Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Senior Relationship Manager
Summary: Key of the Trump Trade is the unexpected
Good Morning all,
We got a reminder yesterday of what to expect in a Trump presidency and that is unexpected volatility. We saw sharp moves in Chip stocks yesterday that were triggered by three news coinciding as far as I can tell.
There were reports on severe trade restrictions against China (this still from the Biden administration to appear firm) at the same time Trump stated he expects Taiwan to pay for it`s own defense and reports he asked Jerome Powell not to lower rates ahead of the election.
This combination caused a massive selloff in chipmakers, the Chipmaker Index fell by 6.8% in the largest fall since the corona pandemic. The Nasdaq lost 2.8%, the S&P500 1.4% and the Dow gained 0.6%. Nvidia fell 6.6%, AMD 10, Meta 5.7% and Apple as well as Tesla 2.5% and 3.1% respectively. Outlier was Intel at +0.5%. Watch TSSM today, the stock in under pressure due to the news but expected to report very strong results. Let us see who wins the tug of war.
Rheinmetall fell more than 5% yesterday, likely on the disappointing German budget, surveys in Germany see car companies reducing staff the next few years.
Yields were largely unaffected by any turmoil, we remain at 4.17%, and the USD Index falls to 103.78. EURUSD rises to 1.0930, GBPUSD is breaking the 1.30 as I am writing, let us see if we hold here. USDJPY is at 156.10. So fart his intervention seems to be going in the desired way.
Silver sold off more than 3% while Gold gave up much less, we are at 30.40 and 2470.
The question if we calm down here and are in a Buy the Dip scenario or it is a larger trend reversal will be on everybody`s mind today and has the possibility for sharp moves.
Besides the obvious risk sentiment, there are some key events to watch:
Thursday
- Data UK Labor data, ECB Rate decision, Initial Jobless claims & Philly Fed Business, Logan speaks
- Earnings: TSMC, Nokia, Netflix,
Friday
- Data Japan JPI, UK retail Sales. Bostic speaks
- Earnings: American Express, Halliburton, Travelers,
Altheas ECB Outlook: