Market in review 2/15/2024

MARKET REPORT

Review:           
– Retail Sales drops. Exp -0.1% Actual -0.8%
– Initial Jobless, Philly Fed and NYS Manuf stronger
– Industrial Production weaker
– UK GDP weaker Exp -0.1% Actual -0.3%
Japan & UK enter technical recessions
– AAPL readies AI tool to rival MSFT’s Github copilot
– Israel kills Hezbollah leader. Hez vows revenge
– Fed pricing is ultimately little changed after some of the ramped rate cut pricing post-retail sales faded through the session with still under 100bps of cuts implied for 2024 by money markets

DOLLAR DX: Down:
– AUD up: 65.24                              +0.4% (64.88 – 65.30) close highs
– EUR down: 92.81                          -0.4% (93.18 – 92.70) close off lows
– GBP up: 125.99                             +0.2% (125.43 – 126) close highs
– JPY down: 149.94                         -0.3% (150.25 – 149.75) close off lows

GOLD up:                                          $2016 +0.5% ($2003 – $2019) close off highs
DOW/ES/ND:                                    38850 +1%, 5050 +0.6%, 117955 +0.4%
CRYPTO: BTC/ETH:                          +-130/-0.2% 51600, +45/+1.5% 2820
CRUDE Up:                                        $78.17 +2% ($75.80 – $78.35) close highs

Upcoming:

DE/FR: Inflation data
UK Retail Sales

US PPI
US Building Permits/Housing Starts
US Michigan Inflation

Speakers:

FED: Barr, Daly, Bostic
BoE: Pill
EcB: Schnabel

Earnings: Swiss Re, NatWest, Kingspan, Eni

MAJORS:

DX:  
The Dollar was weaker with the Index hiting a low of 104.170, stopping just short of the 100DMA at 104.10 and beneath that the pre-CPI low of 103.96. We saw soft retail sales, the headline down 0.8% M/M (prev. +0.4%), deeper than the expected fall of 0.1%. Ex-Autos surprisingly fell too, with the supercore falling 0.5% against the prior 0.6% gain.
Empire Fed survey, despite still negative, and the Philly Fed survey both better than expected.
Initial jobless claims dipped to 212k (exp. & prev. 220k).
On the Fed footing, influential Governor Waller spoke but did not say anything of note for policy, while Punchbowl reported Fed Chair Powell is to testify before the House of Representatives Financial Services Committee on March 6th. Participants await PPI (Jan), Michigan prelim survey (Feb), Fed’s Daly (v), Barr (v), and Barkin (v) all on Friday; note there is a US market holiday on Monday.  

No call with PPI in morn.

AUD:
Australian Employment was disappointing but weaker US Retail Sales drove the Aussie higher. Pre US open we were sub 65 with Retail driving the battler higher to 65.30 in which we closed just off, +0.5%

No call with PPI in morn.

6-

GBP:
Sterling saw slight gains against the Dollar after initial UK GDP-induced downside for the pound was countered by Dollar selling. Cable hit a low of 1.2543 (just shy of Wed. 1.2536 trough) before recovering to 1.2600.
Note that BoE Governor Bailey looked to get in front of the report earlier this week, saying that he “wouldn’t put too much weight on whether the UK enters a technical recession” and added that they are starting to see signs of an upturn. BoE’s Greene and Mann spoke on Thursday, where the former isn’t considering loosening policy, although did suggest she may shift her voting (dovishly) if measures of wage growth weaken.

No call with PPI in morn.

12-

EUR
Euro profited off the broader Buck’s dip in the backdrop of a plethora of ECB speak from the likes of President Lagarde, Chief Economist Lane, accompanied by De Cos and Scicluna.
Separately, European Commission Winter Forecasts saw the EZ GDP growth forecast for 2024 cut to 0.8% from 1.2% in November and sees 1.5% growth in 2025.

No call with PPI in morn.
9-

YEN:
Yen firmed vs. the Greenback despite soft Japanese GDP metrics, which saw some pullback in BoJ hike pricing. The currency strength could be a combination of technical factors after the pair ran out of steam at 150.88 as well as increased jawboning from Japanese officials. Pair was able to print a low of 149.55. Looking ahead, absent a pick-up in hawkish BoJ comms, focus for the pair will remain on the upside.

No call with PPI in morn.

1

GOLD & SILVER:

Weaker US Retail sales helped floor the Yellow metal above $2000, up 0.5% on the day to close $2016.
Silver Outperformed up 2% back to the $23 even handle

No call with PPI in morn.

EQUITIES:
US INDEXES:
– SPX +0.58% 5,029
– NDX +0.21% 17,845
– DJIA +0.91% 38,773
– RUT +2.45% 2,061

EUR INDEXES:
– DAX: +0.60% 17,046.69
– FTSE: +0.38% 7,597.53
– CAC: +0.86% 7,743.42
– ES50: +0.73% 4,743.55

SECTORS (S to W): Energy +2.48%, Real Estate +2.36%, Materials +1.88%, Financials +1.66%, Utilities +1.54%, Consumer Discretionary +0.88%, Health +0.7%, Industrials +0.69%, Consumer Staples +0.54%, Communication Services +0.08%, Technology -0.44%.

STOCKS:
– Cisco Systems -2.5%: Next quarter and FY guidance was very weak accompanied by downbeat commentary.
Wells Fargo +7%: Said OCC terminated its 2016 consent order which was tied to sales practices misconduct, according to Bloomberg.
Apple flat: Readies AI tool to rival Microsoft’s (MSFT) Github copilot, according to Bloomberg; also looking to use AI to generate code for testing apps
Disney/Fox/Warner Bros: Streaming deal faces DOJ antitrust review, according to Bloomberg.

OIL
:
WTI (J4) SETTLED USD 1.23 HIGHER AT 77.59/BBL; BRENT (J4) SETTLED USD 1.26 HIGHER AT 82.86/BBL

Oil prices grinded higher on Thursday with the softening Dollar and sustained Middle East woes providing tailwinds. WTI (J4) and Brent (J4) peaked in the NY morning at USD 78.07/bbl and 83.25/bbl, respectively, and hovered near highs into the settlement. Meanwhile, the IEA’s monthly report saw the 2024 global oil demand growth downgraded by 200k BPD to 1.22mln BPD (prev. 1.24mln), which said global oil demand growth is losing momentum, with the pace of expansion set to decelerate from 2.3mln BPD last year, in part due to China. There was another attack on a vessel in the Red Sea, despite it travelling through the internationally recommended corridor off the coast of Yemen; note that Maersk warned on Wednesday that it didn’t expect the resumption of transit until potentially Q3. Meanwhile, Al Arabiya reported that Hamas rejected an Israeli offer for a three-month ceasefire and the exit of its leaders from Gaza, highlighting the gulf between the two sides as negotiators scramble for a solution. Oil report courtesy of newsquark


BOND YIELDS:

US 1-MO 5.38 -0.001 US 6-MO 5.329 -0.004 US 1-YR 4.972 +0.001 US 5-YR 4.218 -0.029 US 10-YR 4.234 -0.033 US 30-YR 4.412 -0.036
2YR/10YR -0.34

CRYPTO:
A “quiet” day for Crypto as market focus was on the plethora of US data released and Fed Speakers.
Early session we saw 52750 before a grind off to close on lows at 51750.
ETH saw 2865 early before giving back to close 2815, but outperformed BTC. Again. Completely wrong on that idea.

No call as market focus will be on PPI in the morn

Best of luck out there. Let the market come to you

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