5 Things You Need to Know to Start Your Day: Americas

8. 7. 2024 - Josef Brynda

Morning Briefing

Powell's Testimony: Federal Reserve Chair Jerome Powell is expected to signal that further evidence of inflation slowing is needed before considering interest rate cuts in his upcoming Congressional testimony. This precedes Thursday's June consumer price data, anticipated to show easing cost pressures. Markets are stable, with S&P 500 futures flat after last week's significant gains. Treasury yields rose slightly, while the Bloomberg Dollar Spot Index held losses following its first weekly decline in seven.

Biden's Political Pressure: Influential Democrats privately urge President Joe Biden to step aside as the party’s nominee following a challenging debate with Donald Trump. This call includes leaders from House committees, totaling nine members. Speculations arise about potential successors, including Vice President Kamala Harris and governors Gavin Newsom, J.B. Pritzker, and Gretchen Whitmer.

Bank Earnings: JPMorgan, Wells Fargo, and Citigroup will kick off the US bank earnings season with expectations of continued market stability. Hedging costs for JPMorgan and Wells Fargo shares remain near 2021 lows, while Citigroup's protection is below its one-year average. Options markets predict muted volatility post-earnings, reflecting a low-volatility environment seen in the Cboe Volatility Index.

Boeing's Legal Settlement: Boeing agrees to plead guilty to criminal conspiracy charges related to the 737 Max crashes, potentially facing a $487.2 million fine. The settlement avoids a contentious trial and mandates corporate reforms and compliance enhancements.

Record Market Participation: Record numbers of Americans are investing in stocks, driven by younger generations starting investment at earlier ages. The popularity of stock trading and sports betting reflects a cultural shift towards online financial engagement.

Inflation Debate: Warren Mosler discusses the implications of high interest rates potentially contributing to inflation on the Odd Lots podcast. He challenges orthodox approaches, advocating for a permanent zero interest-rate policy to manage economic stabilization.

Daily analysis 07/08/2024

8. 7. 2024 - Josef Brynda

Latest news

• French Left Set for Shock Victory Over Macron and Le Pen
• French Stocks Recover From Initial Fall After Leftist Alliance Win
• The US Dollar (USD) remains resilient against its major competitors at the start of the new week. After losing nearly 1% in the previous week and snapping a four-week winning streak, the US Dollar Index is trading in a narrow range around 105.00
• Sentiment towards Asian currencies remained tense on fears of a possible trade conflict between China and the European Union. However, most regional currencies made some gains after the dollar weakened sharply last week on growing optimism about US interest rate cuts.
• Japanese yen strengthens on strong wage data
• The EU on Friday continued to impose strict import tariffs on Chinese electric vehicles, despite Beijing's objections. Chinese officials have also raised the possibility of a trade war
• Oil Edges Lower as Investors Take Stock of Risks to Production
• US employers added a solid 206,000 jobs in June in a sign of continued economic strength
• This week’s U.S. inflation report could have serious implications for stocks
• Bearish signs intensify for Chinese stocks ahead of Third Plenum
• Euro zone investor morale drops, breaking streak of gains in "setback"
• China’s PBOC Keeps Gold Buying on Hold for Second Month

News summary

• The French Left achieved a surprising victory over Emmanuel Macron and Marine Le Pen. After an initial decline, French stocks recovered following the leftist alliance's win. The US Dollar (USD) remains resilient against its major competitors at the start of the new week. After losing nearly 1% in the previous week and snapping a four-week winning streak, the US Dollar Index is trading in a narrow range around 105.00.
• Sentiment towards Asian currencies remained tense due to fears of a possible trade conflict between China and the European Union. However, most regional currencies made some gains after the dollar weakened sharply last week on growing optimism about US interest rate cuts. The Japanese yen strengthened on strong wage data. The EU on Friday continued to impose strict import tariffs on Chinese electric vehicles, despite Beijing's objections. Chinese officials have also raised the possibility of a trade war.
• Oil prices edged lower as investors assessed risks to production. US employers added a solid 206,000 jobs in June, indicating continued economic strength. This week’s US inflation report could have serious implications for stocks. Bearish signs intensified for Chinese stocks ahead of the Third Plenum. Eurozone investor morale dropped, breaking a streak of gains in a "setback". China's PBOC kept gold buying on hold for the second month.
• Based on these reports, the euro is likely to face some pressure due to declining investor confidence in the Eurozone. The US dollar remains relatively stable, but its future performance will depend on the upcoming inflation report and potential interest rate changes. If US interest rates are cut, the dollar could weaken, which might help the euro and other currencies gain value.

