North American News
US Stock Market Rallies: Nasdaq Shines
Market Performance:
- Nasdaq Composite: +2.3% (up 9% in six sessions, the best run since November 2022)
- S&P 500: +1.6%
- Dow Jones Industrial Average (DJIA): +1.4%
- Russell 2000: +2.4%
Key Highlights:
- Nasdaq Rally: The Nasdaq’s 9% increase over the past six sessions marks its strongest performance over such a period since late 2022. The index has rebounded significantly, rising 12% from its intraday low on August 5.
- Market Sentiment: Positive data, including improved retail sales and initial jobless claims, has bolstered market sentiment and countered recession fears that were present earlier in the month.
Summary: The US stock market closed positively, with the Nasdaq achieving its best six-day run since November 2022. The index, alongside other major indices, saw substantial gains driven by encouraging economic data and a shift away from recession concerns.
Atlanta Fed GDPNow Q3 2.4% vs 2.9% prior
- The latest GDP tracker from the Atlanta Fed
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2024 is 2.4 percent on August 15, down from 2.9 percent on August 8. After recent releases from the Treasury’s Bureau of the Fiscal Service, the US Census Bureau, the US Bureau of Labor Statistics, and the Federal Reserve Board of Governors, the nowcast of third-quarter real gross private domestic investment growth decreased from 2.8 percent to 0.0 percent.
US July retail sales +1.0% versus +0.3% expected
- US July 2024 retail sales data
- Prior month: 0.0% (revised to -0.2%)
- Retail sales came in at $709.7 billion vs $704.3 billion in the month before
Details:
- Retail sales: +1.0 vs 0.0% prior
- Retail sales YoY: +2.7 vs +2.3% prior
- Ex Autos: +0.4 vs 0.4% prior (estimate was +0.1%)
- Prior ex autos: +0.4% (revised to +0.5%)
- Control group: +0.3 vs 0.9% prior (estimate was 0.1%)
- Prior month control group: 0.9%
- Ex autos and gas: +0.4vs 0.8% prior
In terms of components:
- Motor vehicle & parts dealers: Up 3.6% This is a significant monthly increase, possibly indicating renewed consumer interest in vehicle purchases.
- Electronics & appliance stores: Up 1.6% Showing resilient consumer demand for tech and appliances.
- Building material & garden equipment & supplies dealers: Up 0.9% m/m in a surprise sign of strength despite warnings from Home Depot and others
- Food & beverage stores: Up 0.9% Indicates steady spending at grocery stores
- Food services & drinking places: Up 0.3% Showing continued, albeit modest, growth in dining out. This is a spot to watch.
- Health & personal care stores: Up 0.8% Showing consistent growth in this sector.
US initial jobless claims 227K vs 235K expected
- Weekly initial jobless claims for the week ending August 10, 2024
- Initial jobless claims 227K vs 235K expected and 233K prior (revised to 234K).
- Continuing jobless claims 1864K vs 1875K expected and 1875K prior (revised to 1871K).
US July import prices 0.1% vs -0.1% expected
- US July import/export price data
- Import prices m/m 0.1% vs -0.1% expected and 0.0% prior.
- Import prices y/y 1.6% vs 1.5% prior (revised from 1.6%).
- Export prices m/m 0.7% vs 0.0% expected and -0.5% prior.
- Export prices y/y 1.4% vs 1.0% prior (revised from 0.7%).
