Senior Relationship Manager
Summary: FOMC tonight, Telsa down, Avis up, Wheat at record high - fasten your seatbelt.
Good Morning.
Equities remain near after hitting new records yesterday, the Dow closed above 36000 for the first time. The USD Index rose back above 94, EURUSD trades at 1.1585, Gold and Silver trade loser at 1780 and 23.45, Bitcoin gains to 63k. Wheat prices hit new records yesterday, the European Contract reached 297. The Dax is approaching the 16000 level again, that is near the top of the recent trading range.
the peak and the USD is stronger ahead of the US Rate decision later today. The base expectation for the FOMC to start tapering and once the asset purchases have been reached zero, rates could be raised. At the expected reduction rate, it will take 8 months before a rate hike would be in scope. The stronger USD we are witnessing seems to hint at a more hawkish expectation. Among market participants. Out John Hardy sees the hawkish case to be tapering to the tune of 30 Bio rather than the 15, possibly coupled with a statement that rates could be raised ahead of the expiration of the asset purchases.
Reuters reported yesterday that several banks were advising their clients to ready for a rise in volatility. This has been part of our Strategy teams approach for a while now, please find more information here:
Avis was the curiosity of the day, rising more than 100% on an announcement that the company would actively adopt electric vehicles. The stock opened at 172 yesterday, rose to above 520 before closing at 357. These movements cannot be explained by valuation in my view but are more driven by stocks being rare goods.
Tesla came under pressure yesterday after it was announced the deal with Hertz was not fully finalized, closing down 3%
Credit Suisse will unveil a new centralized structure on Thursday that is set up to control risks better.
Lufthansa returned into the black on rising traveller numbers
The Founder of ByteDance, Yiming, has stepped down as chairman of the TikTok owner
Today the EU unemployment and the US PMI will be interesting but all eyes will be on the FOMC at 19:00 CET (Due to the Time difference change) and the Press conference 30 minutes later.
Wednesday: Novo Nordisk A/S, Booking Holdings, QUALCOMM Inc , CVS Health
Thursday: Siemens Healthiners , Toyota Motor,Deutsche Post AG ,Duke Energy Corp,Square Inc, Airbnb Inc, Enel SpA, Uber Technologies, MercadoLibre, Moderna Inc , Zoetis Inc Cigna Corp, Fidelity National
Friday: Alibaba Group Holding, Enbridge Inc
Saturday: Berkshire Hathaway
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist