounded significantly at the end of the Asian session, breaking through $2,666 per ounce at one point. Over the past week, gold prices have continued to rise. The situation in the Middle East is undoubtedly one of the key factors driving the increase in gold prices. The U.S. federal debt has reached a new high, and renowned economist Laurent Morill noted that the U.S. economy is currently highly dependent on foreign capital, with the government continuously supporting economic expansion through credit. However, the explosive growth of debt has also sparked market concerns about future economic stability. Against this backdrop, the demand for gold as a safe-haven asset has been further supported. Additionally, in the medium to long term, the Federal Reserve's monetary policy remains one of the core factors affecting the trend of gold prices. The speeches of Federal Reserve officials Kashkari and Waller have attracted much attention, as their views on the interest rate outlook directly affect the strength of the U.S. dollar. Recently, due to strong U.S. economic data, market expectations for a 50 basis point rate hike in November have weakened, bringing the dollar close to a seven-week high. The strengthening of the dollar usually puts pressure on gold, but the safe-haven demand brought by the situation in the Middle East has kept gold prices resilient. At the same time, the high consumption and low savings phenomenon in the U.S. continues, and this unbalanced economic structure increases potential financial risks in the future. Morill pointed out that U.S. consumers' dependence on credit is deepening, and this optimism, while supporting GDP growth, also makes the economy more fragile. U.S. funds continue to buy gold, reflecting investors' concerns about future economic risks.

The Federal Reserve may slow down rate cuts, and the U.S. dollar index will strengthen in the short term, but it is estimated that 104 is the short-term top. Therefore, in the long run, the upward trend of gold has not ended. Rate cuts will lower risk-free yields, and investors will polarize, with one end increasing holdings of high-yield old debt or high-yield stocks, and the other end increasing holdings of high-growth assets. This will bring more funds to investment-type gold ETFs.

The main reason for the lack of short-term gold price momentum is the slight rebound in U.S. inflation data, which has led to an increase in U.S. Treasury yields, suppressing the overall gold price. Personally, I believe that the gold price trend will continue to rise, and it is possible to reach $3,000 per ounce.

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④ Investment banking business "rescues the field" Wells Fargo's third-quarter earnings exceed expectations

Wells Fargo's third-quarter revenue was $20.4 billion, a year-on-year decrease of 2.4%, lower than expected; but profits exceeded analysts' expectations, as the surge in investment banking fees helped offset the decline in loan income due to lower interest rates. The bank's investment banking fees in the third quarter increased by 37% to $672 million, which helped boost non-interest income, with a 12% increase to $8.7 billion in the same period. Net profit for the quarter fell by 11% to $5.1 billion, or $1.42 per share, after the company recorded a $447 million loss on debt securities held during portfolio adjustments. Without these losses, adjusted earnings per share would be $1.52, while analysts' average expectation was $1.28. Additionally, the bank's wealth and investment management income was $3.88 billion, a 1% increase quarter-on-quarter and a 5% increase year-on-year. Total customer assets were $2.29 trillion, a 4% increase quarter-on-quarter and an 18% increase year-on-year. Wells Fargo is still under the asset cap set by the Federal Reserve, limiting its balance sheet to the size at the end of 2017. Barclays, KWB, and Piper Sandler all raised their target prices for Wells Fargo, with Barclays raising the most, from $66 to $75.

Currently, there is a divergence in the market for the financial sector. As interest rates stand high, it indeed reduces the demand for indirect financing, leading to a contraction in traditional banking businesses that rely on interest income. Therefore, Wells Fargo is the first to be affected. Third-quarter revenue fell by 3% year-on-year, and profits plummeted by 11%. In contrast, BlackRock's profits grew by 15%, and earnings grew by 2%. In the future, as interest rates decline, it is believed that the demand for indirect financing will increase, but this will only be helpful when interest rates drop below 4%.