US July Philly Fed -7.0 vs +6.0 expected
- Philadelphia-area manufacturing survey for August 2024
- Lowest since January
- Prior +13.9
Details:
- New orders: 14.6 vs 20.7 prior
- Shipments: 8.5 vs 27.8 prior
- Unfilled orders: 3.2 vs 9.1 prior
- Delivery times: 14.1 vs 8.5 prior
- Inventories: -4.8 vs -9.4 prior
- Prices paid: 24.0 vs 19.8 prior
- Prices received: 13.7 vs 24.2 prior
- Employment: -5.7 vs 15.2 prior
- Average workweek: -2.3 vs -1.6 prior
Six-month ahead expectations:
- General business conditions: 15.4 vs 38.7 prior
- New orders: 10.4 vs 31.3 prior
- Capital expenditures: 12.0 vs 7.4 prior
August Empire Fed -4.7 vs -6.0 expected
- The August 2024 New York Fed manufacturing index
- Empire Fed -4.7 vs -6.0 prior
Details
- New orders: -7.9 vs -0.6 prior
- Shipments: 0.3 vs 3.9 prior
- Unfilled orders: -7.4 vs -11.2 prior
- Delivery times: -3.2 vs -9.2 prior
- Inventories: -10.6 vs -6.1 prior
- Prices paid: 23.4 vs 26.5 prior
- Prices received: 8.5 vs 6.1 prior
- Employment: -6.7 vs -7.9 prior
- Average employee workweek: -17.8 vs -0.1 prior
- Supply availability: -2.1 vs 0.0 prior
Six-month ahead expectations:
- General business conditions: 22.9 vs 25.8 prior
- New orders: 24.8 vs 20.8 prior
- Capital expenditures: 8.5 vs 3.1 prior
US July industrial production -0.6% vs -0.3% expected
- US July 2024 industrial production data
- Prior was +0.6% (revised to +0.3%)
- Manufacturing output -0.3% vs -0.2% expected
- Prior manufacturing output +0.4% (revised to 0.0%)
- Capacity utilization 77.8% vs 78.5% expected (78.8% prior)
US August NAHB home builder sentiment survey 39 vs 43 expected
- Home builder sentiment from the National Association of Home Builders for August
- Prior was 42
- Current sales 44 vs 47 prior
- Prospective sales 25 vs 27 prior
US June business inventories +0.3% vs +0.3% expected
- US business inventory data for June 2024
- Prior was +0.5%
- Retail inventories +0.2% vs +0.2% prior
Fed’s Musalem: Time may be nearing for a change in the policy rate
- St Louis Fed President Alberto Musalem speaks in Louisville
- Monetary policy is moderately restrictive
- Labor market is no longer overheated
- Labor market no longer clear upside risk to inflation
- Recent data have bolstered my confidence on inflation
- Risk to both sides seem more balanced
- Time may be nearing for a change in policy
- Sees GDP growth 1.5% to 2.0% in H2
- Does not think the Fed is behind the curve and says the economy is doing very well
- Sees risks to cutting too early or too late
- Models suggest interest rates going forward likely to be higher than pre-pandemic
Fed’s Bostic says open to a rate cut in September as inflation cools
- Remarks by Atlanta Fed president, Raphael Bostic, to the FT
- The labour market is weakening “but not weak”
- As price pressures ease, officials need to be conscious of their mandate of maintaining full employment
UBS says doesn’t see reason for 50bp Federal Open Market Committee (FOMC) rate cut in Sept
- The ‘but’ UBS add is to watch for reason from the August NFP report.
- The inflation data has been good enough to allow the Fed to start cutting rates in September
- But does not give them a reason to cut aggressively
- The decision whether to cut by 50 basis points instead of the usual 25 bps may come down to the August labor report
- Thursday’s retail sales data is another critical release
UBS says the main downside risk to their base case of a soft landing is a pullback in consumer spending.
The US retail sales data for July is due at 0830 US Eastern time, 1230 GMT:
- Retail sales m/m is expected at 0.3%, with the range of expectations spanning -0.1% to 0.9%
- Ex-autos m/m is expected at 0.1%, range -0.4% to 0.4%
Canada June wholesale sales -0.6% vs -0.6% expected
- Canada June wholesale and manufacturing sales
- Wholesale sales m/m -0.6% vs -0.6% expected and -0.8% prior.
- New motor vehicle sales m/m 168.0K vs 184.7K prior.
