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Morning Brew September 24 2024
Erik Schafhauser
Senior Relationship Manager
Summary: Is the Chinese Stimulus strong enough?
Good morning.
China this morning announced the largest stimulus measures since the pandemic but from initial commentary collected by Reuters somewhat less than traders had hoped. The measures are mainly geared at lowering interest rates and minimum reserves to inject liquidity.
The measures come as the US is looking ot ban Chinese EV with connected car technology fro US roads and overall trade frictions are worsening.
Ukrainian President Selensky said we were closer to peace than thought while Joe Biden is scheduled to address the United Nations.
US 10 Year Yields rose a little to 3.75 and the USD Index rose to 100.95, EURUSD is 1.1115, GBPUSD 1.3350, USDJPY 144.10. Gold and are fairly volatile and are currently at 2625 and 30.70. Gold is making new all time highs while Silver is failing to make significant gains, an “interesting” setup where a breakout either way is becoming likely.
Equities are trading friendly with the US 500 at 5720, the US tech 100 NAS at 19879, the US30 42100 and the GER40 at 18940. Tesla was the big gainer yesterday at nearly 5% on the Robotaxi launch, Intel rose nearly 3% on the interest by Apollo.
European PMI had disappointed yesterday and Althea sounds the recession warning:
Summary:
- Accelerating Economic Slowdown: The latest PMI data reveals sharp contractions in Germany and France, signaling an increasing risk of recession across Europe.
- Yield Curve Disinversion: The recent disinversion of the German yield curve signals rising recession risks in Germany and the broader Eurozone, with markets expecting the ECB to shift toward rate cuts to support the weakening economy. This mirrors past crises, such as post-German reunification, and indicates slower growth ahead alongside potential monetary easing.
- Monitor ECB Policy: With potential rate cuts on the horizon, keep a close watch on ECB policy decisions, as they could further influence bond markets and currency volatility.
- Defensive Strategies: Investors should focus on defensive positions, such as short-term bonds and quality credits, to mitigate risks in a slowing economy.
Oil rose on the news out of China on hopes of a higher demand.
Today the economic agenda is basically empty and traders will focus on the middle east, the Chinese stimulus and it`s implications.
John Hardy put out a new US Election Countdown, raining fears of a scenario of a Trump Gridlock in which Trump is elected president and the Republicans take the Senate, but fail to take the House.
“It would likely prove one of the most negative plausible scenarios for the US economic outlook and for global markets. The Democratic House and Trump would likely be in constant war as the House blocks any attempt at new tax cuts and possibly even the continuation of some of his old tax cuts while Trump blocks continuation of the “green” parts of Biden’s huge fiscal packages and stops all new spending initiatives that don’t come with new tax cuts”
Tuesday
- Data Australia Rate decision DE IFO Index
Wednesday
- Data Japan PPI, New Home Sales
Thursday
- Data SNB , US Initial Jobless Claims, GDP & Durable Goods orders,
- speakers: Collins, Williams, Kashkari, Zelensky visits the US
Friday
- Data EU Consumer confidence, US PCE, Canada GDP