Morning Brew September 12 2024

Good morning. Yesterday’s CPI report killed hopes of a 50 Basis Point cut next week’s Wednesday, the initial market reaction was quite negative but Tech with Nvidia in particular came to the rescue.  A 50 Basis point hike is being traded at 13%.

A Reports that the demand for the new AI chips was so high, Nvidia was facing delivery issues caused Nvidia to gain 8%, sparked a tech rally and saved the day. The Nasdaq opened 1% lower but ended the day 2% higher. The Dow ended up 0.3% and the S&P 1%

Banks were friendly after the CPI as a higher rate gives more earning potential

After the presidential debate, Trump Media continued it`s decline while Solar stocks gained on hopes of a strengthening green transition with Harris in power.

Volumes were nearly 20% above average.

US Yields rose to 3.66 and the USD Index rose to 101,70 with EURUSD at 1.103, GBPUSD fell to 1.3050 and USDJPY saw huge swings to now trade at 142.60. Gold and Silver traded in a wide range yesterday and are now at 2520 and 28.80.

Today all eyes will be on the ECB, it is basically certain we will see a cut by 25 Basis points, from there it will be interesting. Will Lagarde give a clear indication of the path going forward? What are her thoughts on Draghi`s investment ideas, is she worried about the state of Germany? The ECB is seen to cut by 65 basis points this year.

In other News, Unicredit is looking to purchase at least parts of Commerzbank, PWC and Samsung are looking at staff reductions.

I am not sure what to expect today, impulse could come out of the ECB but likely the sentiment in US tech and any shift in expectations for the US Rate path. We are still trading 4 rate cuts this year with three meetings to go – to come true we will need at least one cut of 50 bps…

Thursday
- Data ECB Rate decision, US Initial Jobless Claims & PPI.
Earnings: Adobe, Kroger
Friday
- Data University of Michigan Sentiment