Commodities
Oil Prices Rebound on Strong US Consumer Spending Signals
Market Movement:
- WTI Crude Oil: Up $1.02
Key Drivers:
- Consumer Spending: Strong consumer activity supports gasoline demand, as consumers continue to spend on travel and fuel, reinforcing positive demand for oil.
- Technical Analysis: Oil prices are consolidating after testing the $72 mark for the second time in three months. A significant breakout above $84 is needed to generate substantial upward momentum.
Positioning and Outlook:
- Positioning: Net long positions are near record lows, indicating potential for a squeeze if positive news on inventories, demand, or geopolitical tensions in the Middle East materializes.
Summary: Oil prices are showing resilience, bouncing back after recent declines. The rebound is supported by robust consumer spending and positive technical signals, although substantial upward momentum will require breaking above key resistance levels.
Buying exhaustion in Copper is now imminent – TDS
We expect notable CTA buying activity in Copper markets this session to set the stage for subsequent buying exhaustion, TDS senior commodity strategist Daniel Ghali notes.
CTA buying activity in Copper to slow down
“CTA trend followers will now be tapped out without a substantial rally propelling Copper prices back towards the $9,800/t mark. The set-up for flows is already asymmetrically tilted to the downside, but we estimate that only a big downtape could spark large-scale selling activity over the coming week.”
“The set-up in Aluminium markets remains more favorable should the complex continue to rally, with continued CTA buying activity expected in an uptape. That being said, the set-up for algo flows in aluminium is now symmetric.”
Beware of the next leg of algo selling activity in Platinum – TDS
Markets expect CTAs to continue covering shorts in Platinum markets this session, but the balance of risks for CTA positioning has now notably shifted to the downside, TDS senior commodity strategist Daniel Ghali notes.
Balance of risks for CTA positioning turns to the downside
“Barring continued strength in prices, we expect CTAs to return to the offer with large-scale selling activity expected over the coming week, even in a flat tape. And, a big downtape could spark massive CTA selling activity totaling up to -50% of the algos’ max size.”
“While there are still some scenarios for the coming week that could result in continued buying activity from algorithmic trend followers, the set-up for flows is already pointing to extreme downside asymmetry.”
EU News
European Equities closes strong
- Strong gains in the main European markets
- Stoxx 600 +1.2%
- German DAX +1.7%
- Francis CAC +1.2%
- UK’s FTSE 100 +0.8%
- Spain’s Ibex +1.2%
- Italy’s FTSE MIB +1.0
UK June monthly GDP 0.0% vs 0.0% m/m expected
- Latest data released by ONS – 15 August 2024
- Prior +0.4%
- Services -0.1% vs +0.1% m/m expected
- Prior +0.3%
- Industrial output +0.8% vs +0.1% m/m expected
- Prior +0.2%; revised to +0.3%
- Manufacturing output +1.1% vs +0.1% m/m expected
- Prior +0.4%; revised to +0.3%
- Construction output +0.5% vs -0.1% m/m expected
- Prior +1.9%; revised to +1.7%
UK Q2 preliminary GDP +0.6% vs +0.6% q/q expected
- Latest data released by ONS – 15 August 2024
- Prior +0.7%
- GDP +0.9% vs +0.9% y/y expected
- Prior +0.3%
Looking at the breakdown, household consumption contributed +0.12%, government consumption +0.30%, and gross capital formation +2.38% on the quarter. That is partially offset by a fall in net trade (-2.20%). Overall, it still points to a solid showing in Q2 for the UK economy.
Switzerland July producer and import prices 0.0% vs 0.0% prior
- Latest data released by the Federal Statistics Office – 15 August 2024
Producer prices were flat on the month while import prices were up marginally by 0.1%. Relative to the same month a year ago, Swiss producer and import prices are seen down 1.7%.
