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Which AI story might crack this market's confidence?
Summary: Today we look at the lackluster session in the US yesterday as we remain nominally bearish with no readily identifiable catalyst in sight. And clear that the catalyst would need to be AI related to puncture this market's confidence. The next best candidate would be Oracle's earnings today after the close, though we have no visibility on what they will report. Also today, a discuss of the weak US dollar that would normally be weaker still given the backdrop, whether the US risks a government shutdown and much much more. Today's pod hosted by Saxo Global Head of Macro Strategy John J. Hardy.
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Today's links
My FX Update from earlier today - was written before the BoJ was out this morning indicating more interest in hiking rates “this year” - the story was also out as we were recording today’s podcast. On the AI bubble watch, there is a well-written article in The Atlantic questioning whether AI drives productivity gains and is anywhere near ready for prime time when it actually decreases productivity in the area where it is most meant to improve it (programming). Must read. The Politico coverage of the new National Defense Strategy that supposedly will put US self reliance and protecting the homeland and the “Western hemisphere” at the top of the agenda over confronting or rivalling China and Russia. The story that ASML is investing big in French AI outfit Mistral and one stab at some of the intriguing possible reasons it is doing so. The New York Times Ezra Klein on Trump’s authoritarian consolidation phase and whether the Democrats will or should put up a stand by shutting down the government rather than continuing to allow it to be funded. A thread on X covering the abominable US crackdown on the South Korean workers in the US to build a Hyundai factory. You can almost hear US soft power evaporating on stories like this. The last two days created a harami formation as noted in today’s illustration above - the S&P 500 index formation was actually far better, but I don’t have a subscription to the S&P 500 index to display it. Supposedly, this could be bearish for at least a brief time period ahead. I suspect we may need a catalyst to counter the upward drift. I have outlined other bearish and one bullish harami formations from the recent past on the chart as well. Four of the five were “successful” if in some cases very modestly so.Chart of the Day - The Nasdaq 100 index
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