Morning Brew July 30 2024

Good Morning all,

I am back in the office a day delayed thanks to Swiss… The travel industry seems to be rather challenged at the moment.

While I was off we did see the expected volatility and you can mark in your calendar that my next holiday is end of September.

Jokes aside, Volatility is huge driven by earnings, fear, interest rates and a selloff in precious metals and I expect this to continue for at least the rest of the week:

Tomorrow we are expecting the Bank of Japan, the US FOMC and EU Inflation, Friday the Nonfarm Payroll to make or break the month and the week…

Key news yesterday were
- Little change in Indexes Dow -0.12%, S&P +0.08%, Nasdaq +0.07%, volumes were low.
- Weak earnings by McDonalds but the stocks rose 3.7%
- Tesla rose more than 5% on a buy recommendation by Morgan Stanley
- Bitcoin failed to break above 70k and retreated to 66k.
- Silver tested a break below the 27,50 but closed above.
- UK Finance minister announces spending cuts
- Oil near 7 week lows

Bank of Japan Preview:

• Japan's inflation and wage growth have recently come in above expectations, bolstering the speculation about a possible rate hike and reduced bond buying from the Bank of Japan., there is currently a 55% chance of a 0.1% hike.
• We believe the BOJ will adopt a gradual and cautious approach, balancing the risk of economic slowdown and market stability.
• Yen strength may have run its course, and Fed’s stance will matter more for the yen than the BOJ itself. A cautious stance on Japanese equities may be warranted, but selective opportunities still exist.

FOMC Preview

• The July FOMC meeting is expected to have minimal impact on market repricing. The Federal Reserve is anticipated to hold interest rates steady, with a potential rate cut in September, supported by recent economic data advocating a cautious approach to policy adjustments.
• While the Federal Reserve is not expected to pre-commit to a rate cut in September, it is likely to emphasize its shift in focus from solely targeting inflation to also considering maximum employment.
• Market expectations are projected to continue diverging from June's Dot Plot until the next FOMC meeting. The June dot plot indicated a higher median Fed Funds rate by the end of the year compared to bond futures market pricing. This divergence may persist until September, when the Fed will present a new Dot Plot and updated macroeconomic projections.

As of now, the probability of a rate change by the FOMC is seen at 4%, the guidance will be key. We are currently trading 66 basis point cuts this year, the first is expected in September. This meas that the press conference tomorrow is likely to be more important than the rate decision.

The middle east remains a risk even as Israel states to look to avoid an all-out war.

Tuesday AU retail Sales, Swiss KOF, EU and DE GDP, DE CPI.
PayPal, Pfizer, BP, P&P, AMD, Starbucks, EA.

Wednesday Bank Of Japan EU Inflation, FOMC and Press Conference,
UBS, Boeing, Mastercard, TEVA, Meta, ARM, Qualcomm

Thursday Swiss Holiday, Global PMI,

Moderna, Amazon, Apple, Intel, Coinbase, Roku,

Friday US Nonfarm Payroll, Unemployment rate,

Exon Mobile, Chevron,