MARKET REPORT
(Unburdened by what has been)
Toronto Bourse 1981
Day in Review:
Today:
(Kamalanomics):
DATA:
– Goldman Sees 3 Consecutive Rate Cuts, JPM Hopes Two For 50bps, Citi 50bps, followed by quarter-point reductions at every subsequent meeting
– Rate-cut expectations explode higher with over four full cuts now priced in for 2024
– PAYROLLS:
– US added just 114K payrolls, a huge miss to expectations of 175K and also a huge drop from the downward revised June print of 206K
– Rate unexpectedly rose to 4.3%
– May revised down by 2,000, from +218,000 to +216,000, and the change for June was revised down by 27,000, from +206,000 to +179,000
– The Bloomberg economist team had this to say:
“July’s nonfarm payrolls suggest the cooling in the labor market shows few signs of stabilizing – and isn’t gradually ‘normalizing,’ as Powell characterized it after the July 31 FOMC decision.
“Some of the weakness in payrolls can be attributed to Hurricane Beryl — but not all — and in any case the storm impact should reverse in coming months. However, the surprisingly sharp increase in the unemployment rate was due primarily to layoffs and people taking longer to find jobs, not weather.
“Furthermore, with the Bureau of Labor Statistics’ ‘birth-death model’ still overstating employment from the net creation of new firms, we think the underlying pace of monthly job growth is likely less than 100k — below the pace consistent with a steady unemployment rate. We expect the unemployment rate to continue rising, reaching to 4.5% by year-end. Not only is a September rate cut likely — even a 50-basis point cut is now in play.”
– VIX EXPLODES HIGHER
US Factory Orders plunged 3.3% MoM in June (the biggest MoM drop since COVID lockdowns), dragging orders down 3.6% YoY (also the worst since COVID lockdowns)
– The final durable goods orders print was worse than the initial – down a shocking 6.7% MoM
COMPANIES:
– Intel SMOKED (26.59%)
– Amazon smoked (-9.2%)
– Exxon smashes company Earnings:
VS:
– Chevron (CVX) (BELOW EXPECTATIONS) released earnings per share at 2.55 USD, compared to market expectations of 2.94 USD
GENERAL:
– Nikkei slides 6% as Japan stocks now back to January levels
– Japan’s Topix Index entered a technical correction in its worst two-day rout since 2011
– NASDAQ ENTERS CORRECTION
– Euro Bourses SHARPLY lower post Jap rout.
– Chevron abandons California for Texas
– Stocks in Mongolia hit all-time high. Yup. THAT’S where all that Nikkei money is flowing to.
– Oats gain by 2.97%
– SELL EVERYTHING!
– Treasury Yields PUKE, Equities Puke (ND into correction), Nikkei PUKES, Oil PUKES, Gold flat (Puking all overnight gains), Silver pukes, Yen PUKES, Dollar pukes, BTC pukes 3000 points, INTEL PUKES
DOLLAR DX up: 103.23 -1.14% (104.33 – 103.12) LOWS
– AUD up: 65.20 +0.33% (64.94 – 65.46) MID
– EUR DOWN: 91.61 -1.12% (92.68 – 91.49) Off LOWS
– GBP up: 128.10 +0.57% (127.08 – 128.39) Off HIGHS
– JPY SMOKED: 146.60 -1.8% (149.62 – 146.41) LOWS
GOLD UNCH: $2479 UNCH (2520 – 2455) MID
DOW/ES/ND DOWN: 39760 -1.86%, 5366 -2.03%, 18535 -2.54%
CRYPTO: BTC/ETH down: 62989 -0.55%, 3024 -3.28%
CRUDE SMOKED: $73.90 -3.11% (77.26 – 72.99) Off LOWS
Coming Up:
– Chinese Caixin Services PMI, EZ/UK/US Final Composite/Services Final PMIs, ISM Services PMI, BoJ Minutes
Week Ahead:
– ISM Services PMI, RBA, BoJ SoO, BoC Minutes, and Chinese inflation
Speakers:
– Fed’s Daly
EARNINGS:
– Infineon
MAJORS:
DX:
The Dollar Index was markedly weaker, with the flight-to-haven trade ramping up after the US jobs report as Yen and Franc’s strength sent the index lower.
The Dollar was initially weaker before the US Jobs report, with losses accelerating once it was unveiled the US added way fewer jobs than expected, as well as the Unemployment Rate unexpectedly ticking higher by 0.2%. Fed pricing reacted extremely dovishly to the data, which added to US growth fears, as there is now 117bps of rate cuts by year-end (prev. 88bps).
