Global Economies
Market Dashboard
Chart of the Week
Global macro remains the same with US GDP growth at 1.4% and Chinese growing 0.7% with their respective interest rates being above prevailing inflation. Jobless rates still within 4.1 – 5% range which is still healthy for the global economy
Major pullback in US equities due to Magnificent 7 sell-off
with NVDA tumbling from $140 to $116 within a few days. There is actually
upside tasuki pattern, which suggest that buyers are coming in but the seller
will remain in control for the new few weeks. Also, SPX sitting 5450 which is
above 100 SMA and Fibo confluence levels and 200 SMA coincide at 5300 – 5225
level which could be an favourable entry point for investors on sidelines or
looking add exposure
European and Asian stocks have broadly followed suit except
for FTSE with very minor dip in China. The sell-off has been indifferent to
style with dividend, growth, value sectors all taking a hit. Surprisingly, US
yields have also moved higher which favours sector rotation within US equities
over the usual risk-off move. Chinese sovereign yield have tightened slightly
and LQD, HYD, EMD have also softened. Commodities and even XAU have also
dropped in tandem. In FX markets, there has been risk-selling however with
EUR/JPY moving from 172.34 to 166.91 last 2 weeks. Crypto markets however have
reversed course in the same period with BTC/$ and DOGE now back up to 67k and
0.1295 levels. Unsurprisingly VIX has jumped from 12.46 to 16.49 and all other
sub-volatilities have done the same.
Economic calendar mainly US and European inflation and
employment data with US non-farm payrolls and unemployment rate due next
Friday, 02/08/. FOMC and BoJ rate decisions also coming up. Earnings release
for McDonalds, Microsoft and Starbucks and we are still running through the
earnings season so plenty of surprises given recent price reactions. Popular
trending stocks still NVDA, TLSA, AAPL, AMZN and MSFT.
Blackrock saying that most of their clients are interested
in BTC and ETH and they don’t forsee many crypto-ETF beyond these digital
assets for the foreseeable future. Also, most clients see BTC and ETH as
complements which demonstrate the user base getting more mature and understand
the different use cases particularly for Ethereum platform. On the other side,
Franklin Templeton actually sees interest in SOL and other crypto FX
Trump’s plans to make a “strategic national bitcoin
stockpile” led to BTC sell-off from $69k due to liquidation of $24M in long
positions. Typical buy on rumour, sell on fact price action and nobody talking
about Mount Gox anymore. Cantor Fitzgerald will open a BTC financing business
which again another driver for the BTC to go mainstream. The company
interestingly already does business with USDT and owns significant amount of
BTC.
JPM Dimon talking hawkish citing that “inflation is moving
in the right direction but it would be good for the Fed to wait” which raises
suspicions that he might be talking his book. His commercial and retail banking
arms clearly makes more money if interest rate spread stay wider for longer.
With inflation is clearly much lower, his talk about government spending,
re-militarization of the world, green economy investments and trade
restructuring come across as red herrings. Fed Powell nowadays focusing on
labour markets as a reason to cut rates sooner, which is actually more insightful.
Fed Adriana also expressed optimism that US inflation heading back to the Fed’s
2% target. This has laid the groundwork for rate cut at 30 – 31 July meeting
and reducing borrowing cost at 17 – 18 Sep gathering. Investors currently
betting this outcome at +90% probability.
Surprisingly, Trump only leads Harris by narrow margin of
49:47% despite the recent shooting which come across as clear staging. Many
videos by former US secret service personnel and other questioning how a
15-year old could have pulled such a stunt off. Having said that, plenty can
happen to these numbers until Dec so will be interesting to watch. Harris going
hard against Trump painting herself as an underdog and calling Trump “plain
weird’. On the flipside, Trump called Harris’ “evil, sick and unhinged” and
that if a crazy liberal like Kamala gets in power the American Dream is dead.
In politics, it’s a well-known principle, that one must demonize their opponent
to increase the legitimacy of their own arguments and candidacy. Truth is never
the politician’s friend unless it can legitimize their opinions as unassailable
fact, otherwise it is ignored or dismissed outright.
Value investors such as Rayliant and M&G continue to
pile into Chinese equities but it remains a slow-burning trade. Forward 12M P/B
ratio stand at 0.95 versus 1.26 for Asia Pacific region. The country’s shaky
economic recovery and lingering property crisis continue to overhand with EU
and Sino-US tensions sustaining headwinds. Whilst the Chinese govt has been supportive,
the rest of the world still waiting for the big bazooka stimulus, which the 3rd
CCP Plenum has failed to deliver so far.
