MARKET REPORT
(Unburdened by what has been)

Day in Review:

Today:
(Kamalanomics):

DATA:
SELL EVERYTHING!
– JAPANIC:

“You can’t unwind the biggest carry trade the world has ever seen without breaking a few heads. That is the impression markets give us this morning,” Kit Juckes, chief foreign exchange strategist at Societe Generale, said in a research note published Monday.

– Dow plunges over 1,100 points, S&P 500, Nasdaq sink 3%

– 140bps of cuts in 2024 at the peak today (as 2025 cuts are brought forward)

– ISM Services PMI tops expected

– China Caxin Services PMI surpasses consensus

COMPANIES:

NVDA -35% from highs
– NVDA AI chips delayed due to design flaws

AI trade HURTING. Below 200D MA

– Intel Drops another 6%

GENERAL:

– Goolsbee refuses to discuss emergency rate cuts

– Goldman Sachs trading desk noted tht overall activity levels are surging up +63% vs. the trailing 2 weeks in line with market volumes up +99% vs the 10dma

S&P closed WELL below 100D MA.

– Euro Bourses hit 27-week low

– Eyes on Iran strike

– Copper plunges through $4, Platinum -5%, Silver smoked, Lead 21-month Low. Cocoa +7%

– Equities down, Treasuries mixed, Crude up, Dollar down

DOLLAR DX down: 102.74             -0.45% (103.01 – 102.18) Off HIGHS
– AUD down: 64.94                         -0.23% (65.11 – 63.56) HIGHS
– EUR down: 91.29                          -0.37% (91.77 – 90.84) MID
– GBP down: 127.75                        -0.2% (127.11 – 128.16) MID
– JPY DOWN: 144.13                       -1.6% (145.03 – 141.67) Off HIGHS

GOLD Down: $2452                                       -0.72% (2497 – 2406) MID
DOW/ES/ND DOWN:                                    39006 -2.19%, 5247 -2.39%, 18146 -2.21%
CRYPTO: BTC/ETH SMOKED:                        54754 -7.10%, 2443 -11%
CRUDE up: $73.89                                         +0.5% (71.68 – 74.00) HIGHS

Coming Up:

– German Industrial Orders, EZ Retail Sales, Canadian Trade Balance

– RBA Policy Announcement

This week:
– PMI, RBA, BoJ SoO, BoC Minutes, and Chinese inflation

Speakers:

– RBA’s Bullock

EARNINGS:

– Bayer, Caterpillar, Uber, SuperMicro

MAJORS:

DX:
Money markets priced in full 50bps rate cut in the Fed September meeting, ahead of ISM Services PMI, accompanied by participants ramping up their rate cut bets.

Fed’s Goolsbee declined to talk about emergency Fed rate cut when asked.

The DXY set a trough at 102.15, bouncing off lows as the session progressed, with the rebound supported by ISM Services PMI coming in above market expectations.

Traders are now pricing in nearly 115bps of rate cuts this year, with the odds for a 50bps reduction in September standing at nearly 92%

DOLLAR DX down: 102.74             -0.45% (103.01 – 102.18) Off HIGHS

EUR
 European data saw mixed reports on HCOB Final PMI data for July, with beats seen in Germany and EZ, except for EZ Services which was in line with expectations, while Italy and France fell short on forecasts; EZ’s Sentix index fell more than expected. HCOB said, “There is still no relief from inflation…We think this points to wage pressure caused by demographic shifts, making it harder for the ECB to hit its 2% inflation target”. EUR/USD later trimmed gains, falling back below 1.10 to around 1.0950, though still well in the green ahead of EZ Retail Sales on Tuesday.

EUR down: 91.29                            -0.37% (91.77 – 90.84) MID

GBP:
JA Focus

GBP down: 127.75                          -0.2% (127.11 – 128.16) MID

AUD:
JA Focus

AUD down: 64.94                            -0.23% (65.11 – 63.56) HIGHS

YEN:
The carry trade refers to investors borrowing money at near-zero interest rates in Japan, and then redeploying that cash into higher-yielding assets around the world, such as stocks and bonds.

The selloff here is to a large extent attributable to the unwind of the so-called carry trade.

Typically, the cheap cash raised in Japan is redirected into higher-yielding US Treasurys, with investors collecting the difference between the interest rates set by the Bank of Japan and the Federal Reserve.

But in times of strong risk-on sentiment, like the long period of bullishness that’s fueled the stock market since the rally began in November 2022, the yen carry trade has spilled over into other assets like stocks.

“They took that money in and invested it in assets around the world including the Magnificent 7, Mexican assets, Brazillian assets, and some of that didn’t go that far, they went into the Japanese stock market,” Yardeni said.

But after the Bank of Japan unexpectedly raised interest rates 15 basis points last week amid the prospect of rate cuts by the Federal Reserve, the yen has strengthened. That’s sparked a wave of margin calls, leading to speculators unwinding their positions and selling stocks.

JPY DOWN: 144.13                         -1.6% (145.03 – 141.67) Off HIGHS

GOLD/METALS:

Silver PUKES

Dead cat?

GOLD Down: $2452                                       -0.72% (2497 – 2406) MID

BONDS:

– Yields collapsed by almost 20bps intraday… twice… before squeezing back higher and ending pratically unchanged. The long-end ended up outperforming on the day (30Y -4bps, 2Y +1bps)…

EQUITIES:

NASDAQ broke but held 200D MA

MAG 7 down 3T from record highs

EUR:
– DAX -1.95% 17,318
– FTSE -2.04% 8,008
– CAC -1.42% 7,149
– ES50 -1.49% 4,570

US:
– SPX -3% at 5,186
– NDX -3% 17,895
– DJIA -2.6% 38,703
– RUT -3.3% 2,039

Sectors (W to S): Technology -3.78%, Communication Services -3.35%, Consumer Discretionary -3.07%, Real Estate -2.95%, Financials -2.9%, Health -2.69%, Utilities -2.69%, Materials -2.28%, Energy -2.01%, Consumer Staples -1.94%, Industrials -1.72%

STOCKS:
Apple (-4.82%) – Warren Buffett’s Berkshire Hathaway (BRK) cut its stake in the Co. by 38% from the previous quarter.
Nvidia (-6.36%) – Its upcoming AI chips, which are part of the Blackwell series, will be delayed by over three months due to design flaws, Information reports.
Berkshire Hathaway (-3.36%) – Revenue fell short, but posted strong Q2 earnings thank to insurance strength with its cash stake growing 47% to 277bln, as it sold a net USD 75.5bln of stocks in Q2, the seventh straight quarter that the CO. sold more stocks than it bought.
Alphabet (-4.61%) – Lost DoJ antitrust suit over search, according to Bloomberg.

OIL:
WTI (U4) SETTLED USD 0.58 LOWER AT 72.94/BBL; BRENT (V4) SETTLED USD 0.51 LOWER AT 76.30/BBL

The crude complex continued its sell off on Monday, albeit settling well off worst levels, as global risk-averse sentiment outweighed heightened Middle East tensions. WTI and Brent tumbled through the European morning to hit lows of USD 71.67/bbl and 75.05/bbl, respectively, amid continued significant growth concerns from Friday out of the US sparked massive risk-off trade. However, as risk sentiment somewhat improved through the US afternoon, although still massively downbeat, the crude complex came off troughs to peak at USD 74.46/bbl and 77.74/bbl. As such, little focus was on energy-specific newsflow as recessionary fears took the stage, with energy losses somewhat cushioned by the ever-growing geopolitical risk as many fear that Iran and Lebanon’s response to the Israeli assassinations may spark a wider conflict. On the data footing, Chinese Services PMI topped. Elsewhere, Libya’s El Sharara oil field (300k BPD) reportedly fully halted production. Looking ahead, attention will continue to focus on US growth concerns and global sentiment, but of course, geopolitical risk continues to be on the radar.

CRUDE up: $73.89                                         +0.5% (71.68 – 74.00) HIGHS

CRYPTO

– Bitcoin briefly fell below $50,000 Monday as market sell-off spread to crypto currencies leading to $1.2 billion in crypto liquidations.

– Ether, Solana, and other alternative crypto assets are down even more than bitcoin.

– Despite bitcoin’s aspirations to be a safe-haven asset, its recent price movements show that it’s still operating as a risk-on asset today.

– This morning’s low was nearly 30% below the $70,000 price level bitcoin hit exactly a week ago.

– As the stock market began to crumble Friday, nervous investors pulled out $237.4 million from spot bitcoin exchange-traded funds (ETFs), according to data from Farside Investors.

CRYPTO: BTC/ETH SMOKED:                        54754 -7.10%, 2443 -11%

KEEP DOING WHATS WORKING

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

Song of the day:
https://www.youtube.com/watch?v=_kdbT4i717E

Joke of the Day:
https://www.youtube.com/watch?v=ry2XlLKctiI

2nd Joke of the day:
Anyone name a successful policy shes done? Bueller?

(Seize all assets of Duke and Duke enterprises)

I can be contacted should anyone have any questions, input at [email protected] during US hours of EST 9am until 5pm

We do our best to provide correct information and pricing. We do not accept liability for error. All pricing listed has been taken care and checked but no liability assumed in error. As ALWAYS, any advice given is general in nature and is not suited to each traders individual: situation/time-frame/goals/financial circumstance/risk profile/loss mechanics etc We offer ideas for trades from time to time, we accept no liability for results, they are to be traded on your discretion and responsibility.

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