As such, bonds soared, with US 10y yields falling over 16bps, adding further pressure to the Buck. The dovish reaction was highlighted in Investment Bank projections, particularly Goldman Sachs and Citi, who now see a 50bps Fed rate cut in both September and November, alongside BofA and Goldman Sachs seeing additional rate cuts by year-end.
Elsewhere, Friday saw Fed’s Goolsbee reiterated the Fed’s narrative, namely, they’d never want to overreact to one month’s data, while Barkin noted the 114k jobs are still a ‘reasonable’ number, even if it marks a slowdown.
Looking ahead, ISM Services PMI (Jul) on Monday acts as the next possible dollar catalyst, with US data release light for the remainder of the week. DX report courtesy of newsquark.
DOLLAR DX up: 103.23 -1.14% (104.33 – 103.12) LOWS
EUR
The Euro was among the best performers against the Greenback, with upside accumulating on the soft NFP report, rather than EZ-specific newflow. EUR/USD surged from just under 1.08 to above the 1.09 handle ahead of EZ HCOB Final PMI (Jul) data on Monday, with EZ newsflow remaining light for the remainder of the week.
EUR DOWN: 91.61 -1.12% (92.68 – 91.49) Off LOWS
GBP:
Pound saw the greatest strength, with Cable rising to peaks of 1.2839 from 1.2708 ahead of Monday’s UK S&P Global PMI (Jul).
BoE pricing now sees 46bps of rate cuts by year-end, up from the 40bps seen pre-NFP. Before the data, BoE’s Chief Economist Pill attempted to attenuate such dovishness, saying it’s a little quick to note inflation is down and still a little way to go on inflation.
GBP up: 128.10 +0.57% (127.08 – 128.39) Off HIGHS
AUD:
Underperformer of the group.
AUD up: 65.20 +0.33% (64.94 – 65.46) MID
YEN:
JPY SMOKED: 146.60 -1.8% (149.62 – 146.41) LOWS
GOLD/METALS:
Gold soared to 2520 overnight on Japanese Stock plunge only to retrace and give up all its gains post NFP, closing unchanged.
GOLD UNCH: $2479 UNCH (2520 – 2455) MID
BONDS:
Yields PUKED as rate cut expectations EXPLODED post payrolls
SHORT END!
Yield curve DISINVERTED
EQUITIES:
– The S&P 500 found support at its 100DMA
– NASDAQ broke below its 100DMA
– Magnificent 7 stocks are now down an incredible $2.3 trillion market cap from their record highs
EUR:
– DAX -2.44% 17,642
– FTSE -1.31% 8,175
– CAC -1.61% 7,252
– ES50 -2.71% 4,637
US:
– SPX -1.8% 5,347
– NDX -2.4% 18,441
– DJIA -1.5% 39,737
– RUT -3.5% 2,109
Sectors (W to S): Consumer Discretionary -4.61%, Financials -2.42%, Energy -2.26%, Industrials -2.2%, Technology -1.99%, Communication Services -1.92%, Materials -1.89%, Health -0.21%, Real Estate +0.09%, Utilities +0.14%, Consumer Staples +0.86%
STOCKS:
– See above (Companies)
OIL:
WTI crude futures fell by more than 3% to below $74 per barrel on Friday, the lowest in 2 months, and extending the losses from the previous session, as global oil demand concerns outweighed supply risks from rising geopolitical tensions in the Middle East.
CRUDE SMOKED: $73.90 -3.11% (77.26 – 72.99) Off LOWS
BOND YIELDS:
US 1-MO 5.354 -0.006
US 6-MO 4.844 -0.199
US 1-YR 4.354 -0.293
US 5-YR 3.623 -0.221
US 10-YR 3.799 -0.178
US 30-YR 4.115 -0.154
2YR/10YR -0.8
CRYPTO
– BTC joined the ‘SELL EVERYTHING! (Except BONDS!)’ post NFP today going from 65k+ back to lows of a 62 handle.
Entire Crypto space had a bad week
CRYPTO: BTC/ETH down: 62989 -0.55%, 3024 -3.28%
KEEP DOING WHATS WORKING
Best of luck out there. Let the market come to you
Song of the day:
Joke of the Day:
Chart of the Day:
Claudia Sahm indicates, a recession has now been triggered. The rule, for those who don’t remember, is that a recession is effectively already underway if the unemployment rate (based on a three-month moving average) rises by half a percentage point from its low of the past year. And that’s what just happened, with the unemployment rate surging 0.6% from the year’s low.
And:
Surprises to the DOWNSIDE now.
(Seize all assets of Duke and Duke enterprises)
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