World Economies
Coin Market Cap
Global Indices
Chinese Exports Still Doing
Decent
Market Commentary
No real change in global macro aside from the fact that Fed didn’t cut rate last meeting. Markets reacting to the tone and messaging as per usual which keeps changing depending on which Fed person being interviewed.
Significant volatility last 3
weeks with VIX spiking to 66 which is near the highs before falling back to 14 levels.
SPX plunged from 5500 to 5119 within a few days and now finding its footing
around 5300 – 5400 range which matches closely our prediction of 5225 – 5300
level. Right now its consolidation range between 5100 – 5600 unless ATH 5669 is
decisively breached. Mixed signals from volume, candlesticks, DMI or any other
technical indicators so best to be patient. Also, smart money been fading
latest rally so it's really on a knife edge for now
ROW equities all sold off in
tandem except for FTSE 100 and Chinese indices which is interesting. Indian
equities mixed with Sensex dropping 81332 to 79705 but Nifty 50 staying around
the same levels. If we look at style, the global equity sell-down has been agnostic
to market-cap, value or growth but dividend, quality and minimum vol plays have
been resilient. This suggest again more rotation play than actual US recession
fearmongering which has been hitting the air waves last 2 weeks. Further
reinforcement from NQFFUSLV and NQVMVUS not moving much which are low and
minimum volatility indices.
Last US non-farm payrolls came in weak with 122k versus
forecasted 147k suggesting a weak US economy. Unemployment rate also worse than
expected at 4.3% versus 4.1%. Having said, that market reacted most Fed meeting
on 31/07 where no rate cut happened. Initial jobless claims 249k and ISM manufacturing
46.8 disappointed expectations on 27/07 but well within the trend. US CPI again
cooler at 2.9% on 13/08 versus forecast 3%, which sent the Dow above 40k levels
Interestingly, strategist now saying that Trump will use
tariffs to make a grand bargain in China to attract Chinese FDI into the USA.
Should it scenario materialise this will be in stark contrast with his first
term where Trump pursued a long-term protectionist strategy with China. Goldman
Sachs currently outlining the possibility of 20% increase in tariffs on Chinese
imports with 10% increase for all other imports. Other analysts also argue the
Chinese will be receptive due to increasing economic risks and need to
diversify its investments.
Upcoming economic calendar has RBNZ rate decision on 13/08,
UK GDP release and US jobless claims and retail sales data. Earnings calendar
however pretty optimistic with more earning beats than misses which is
encouraging. This week the earning calendar is much light with popular names
such as WMT, AMAT, CISCO, INTU disclosing their numbers. Trending stocks will
very tech heavy with NVDA, TLSA, AMZN, AMD leading the charge
Also, strategists are now saying falling inflation will not
boost stocks given its relatively normal levels, the potential for it to
surprise on the downside has diminished. As a result, market more focused on
other factors such as economic growth and Fed policy, which implies that if
retail sales and manufacturing data improves and if Fed Powell leaves the room
for more rate cuts, it could reignite a rally in the stock market.
China’s long dated sovereign bonds have surged as investors
seek safety from a slowing economy and volatile stock markets. This explains
why the Chinese yield curve has not been reacting lately to US and other
sovereign yields tightening. Also, Chinese economic data remains weak with last
GDP print 0.7% and industrial production and new home prices also still very
weak. However, the export machine is running decently with $300B in 07/24 being
a respectable figure. Other data beats were there but investors interpreting them
negatively, rising inflation atributre to bad weather rather than stronger
domestic demand, import jumps reflecting frontloading chip purchases before
expected US tech crubs and retails sales flattened by low comparison in 2023.
All this is keeping up the political pressure to loosen the fiscal spigot
further and consider dolling out shopping vouchers to get growth back to 5%
target
Cellula introduces Programmable Incentive Layer to gamify
asset issuances which demonstrates that
the crypto landscape still very speculative driven despite recent adoption by
institutional investors. As the core of Cellula’s innovation is its virtual PoW
consensus mechanism, which combines principles from Conway’s Game of Life, Variable
Rae GDAs mechanism and Game Theory to revolutionize the way digital assets are
distributed and liquidity allocated.
TD Cowen observed that the crypto lobby has leveraged the
sector’s wealth creation to build political influence as the election approaches.
However, they caution against mistaking campaign rhetoric for actual policy
advancements such as more lenient regulatory actions in event of a 2nd
Trump term. Harris also perceived as more receptive than Biden towards
supporting policy initiative’s, which encourage industry’s growth, but is
unlikely to oppose efforts aimed at strengthening investor protections in
crypto.
