London Quick Take - 8 August - Gold futures spike on tariffs, stocks drift, Apple catches a bid

Flat open in London on Friday as we are in the depths of the summer season. The S&P 500 slipped a bit and couldn’t break above the key resistance at 6,340 and technical picture looks negative...market breadth and volume weak despite the Nasdaq Composite rising to a record high with Apple rising 3%. Oil declined amid talk of a meeting between Putin and Trump. Sterling is up after the Bank of England cut yesterday with a closer decision than thought - I stick to my view that they will go deeper but more slowly than the market has assumed or prices now.

Gold is up to some funny business with the US apparently slapping tariffs on one-kilo bars, which has seen New York futures surge. Rather like the copper market it’s unbalanced the usual internal structure of the physical vs futures markets. The NY market is used by bullion banks as a hedging tool, so we’re seeing shorts intended as hedges get blown up. For now the London spot price is the most reliable gauge of price.

Jobless claims ticked up to the highest since 2021. Labour market is still tight, not much hiring or firing...goes to the point that the labour market is not the same as it was a year ago – immigration crackdown has killed the supply, so the way the Fed looks at the numbers is changing. I reiterate what I said earlier this week, that lower labour supply will mean a lower rate of job creation. Slower nonfarm payrolls growth does not tell the whole picture and does not explain how the US economy is doing vis-a-vis the Fed’s mandate.

Trump has selected Council of Economic Advisers Chairman Stephen Miran to serve as a Federal Reserve governor, replacing the expiring term of Fed Governor Adriana Kugler. He is not the next Fed chair, however.

Intel fell as Trump said its CEO should resign, citing links to China. In a Truth Social post, Trump said Intel CEO Lip-Bu Tan “is highly CONFLICTED and must resign, immediately. There is no other solution to this problem.”

Nebius – AI infrastructure play - stunning results. Revenue up 625% year-on-year and 106% quarter-on-quarter, lifted annualized run-rate revenue guidance to $900 million to $1.1 billion for the end of 2025.

Novo Nordisk, Eli Lilly: no fat. Shares of both the key obesity drugmakers are looking decidedly skinny now as some of the most-hyped shares are sruggling to keep pace with expectations. Novo Nordisk stock got a rare, by recent standards, lift after Eli Lilly’s data on its oral obesity drug orforglipron was a little disappointing. It was a really good quarter with sales up 38% and full-year guidance raised, but LLY stock got punished on the trial results, which in turn gave under-pressure Novo a much-needed lift. Neither it seems is able to keep up with prior sky-high hopes but a reset in the stocks may indicate it’s time to look at these again – however the uncertainty over pharmaceutical tariffs makes it hard to make a case...buyer beware but these are trading more cheaply than they have done for a while. 

Apple extended gains – were investors really just waiting for the tariff overhang to clear? If so then it might have further to run. Bank of America thinks so and raised its Apple price target to $250 from $240, after Trump said yesterday that the company’s investments in US manufacturing exempt it from a 100% chip tariff. “We believe there is the potential for Apple gaining smartphone market share in the U.S. if competitors are exposed to tariffs while iPhones were to remain exempt,” the bank said. Wedbush analyst Dan Ives called it a “good strategic poker move for Cook”.

Also BofA: “Mag7+AVGO+ORCL+PLTR = 80% of SPX return since Liberation Day; US stock concentration, etc. but reinforced by pro-monopoly American First policy + AI on cusp of US labor market disruption.”

And: “America First = US$ last”; 2020s = end of Japan deflation, start of Europe fiscal stimulus, start of China consumer rebalancing, all +ve global trends Trump accelerating; US$ in bear, international in vogue structural not cyclical; China = our fave play…unloved, peak tariffs, consumer stimulus, record trade surplus.”