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Risk off has gone global, even as US treasuries and FX press snooze
Podcast 21 minutes to read
Summary: Today, we note that the market's stabilization attempt from Friday seems to have failed as risk-off has gone global in equities, perhaps led by the meltdown in Bitcoin. Amidst the deepening unease, it's remarkable that bond markets, with the notable exception of Japan, remain calm, while transmission into FX is minimal. But the tension is building, with a key event risk on Friday for Japan possibly set to unleash volatility. This and much more on today's podcast, which is hosted by Saxo Global Head of Macro Strategy John J. Hardy.
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Today’s Links
Yours truly’s The FX Trader from this morning.
Double Line’s Gundlack discusses private equity’s “garbage lending” and his generally heavy-on-cash-allocation and risk-off stance. Sounds like he is already at Defcon 2 or even lower.
Kevin Warsh vying for Fed Chair nomination and making clear his positions - worth noting if he gets the nod.
Endgame Macro weighs in on the macro implications of Japan’s higher yields - I don’t agree with all of this, but the bottom line is that eventually Japan must bring capital home - whether for better returns or because it is forced to in order to help stabilize national finances - and that has implications for global liquidity and capital markets.
A wholesale recommendation of nearly all of FTAlphaville’s further reading links from today, which link to extensive thoughts on what plagues the UK and how to fix it, the murky world of conduit financing, the tsunami of crap that Generation X is inheriting from their Boomer parents and more. FTAlphaville also runs down Oracle’s possibly dangerous dependency on OpenAI for future profits, as Oracle’s market cap is now 74 billion dollars below what it was before announcing the deal.
Chart of the Day - Bitcoin
Bitcoin has proven an advanced indicator to the recent market woes and piled on the pressure with the move lower overnight as that 61.8% retracement level of the latest big rally wave off the April lows that was tested on Friday and then over the weekend was taken out in yesterday’ action, with more follow through overnight. If Bitcoin is meant to offer some support for global markets here, it needs to dig itself out of trouble, which it is trying to do today in Europe - but needing at least a swift reversal back above that 94.2k area to get started, and in the bigger picture a rally back above 100k. That’s a lot of heavy lifting. In the meantime, there isn’t much on the chart to offer support until the existentially important 74k area - the prior major high that was retested earlier this year. The trendline folks are also nervous here on third touch today as noted in chart.
Questions and comments, please!
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