Asia-Pacific-World News
PBOC Governor Pan: Will stabilize expectations and help consolidate recovery
- Comments from Pan Gongsheng, governor of the People’s Bank of China via Xinhua
- Will focus on striking a balance between short-term and long-term objectives, between growth stabilization and risk prevention
- China will improve the mechanism for forestalling and defusing systemic risks
- China will place greater emphasis on the use of price-based tools such as interest rates
- Will gradually shift away from a focus on quantitative targets
- China will adhere to supportive monetary policy
China’s National Bureau of Statistics (NBS) says PPI deflation will narrow in months ahead
- NBS remarks following data for July
National Bureau of Statistics (NBS) with remarks:
- Economic recovery trend needs to be consolidated
- Expects recovery in consumption to consolidate as policies gain traction
- Falls in Producer Prices Index are likely to narrow in coming months
- Consumer prices are expected to remain relatively stable
- domestic demand is likely to improve due to policy support
- Economic development in China faces more favourable conditions despite challenges and risks
- China’s foreign trade remains resilient despite rising protectionism
China July data: Retail sales +2.7% y/y (expected +2.6). Industrial production +5.1% y/y
- Industrial production miss. Retail beats estimates
The beat for retail sales is going to be read as slightly better news on household consumption/demand.
The other two headline data points are both misses though. Industrial output has dribbled lower compared to the previous month for the third consecutive month.
China House Prices for July 2024 -0.7% m/m and -4.9% y/y
- The vicious circle of lower house prices continues
No end in sight for the woes besetting China’s property market.
July house prices -0.7% m/m and -4.9% y/y
- priors -0.6% and -4.5% respectively
PBOC sets USD/ CNY mid-point today at 7.1399 (vs. estimate at 7.1461)
- PBOC CNY reference rate setting for the trading session ahead
In open market operations:
- PBOC injects 578n via 7-day RR, sets rate at 1.7%
- 7bn yuan mature today
- net 571bn yuan injection today
No Medium-term Lending Facility (MLF) operation from the People’s Bank of China today
- The PBoC says it’ll conduct the MLF on August 26
The bank injected 577 bn yuan in 7 day reverse repos instead today.
The Bank says this is meant to counteract the maturing MLF loans, tax payments, and government bond issuance.
Australian July unemployment rate 4.2% (vs. 4.1% expected)
- Employment report from Australia for July 2024
Another strong employment report from Australia.
Employment +58.2k
- expected +20.0k, prior +50.2k
Unemployment Rate 4.2%
- expected 4.1%, prior 4.1%
Participation Rate 67.1%
- expected 66.9%, prior 66.9%
Full Time Employment +60.5k
- prior + 43.3k
Australian Inflation Expectations for August 2024 have jumped from July
- 4.5% vs. 4.3% prior
Australia MI Inflation Expectations for August 2024 come in at 4.5%
- Previous was 4.3%
RBNZ expected to cut cash rate by at least another 50 bps before year-end – poll
- The findings from Reuters’ latest poll on economists on the RBNZ
- 23 of 25 economists forecast a 25 bps rate cut in October next
- Of the remaining two, one anticipates a 50 bps rate cut and the other no change
- 23 of 25 economists forecast the RBNZ to cut by at least 50 bps to 4.75% by year-end
- The remaining two expect the cash rate to be cut to 5.00% i.e. one more rate cut only
New Zealand retail sales data -0.1% m/m and -4.9% y/y
- New Zealand Electronic Card Spending
Card spending data covers around 68% of core retail sales in NZ.
