Morning Brew June 17 2024

Good morning

Friday was a bit of a strange day with only tiny movements in the Indexes but the Nasdaq managed the fifth consecutive Record close. The Dow closed down 0.2%, the S&P 500 lost 0.04%, and the Nasdaq ended up 0.1%.

Nvidia gained 1.8% but at the intraday high, it surpassed Apple as the second most valuable company.

Fed Speaker Goolsbee said he was relieved inflation had cooled but needs more months of similar data before cutting interest rates.

The University of Michigan Consumer Sentiment came with a very bad reading on Friday, coming at 65 against a forecast of 72.

Chinese data over night was mixed, Retail Sales were strong at 3.7% industrial output was lower than expected at 5.6% vs 6% expected.

Worries on France are coming into focus, stocks remain under pressure, yields soar, and the Euro is weighed down by uncertainty about the Grande Nation. The Risk premium on French Bonds rose to the highest since 2017 and recorded the biggest weekly jump since the Euro Crisis in 2011.

This weighs on the Euro overall, we tested a break below 1.07 on Friday but closed just above. The Week EUR also explains the disconnect between the US Yields and the USD Index. 10 Year Yields ended the week at 4.22 and the USD Index 105.52. Worth watching is EURCHF: Testing Parity fust three weeks ago we are now approaching the 0.95 (currently 0.9530). This may have an impact on the SNB as the quarterly rate decision is coming up Thursday.

Gold and Silver had a strong end of the week, both gaining more than a percent. Silver added 1.86% to 29.54 and Gold 1.3% to close at 2332. This morning, both metals cannot hold the gains, we are at 29.15 and 2320.

The coming week has interesting data coming up with he highlights Tuesday: The EU Inflation, the German ZEW and US Retail Sales! On Thursday we expect the Chinese, Swiss and UK rate decisions. Based on Rate Futures, there is a 73% chance the SNB will cut, the Bank of England will refrain from action with a probability of 90%.

We have a lot of Fed speakers and after the constellation last week where ethe low inflation reading came after the FOMC members had made their forecasts, their comments will be closely watched.

Koen wrote a very good analysis on how Options can help to manage risks and increase the yield of a portfolio:

For stock investors looking to enhance performance and manage risk, options can offer a strategic edge. Our comprehensive toolkit is designed to show you how options can complement your stock investments, providing opportunities for better results and superior risk control. Dive into our guides and case studies to discover practical options strategies that can help you protect your portfolio and unlock new potential for growth.

https://www.home.saxo/content/articles/options/investors-options-toolkit-14062024

Referencing 5 different pages/articles:

• Covered Calls
• Protective Puts
• Collars ⁠
• Cash Secured Puts:
• Long-term Options

Monday
- Data  China Retail Sales, Italy CPI, Canada House Starts, Williams & Harker speak
Tuesday
- Data AU Rate Decision, AT Inflation, EU Inflation. DE ZEW, US Retail Sales, Industrial Production. Barkin,. Collins, Kugler, Logan, Musalem and Golsbee speak
Wednesday
- Data, Japan Trade Balance, UK CPI, Kashkari & Barkin speak
Thursday
- Data AU GDP, China Rate Decision. CH Rate Decision, UK Rate Decision, US Initial Jobless Claims, Philly Fed, EU Consumer Conficence.. Daly Speaks
Friday
- Data International PMI UK Retail Sales.