5 Things You Need to Know to Start Your Day: Americas

27. 6. 2024 - Josef Brynda

Market Overview
US equity futures are declining with higher Treasury yields ahead of crucial economic data releases. Investors are focused on reports on economic growth and jobless claims before tomorrow's key inflation figures, following comments from Fed Governor Michelle Bowman cautioning against expectations for rate cuts.

Micron's Performance
Micron, the largest US memory chip maker, is seeing pre-market losses after disappointing forecasts amidst AI growth hopes. This comes amid a record rally this year and notable tech sector selling.

European Retail Struggles
Hennes & Mauritz shares plunged 15% due to weak June sales from adverse weather. Similar challenges were evident in UK firms like Currys and Halfords, hinting at broader consumer demand softness.

Yen Dynamics
The yen remains stable near 160 against the dollar after hitting its weakest level since 1986. Concerns persist over potential currency interventions amid Japan's economic challenges.

China Financial Reforms
China's finance sector faces stringent new regulations under President Xi's "common prosperity" drive, affecting bonuses and pay limits at major financial firms.

Economic Indicators
General Mills reported sales decline amid tough consumer conditions, shifting focus to volume growth strategies and increased promotional activities to boost demand.

Key Readings
GSK and Iceland's gender bond; financial gains from natural gas; UK political debate dynamics; potential unity government in France.

Joe's Thoughts
Joe highlights the shift from price-focused strategies to volume growth amid inflation concerns and economic uncertainties, influencing market sentiments and policy outlooks.

Daily analysis 06/27/2024

27. 6. 2024 - Josef Brynda

Latest news

• Dollar consolidates ahead of key inflation release; yen nears intervention
• Poles seek safety in gold investments during troubled times across their eastern borders
• Weak Yen’s Sway Over Japanese Stock Market Is Unravelling
• The National Council of Applied Economic Research (NCAER) projects India's GDP growth to be close to 7.5% for the fiscal year 2024-2
• Today's macroeconomic calendar includes several significant events. Investors should primarily focus on the final Q1 GDP report for the USA, durable goods orders, and weekly jobless claims
• Initial jobless claims are expected to be around 235,000, reflecting a slight decrease from previous weeks' levels of approximately 243,000
• Analyst expectations indicate a quarter-over-quarter economic growth of 1.6%. This is the third and final report, with previous publications showing growth of 1.6% and 1.3% Q/Q respectively. In the last quarter of 2023, the US economy grew by 3.4%; despite still positive growth, a slight slowdown in dynamics is noticeable.
• Household wealth increased by $431.5 billion (2.7%) to $16,208.3 billion in Australia
• International reasearch group BMI has lowered its real GDP growth forecast for New Zealand for 2024, saying "weak growth in the firts quater indicates that the domestic macroeconomic enviroment may be facing more challenges
• The RBNZ is expected to shift to a more accommodative monetary policy later in 2024, with potential interest rate cuts anticipated to support the economy
• Bank of Canada's cutting cycle a 'big tailwind for Canadians': economist
• S&P 500 gain in first half of 2024 blows historical average ‘out of the water’
• Treasury yields at two-week highs as crucial PCE inflation data looms
• ECB Will Be Agile in Deciding on Interest-Rate Path, Lane Says

News summary

• The dollar is consolidating ahead of key inflation data releases, while the yen approaches intervention, potentially increasing volatility in the forex market. Poles are seeking safety in gold investments amid unsettled conditions on their eastern borders, indicating heightened demand for safe-haven assets. The weakness of the yen is no longer influencing the Japanese stock market, prompting potential shifts in investment strategies.
• NCAER projects India's GDP growth to be close to 7.5% for fiscal year 2024-25, supporting an optimistic outlook for the economy. Today's macroeconomic calendar includes the final Q1 GDP report for the USA, durable goods orders, and weekly jobless claims expected around 235,000, showing a slight decrease from previous weeks.
• Analyst expectations point to a quarterly economic growth of 1.6%, the third and final report following 1.6% and 1.3% Q/Q growth. Despite a positive 3.4% growth in Q4 2023, the US economy shows signs of slight slowdown. Household wealth in Australia increased by $431.5 billion (2.7%) to $16,208.3 billion.
• BMI has lowered its real GDP growth forecast for New Zealand for 2024 due to weak growth in the first quarter, indicating challenges in the domestic macroeconomic environment. RBNZ is expected to shift to a more accommodative monetary policy later in 2024 with potential interest rate cuts to support the economy. Economists suggest that Bank of Canada's cutting cycle is a significant boost for Canadians, likely supporting domestic consumption and investments.
• The S&P 500's gain in the first half of 2024 surpasses historical averages, reflecting investor optimism. Treasury yields are at two-week highs ahead of crucial PCE inflation data. ECB, according to Lane, will be agile in deciding on interest rates, signaling flexibility in response to economic conditions.
• These events could cause global market volatility, strengthen safe-haven assets like gold, and prompt changes in investment strategies. The USD may strengthen or weaken based on inflation data, JPY could weaken further with intervention, CAD may strengthen on expectations of rate cuts, while currencies like NZD and AUD may be influenced by domestic macroeconomic outlooks and changes in monetary policy.

