Senior Relationship Manager
Summary: Watch Nvidia
Good Morning,
We are witnessing number of curious market moves and the reasoning is not fully obvious.
Indexes gave up a little ground yesterday on little volume. The biggest detractors were retail after Macy`s warned of slow consumer spending. It`s shares declined 14%. Banks suffered after the S&P downgrade of banks - Citi is under severe pressure – on the other hand UBS is having a great time. Since 2020 UBS has gained more than 70% while Citi has lost almost 50%-.
Nvidia could gain after good earnings of Baidu but ass the breakdown shoed that ad revenue was higher and the cloud business actually disappointed, Nvidia gave up ground. The earnings release after the bell will be THE event of the day.
Indexes closed within 0.5% range and since gained. The US 500 is back at 4400, the US 30 34373 and the US Tech 100 NAS at 15760. The GER40 is at 15760. Volumes were 15% below average.
Yields remain high with the 10 year at 4.30 and the USD Index strong at 103.50, EURUSD fell below the 1.09 top trade 1.0850 and GBPUSD is at 1.2750. Gold and Silver are strong with Gold at 1903 and Silver at 23.60.
What will drive sentiment?
Little Data today unless there is a severe surprise in one of the PMI, Nvidia earnings after the close. We are expecting two key US bond auctions for 20and 30 Year bonds today and tomorrow. Comments out of the BRICS and Jackson Hole Meetings are likely to make or break the week.
Wednesday August 23
Data: Japan PMI, Denmark consumer confidence, FR DE, UK, EU PMI, EU Consumer confidence
Earnings China Construction Bank, China Life Insurance ,Analog Devices Inc, NVIDIA Corp
Thursday August 24
Start: The 2023 Economic Policy Symposium in Jackson Hole "Structural Shifts in the Global Economy," Aug. 24-26.
Data: Turkey Rate decision, US Durable Goods orders, Initial jobless claims
Earnings CRH PLC, AIA Group, Toronto-Dominion, Workday Inc, Marvell Technology, Royal Bank of Canada
Friday August 25
Data: Japan CPI; PPI, DE GDP & IFO, University of Michigan
Earnings: China Merchants Bank China Petroleum & Chemical Zijin Mining Group
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach