Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Trader Strategy
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Morning Brew August 2 2024
Erik Schafhauser
Senior Relationship Manager
Good morning all,
August had a rough start with lots of volatility. A disappointing ISM report came in very disappointingly, and high initial jobless claims raised fears that the FED is risking a recession by waiting too long to cut rates. The Dow lost 1.2%, S&P 500 1.4%, the Russell and the Nasdaq 2.3% after the July 31 session, which was one of the best this year. The daily change in the value of Nvidia is basically equal to the largest German company. That seems to be excessive. After rising 10% on Wednesday, yesterday the stock gave up 6.7% again. Yesterday, ARM lost 15% and Qualcomm 9.4%. Moderna lost 21%. Tesla lost 6.5%.
Yesterday's earnings were mixed:
- Apple came in better than expected, and shares rose by 1% after hours. iPhone sales were higher than expected in the last quarter, and the company is looking at strong upcoming sales.
- Amazon reported slowing growth and consumers looking at cheaper products overall. Despite beating expectations overall, shares slid almost 8% in extended trading.
- Intel severely disappointed traders with a drop of approximately 20% in late trading. The company will halt dividends and cut staff by 15%.
With the load of data and rate decisions, we saw massive moves in FX. EURUSD is trading at 1.0797, GBPUSD at 1.2730, USDJPY at 149.30, and Gold and Silver are at 2460 and 28.88, respectively. Silver traded in great swings again. It has long been said that JP Morgan was one of the participants weighing on the price of silver; it just issued a buy recommendation and predicts an average price of USD 36 per ounce.
10-year yields fell to below 4% yesterday on the expectation that the FED will have to cut aggressively from here. Traders are looking at -33 basis points for the September meeting; this means there is a 30% chance of a 50 BPS cut! December is seen at -84 bps right now.
Today, the highlight will be the nonfarm payrolls at 4:30, expected at a weak 175k after 206k in July. The unemployment rate is expected at 4.1%, and average earnings at 3.7%.
Locally, the Swiss CPI and PMI will be released at 8:00 and 9:30. The CPI is seen at 1.3%. The Swiss Franc had a strong July; let's see if it continues in August.
Geopolitically, the Middle East remains a hot topic.
Expect nervous trading and massive swings if the trend of the last few days continues!
Friday: US Nonfarm Payroll, Unemployment rate, Exxon Mobil, Chevron,
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