5 Things You Need to Know to Start Your Day: Americas

26. 6. 2024 - Josef Brynda

Market Overview US equities are set to rise following a tech rally in Europe. Rivian gets a boost from Volkswagen's investment, and US options traders bet on rate cuts.

Interest Rate Cuts European stocks climbed after a policymaker suggested two more rate cuts for the euro area this year. Gains were led by Nvidia’s rally, lifting the S&P 500.

Rivian's Surge Rivian Automotive soared 50% postmarket, recovering half its year-to-date losses after securing a $5 billion deal with Volkswagen. VW gains access to Rivian’s EV technology and collaboration on new battery-powered vehicles.

Bold Bets on Rate Cuts US traders are betting on a 300 basis point rate cut by the Federal Reserve within nine months, a hedge against a potential economic downturn.

Archegos Trial Bill Hwang’s family office is on trial, exposing Wall Street's questionable practices. Evidence reveals the chaotic final days of Archegos.

Economic Insights Today’s focus includes MBA mortgage applications and new home sales data. Earnings reports from Micron, Blackberry, Levi Strauss, Jefferies, and General Mills are anticipated.

Key Reads

• Nomura CEO's record $12 million pay
• Julian Assange’s release after 14 years
• Mate Rimac’s autonomous car for 2026
• Sanofi’s $20 billion consumer health sale
• Switzerland's banking capital rules timetable

Joe’s Thoughts Joe analyzes Fed policy risks and inflation concerns, noting the potential for rising unemployment and challenges in managing inflation.

5 Things You Need to Know to Start Your Day: Americas

25. 6. 2024 - Josef Brynda

Daily analysis 06/25/2024

25. 6. 2024 - Josef Brynda

Latest news

• European stocks mostly weaken; sentiment hit by tech-led weakness on Wall Street
• Asia FX sees some relief as dollar cools; yen firms amid intervention talk
• NZ out of recession but ‘don’t pop the champagne just yet’
• New Zealanders have become significantly more pessimistic about the labour market over the past three months
• Perceptions of current job opportunities in New Zealand fell sharply in the second quarter, suggesting that the unemployment rate will rise further in the coming months
• Japan and South Korea agreed to seek ways to bolster their currency swap deal in an effort to address persistent weakness in both the yen and won that has exacerbated inflationary pressure via import costs.
• Australia’s Households Remain Pessimistic on RBA Rate-Rise Fears
• US labor market, housing data point to slowing economy
• CB consumer confidence in the US is forecast to be lower than the previous reading, which could signal and confirm a continued cooling of the economy
• Oil Holds Near Eight-Week High on Escalating Political Tensions
• China's premier slams trade tensions as EV exports are hit by tariffs

News summary

• European stocks mostly weakened, with sentiment hit by tech-led weakness on Wall Street. In Asia, FX markets saw some relief as the dollar cooled, and the yen firmed amid talk of intervention. New Zealand is out of recession, but optimism is premature. New Zealanders have become significantly more pessimistic about the labor market over the past three months, suggesting that the unemployment rate will rise further in the coming months.
• Japan and South Korea agreed to seek ways to bolster their currency swap deal to address persistent weakness in both the yen and won, which has exacerbated inflation through import costs. Australian households remain pessimistic due to fears of another RBA rate rise. US labor market and housing data point to a slowing economy. Consumer confidence in the US is forecast to be lower than the previous reading, which could signal continued cooling of the economy.
• Oil prices hold near an eight-week high amid escalating political tensions. China’s premier criticized trade tensions as EV exports are hit by tariffs. Spain’s economy grew faster than expected.
• The weakness in US tech stocks may shortly negatively impact investor confidence, leading to a further decline in the US dollar
• The Australian dollar might weaken due to household pessimism and rate hike fears, while the New Zealand dollar could face pressure due to expected rising unemployment. The USD/CAD pair could be affected by geopolitical tensions and oil prices, where higher oil prices might support the Canadian dollar against the US dollar.

IMF chief says Europe looks like ‘an ideas supermarket’ for the U.S., calls for further integration

24. 6. 2024 - Josef Brynda

The head of the International Monetary Fund on Thursday called on Europe to achieve the full potential of its prized single market, lamenting what she described as a situation that makes the region look like “an ideas supermarket” for the U.S.

Speaking to CNBC’s Karen Tso, IMF Managing Director Kristalina Georgieva said Europe’s economic performance was strengthening and inflation was clearly on a downward trajectory.