⑤ Carnival Cruise Line's overall performance is strong, and Citi is bullish on cruise stocks

Carnival Cruise Line's overall performance in the third quarter was strong, with both revenue and profits reaching historical highs. Third-quarter revenue exceeded $8 billion, a 14% year-on-year increase, surpassing the historical record for the same period; net income reached $2.8 billion, a 60% year-on-year increase; adjusted net income reached $6 billion, a 60% year-on-year increase; adjusted free cash flow was $2.2 billion. The company expects net income for the full year of 2024 to reach $6 billion, surpassing the peak level of 2019; it expects a capital return rate of 10.5% for 2024, higher than the expectations at the beginning of the year and the level of last year. The company's main brand ticket prices and net yields have all increased, regardless of capacity growth, with unit operating income increasing by 20% and 26%, reaching the highest level in 15 years. Bookings for 2025 are strong, with all brands achieving high occupancy rates at higher prices; bookings for 2026 are record-breaking, achieving record bookings a year and a half in advance. Third-quarter customer deposits reached $7 billion, a 50% year-on-year increase; onboard consumption levels continued to be strong, with a 7% year-on-year increase. In the future, the company will continue to drive price growth and invest in new destinations and the existing fleet to maintain growth momentum and enhance shareholder value. Last week, Citi upgraded Norwegian Cruise Line's rating from "neutral" to "buy"; Royal Caribbean Cruises was added to the positive catalyst watch list.

Cruise travel is a popular way of tourism for the middle and upper classes in the United States, and the current audience is becoming younger and younger. There are also many exciting projects on cruise ships, such as rock climbing, surfing, etc. However, due to the disturbance of the epidemic, the global cruise industry was almost zero income from 2020 to 2022, but it had to pay huge maintenance and operating costs, resulting in a significant increase in debt and a severe interest burden. However, with the business warming up, we have seen the number of bookings for major cruise companies continuously hit new highs. Carnival Cruise Line's new season's financial report shows a year-on-year revenue increase of 15.2%, with profits growing by 62%, especially non-GAAP finally turning from loss to profit, reaching $1.75 billion, only $70 million less than the third quarter of 2019. Therefore, we should be optimistic about the cruise industry.

⑥ Delta Air Lines' third-quarter performance was not satisfactory, and J.P. Morgan raised its target priceDelta Air Lines reported adjusted revenue of $14.59 billion for the third quarter, a year-over-year increase of 0.3%; non-GAAP earnings per share were $1.5, both below expectations. However, net profit for the third quarter increased by 15% year-over-year to $1.27 billion, with total revenue growing by 1% to $15.68 billion. Passenger revenue was relatively stable compared to last year, but sales of premium services such as first class continued to outpace those of the main cabin. Delta expects adjusted earnings per share for the fourth quarter to be between $1.60 and $1.85, with revenue growth of 2% to 4% year-over-year, which would be below Wall Street expectations. Overcapacity in the domestic U.S. market has limited ticket prices, but Delta's President, Glen Hauenstein, stated that the industry's supply growth continues to trend towards rationality, and Delta is in good shape for the last quarter of this year and for 2025. The company plans to increase capacity by 3% to 4% in the fourth quarter. J.P. Morgan raised its target price for Delta from $68 to $80, while maintaining an "overweight" rating.

In July of this summer, the number of air passengers in the United States reached a new high of 9.18 million, a year-over-year increase of 4.5%. The current trend suggests that the number of passengers will gradually increase, but whether this will benefit airlines depends on their ability to control costs. If labor costs, oil prices, and financing costs can all be controlled, it is believed that the profitability of U.S. airlines will benefit. However, at present, apart from a decline in oil prices, there is no sign of effectiveness in other factors. Delta's revenue for the third quarter increased by 1% year-over-year, but operating costs increased by 5% year-over-year, so the actual non-GAAP profit only grew by 1.5%.

In the long term, China's air travel consumption penetration rate remains low, with significant demand potential, ongoing air traffic slot bottlenecks, ticket prices that are essentially market-based, and a significant slowdown in fleet growth. As supply and demand recover, an upward shift in the long-term profit center is expected. In 2024, supply and demand are still recovering, with airlines continuing to significantly reduce losses under high oil prices in the first half of the year. Future international flight increases and demand growth will continue to drive supply and demand recovery. The market expectation is already low, and aviation still has a major logic, with the long-term value of airlines gradually becoming apparent. Invest against the trend in the off-season.