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Morning Brew August 20 2024
Erik Schafhauser
Senior Relationship Manager
Résumé: Risk on into Jackson Hole?
Good morning,
Risk sentiment remains strong across the board – let us see if it holds!
The Dow rose 0.6%, the S&P 500 1% and the Nasdaq 1.4% in fairly low volumes. On US exchanges 10.3 billion shares were traded against a 20 day average of 12.24. Nvidia rose to 130, more than 30% off the august lows, Tesla is at 222.7. the rate of recovery is amazing. AMD gained 4.5% after announcing its acquisition of ZT Systems
European and Asian Equities remain strong with the GER40 at 18444 and the Japan 225 at 38165.
Ten-year yields are stable at 3.88 but the USD index remains under pressure at just below 102, EURUSD is 1.1075, GBPUSD 1.2977 and USDJPY 147.25. Gold and Silver remain strong at 2500 and 29.35. Ole points out: Gold remains in record-setting form ahead of Powell’s Jackson Hole speech on Friday, holding around USD 2,500 with profit-taking attempts so far being rejected ahead of the 2,475-80 support area. This is despite reports of a potential Gaza cease-fire and fading appetite for gold in China after record prices helped drive a 24% drop in imports last month to a two-year low. Oil declined on the advances in the ceasefire talks in the middle east, Israel is said to have agreed to the US suggestion and now Hamas needs to follow.
ECB may need to cut rates again in Sept: Olli Rehn said that the recent increase in negative growth risks in the Euro area has reinforced the case for a rate cut at the next ECB monetary policy meeting in September. Traders are pricing in a 25 basis point cut with a 90% probability, the year end sees 2.5 cuts. The Fed is seen to cut 25 basis points ion September and 3.5 times this year still.
After China left rates unchanged as expected, the key events are the EU Inflation and the Turkish rate decision for those with interest in emerging markets, followed by the Canadian CPI. The EU HICP is expected at 2.6%.
Besides economic data we are closely watching the US Election with the DNC under way, the Middle East as well as Russia.
The Key events are likely Thursday and Friday the speeches of Kamala Harris and Jerome Powell at the DNC and Jackson Hole. In addition, I suspect traders are a little nervous of the stellar recovery after August 5 and any bad news may shift sentiment fast so consider your positions and take profits, stop losses and your risk.
Tuesday
- Data EU Inflation, Turkey rate decision, Canada CPI,
- Earnings: Medtronic, Lowe’s
Speakers: Bostic, Barr
Wednesday
- Data Japan Trade Balance
- Earnings: Agricultural Bank of China Xiaomi, Synopsys, Target, Snowflake
Speakers: FOMC Minutes
Thursday
- Data International PMI, US Initial Jobless claims, EU Consumer Confidence,
- Earnings: Intuit, Workday
Speakers: Jackson Hole Summit kicks off
Friday
- Data Japan CIP Canada Retail Sales, US New Home Sales
- Earnings: China Construction Bank, China Petroleum
- Speakers: 16:00 Powell speaks at Jackson Hole
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