RBNZ Governor Orr trimming monetary policy restraint is appropriate now
RBNZ Orr speaking and says:
- the Bank will proceed cautiously
- to proceed with caution in adjusting interest rates
- price behaviour is in line with low inflation
- removing monetary policy restraint is appropriate for the time being
- Current economic environment is weak
- Economy weaker than anticipated six months ago
- We have strong control over the inflation story
- No talk on committee of raising rates again
- We are not done yet on inflation but definitely moving in right direction
- If inflation expectations well anchored we can look through some noise
Japan’s Economy minister Shindo says wages and income will improve
- Comments following the solid Q2 GDP data
Yoshitaka Shindo, Japan’s Minister of State for Economic and Fiscal Policy:
- On GDP data: govt will work closely with BOJ to carry out flexible macroeconomic policy management
- Govt will closely monitor, economic, price situations and financial markets
- The economy expected to gradually recover as wages, income improve
- Need to be mindful of downside risks in overseas economy, market movements
Japan Q2 GDP +0.8% q/q (vs. +0.5% expected)
- Japan’s economy back in expansion
Japanese GDP for the April to June quarter of 2024 is better than the contraction in Q1.
+0.8% q/q
- expected 0.5%, prior -0.6%
QQ Annualised is +3.1%
- expected +2.1%, prior -2.3%
Private consumption q/q +1.0% … up for the first time in 5 quarters
- expected +0.5%, prior -0.6%
External demand q/q -0.1%
- expected -0.1%, prior -0.5%
Capital Expenditure q/q +0.9% … higher for the first time in two quarters
- expected +0.9%, prior -0.4%
Barclays forecast the next Bank of Japan rate hike in January 2025 (prior April 2025)
- Bank of Japan interest rate forecast
Snippet from Barclays, a contrasting view, saying the Bank needs to see higher inflation feeding through:
- Its likely that the BoJ will need to wait until at least the December meeting to confirm “that the next wave of service price markups is reflected on the nationwide CPI data” … Barclays expect wage pressure will move inflation higher
- next BoJ rate hike expected in January (Barclays were previously tipping April 2025)
Barclays says the Summary of July meeting shows some members of the Board are
- biased against rate hikes
- and even those supportive of further hikles are cautious
Cryptocurrency News
Bitcoin Dips to Weekly Lows, Testing Support Levels
Current Price:
- Bitcoin: $57,600 (down nearly $2,000)
Key Points:
- Support Levels: Bitcoin’s drop to $57,600 matches earlier weekly lows, providing potential support. However, a further decline could lead to a test of the $55,000 level, which might signal broader risk trade concerns.
- Potential Catalyst: The recent decline may be linked to movements involving Mt. Gox funds. A trial transaction involving $2.1 billion worth of Bitcoin could potentially impact the market if these assets are sold.
Summary: Bitcoin has fallen sharply, approaching the lows of the week. Current support around $57,600 will be crucial, with further drops potentially reaching $55,000. The movement of Mt. Gox funds might be influencing the market, raising concerns among Bitcoin investors.
FLOKI Declines Despite Premier League Partnership with Nottingham Forest
Market Reaction:
- FLOKI: Down 1.5%
Partnership Announcement: Floki Inu (FLOKI) has revealed a partnership with Premier League football club Nottingham Forest for the 2024/2025 season. The agreement will see FLOKI become the club’s official crypto partner, featuring live advertisements during Nottingham Forest’s home matches, stadium presence, and other promotional opportunities.
Price Movement: Despite the high-profile partnership, FLOKI’s price has fallen by 1.5% in the past 24 hours, extending its weekly decline to 7.8%. The general downturn in the meme coin market has overshadowed the positive impact expected from such a high-profile partnership.
Meme Coin Market Overview:
- Profitability: Despite the overall market decline, many meme coin holders remain profitable. According to IntoTheBlock’s data:
- Dogecoin (DOGE): 72.5% of holders are in profit.
- FLOKI: 70.4% of holders are in profit.
- MOG: 61.5% of holders are in profit.
- PEPE: 56.1% of holders are in profit.
- Shiba Inu (SHIB): 46.3% of holders are in profit.
Notes:
- Exclusions: IntoTheBlock’s data does not include newer large-cap meme coins like dogwifhat (WIF), BONK, and BRETT, which could also impact the overall meme coin landscape.
The partnership with Nottingham Forest may enhance FLOKI’s brand visibility, but current market conditions and broader trends in the meme coin space are influencing its price performance.
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